<SUBMISSION>
<ACCESSION-NUMBER>0000936392-05-000306
<TYPE>S-4/A
<PUBLIC-DOCUMENT-COUNT>9
<FILING-DATE>20050919
<DATE-OF-FILING-DATE-CHANGE>20050919
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>QUALCOMM INC/DE
<CIK>0000804328
<ASSIGNED-SIC>3663
<IRS-NUMBER>953685934
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0930
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-4/A
<ACT>33
<FILE-NUMBER>333-127725
<FILM-NUMBER>051092123
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>5775 MOREHOUSE DR
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92121
<PHONE>8585871121
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>5775 MOREHOUSE DR
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92121
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-4/A
<SEQUENCE>1
<FILENAME>a11421a1sv4za.htm
<DESCRIPTION>AMENDMENT NO. 1 TO FORM S-4
<TEXT>
<HTML>
<HEAD>
<TITLE>Qualcomm Inc.</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 10pt;">
<B>As filed with the Securities and Exchange Commission on
September&nbsp;19, 2005</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="right" style="font-size: 10pt;">
<B>Registration No.&nbsp;333-127725</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 6pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 4pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>Washington,&nbsp;D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Amendment No. 1</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 12pt;">
<B>to</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 18pt;">
<B>Form S-4</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>REGISTRATION STATEMENT</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>UNDER</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>THE SECURITIES ACT OF 1933</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>QUALCOMM INCORPORATED</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(Exact name of registrant as specified in its charter)</I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Delaware</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B>3663</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B>95-3685934</B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <I>(State or other jurisdiction of<BR>
    incorporation or organization)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <I>(Primary Standard Industrial<BR>
    Classification Code Number)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <I>(I.R.S. Employer<BR>
    Identification Number)</I></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>5775 Morehouse Drive</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>San&nbsp;Diego, California 92121-1714</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(858)&nbsp;587-1121</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(Address, including zip code, and telephone number,</I>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>including area code, of registrant&#146;s principal executive
offices)</I>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Paul E. Jacobs</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Chief Executive Officer</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>QUALCOMM INCORPORATED</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>5775 Morehouse Drive</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>San&nbsp;Diego, California 92121-1714</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(858)&nbsp;552-9500</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(Name, address, including zip code, and telephone number,</I>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>including area code, of agent for service)</I>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Copies to:</I></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B>Cameron Jay Rains,&nbsp;Esq.<BR>
    David R. Young,&nbsp;Esq.<BR>
    Randy L. Socol,&nbsp;Esq.<BR>
    Matthew W. Leivo,&nbsp;Esq.<BR>
    DLA PIPER RUDNICK GRAY CARY US LLP<BR>
    4365 Executive Drive, Suite&nbsp;1100<BR>
    San&nbsp;Diego, California 92121-2133<BR>
    Telephone: (858)&nbsp;677-1400</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B>David A. Hahn,&nbsp;Esq.<BR>
    Howard L. Armstrong,&nbsp;Esq.<BR>
    Ann C. Buckingham, Esq.<BR>
    LATHAM&nbsp;&#38; WATKINS LLP<BR>
    600&nbsp;West Broadway, Suite&nbsp;1800<BR>
    San&nbsp;Diego, California 92101-3375<BR>
    Telephone: (619)&nbsp;236-1234</B></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Approximate date of commencement of proposed sale to the
public:</B> As soon as practicable after this Registration
Statement has become effective and all other conditions to the
consummation of the transactions have been satisfied or waived.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the securities being registered on this Form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check the
following
box.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If this Form is filed to register additional securities for an
offering pursuant to Rule&nbsp;462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If this Form is a post-effective amendment filed pursuant to
Rule&nbsp;462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section&nbsp;8(a)
of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said
Section&nbsp;8(a), may determine.</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 8pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 4pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" cellpadding="5" style="border: 3pt double #000000; margin-bottom: 6pt; font-size: 10pt"><TR><TD>
<FONT style="font-size: 8pt" color="#E8112D">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.</FONT><FONT style="font-size: 8pt"> <BR>


</FONT>
</TD></TR></TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 1pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><FONT color="#E8112D">SUBJECT TO COMPLETION, DATED
SEPTEMBER&nbsp;19, 2005</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <IMG src="a11421a1a1142100.gif" alt="(LOGO OF QUALCOMM INCORPORATION)"></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <IMG src="a11421a1a1142101.gif" alt="(LOGO OF FLARION TECHNOLOGIES, INC.)"></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <B>PROSPECTUS OF<BR>
    QUALCOMM INCORPORATED</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B>&nbsp;INFORMATION STATEMENT OF<BR>
    FLARION TECHNOLOGIES, INC.</B></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Dear Stockholders:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are pleased to report that the boards of directors of
QUALCOMM Incorporated and Flarion Technologies, Inc. have
unanimously approved a merger agreement which provides for the
merger of a QUALCOMM subsidiary into Flarion. The merger
agreement has also been adopted by written consent by
Flarion&#146;s stockholders. As a result of the proposed merger,
Flarion will become a wholly owned subsidiary of QUALCOMM. If we
complete the proposed merger, you will become a stockholder of
QUALCOMM, your shares of Flarion common stock, if any, will be
converted into the right to receive shares of QUALCOMM common
stock according to a formula contained in the merger agreement,
and your shares of Flarion preferred stock, if any, will be
converted into the right to receive a combination of shares of
QUALCOMM common stock and cash according to a formula contained
in the merger agreement. In addition, holders of Flarion capital
stock will be entitled to receive additional consideration,
payable in cash, upon achievement of a patent milestone.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The proposed merger is more fully described in the accompanying
prospectus/ information statement. If the merger were completed
on September&nbsp;13, 2005, based on Flarion&#146;s outstanding
capital stock, options and warrants as of August&nbsp;5, 2005
and the average closing sales prices per share of QUALCOMM
common stock from July&nbsp;26, 2005 through September&nbsp;13,
2005, Flarion stockholders would own approximately 0.4% of
QUALCOMM outstanding common stock immediately after the proposed
merger. QUALCOMM common stock is listed on The Nasdaq National
Market under the trading symbol &#147;QCOM.&#148; On
September&nbsp;13, 2005, the last sale price of shares of
QUALCOMM common stock on The Nasdaq National Market was
$42.85&nbsp;per share.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion stockholders have already adopted the merger agreement
and we are not soliciting a vote of the Flarion stockholders.
However, this prospectus/ information statement is being
provided to you for informational purposes, including alerting
you of your right of appraisal of your shares of Flarion capital
stock in connection with the proposed merger, as described in
the section entitled &#147;Appraisal Rights.&#148;
</DIV>

<DIV align="left" style="font-size: 12pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>We encourage you to read this prospectus/ information
statement carefully. In particular, you should review the
matters discussed in the section entitled &#147;Risk
Factors.&#148;</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of QUALCOMM
securities to be issued pursuant to the merger or passed upon
the adequacy or accuracy of this prospectus/ information
statement. Any representation to the contrary is a criminal
offense.</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This prospectus/ information statement is dated
September&nbsp;19, 2005, and is first being mailed on or about
September&nbsp;20, 2005.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Sincerely,</TD>
</TR>

<TR>
    <TD style="font-size: 48pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    /s/ Paul E. Jacobs</TD>
</TR>

<TR valign="top"  style="font-size: 3pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Paul E. Jacobs</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>Chief Executive Officer of QUALCOMM Incorporated</I></TD>
</TR>

</TABLE>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 10pt;">
<!-- TOC -->
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name="tocpage"></A>
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='101'></A>
</DIV>

<!-- link1 "REFERENCES TO ADDITIONAL INFORMATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REFERENCES TO ADDITIONAL INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This prospectus/information statement incorporates important
business and financial information about QUALCOMM from documents
filed with the Securities and Exchange Commission that have not
been included in or delivered with this document. This
information is available at the Internet website that the
Securities and Exchange Commission maintains at
http://www.sec.gov, as well as from other sources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You may also request copies of these documents from QUALCOMM,
without charge, upon written or oral request to:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
QUALCOMM INCORPORATED
</DIV>

<DIV align="center" style="font-size: 10pt;">
5775 Morehouse Drive
</DIV>

<DIV align="center" style="font-size: 10pt;">
San&nbsp;Diego, California 92121-1714
</DIV>

<DIV align="center" style="font-size: 10pt;">
Attn: Investor Relations
</DIV>

<DIV align="center" style="font-size: 10pt;">
(858)&nbsp;658-4813 or ir@qualcomm.com
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>In order to receive timely delivery of the documents, you
must make your request no later than October&nbsp;3, 2005.</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For more information, see the section entitled &#147;Where You
Can Find More Information.&#148;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#101'>REFERENCES TO ADDITIONAL INFORMATION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#102'>CAUTIONARY STATEMENT REGARDING
    FORWARD-LOOKING INFORMATION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>iv</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#103'>QUESTIONS AND ANSWERS ABOUT THE PROPOSED
    TRANSACTION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>v</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#104'>SUMMARY</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#105'>The Companies</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#106'>Summary of the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#107'>Share Ownership of Directors and Executive
    Officers of Flarion; Stockholder Vote</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#108'>QUALCOMM Market Price Data</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#109'>Material United States Federal Income Tax
    Consequences of the Mergers</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#110'>Accounting Treatment</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#111'>Regulatory Approvals</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#112'>QUALCOMM&#146;S Reasons for the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#113'>Flarion&#146;s Reasons for the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#114'>Opinion of Flarion&#146;s Financial
    Advisor</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#115'>Interests of Flarion&#146;s Directors and
    Management in the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#116'>Appraisal Rights</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#117'>Notice to Flarion Stockholders</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#118'>FLARION&#146;S MARKET PRICE AND DIVIDEND
    INFORMATION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#119'>QUALCOMM INCORPORATED SELECTED FINANCIAL
    DATA</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#120'>RISK FACTORS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#121'>Risks Related to the Transaction</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#122'>Risks Related to Our Business</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#123'>THE MERGER</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#124'>Background of the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#125'>QUALCOMM&#146;s Reasons for the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#126'>Flarion&#146;s Reasons for the Merger;
    Recommendation of the Flarion Board of Directors</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#127'>Opinion of Flarion&#146;s Financial
    Advisor</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#128'>Interests of Flarion&#146;s Directors and
    Management in the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#129'>Management of QUALCOMM after the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#130'>Material United States Federal Income Tax
    Consequences of the Mergers</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#131'>Regulatory Approvals</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#132'>Relationships Between QUALCOMM and
    Flarion</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#133'>Stock Ownership Following the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#134'>CERTAIN TERMS OF THE MERGER AGREEMENT</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#135'>General</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#136'>The Completion of the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#137'>Manner and Basis of Converting Shares of
    Flarion Common Stock and Flarion Preferred Stock Pursuant to the
    Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#138'>Initial Purchase Price Adjustments in
    Connection with Estimated Closing Working Capital and
    Expenses</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#139'>Procedure for Determining Closing Working
    Capital</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#140'>Tax Adjustment</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#141'>Treatment of Options to Purchase Flarion
    Common Stock</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#142'>Treatment of Warrants to Purchase Flarion
    Preferred Stock</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>54</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#143'>Exchange of Flarion Stock Certificates; No
    Further Rights as Flarion Stockholder</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>54</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#144'>Distributions with Respect to Unexchanged
    Shares</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#145'>Transfers of Ownership and Lost Stock
    Certificates</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#146'>Stockholders&#146; Agent and Expenses
    Fund</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#147'>Appraisal Rights</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#148'>Patent Milestone Payment</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#149'>Representations and Warranties</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#150'>Conduct of Flarion&#146;s Business Before
    Completion of the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#151'>Additional Agreements</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#152'>Directed Options</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#153'>Employee Matters</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#154'>Conditions to the Closing of the Merger</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#155'>Indemnification of QUALCOMM and Flarion</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#156'>Limitations on Indemnification</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#157'>Indemnification Holdback Amount</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#158'>Determination of Damages</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#159'>Stockholders&#146; Agent</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#160'>Termination of the Merger Agreement</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#161'>Amendments and Waiver</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#162'>Termination Fee</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#163'>Expenses</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#164'>Agreements with Certain Executive
    Officers</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#165'>FLARION&#146;S BUSINESS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#166'>Overview</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#167'>Customers and Products</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#168'>Sales and Marketing</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#169'>Manufacturing and Supply</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#170'>Research and Development</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#171'>Competition</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#172'>Intellectual Property</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#173'>Employees</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#174'>Legal Proceedings</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#175'>FLARION&#146;S MANAGEMENT PRIOR TO THE
    MERGER</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#176'>FLARION&#146;S PRINCIPAL STOCKHOLDERS PRIOR
    TO THE MERGER</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#177'>DESCRIPTION OF QUALCOMM CAPITAL STOCK</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#178'>Common Stock</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#179'>Preferred Stock</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#180'>Rights Agreement</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#181'>Transfer Agent and Registrar</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#182'>Delaware Law and Certain Charter
    Provisions</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#183'>COMPARISON OF RIGHTS OF QUALCOMM
    STOCKHOLDERS AND FLARION STOCKHOLDERS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#184'>Capitalization</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">ii

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#185'>Classification, Number and Election of
    Directors</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#186'>Vacancies on the Board of Directors and
    Removal of Directors</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#187'>Committees of the Board of Directors</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#188'>Amendments to the Certificate of
    Incorporation</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#189'>Amendments to Bylaws</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#190'>Ability to Call Special Meetings of
    Stockholders</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#191'>Notice of Stockholder Action</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#192'>Indemnification of Directors and
    Officers</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#193'>Certain Business Combination
    Restrictions</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#194'>APPRAISAL RIGHTS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#195'>NOTICE TO FLARION STOCKHOLDERS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#196'>LEGAL MATTERS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#197'>EXPERTS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#198'>WHERE YOU CAN FIND MORE INFORMATION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Flarion Technologies, Inc. Index to Consolidated Financial
    Statements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#199'>ANNEX A&nbsp;&#151; AGREEMENT AND PLAN OF
    REORGANIZATION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#200'>ANNEX B&nbsp;&#151; OPINION OF
    FLARION&#146;S FINANCIAL ADVISOR</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>B-1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#201'>ANNEX C&nbsp;&#151; SECTION&nbsp;262 OF THE
    GENERAL CORPORATION LAW OF THE STATE OF DELAWARE</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>C-1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#202'>ANNEX D&nbsp;&#151; FORM OF FLARION
    STOCKHOLDER WRITTEN CONSENT</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>D-1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#203'>PART&nbsp;II&nbsp;&#151; INFORMATION NOT
    REQUIRED IN THE PROSPECTUS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>II-1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a11421a1exv8w1.htm">EXHIBIT 8.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a11421a1exv8w2.htm">EXHIBIT 8.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a11421a1exv23w2.txt">EXHIBIT 23.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a11421a1exv23w4.txt">EXHIBIT 23.4</A></FONT></TD></TR>
</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt;">iii
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<A name='102'></A>
</DIV>

<!-- link1 "CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Some of the information relating to QUALCOMM, Flarion and the
combined company contained or incorporated by reference into
this prospectus/ information statement is forward-looking in
nature. All statements included or incorporated by reference
into this prospectus/ information statement or made by
management of QUALCOMM or Flarion, other than statements of
historical fact regarding QUALCOMM or Flarion, are
forward-looking statements. Words such as &#147;expects,&#148;
&#147;anticipates,&#148; &#147;intends,&#148; &#147;plans,&#148;
&#147;believes,&#148; &#147;seeks,&#148; &#147;estimates&#148;
and similar expressions or variations of such words are intended
to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in
this prospectus/ information statement. Additionally, statements
concerning future matters such as the development of new
products, enhancements of technologies, sales levels, expense
levels and other statements regarding matters that are not
historical are forward-looking statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although forward-looking statements in this prospectus/
information statement reflect the good faith judgment of the
management of QUALCOMM and Flarion, such statements can only be
based on facts and factors currently known by management.
Consequently, forward-looking statements are inherently subject
to risks and uncertainties and actual results and outcomes may
differ materially from the results and outcomes discussed in or
anticipated by the forward-looking statements. Factors that
could cause or contribute to such differences in results and
outcomes include without limitation those discussed in the
section entitled &#147;Risk Factors,&#148; as well as those
discussed elsewhere in this prospectus/ information statement.
Readers are urged not to place undue reliance on these
forward-looking statements, which speak only as of the date of
this prospectus/ information statement. QUALCOMM undertakes no
obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after
the date of this prospectus/ information statement. Readers are
urged to carefully review and consider the various disclosures
made in this prospectus/ information statement that attempt to
advise interested parties of the risks and factors that may
affect our business, financial condition, results of operations
and prospects.
</DIV>

<P align="center" style="font-size: 10pt;">iv

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<DIV align="left" style="font-size: 10pt;">
<A name='103'></A>
</DIV>

<!-- link1 "QUESTIONS AND ANSWERS ABOUT THE PROPOSED TRANSACTION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>QUESTIONS AND ANSWERS ABOUT THE PROPOSED TRANSACTION</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Why am I receiving this prospectus/ information statement?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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 &#147;Certain Terms of the Merger Agreement.&#148; A
    copy of the merger agreement is attached to this prospectus/
    information statement as Annex&nbsp;A. On July&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What will happen in connection with the proposed
    transaction?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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 &#147;first merger,&#148; and references to
    the &#147;merger,&#148; 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
    &#147;mergers.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Why is Flarion proposing the merger?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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 &#147;The Merger&nbsp;&#151;
    Flarion&#146;s Reasons for the Merger; Recommendation of the
    Flarion Board of Directors.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What will I be entitled to receive pursuant to the merger?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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 &#147;Certain Terms of the Merger
    Agreement&nbsp;&#151; Directed Options&#148;) of
    $600&nbsp;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&nbsp;5, 2005, the initial consideration per share of
    Flarion common stock would be approximately $3.93.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    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.&nbsp;patents, out of
    approximately 125&nbsp;Flarion U.S.&nbsp;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&nbsp;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&nbsp;million for damages incurred by QUALCOMM for
    which it is entitled to indemnification pursuant to the merger
    agreement.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    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.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

</TABLE>

<P align="center" style="font-size: 10pt;">v

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What do I need to do now?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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 <B><I>not</I></B> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What vote was needed to adopt the merger agreement?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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)&nbsp;capital stock of Flarion, voting as a single
    class on an as-converted basis, and (ii)&nbsp;preferred stock of
    Flarion, voting as a single class on an as-converted basis. On
    July&nbsp;26, 2005, the requisite vote from Flarion stockholders
    was received by written consent and the merger agreement was
    adopted by the Flarion stockholders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Did the Flarion board of directors recommend the merger?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Yes. The Flarion board of directors unanimously determined that
    the merger is advisable and fair to, and in the best interests
    of, Flarion&#146;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&#146;s board of directors&#146;
    determination are discussed in greater detail in the section
    entitled &#147;The Merger&nbsp;&#151; Flarion&#146;s Reasons for
    the Merger; Recommendation of the Flarion Board of
    Directors.&#148;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Do persons involved in the merger have interests that may
    conflict with mine as a Flarion stockholder?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Yes. When considering the recommendations of Flarion&#146;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&#146;s directors and management in the merger in greater
    detail, see &#147;The Merger&nbsp;&#151; Interests of
    Flarion&#146;s Directors and Management in the Merger.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What are the conditions to completion of the merger?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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
    &#147;Certain Terms of the Merger Agreement&nbsp;&#151;
    Conditions to the Closing of the Merger.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Should I send in my Flarion stock certificates now?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    No.&nbsp;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.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>When do you expect the merger to be completed?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Will the proposed merger be completed?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">vi

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Am I entitled to appraisal rights?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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&nbsp;262 of the General Corporation Law
    of the State of Delaware, or the DGCL, which is attached to this
    prospectus/ information statement as Annex&nbsp;C.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    Under Section&nbsp;262, Flarion stockholders who comply with the
    procedures set forth in Section&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Are there risks I should consider in deciding whether to
    exercise my appraisal rights in connection with the merger?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Yes. In evaluating the merger, you should carefully consider the
    factors discussed in the section entitled &#147;Risk
    Factors.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Will Flarion stockholders recognize a taxable gain or loss
    for United States federal income tax purposes as a result of the
    mergers?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    Tax matters are very complicated and the tax consequences of the
    mergers to a Flarion stockholder will depend on the facts of
    each holder&#146;s own situation. We encourage each Flarion
    stockholder to carefully read the discussion in the section
    entitled &#147;The Merger&nbsp;&#151; Material United States
    Federal Income Tax Consequences of the Mergers&#148; and to
    consult the stockholder&#146;s own tax advisor for a full
    understanding of the tax consequences of the mergers.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What will happen to options to acquire Flarion common stock
    upon the merger?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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&nbsp;million, conditioned upon the
    achievement of a patent milestone, subject to a holdback or
    offset for indemnification, as described in the section entitled
    &#147;Certain Terms of the Merger Agreement&nbsp;&#151;
    Indemnification Holdback Amount.&#148;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What will happen to warrants to acquire Flarion preferred
    stock upon the merger?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    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&nbsp;million, conditioned upon the</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

</TABLE>

<P align="center" style="font-size: 10pt;">vii

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<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    achievement of a patent milestone, subject to a holdback or
    offset for indemnification as described in the section entitled
    &#147;Certain Terms of the Merger Agreement&nbsp;&#151;
    Indemnification Holdback Amount.&#148;</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Are there any regulatory consents or approvals that are
    required to complete the merger?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Neither QUALCOMM nor Flarion is aware of the need to obtain any
    regulatory approvals in order to complete the merger other than
    the following:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the registration statement of which this prospectus/ information
    statement is a part must be declared effective by the Securities
    and Exchange Commission;&nbsp;and</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&nbsp;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&nbsp;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.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Who can help answer my questions?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    If you would like additional copies, without charge, of this
    prospectus/ information statement or if you have questions about
    the merger, you should contact:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    QUALCOMM Incorporated</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Attn: Investor Relations</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    5775 Morehouse Drive</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    San&nbsp;Diego, California 92121</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Telephone No.: (858)&nbsp;658-4813</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Flarion Technologies, Inc.</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Attn: Edward B. Jordan</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    135 Route 202/ 206 South</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Bedminster, New Jersey 07921</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Telephone No.: (908)&nbsp;947-7000</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">viii
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 10pt;">
<A name='104'></A>
</DIV>

<!-- link1 "SUMMARY" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SUMMARY</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="98%"></TD>
    <TD width="2%"></TD>
</TR>

<TR valign="top">
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>This summary highlights selected information from this
    prospectus/ information statement and may not contain all of the
    information that is important to you. You should carefully read
    this entire document and the other documents to which this
    document refers you or that are incorporated herein by reference
    in order to fully understand the merger. See &#147;Where You Can
    Find More Information.&#148; The merger agreement is attached as
    Annex&nbsp;A to this prospectus/ information statement. QUALCOMM
    and Flarion encourage you to read the merger agreement as it is
    the legal document that governs the merger. Page references are
    included in the parentheses below to direct you to a more
    detailed description of the topics presented in this summary.</I></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All references in this document to QUALCOMM&#146;s common stock
include the associated preferred share purchase rights. See the
section entitled &#147;Description of QUALCOMM Capital
Stock&nbsp;&#151; Rights Agreement.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='105'></A>
</DIV>

<!-- link1 "The Companies" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The Companies</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    QUALCOMM INCORPORATED</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    5775 Morehouse Drive</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    San&nbsp;Diego, California 92121-1714</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Telephone (858)&nbsp;552-9500</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM designs, manufactures and markets digital wireless
telecommunications products and services based on Code Division
Multiple Access, or CDMA, technology and other technologies.
CDMA technology is one of the three main technologies used in
digital wireless communications networks. QUALCOMM is a leading
developer and supplier of integrated circuits and system
software. QUALCOMM&#146;s products are used for wireless voice
and data communications, multimedia functions and global
positioning. As the innovator of CDMA, QUALCOMM grants licenses
to use portions of its intellectual property portfolio, which
includes certain patent rights essential to and/or useful in the
manufacture and sale of CDMA products.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM maintains a website on the Internet at
www.qualcomm.com. However, information found on QUALCOMM&#146;s
website is not a part of this prospectus/ information statement.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    FLUORITE ACQUISITION CORPORATION</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    5775 Morehouse Drive</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    San&nbsp;Diego, California 92121-1714</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Telephone: (858)&nbsp;552-9500</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    QUARTZ ACQUISITION CORPORATION</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    5775 Morehouse Drive</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    San&nbsp;Diego, California 92121-1714</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Telephone: (858)&nbsp;552-9500</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fluorite Acquisition Corporation and Quartz Acquisition
Corporation are each wholly owned subsidiaries of QUALCOMM.
Fluorite Acquisition Corporation and Quartz Acquisition
Corporation were incorporated on June&nbsp;30, 2005 and
July&nbsp;1, 2005, respectively, in the State of Delaware.
Neither Fluorite Acquisition Corporation nor Quartz Acquisition
Corporation has engaged in any operations and each exists solely
to effect and otherwise facilitate the mergers. Therefore,
although each corporation is a party to the merger, when we
discuss the transaction in this prospectus/ information
statement, we generally refer only to QUALCOMM. Fluorite
Acquisition Corporation and Quartz Acquisition Corporation are
referred to in this prospectus/ information statement as
QUALCOMM&#146;s merger subsidiaries.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    FLARION TECHNOLOGIES, INC.</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    135 Route 202/ 206 South</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Bedminster, New Jersey 07921</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Telephone: (908)&nbsp;947-7000</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion is a developer of Orthogonal Frequency Division Multiple
Access (OFDMA)&nbsp;technology and the inventor of FLASH-OFDM
(Fast Low-Latency Access with Seamless Handoff-OFDM) technology
for
</DIV>
</DIV>

<P align="center" style="font-size: 10pt;">1

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 10pt;">
wireless mobile communications. The technology offers a
wide-area mobile broadband voice and data solution through an
all-Internet Protocol (IP)&nbsp;packet-switched wireless
communication network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion maintains a website on the Internet at www.flarion.com.
However, information found on Flarion&#146;s website is not a
part of this prospectus/ information statement.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='106'></A>
</DIV>

<!-- link1 "Summary of the Merger (Page 28)" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Summary of the Merger (Page&nbsp;28)</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>The Initial Merger Consideration (Page&nbsp;51)</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon the closing of the merger, holders of Flarion common stock
will be entitled to receive, for each outstanding share of
Flarion common stock, consideration, payable in shares of
QUALCOMM common stock, equal to a pro rata portion (on a fully
diluted, as converted basis including all outstanding options
and warrants, exclusive of directed options) of
$600&nbsp;million, subject to certain potential adjustments.
Holders of Flarion preferred stock will be entitled to receive,
for each outstanding 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&nbsp;5, 2005, the initial consideration payable per share
of Flarion common stock would be approximately $3.93.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Working Capital Adjustment (Page&nbsp;51)</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The initial purchase price that the Flarion stockholders are
entitled to receive is subject to reduction in the event that
Flarion&#146;s transaction expenses exceed $10&nbsp;million or
Flarion&#146;s closing working capital is less than a specified
threshold.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Tax Adjustment (Page&nbsp;52)</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to ensure that the merger qualifies as a tax-free
reorganization, the amount of shares of QUALCOMM common stock
included in the initial purchase price that holders of Flarion
preferred stock are entitled to receive may be increased, with a
corresponding reduction in the amount of cash.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stockholders&#146; Agent and Expenses Fund
    (Page&nbsp;55)</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QF REP, LLC has been appointed by the stockholders of Flarion to
act as the stockholders&#146; agent in connection with the
mergers. An aggregate of $1.5&nbsp;million of the cash and
shares of QUALCOMM common stock that the Flarion stockholders
are entitled to receive as the initial merger consideration will
be deposited in an expenses fund to reimburse the costs and
expenses of the stockholders&#146; agent.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Treatment of Options to Purchase Flarion Common Stock
    (Page&nbsp;53)</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each option to purchase shares of Flarion common stock which
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.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Treatment of Warrants to Purchase Flarion Preferred Stock
    (Page&nbsp;54)</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Additional Consideration in Connection with the Patent
    Milestone (Page&nbsp;56)</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion stockholders, option holders (other than with respect to
directed options) and warrant holders may also be entitled to
receive additional consideration conditioned upon the
achievement of a patent milestone. Upon the issuance of 20
U.S.&nbsp;patents out of approximately 125 Flarion
U.S.&nbsp;patent applications prior to the eighth anniversary of
the closing date of the merger, Flarion stockholders, option
holders (other
</DIV>
</DIV>

<P align="center" style="font-size: 10pt;">2

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
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) of additional aggregate
consideration of $205&nbsp;million, payable in cash to Flarion
stockholders and shares of QUALCOMM common stock to Flarion
option holders (other than with respect to directed options) and
warrant holders, which shares shall be issuable upon or
following the exercise of such options and warrants, subject to
holdback and offset of up to $75&nbsp;million for damages
incurred by QUALCOMM for which it is entitled to indemnification
pursuant to the merger agreement.
</DIV>

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</FONT></DIV>

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    <B><I>Indemnification (Page&nbsp;63)</I></B></TD>
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</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the merger agreement, Flarion has agreed that, for a
specified time period after the effective date of the merger,
its stockholders will indemnify QUALCOMM and its affiliates,
officers, directors, employees, representatives, attorneys,
consultants and agents against losses and damages arising from
matters specified in the merger agreement in an amount not to
exceed $75&nbsp;million. QUALCOMM has also agreed that, for a
specified time period after the effective date of the merger, it
will indemnify Flarion and its stockholders, affiliates,
officers, directors, employees, representatives, attorneys,
consultants and agents against losses and damages arising from
matters specified in the merger agreement. The indemnification
provisions of the merger agreement are detailed in the section
entitled &#147;Certain Terms of the Merger Agreement&nbsp;&#151;
Indemnification.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='107'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Share Ownership of Directors and Executive Officers of
Flarion; Stockholder Vote</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the close of business on August&nbsp;5, 2005, directors and
executive officers of Flarion and their affiliates beneficially
owned and were entitled to vote approximately
11,910,974&nbsp;shares of Flarion common stock, collectively
representing approximately 57.5% of the shares of Flarion common
stock outstanding on that date, and approximately
29,342,724&nbsp;shares of Flarion preferred stock, collectively
representing approximately 54.3% of the shares of Flarion
preferred stock outstanding on that date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger did not require the vote of QUALCOMM&#146;s
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)&nbsp;capital stock of Flarion, voting
as a single class on an as-converted basis, and
(ii)&nbsp;preferred stock of Flarion, voting as a single class
on an as-converted basis. On July&nbsp;26, 2005, the requisite
vote from Flarion stockholders was received by written consent
and the merger agreement was adopted by the Flarion stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='108'></A>
</DIV>

<!-- link1 "QUALCOMM Market Price Data" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>QUALCOMM Market Price Data</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM common stock is listed on The Nasdaq National Market
under the symbol &#147;QCOM.&#148; On August&nbsp;10, 2005, the
last full trading day prior to the public announcement of the
proposed merger, the last sale price of QUALCOMM&#146;s common
stock was $39.21&nbsp;per share. On September&nbsp;16, 2005, the
last sale price of QUALCOMM&#146;s common stock was
$43.32&nbsp;per share.
</DIV>

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</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='109'></A>
</DIV>

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<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Material United States Federal Income Tax Consequences of the
Mergers (Page&nbsp;43)</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tax matters are very complicated, and the tax consequences of
the mergers to a Flarion stockholder will depend on the facts of
each holder&#146;s own situation. We encourage each Flarion
stockholder to carefully read
</DIV>
</DIV>

<P align="center" style="font-size: 10pt;">3
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<DIV align="left" style="font-size: 10pt;">
the discussion in the section entitled &#147;The
Merger&nbsp;&#151; Material United States Federal Income Tax
Consequences of the Mergers&#148; and to consult the
stockholder&#146;s own tax advisor for a full understanding of
the tax consequences of the mergers.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='110'></A>
</DIV>

<!-- link1 "Accounting Treatment (Page 11)" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Accounting Treatment (Page&nbsp;11)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM will account for the merger under the purchase method
of accounting for business combinations under accounting
principles generally accepted in the United States, which we
refer to as U.S.&nbsp;GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='111'></A>
</DIV>

<!-- link1 "Regulatory Approvals (Page 48)" -->

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</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Regulatory Approvals (Page&nbsp;48)</B>
</DIV>

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</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Neither QUALCOMM nor Flarion is aware of the need to obtain any
material regulatory approvals in order to complete the merger
other than the following:
</DIV>

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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the registration statement of which this prospectus/ information
    statement is a part must be declared effective by the Securities
    and Exchange Commission;&nbsp;and</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the mergers are subject to review by the United States Federal
    Trade Commission and the Antitrust Division of the Department of
    Justice under 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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='112'></A>
</DIV>

<!-- link1 "QUALCOMM&#146;S Reasons for the Merger (Page 30)" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>QUALCOMM&#146;S Reasons for the Merger (Page&nbsp;30)</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM&#146;s board of directors, while considering a number
of different factors and consulting the judgment, advice and
analysis of QUALCOMM&#146;s management, as well as its financial
and legal advisors, determined that the acquisition of Flarion
is in the best interests of QUALCOMM and its stockholders and,
accordingly, has approved the merger and the merger agreement.
QUALCOMM believes a business combination with Flarion will
enhance its already strong position in OFDMA technology and
establish QUALCOMM as a leader in designing and licensing OFDMA
systems, components and products for operators interested in
OFDMA or hybrid CDMA/ OFDMA networks. The combination of
Flarion&#146;s and QUALCOMM&#146;s engineering resources will
establish a world class&nbsp;OFDMA technology team focused on
developing industry-leading technologies for the wireless
market. The combination of QUALCOMM&#146;s and Flarion&#146;s
patent portfolios will establish an industry-leading OFDMA/OFDM
intellectual property portfolio. QUALCOMM will continue to
invest in development of CDMA advancements that it believes will
provide the most advanced, spectrally efficient wide area
wireless mobile networks for the foreseeable future. The
acquisition of Flarion, however, will enable QUALCOMM to support
operators who may prefer OFDMA-based networks.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='113'></A>
</DIV>

<!-- link1 "Flarion&#146;s Reasons for the Merger (Page 32)" -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion&#146;s Reasons for the Merger (Page&nbsp;32)</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s board of directors unanimously approved the
merger, the merger agreement and the other transactions
contemplated by the merger agreement based on the determination
that the terms of the merger were fair to, and in the best
interests of, Flarion and its stockholders and represent the
best strategic alternative to Flarion after investigation of all
known practical alternatives. In the course of reaching its
decision to approve the merger agreement, the Flarion board of
directors consulted with Flarion&#146;s management, as well as
its financial, legal, accounting and other advisors, and
considered a number of factors which included the various risks
and rewards associated with continuing as an independent company
or seeking a combination with another party. After further
scrutiny of such factors as the value of the consideration to be
received by the stockholders as well as the public market for
shares of QUALCOMM common stock, the Flarion board of directors
determined that the potential benefits of a combination with
QUALCOMM outweighed the uncertainties associated with
alternative ventures. Specifically, 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&#146;s ability to bring technology to market.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
</DIV>

<P align="center" style="font-size: 10pt;">4

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<DIV align="left" style="font-size: 10pt;">
<A name='114'></A>
</DIV>

<!-- link1 "Opinion of Flarion&#146;s Financial Advisor (Page 33)" -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Opinion of Flarion&#146;s Financial Advisor (Page&nbsp;33)</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore Group Inc., financial advisor to Flarion, delivered an
opinion to the Flarion board of directors orally on
July&nbsp;24, 2005, which was subsequently confirmed in writing,
that, as of that date, and based upon and subject to the various
assumptions and limitations set forth in the opinion, from a
financial point of view, the consideration in the aggregate to
be paid by QUALCOMM to the holders of Flarion common stock,
preferred stock, options and warrants pursuant to the merger
agreement was fair to such security holders. The full text of
Evercore&#146;s written opinion is attached to this prospectus/
information statement as Annex&nbsp;B. We encourage you to read
this opinion carefully in its entirety for a description of the
procedures followed, assumptions made, matters considered and
limitations on the review undertaken.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='115'></A>
</DIV>

<!-- link1 "Interests of Flarion&#146;s Directors and Management in the Merger (Page 40)" -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Interests of Flarion&#146;s Directors and Management in the
Merger (Page&nbsp;40)</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain Flarion directors and officers have interests in the
merger that may be different from, or are in addition to, other
stockholders of Flarion. These interests include employment of
Flarion executive officers by QUALCOMM after the mergers and the
indemnification of directors and officers of Flarion by QUALCOMM.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='116'></A>
</DIV>

<!-- link1 "Appraisal Rights (Page 84)" -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Appraisal Rights (Page&nbsp;84)</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM stockholders do not have appraisal rights in connection
with the issuance of QUALCOMM common stock pursuant to the
merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement has already been adopted by the required
vote of the stockholders of Flarion. However, holders of Flarion
capital stock who demand appraisal of their shares and otherwise
comply with the requirements of Section&nbsp;262 of the DGCL,
will be entitled to be paid, in cash, the fair value of their
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 Delaware
Court of Chancery.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order for a Flarion stockholder to exercise appraisal rights,
a written demand for appraisal as provided in the DGCL must be
sent by such stockholder and such stockholder must comply with
the other procedures required by the DGCL, as more fully
described in the section entitled &#147;Appraisal Rights.&#148;
Failure to send such demand or to follow such other procedures
will result in the waiver of such stockholder&#146;s appraisal
rights. See the section entitled &#147;Appraisal Rights&#148;
and Annex&nbsp;C for a description of the procedures that must
be followed to perfect such rights.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='117'></A>
</DIV>

<!-- link1 "Notice to Flarion Stockholders (Page 87)" -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notice to Flarion Stockholders (Page&nbsp;87)</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This prospectus/ information statement serves as notice to
Flarion stockholders pursuant to Section&nbsp;228(e) of the DGCL
that on July&nbsp;26, 2005, by action by written consent without
a meeting, the Flarion stockholders adopted the merger
agreement, elected that the merger shall not constitute a
liquidation, dissolution or winding up of Flarion for purposes
of Flarion&#146;s certificate of incorporation, and approved an
amendment to Flarion&#146;s certificate of incorporation.
</DIV>
</DIV>

<P align="center" style="font-size: 10pt;">5

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<DIV align="left" style="font-size: 10pt;">
<A name='118'></A>
</DIV>

<!-- link1 "FLARION&#146;S MARKET PRICE AND DIVIDEND INFORMATION" -->

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<B>FLARION&#146;S MARKET PRICE AND DIVIDEND INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There is no established public trading market for Flarion&#146;s
capital stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No cash dividends have been declared with respect to any class
of Flarion&#146;s capital stock at any time in the period since
December&nbsp;31, 2002. Other than the protective provisions and
dividend preferences of the Flarion preferred stock pursuant to
Flarion&#146;s certificate of incorporation, there are no
restrictions on the ability of Flarion to pay dividends.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of August&nbsp;5, 2005 there were 206 holders of Flarion
capital stock.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon the consummation of the transactions contemplated by the
merger agreement, all shares of the capital stock of Flarion
will be cancelled in exchange for a right to receive a pro rata
portion of the merger consideration.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
</DIV>

<P align="center" style="font-size: 10pt;">6
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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 10pt;">
<A name='119'></A>
</DIV>

<!-- link1 "QUALCOMM INCORPORATED SELECTED FINANCIAL DATA" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>QUALCOMM INCORPORATED SELECTED FINANCIAL DATA</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM derived the following information from its audited
consolidated financial statements as of and for the years ended
September&nbsp;30, 2000 through 2004 and unaudited consolidated
financial statements as of and for the nine months ended
June&nbsp;27, 2004 and June&nbsp;26, 2005. The selected
financial data for the nine months ended June&nbsp;27, 2004 and
June&nbsp;26, 2005 are unaudited but reflect, in the opinion of
management, all adjustments, which are only normal and
recurring, necessary for a fair presentation of such data.
Results for the nine months ended June&nbsp;26, 2005 are not
necessarily indicative of the results which may be expected for
any other interim periods or for the year as a whole. The
following information should be read in conjunction with the
QUALCOMM consolidated financial statements and related notes
that are incorporated by reference into this prospectus/
information statement.
</DIV>

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    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Nine Months Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Years Ended September&nbsp;30(1)</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>June&nbsp;26,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>June&nbsp;27,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004(2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004(2)(6)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003(2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002(2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001(3)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2000(3)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>(In millions except per share data)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Statement of Operations Data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,197</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>723</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from continuing operations before accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,725</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(560</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>622</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(202</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(165</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounting changes, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(578</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>622</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic earnings (loss) per common share(4):</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from continuing operations before accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.37</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.13</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounting change, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.38</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted earnings (loss) per common share(4):</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from continuing operations before accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.37</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.39</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.12</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.10</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounting change, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.38</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.39</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dividends per share announced</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Shares used in earnings per share calculations(4):</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,434</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,600</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro forma effect of change in accounting principle(5):</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>595</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net earnings per common share&nbsp;&#151; basic</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.41</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net earnings per common share&nbsp;&#151; diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.38</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance Sheet Data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash, cash equivalents and marketable securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,521</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,015</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total stockholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,468</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Our fiscal year ends on the last Sunday in September. As a
    result, fiscal 2001 includes 53&nbsp;weeks. For presentation
    purposes, we present our fiscal years as ending on
    September&nbsp;30.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    During fiscal 2004, we sold our consolidated subsidiaries, the
    V&#233;sper Operating Companies and TowerCo, and returned
    personal mobile service (SMP)&nbsp;licenses to Anatel, the
    telecommunications regulatory agency in Brazil. The results of
    operations, including gains and losses realized on the sales
    transactions and the SMP licenses, are presented as discontinued
    operations.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt;">7

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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    During fiscal 2001 and 2000, we accounted for our investment in
    the V&#233;sper Operating Companies under the equity method of
    accounting and recorded $150&nbsp;million and $48&nbsp;million,
    respectively, in equity in losses of those entities in income
    (loss) from continuing operations before accounting change.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    We effected a four-for-one stock split in December 1999 and a
    two-for-one stock split in August 2004. All references to number
    of shares and per share amounts reflect these stock splits.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    The pro forma effect of change in accounting principle reflects
    the impact of SAB&nbsp;101 on previously reported results
    assuming it had been in effect in those periods.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Prior to the fourth quarter of fiscal 2004, we recorded royalty
    revenues from certain licensees based on our estimates of
    royalties during the period they were earned. Starting in the
    fourth quarter of fiscal 2004, we began recognizing royalty
    revenues solely based on royalties reported by licensees during
    the quarter. The change in the timing of recognizing royalty
    revenue was made prospectively and had the initial one-time
    effect of reducing royalty revenues recorded in the fourth
    quarter of fiscal 2004.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt;">8

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<DIV align="left" style="font-size: 10pt;">
<A name='120'></A>
</DIV>

<!-- link1 "RISK FACTORS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RISK FACTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you are a Flarion stockholder, you should consider each of
the following factors as well as the other information in this
prospectus/ information statement before deciding whether to
exercise statutory appraisal rights in connection with the
merger. The risks and uncertainties described below are not the
only ones we face. Additional risks and uncertainties not
presently known to us or that we currently consider immaterial
may also impair our business operations. If any of the following
risks actually occur, our business and financial results could
be harmed. In that case the trading price of our common stock
could decline. You should also refer to the other information
set forth in this prospectus/ information statement and in our
&#147;Annual Report on Form&nbsp;10-K for the fiscal year ended
September&nbsp;26, 2004&#148; and our &#147;Quarterly Report on
Form&nbsp;10-Q for the fiscal quarter ended June&nbsp;26,
2005&#148; incorporated by reference, including our financial
statements and the related notes.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='121'></A>
</DIV>

<!-- link1 "Risks Related to the Transaction" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Risks Related to the Transaction</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The use of an exchange ratio that is tied to an average closing
price over an extended period of time is intended to provide
Flarion stockholders with a negotiated level of appropriate
&#147;value&#148; of QUALCOMM common stock for each share of
Flarion common stock and Flarion preferred stock on a fully
diluted, as-converted basis exchanged for QUALCOMM common stock,
without permitting one-day trading spikes, arbitrage or other
unusual market activity to artificially raise or lower the
exchange rate. However, you may not be able to sell your shares
at the average closing price. If the QUALCOMM average closing
price over the measurement period is higher than the market
price of the QUALCOMM common stock at the effective time of the
merger, the QUALCOMM common stock issued pursuant to the merger,
together with any cash consideration issued, would be worth less
than the nominal amount of initial merger consideration per
share of Flarion common stock.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>If a sufficient number of Flarion U.S.&nbsp;patent
    applications do not result in issued U.S.&nbsp;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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the initial purchase price to be paid to Flarion
stockholders upon the closing of the merger and the surrender to
the exchange agent by Flarion stockholders of certificates
representing the shares of Flarion capital stock held by them,
Flarion stockholders, option holders (other than with respect to
directed options) and warrant holders are entitled to receive
their pro rata portion (determined on a fully diluted,
as-converted basis including all outstanding options and
warrants, exclusive of directed options) of additional aggregate
consideration of $205&nbsp;million, payable in cash to Flarion
stockholders and shares of QUALCOMM common stock issuable upon
or following the exercise of such options or warrants to Flarion
option holders (other than with respect to directed options) and
warrant holders, subject to offset of up to $75&nbsp;million for
damages incurred by QUALCOMM for which it is entitled to
indemnification pursuant to the merger agreement, if within
eight years from the closing of the merger at least 20 of
Flarion&#146;s approximately 125 pending U.S.&nbsp;patent
applications result in patents issued by the U.S.&nbsp;Patent
and Trademark Office. However, there can be no guarantee that
any Flarion patents will be issued or that this milestone will
be achieved. If this milestone is not achieved, no additional
consideration will be payable. For a detailed discussion of the
potential consideration payable upon achievement of this patent
milestone, see the section entitled &#147;Certain Terms of the
Merger Agreement&nbsp;&#151; Patent Milestone Payment.&#148;
</DIV>

<P align="center" style="font-size: 10pt;">9

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>$75&nbsp;million of the additional consideration payable
    upon the issuance of at least 20 additional U.S.&nbsp;patents
    may be subject to holdback and offset for indemnification
    purposes for a period of at least eighteen months.</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the terms of the merger agreement, a portion of the
potential $205&nbsp;million of additional consideration payable
upon the achievement of the patent milestone will be subject to
holdback and offset with respect to claims for indemnification
for damages that QUALCOMM may incur in connection with or as a
result of the merger. In all events, however, if the patent
milestone is achieved prior to the date that is 18&nbsp;months
after the effective time of the merger, $75&nbsp;million of the
aggregate additional consideration will be subject to holdback
and offset until the completion of the 18-month period after the
effective time of the merger; provided that if a claim for
indemnification has been made by QUALCOMM and remains
outstanding at the end of such 18-month period, a portion of
such holdback amount sufficient to satisfy outstanding claims
will not be released until the resolution of such claims. If
QUALCOMM successfully asserts a claim for indemnification for
damages, you will not receive your full pro rata portion of the
potential additional consideration. See the section entitled
&#147;Certain Terms of the Merger Agreement&nbsp;&#151;
Indemnification Holdback Amount.&#148;
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>The Stockholders&#146; Agent may not act in the manner you
    desire.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QF REP, LLC, a limited liability company formed by certain
Flarion preferred stockholders, has been appointed as the
stockholders&#146; agent to act as the stockholders&#146;
representative in certain matters involving the indemnification
by the stockholders of QUALCOMM and the holdback and offset of
certain amounts which the stockholders, option holders (other
than with respect to directed options) and warrant holders may
be entitled to receive upon achievement of the patent milestone.
As stockholders&#146; agent, QF REP, LLC will have the right,
among other things, to compromise and to settle claims for
damages made by QUALCOMM against the holdback amount. The
stockholders&#146; agent may not act in the manner you desire
and decisions made by the agent could have the effect of
reducing the aggregate consideration you ultimately receive
pursuant to the merger.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>The need for governmental clearances may prevent or delay
    consummation of the merger.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger is subject to review by the U.S.&nbsp;Federal Trade
Commission and the Antitrust Division of the Department of
Justice under the HSR Act. 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 merger. QUALCOMM and
Flarion have made these required filings and will seek to
satisfy any additional regulatory requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The reviewing authorities may not permit the merger at all or
may impose restrictions or conditions on the merger that may
seriously harm QUALCOMM if the merger is completed. These
conditions could include a complete or partial license,
divestiture, spin-off or the holding separate of assets or
businesses. QUALCOMM may refuse to complete the merger if
restrictions or conditions are required by governmental
authorities that would require the divestiture of any assets of
QUALCOMM or Flarion or would limit QUALCOMM&#146;s freedom of
action with respect to, or its ability to retain, Flarion or any
part of Flarion or any of QUALCOMM&#146;s other assets or
businesses. Any delay in the completion of the merger could
diminish the anticipated benefits of the merger or result in
additional transaction costs, loss of revenue or other effects
associated with uncertainty about the transaction. Even though
QUALCOMM and Flarion are not required to, they may agree to
restrictions or conditions imposed by antitrust authorities in
order to obtain regulatory approval, and these restrictions or
conditions could harm QUALCOMM&#146;s operations. In addition,
during or after the statutory waiting periods imposed by the HSR
Act, and even after completion of the merger, governmental
authorities could seek to block or challenge the merger as they
deem necessary or desirable in the public interest. In addition,
in some jurisdictions, a competitor, customer or other third
party could initiate a private action under the antitrust laws
challenging or seeking to enjoin the merger, before or after it
is completed. QUALCOMM, Flarion or the corporation surviving the
mergers may not prevail, or may incur significant costs, in
defending or settling any action under the antitrust laws.
</DIV>

<P align="center" style="font-size: 10pt;">10

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>We may not realize all of the anticipated benefits of the
    merger.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Achieving the anticipated benefits of the merger will depend in
part upon our ability to integrate Flarion&#146;s businesses in
an efficient and effective manner. The integration of two
companies that have previously operated independently may result
in significant challenges, and we and Flarion may be unable to
accomplish the integration smoothly or successfully. The
difficulties of integrating the two companies include, among
others:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    retaining key employees;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    maintenance of important relationships of QUALCOMM and Flarion;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    minimizing the diversion of management&#146;s attention from
    ongoing business matters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    coordinating geographically separate organizations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    consolidating research and development operations;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    consolidating corporate and administrative infrastructures.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We cannot assure you that the integration of Flarion with our
business will result in the realization of the full benefits
anticipated by us to result from the merger. We may not derive
any commercial value from Flarion&#146;s current technology,
products and intellectual property or from future technologies
and products based on OFDM and OFDMA that utilize Flarion&#146;s
patents and intellectual property.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>If the mergers fail to qualify as a tax-free
    reorganization, you will recognize gain or loss on the exchange
    of your Flarion shares.</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM and Flarion have structured the transaction as
&#147;back-to-back mergers&#148; in order to qualify as a
tax-free reorganization under Section&nbsp;368(a) of the
Internal Revenue Code. Although the Internal Revenue Service has
not provided a ruling on the mergers, QUALCOMM and Flarion will
each obtain a legal opinion from their respective counsel that
the mergers qualify as a tax-free reorganization. These opinions
neither bind the IRS nor prevent the IRS from adopting a
contrary position. If the mergers fail to qualify as a tax-free
reorganization, you would generally recognize gain or loss on
each share of Flarion capital stock surrendered in the merger in
the amount of the difference between your basis in such share
and the fair market value of the QUALCOMM common stock and cash
you receive or may receive in exchange for each share of Flarion
capital stock. You should consult with your own tax advisor
regarding the proper reporting of the amount and timing of such
gain or loss.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Incremental expenses resulting from the application of the
    purchase method of accounting and related to Flarion&#146;s
    ongoing research and development activities and product related
    business may adversely affect the market value of our common
    stock following the merger.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with U.S.&nbsp;GAAP, the merger will be accounted
for using the purchase method of accounting, which will result
in incremental expenses that could have an adverse impact on the
market value of our common stock following completion of the
merger. Under the purchase method of accounting, the total
estimated purchase price will be allocated to Flarion&#146;s net
tangible assets and identifiable intangible assets based on
their fair values as of the date of completion of the merger.
The excess of the purchase price over those fair values will be
recorded as goodwill. Goodwill is not amortized but is tested
for impairment at least annually. The combined company will
incur additional amortization expense based on the identifiable
amortizable intangible assets acquired pursuant to the merger
agreement and their relative useful lives. Additionally, to the
extent the value of goodwill or identifiable intangible assets
or other long-lived assets become impaired, the combined company
may be required to record material charges relating to the
impairment. These amortization and potential impairment charges
could have a material impact on the combined company&#146;s
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will incur incremental costs, principally related to research
and development, amortization of intangible assets and
stock-based compensation after completion of the merger. We
estimate that incremental
</DIV>

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<DIV align="left" style="font-size: 10pt;">
research and development expenses and amortization of intangible
assets will total approximately $50&nbsp;million in fiscal 2006.
Additionally, we expect to record one-time charges of
approximately $10&nbsp;million, principally related to
in-process research and development, upon closing of the merger.
Changes in earnings per share, including changes that result
from this incremental expense, could adversely affect the
trading price of our common stock.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to Section&nbsp;262 of the DGCL, Flarion stockholders
who perfect appraisal rights provided thereunder are entitled to
an appraisal by the Delaware courts of the fair value of each
share of Flarion capital stock held by such stockholder and to
receive payment from us of the appraised fair value, together
with interest. The determination by the court of the fair value
of shares of Flarion capital stock will be made exclusive of any
element of value arising from the accomplishment or expectation
of the merger, including the anticipated benefits resulting from
the merger, and thus the fair value could be equal to an amount
per share which is less than the amount per share that a Flarion
stockholder would be entitled to receive pursuant to the merger
agreement. See the section entitled &#147;Certain Terms of the
Merger Agreement&nbsp;&#151; Appraisal Rights.&#148;
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Certain of Flarion&#146;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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to Flarion&#146;s amended and restated investors&#146;
rights agreement, certain Flarion stockholders hold advance
notice and other rights in connection with the proposed
acquisition of Flarion. Although the merger agreement
contemplates and was drafted to preserve such stockholders&#146;
rights, these stockholders may assert that their rights were not
adequately afforded. If any such claim is brought against the
corporation surviving the mergers, we cannot assure you that we
would be successful in settling or defending against such claim,
and we may be forced to make significant payments to such
stockholders. This could have a material adverse effect on our
business, financial condition and results of operations.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Directors and officers of Flarion may have conflicts of
    interest that may influence them to support or approve the
    merger.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although the Flarion board of directors recommended to the
Flarion stockholders that they adopt the merger agreement,
Flarion stockholders should be aware that certain members of the
Flarion board of directors and executive officers of Flarion
have interests in the transactions contemplated by the merger
agreement that may be different from, or are in addition to, the
general interests of Flarion stockholders. Flarion stockholders
should consider whether these interests may have influenced
these directors and executive officers to support or recommend
the merger transaction. For a detailed discussion of the
interests of the directors and executive officers of Flarion,
see the section entitled &#147;The Merger&nbsp;&#151; Interests
of Flarion&#146;s Directors and Management in the Merger.&#148;
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our business differs from that of Flarion, and accordingly, the
combined company will face risks that are different from those
faced by Flarion and the results of operations of the combined
company will be affected by some factors different from those
currently affecting the results of operations of Flarion. For a
discussion of our business and of certain factors to consider in
connection with our business, see our Annual Report on
Form&nbsp;10-K for the fiscal year ended September&nbsp;26, 2004
and the section in this prospectus/ information statement
entitled &#147;Risk Factors&nbsp;&#151; Risks Related to Our
Business.&#148;
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>The issuance of the directed options may result in further
    dilution.</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion has agreed, as specified by us, to grant options to
purchase Flarion common stock to certain Flarion employees
having exercise prices that are in the aggregate up to
$26&nbsp;million less than the initial per share consideration
in the merger allocable to such Flarion common stock (referred
to as intrinsic value). These directed options are not accounted
for in the fully diluted share total used to allocate the
initial $600&nbsp;million in merger consideration or the
$205&nbsp;million additional patent consideration. Therefore, in
addition to the intrinsic value, issuance of the directed
options will result in the issuance of additional shares of our
common stock in the merger, resulting in further dilution to our
stockholders and additional stock compensation expense, and
potentially impacting the trading price of our common stock.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='122'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Risks Related to Our Business</B>
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>If CDMA technology is not widely deployed, our revenues
    may not grow as anticipated.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We focus our business primarily on developing, patenting and
commercializing CDMA technology for wireless telecommunications
applications. In addition, with the acquisition of Flarion,
there will be an increased emphasis on developing, patenting
and, to the extent required by our customers, commercializing
OFDMA technology. Other digital wireless communications
technologies, particularly GSM technology, have been more widely
deployed than CDMA technology. OFDMA has not been widely
deployed commercially. Notwithstanding our expanded portfolio of
OFDMA/OFDM intellectual property, if CDMA technology does not
become the preferred wireless communications industry standard
in the countries where our products and those of our customers
and licensees are sold, or if wireless operators do not select
CDMA for their networks or update their current networks to any
CDMA-based third generation technology, our business and
financial results could suffer. Further, if OFDMA technology is
not adopted and deployed commercially, our investment in Flarion
and OFDMA technology may not provide us a significant return on
investment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To increase our revenues and market share in future periods, we
are dependent upon the commercial deployment of third generation
(3G) wireless communications equipment, products and services
based on our CDMA technology. Although network operators have
commercially deployed CDMA2000 1X, 1xEV-DO and WCDMA, we cannot
predict the timing or success of further commercial deployments
of CDMA2000&nbsp;1X, 1xEV-DO, WCDMA or other CDMA systems. If
existing deployments are not commercially successful, or if new
commercial deployments of CDMA2000 1X, 1xEV-DO, WCDMA or other
CDMA systems are delayed or unsuccessful, our business and
financial results may be harmed. In addition, our business could
be harmed if network operators deploy competing technologies or
switch existing networks from CDMA to GSM or if network
operators introduce new technologies. A limited number of
operators have started testing OFDMA technology, but there can
be no assurance that OFDMA will be adopted or deployed
commercially or that we will be successful in developing and
marketing OFDMA products. Although the acquisition of Flarion
brings us a very strong portfolio of issued and pending patents
related to OFDMA technology, and, prior to the acquisition, we
had hundreds of issued or pending patents relating to
applications of GPRS, EDGE, OFDM, OFDMA and multi in, multi out
(&#147;MIMO&#148;), there can be no assurance that our patent
portfolio in these areas would be as valuable as our CDMA
portfolio.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our business and the deployment of our technologies are
dependent on the success of our customers and licensees. Our
customers and licensees may incur lower operating margins on
products based on our technologies than on products using
alternative technologies due to greater competition in the
relevant market, lack of product improvements or other factors.
If CDMA phones and/or infrastructure manufacturers exit the CDMA
market, the deployment of CDMA technology could be negatively
affected, and our business could suffer.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Our three largest customers as of June&nbsp;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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>QUALCOMM CDMA Technologies (&#147;QCT&#148;) Segment.</I> The
loss of any one of our QCT segment&#146;s significant customers
or the delay, even if only temporary, or cancellation of
significant orders from any of these customers would reduce our
revenues in the period of the cancellation or deferral and could
harm our ability to achieve or sustain desired levels of
profitability. Accordingly, unless and until our QCT segment
diversifies and expands its customer base, our future success
will significantly depend upon the timing and size of future
purchase orders, if any, from these customers. Factors that may
impact the size and timing of orders from customers of our QCT
segment include, among others, the following:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the product requirements of these customers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the financial and operational success of these customers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the success of these customers&#146; products that incorporate
    our products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    value added features which drive replacement rates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    shortages of key products and components;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    fluctuations in channel inventory levels;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the success of products sold to our customers by licensed
    competitors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the rate of deployment of new technology by the network
    operators and the rate of adoption of new technology by the end
    consumers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the extent to which certain customers successfully develop and
    produce CDMA-based integrated circuits and system software to
    meet their own needs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    general economic conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in governmental regulations in countries where we or our
    customers currently operate or plan to operate;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    widespread illness.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>QUALCOMM Technology Licensing (&#147;QTL&#148;) Segment.</I>
Our QTL segment derives royalty revenues based upon sales of
CDMA products by our licensees. Although we have over 125
licensees, we derive a significant portion of our royalty
revenue from a smaller number of licensees. Our future success
depends upon the ability of our licensees to develop, introduce
and deliver high volume products that achieve and sustain market
acceptance. We have little or no control over the sales efforts
of our licensees, and we cannot assure you that our licensees
will be successful or that the demand for wireless
communications devices and services offered by our licensees
will continue to increase. Any reduction in the demand for or
any delay in the development, introduction or delivery of
wireless communications devices utilizing our CDMA technology
could have a material adverse effect on our business. Reductions
in the average selling price of wireless communications devices
utilizing our CDMA technology, without a comparable increase in
the volumes of such devices sold, could have a material adverse
effect on our business. Weakness in the value of foreign
currencies in which our customers&#146; products are sold may
reduce the amount of royalties payable to us in
U.S.&nbsp;dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Royalties under our license agreements are generally payable to
us for the life of the patents that we license under our
agreements. The licenses granted to and from us under a number
of our license agreements include only patents that are either
filed or issued prior to a certain date. As a result, there are
agreements with some licensees where later patents are not
licensed by or to us under our license agreements. In order to
license any such later patents, we will need to extend or modify
our license agreements or enter into new
</DIV>

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license agreements with such licensees. Although in the past we
have amended many of our license agreements to include later
patents without affecting the material terms and conditions of
our license agreements, there is no assurance that we will be
able to modify our license agreements in the future to license
any such later patents or extend such date(s) to incorporate
later patents without affecting the material terms and
conditions of our license agreements with such licensees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There can be no assurance that our patent portfolio in other
technologies, such as GPRS, EDGE, OFDM, OFDMA and MIMO, will
generate licensing income or be as valuable in generating
licensing income as our CDMA patent portfolio.
</DIV>

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    <TD>
    <B><I>Changes in financial accounting standards related to
    share-based payments are expected to have a significant effect
    on our reported results.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Financial Accounting Standards Board recently issued a
revised standard that requires that we record compensation
expense in the statement of operations for share-based payments,
such as employee stock options, using the fair value method. The
adoption of the new standard is expected to have a significant
effect on our reported earnings, although it will not affect our
cash flows, and could adversely impact our ability to provide
accurate guidance on our future reported financial results due
to the variability of the factors used to estimate the values of
share-based payments. As a result, the adoption of the new
standard in the first quarter of fiscal 2006 could negatively
affect our stock price and our stock price volatility.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our ability to meet customer demands depends, in part, on our
ability to obtain timely and adequate delivery of parts and
components from our suppliers and available manufacturing
capacity. A reduction or interruption in component supply, an
inability of our partners to react to rapid shifts in demand or
a significant increase in component prices could have a material
adverse effect on our business or profitability. Component
shortages could adversely affect our ability and that of our
customers to ship products on a timely basis and our
customers&#146; demand for our products. Any such shipment
delays or declines in demand could reduce our revenues and harm
our ability to achieve or sustain desired levels of
profitability. Additionally, failure to meet customer demand in
a timely manner could damage our reputation and harm our
customer relationships potentially resulting in reduced market
share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>QCT Segment.</I> We outsource all of the manufacturing and
assembly, and most of the testing, of our integrated circuits.
We depend upon a limited number of third parties to perform
these functions, some of which are only available from single
sources with which we do not have long-term contracts. IBM,
Taiwan Semiconductor Manufacturing Co. and United
Microelectronics are the primary foundry partners for our family
of baseband integrated circuits. IBM, Freescale (formerly
Motorola Semiconductor) and Atmel are the primary foundry
partners for our family of radio frequency and analog integrated
circuits. Our reliance on a sole-source vendor primarily occurs
during the start-up phase of a new product. Once a new product
reaches a significant volume level, we typically establish
alternative suppliers for technologies that we consider
critical. Our reliance on sole or limited-source vendors
involves risks. These risks include possible shortages of
capacity, product performance shortfalls and reduced controls
over delivery schedules, manufacturing capability, quality
assurance, quantity and costs. During fiscal 2004 and the first
quarter of fiscal 2005, we experienced supply constraints which
resulted in our inability to meet certain customer demands.
These constraints substantially diminished during the second
quarter of fiscal 2005 and were alleviated in the third quarter
of fiscal 2005, with improvements to supply more closely
aligning with our current customer demand profile. To improve
the supply and delivery of parts and components from our
suppliers, we worked with our existing suppliers to increase
available manufacturing capacity and increased and extended our
firm orders to our suppliers. Additionally, we continue to
evaluate potential new suppliers to augment our future needs. We
work closely with customers to expedite their processes for
evaluating new products from our foundry suppliers; however, in
some instances, transition to new product supply may cause a
temporary decline in
</DIV>

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shipments of specific products to individual customers. To the
extent that we do not have firm commitments from our
manufacturers over a specific time period or in any specific
quantity, our manufacturers may allocate, and in the past have
allocated, capacity to the production of other products while
reducing deliveries to us on short notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our operations may also be harmed by lengthy or recurring
disruptions at any of the facilities of our manufacturers and
may be harmed by disruptions in the distribution channels from
our suppliers and to our customers. These disruptions may
include labor strikes, work stoppages, widespread illness,
terrorism, war, political unrest, fire, earthquake, flooding or
other natural disasters. These disruptions could cause
significant delays in shipments until we are able to shift the
products from an affected manufacturer to another manufacturer.
The loss of a significant third-party manufacturer or the
inability of a third-party manufacturer to meet performance and
quality specifications or delivery schedules could harm our
ability to meet our delivery obligations to our customers.
</DIV>

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In addition, one or more of our manufacturers may obtain
licenses from us to manufacture CDMA integrated circuits that
compete with our products. In this event, the manufacturer could
elect to allocate scarce components and manufacturing capacity
to their own products and reduce deliveries to us. In the event
of a loss of or a decision to change a key third-party
manufacturer, qualifying a new manufacturer and commencing
volume production or testing could involve delay and expense,
resulting in lost revenues, reduced operating margins and
possible loss of customers.
</DIV>

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<I>QUALCOMM Wireless Internet (&#147;QWI&#148;) Segment.</I>
Several of the critical subassemblies and parts used in our
QUALCOMM Wireless Business Solutions (&#147;QWBS&#148;)
division&#146;s existing and proposed products are currently
available only from third-party single or limited sources. These
include items such as electronic and radio frequency components,
and other sophisticated parts and subassemblies which are used
in the OmniTRACS, TruckMAIL, OmniExpress, T2 Untethered
TrailerTRACS, GlobalTRACS and EutelTRACS products. These third
parties include companies such as Tyco International (M/ A Com),
Rakon, Mini-Circuits, Cambridge Tool&nbsp;&#38; Mfg., PCTEL
Antenna Products Group, Inc., American Design, Deutsch ECD, PCI
Limited, KeyTronic EMS, Danaher Motors, Fujitsu Corporation,
Tectrol, uBlox, Navman NZ, Eagle-Picher Industries, Centurion
Wireless Technologies, Sony/ Ericsson and Sharp Corporation. Our
reliance on sole or limited source vendors involves risks. These
risks include possible shortages of certain key components,
product performance shortfalls, and reduced control over
delivery schedules, manufacturing capability, quality and costs.
In the event of a long-term supply interruption, alternate
sources could be developed in a majority of the cases. The
inability to obtain adequate quantities of significant compliant
materials on a timely basis could have a material adverse effect
on our business, operating results, liquidity and financial
position.
</DIV>

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<DIV align="left"><FONT size="1">

</FONT></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

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    <TD></TD>
    <TD>
    <B><I>We are subject to the risks of our licensees and our
    conducting business outside the United States.</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A significant part of our strategy involves our continued
pursuit of growth opportunities in a number of international
markets. We market, sell and service our products
internationally. We have established sales offices around the
world. We expect to continue to expand our international sales
operations and enter new international markets. This expansion
will require significant management attention and financial
resources to successfully develop direct and indirect
international sales and support channels, and we cannot assure
you that we will be successful or that our expenditures in this
effort will not exceed the amount of any resulting revenues. If
we are not able to maintain or increase international market
demand for our products and technologies, we may not be able to
maintain a desired rate of growth in our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our international customers sell their products to markets
throughout the world, including China, India, Japan, Korea,
North America, South America and Europe. We distinguish revenues
from external customers by geographic areas based on customer
location. Consolidated revenues from international customers as
a percentage of total revenues were 81% and 79% in the first
nine months of fiscal 2005 and 2004, respectively, and 79% and
77% in fiscal 2004 and 2003, respectively. Because most of our
foreign sales are denominated in U.S.&nbsp;dollars, our products
and those of our customers and licensees that are sold in
U.S.&nbsp;dollars become less
</DIV>

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price-competitive in international markets if the value of the
U.S.&nbsp;dollar increases relative to foreign currencies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In many international markets, barriers to entry are created by
long-standing relationships between our potential customers and
their local service providers and protective regulations,
including local content and service requirements. In addition,
our pursuit of international growth opportunities may require
significant investments for an extended period before we realize
returns, if any, on our investments. Our business could be
adversely affected by a variety of uncontrollable and changing
factors, including:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in legal or regulatory requirements, including
    regulations governing the materials used in our products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    difficulty in protecting or enforcing our intellectual property
    rights and/or contracts in a particular foreign jurisdiction;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our inability to succeed in significant foreign markets, such as
    China, India or Europe;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    cultural differences in the conduct of business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    difficulty in attracting qualified personnel and managing
    foreign activities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    recessions in economies outside the United States;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    longer payment cycles for and greater difficulties collecting
    accounts receivable;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    export controls, tariffs and other trade protection measures;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    fluctuations in currency exchange rates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    inflation and deflation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    nationalization, expropriation and limitations on repatriation
    of cash;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    social, economic and political instability;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    natural disasters, acts of terrorism, widespread illness and war;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    taxation;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in laws and policies affecting trade, foreign
    investments, licensing practices and loans.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to general risks associated with our international
sales, licensing activities and operations, we are also subject
to risks specific to the individual countries in which we do
business. We cannot be certain that the laws and policies of any
country with respect to intellectual property enforcement or
licensing, issuance of wireless licenses or the adoption of
standards will not be changed in a way detrimental to our
licensing program or to the sale or use of our products or
technology. Declines in currency values in selected regions may
adversely affect our operating results because our products and
those of our customers and licensees may become more expensive
to purchase in the countries of the affected currencies. During
the first nine months of fiscal 2005, 38% and 21% of our
revenues were from customers and licensees based in South Korea
and Japan, respectively, as compared to 43% and 19%,
respectively, during the first nine months of fiscal 2004.
During fiscal 2004, 43% and 18% of our revenues were from
customers and licensees based in South Korea and Japan,
respectively, as compared to 45% and 15% during fiscal 2003.
These customers based in South Korea and Japan sell their
products to markets worldwide, including Japan, South Korea,
North America, South America and Europe. A significant downturn
in the economies of Asian countries where many of our customers
and licensees are located, particularly the economies of South
Korea and Japan, or the economies of the major markets they
serve would materially harm our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The wireless markets in China and India, among others, represent
growth opportunities for us. If wireless carriers in China or
India, or the governments of China or India, make technology
deployment or other decisions that result in actions that are
adverse to the expansion of CDMA technologies our business could
be harmed.
</DIV>

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We are subject to risks in certain global markets in which
wireless operators provide subsidies on phone sales to their
customers. Increases in phone prices that negatively impact
phone sales can result from changes in regulatory policies
related to phone subsidies. Limitations or changes in policy on
phone subsidies in South&nbsp;Korea, Japan, China and other
countries may have additional negative impacts on our revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We expect that royalty revenues from international licensees
based upon sales of their products outside of the United States
will continue to represent a significant portion of our total
revenues in the future. Our royalty revenues from international
licensees are denominated in U.S.&nbsp;dollars. To the extent
that such licensees&#146; products are sold in foreign
currencies, any royalties that we derive as a result of such
sales are subject to fluctuations in currency exchange rates. In
addition, if the effective price of products sold by our
customers were to increase as a result of fluctuations in the
exchange rate of the relevant currencies, demand for the
products could fall, which in turn would reduce our royalty
revenues.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
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</TR>

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    <TD></TD>
    <TD>
    <B><I>Currency fluctuations could negatively affect future
    product sales or royalty revenue, harm our ability to collect
    receivables, or increase the U.S.&nbsp;dollar cost of the
    activities of our foreign subsidiaries and international
    strategic investments.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are exposed to risk from fluctuations in currencies, which
may change over time as our business practices evolve, that
could impact our operating results, liquidity and financial
condition. We operate and invest globally. Adverse movements in
currency exchange rates may negatively affect our business due
to a number of situations, including the following:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.&nbsp;dollar value
    of royalties from licensees&#146; sales that are denominated in
    foreign currencies.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our trade receivables are generally U.S.&nbsp;dollar
    denominated. Any significant increase in the value of the dollar
    against our customers&#146; or licensees&#146; functional
    currencies could result in an increase in our customers&#146; or
    licensees&#146; cash flow requirements and could consequently
    affect our ability to collect receivables.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.&nbsp;dollars.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.&nbsp;dollar
    cost of equity in losses of foreign investees may increase.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

</TABLE>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>We may engage in strategic transactions that could result
    in significant charges or management disruption and fail to
    enhance stockholder value.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From time to time, we engage in strategic transactions with the
goal of maximizing stockholder value. In the past we have
acquired businesses, entered into joint ventures and made
strategic investments in or loans to CDMA wireless operators,
early stage companies, or venture funds to support global
adoption of CDMA and the use of the wireless Internet. Most of
our strategic investments entail a high degree of risk and will
not
</DIV>

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become liquid until more than one year from the date of
investment, if at all. We cannot assure you that our strategic
investments (either those we currently hold or future
investments) will generate financial returns or that they will
result in increased adoption or continued use of CDMA
technologies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will continue to evaluate potential strategic transactions
and alternatives that we believe may enhance stockholder value.
These potential future transactions may include a variety of
different business arrangements, including acquisitions,
spin-offs, strategic partnerships, joint ventures,
restructurings, divestitures, business combinations and equity
or debt investments. Although our goal is to maximize
stockholder value, such transactions may impair stockholder
value or otherwise adversely affect our business and the trading
price of our stock. Any such transaction may require us to incur
non-recurring or other charges and/or to consolidate or record
our equity in losses and may pose significant integration
challenges and/or management and business disruptions, any of
which could harm our operating results and business.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our products are inherently complex and may contain defects and
errors that are detected only when the products are in use.
Further, because our products and services are responsible for
critical functions in our customers&#146; products and/or
networks, such defects or errors could have a serious impact on
our customers, which could damage our reputation, harm our
customer relationships and expose us to liability. Defects or
impurities in our components, materials or software or those
used by our customers or licensees, equipment failures or other
difficulties could adversely affect our ability and that of our
customers and licensees to ship products on a timely basis as
well as customer or licensee demand for our products. Any such
shipment delays or declines in demand could reduce our revenues
and harm our ability to achieve or sustain desired levels of
profitability. We and our customers or licensees may also
experience component or software failures or defects which could
require significant product recalls, reworks and/or repairs
which are not covered by warranty reserves and which could
consume a substantial portion of the capacity of our third-party
manufacturers or those of our customers or licensees. Resolving
any defect or failure related issues could consume financial
and/or engineering resources that could affect future product
release schedules. Additionally, a defect or failure in our
products or the products of our customers or licensees could
harm our reputation and/or adversely affect the growth of 3G
wireless markets.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Global economic conditions that impact the wireless
    communications industry could negatively affect our revenues and
    operating results.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Global economic weakness can have wide-ranging effects on
markets that we serve, particularly wireless communications
equipment manufacturers and network operators. We cannot predict
negative events, such as war, that may have adverse effects on
the economy or on phone inventories at CDMA equipment
manufacturers and operators. The continued threat of terrorism
and heightened security and military action in response to this
threat, or any future acts of terrorism, may cause further
disruptions to the global economy and to the wireless
communications industry and create further uncertainties.
Further, an economic recovery may not benefit us in the near
term. If it does not, our ability to increase or maintain our
revenues and operating results may be impaired. In addition,
because we intend to continue to make significant investments in
research and development and to maintain extensive ongoing
customer service and support capability, any decline in the rate
of growth of our revenues will have a significant adverse impact
on our operating results.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>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&#146; products and our products, negatively
    affecting our revenues and operating results.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We currently face significant competition in our markets and
expect that competition will continue. Competition in the
telecommunications market is affected by various factors,
including:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    comprehensiveness of products and technologies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    value added features which drive replacement rates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    manufacturing capability;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    scalability and the ability of the system technology to meet
    customers&#146; immediate and future network requirements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    product performance and quality;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    design and engineering capabilities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    compliance with industry standards;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    time to market;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    system cost;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    customer support.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This competition may result in increased development costs and
reduced average selling prices for our products and those of our
customers and licensees. Reductions in the average selling price
of our licensees&#146; products, unless offset by an increase in
volumes, generally result in reduced royalties payable to us.
While pricing pressures from competition may, to a large extent,
be mitigated by the introduction of new features and
functionality in our licensees&#146; products, there is no
guarantee that such mitigation will occur. We anticipate that
additional competitors will enter our markets as a result of
growth opportunities in wireless telecommunications, the trend
toward global expansion by foreign and domestic competitors,
technological and public policy changes and relatively low
barriers to entry in selected segments of the industry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Companies that promote non-CDMA technologies (e.g. GSM and
WiMax) and companies that design competing CDMA integrated
circuits are included amongst our competitors. Examples of such
competitors (some of whom are strategic partners of ours in
other areas) include Ericsson, Freescale, Intel, NEC, Nokia,
Samsung, Texas Instruments and VIA Telecom. With respect to our
OmniTRACS, TruckMAIL, OmniExpress, T2 Untethered TrailerTRACS,
GlobalTRACS, QConnect, OmniOne, EutelTRACS and LINQ products and
services, our existing competitors are aggressively pricing
their products and services and could continue to do so in the
future. In addition, these competitors are offering new
value-added products and services similar in many cases to those
we have developed or are developing. Emergence of new
competitors, particularly those offering low cost
terrestrial-based products and current as well as future
satellite-based products, may impact margins and intensify
competition in current and new markets. Similarly, some original
equipment manufacturers of trucks and truck components are
beginning to offer built-in, on-board communications and
position location reporting products that may impact our margins
and intensify competition in our current and new markets. Some
potential competitors of our QWBS business, if they are
successful, may harm our ability to compete in certain markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Many of these current and potential competitors have advantages
over us, including:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    longer operating histories and presence in key markets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    greater name recognition;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    motivation by our customers in certain circumstances to find
    alternate suppliers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    access to larger customer bases;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    greater sales and marketing, manufacturing, distribution,
    technical and other resources than we have.</TD>
</TR>

</TABLE>

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As a result of these and other factors, our competitors may be
more successful than us. In addition, we anticipate additional
competitors will enter the market for products based on 3G
standards. These competitors may have more established
relationships and distribution channels in markets not currently
deploying wireless communications technology. These competitors
also may have established or may establish financial or
strategic relationships among themselves or with our existing or
potential customers, resellers or other third parties. These
relationships may affect our customers&#146; decisions to
purchase products or license technology from us. Accordingly,
new competitors or alliances among competitors could emerge and
rapidly acquire significant market share to our detriment.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Our operating results are subject to substantial quarterly
    and annual fluctuations and to market downturns.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our revenues, earnings and other operating results have
fluctuated significantly in the past and may fluctuate
significantly in the future. General economic or other
conditions causing a downturn in the market for our products or
technology, affecting the timing of customer orders or causing
cancellations or rescheduling of orders could also adversely
affect our operating results. Moreover, our customers may change
delivery schedules or cancel or reduce orders without incurring
significant penalties and generally are not subject to minimum
purchase requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our future operating results will be affected by many factors,
including, but not limited to: our ability to retain existing or
secure anticipated customers or licensees, both domestically and
internationally; our ability to develop, introduce and market
new technology, products and services on a timely basis;
management of inventory by us and our customers and their
customers in response to shifts in market demand; changes in the
mix of technology and products developed, licensed, produced and
sold; seasonal customer demand; and other factors described
elsewhere in this prospectus/ information statement and in these
risk factors. Our corporate cash investments represent a
significant asset that may be subject to fluctuating or even
negative returns depending upon interest rate movements and
financial market conditions in fixed income and equity
securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
These factors affecting our future operating results are
difficult to forecast and could harm our quarterly or annual
operating results. If our operating results fail to meet the
financial guidance we provide to investors or the expectations
of investment analysts or investors in any period, securities
class action litigation could be brought against us and/or the
market price of our common stock could decline.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Our stock price may be volatile.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The stock market in general, and the stock prices of
technology-based and wireless communications companies in
particular, have experienced volatility that often has been
unrelated to the operating performance of any specific public
company. The market price of our common stock has fluctuated in
the past and is likely to fluctuate in the future as well.
Factors that may have a significant impact on the market price
of our stock include:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    receipt of substantial orders or order cancellations for
    integrated circuits and system software products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    quality deficiencies in services or products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    announcements regarding financial developments or technological
    innovations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    international developments, such as technology mandates,
    political developments or changes in economic policies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    lack of capital to invest in 3G networks;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    new commercial products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in recommendations of securities analysts;</TD>
</TR>

</TABLE>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    government regulations, including stock option accounting and
    tax regulations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    energy blackouts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    acts of terrorism and war;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    inflation and deflation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    widespread illness;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    proprietary rights or product or patent litigation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    strategic transactions, such as acquisitions and
    divestitures;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    rumors or allegations regarding our financial disclosures or
    practices.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our future earnings and stock price may be subject to
volatility, particularly on a quarterly basis. Shortfalls in our
revenues or earnings in any given period relative to the levels
expected by securities analysts could immediately, significantly
and adversely affect the trading price of our common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From time to time, we may repurchase our common stock at prices
that may later be higher than the market value of the stock on
the repurchase date. This could result in a loss of value for
stockholders if new shares are issued at lower prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the past, securities class action litigation has often been
brought against a company following periods of volatility in the
market price of its securities. Due to changes in the volatility
of our stock price, we may be the target of securities
litigation in the future. Securities litigation could result in
substantial costs and divert management&#146;s attention and
resources. In addition, stock volatility may be precipitated by
failure to meet earnings expectations or other factors, such as
the potential uncertainty in future reported earnings created by
the adoption of option expensing and the related valuation
models used to determine such expense.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Our industry is subject to rapid technological change, and
    we must keep pace to compete successfully.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
New technological innovations generally require a substantial
investment before they are commercially viable. We intend to
continue to make substantial investments in developing new
products and technologies, and it is possible that our
development efforts will not be successful and that our new
technologies will not result in meaningful revenues. In
particular, we intend to continue to invest significant
resources in developing integrated circuit products to support
high-speed wireless Internet access and multimode, multiband,
multinetwork operation and multimedia applications which
encompass development of graphical display, camera and video
capabilities, as well as higher computational capability and
lower power on-chip computers and signal processors. While our
research and development activities have resulted in inventions
relating to applications of GPRS, EDGE, OFDM, OFDMA and MIMO and
hundreds of issued or pending patent applications, there can be
no assurance that our patent portfolio in these areas would be
as valuable as our CDMA portfolio. Further, if OFDMA technology
is not adopted and deployed commercially, our investment in
Flarion and OFDMA technology may not provide us a significant
return on investment. We will also continue our significant
development efforts with respect to our Binary Runtime
Environment for Wireless (&#147;BREW&#148;) applications
development platform. We also continue to invest in the
development of our MediaFLO media distribution system and
Forward Link Only (&#147;FLO&#148;) technology for delivery of
low cost multimedia content to multiple subscribers. We cannot
assure you that the revenues generated from these products will
meet our expectations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The market for our products and technology is characterized by
many factors, including:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    rapid technological advances and evolving industry standards;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in customer requirements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    frequent introductions of new products and enhancements;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    evolving methods of building and operating telecommunications
    systems.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">22

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our future success will depend on our ability to continue to
develop and introduce new products, technology and enhancements
on a timely basis. Our future success will also depend on our
ability to keep pace with technological developments, protect
our intellectual property, satisfy varying customer
requirements, price our products competitively and achieve
market acceptance. The introduction of products embodying new
technologies and the emergence of new industry standards could
render our existing products and technology, and products and
technology currently under development, obsolete and
unmarketable. If we fail to anticipate or respond adequately to
technological developments or customer requirements, or
experience any significant delays in development, introduction
or shipment of our products and technology in commercial
quantities, demand for our products and our customers&#146; and
licensees&#146; products that use our technology could decrease,
and our competitive position could be damaged.
</DIV>

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    <TD width="3%"></TD>
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    <TD></TD>
    <TD>
    <B><I>The enforcement and protection of our intellectual
    property rights may be expensive and could divert our valuable
    resources.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We rely primarily on patent, copyright, trademark and trade
secret laws, as well as nondisclosure and confidentiality
agreements and other methods, to protect our proprietary
information, technologies and processes, including our patent
portfolio. Policing unauthorized use of our products and
technologies is difficult and time consuming. We cannot be
certain that the steps we have taken will prevent the
misappropriation or unauthorized use of our proprietary
information and technologies, particularly in foreign countries
where the laws may not protect our proprietary rights as fully
or as readily as United States laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The vast majority of our patents and patent applications relate
to our CDMA digital wireless communications technology and much
of the remainder of our patents and patent applications relate
to our other technologies and products. Litigation may be
required to enforce our intellectual property rights, protect
our trade secrets or determine the validity and scope of
proprietary rights of others. As a result of any such
litigation, we could lose our proprietary rights or incur
substantial unexpected operating costs. Any action we take to
enforce our intellectual property rights could be costly and
could absorb significant management time and attention, which,
in turn, could negatively impact our operating results. In
addition, failure to protect our trademark rights could impair
our brand identity.
</DIV>

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    <TD width="3%"></TD>
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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Claims by other companies that we infringe their
    intellectual property or that patents on which we rely are
    invalid could adversely affect our business.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From time to time, companies may assert patent, copyright and
other intellectual proprietary rights against our products or
products using our technologies or other technologies used in
our industry. These claims may result in our involvement in
litigation. We may not prevail in such litigation given the
complex technical issues and inherent uncertainties in
intellectual property litigation. If any of our products were
found to infringe on another company&#146;s intellectual
property rights, we could be required to redesign our products
or license such rights and/or pay damages or other compensation
to such other company. If we were unable to redesign our
products or license such intellectual property rights used in
our products, we could be prohibited from making and selling
such products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, as the number of competitors in our market
increases and the functionality of our products is enhanced and
overlaps with the products of other companies, we may become
subject to claims of infringement or misappropriation of the
intellectual property rights of others. Any claims, with or
without merit, could be time consuming to address, result in
costly litigation, divert the efforts of our technical and
management personnel or cause product release or shipment
delays, any of which could have a material adverse effect upon
our operating results. In any potential dispute involving other
companies&#146; patents or other intellectual property, our
licensees could also become the targets of litigation. Any such
litigation could severely disrupt the business of our licensees,
which in turn could hurt our relations with our licensees and
cause our revenues to decrease.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A number of other companies have claimed to own patents
essential to various CDMA standards, GSM standards and
implementations of OFDM and OFDMA systems. If we or other
product manufacturers are required to obtain additional licenses
and/or pay royalties to one or more patent holders, this could
have a
</DIV>

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<DIV align="left" style="font-size: 10pt;">
material adverse effect on the commercial implementation of our
CDMA or multi-mode products and technologies and our
profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other companies or entities also may commence actions seeking to
establish the invalidity of our patents. In the event that one
or more of our patents are challenged, a court may invalidate
the patent or determine that the patent is not enforceable,
which could harm our competitive position. If any of our key
patents are invalidated, or if the scope of the claims in any of
these patents is limited by court decision, we could be
prevented from licensing the invalidated or limited portion of
such patents. Even if such a patent challenge is not successful,
it could be expensive and time consuming to address, divert
management attention from our business and harm our reputation.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Potential tax liabilities could adversely affect our
    results.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are subject to income taxes in both the United States and
numerous foreign jurisdictions. Significant judgment is required
in determining our worldwide provision for income taxes. In the
ordinary course of our business, there are many transactions and
calculations where the ultimate tax determination is uncertain.
We are regularly under audit by tax authorities. Although we
believe our tax estimates are reasonable, the final
determination of tax audits and any related litigation could be
materially different than that which is reflected in historical
income tax provisions and accruals. In such case, a material
effect on our income tax provision and net income in the period
or periods in which that determination is made could result.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our growth is dependent upon the increased use of wireless
communications services that utilize our technology. In order to
provide wireless communications services, wireless operators
must obtain rights to use specific radio frequencies. The
allocation of frequencies is regulated in the United States and
other countries throughout the world and limited spectrum space
is allocated to wireless communications services. Industry
growth may be affected by the amount of capital required to:
obtain licenses to use new frequencies; deploy wireless networks
to offer voice and data services; and expand wireless networks
to grow voice and data services. Over the last several years,
the amount paid for spectrum licenses has increased
significantly, particularly for frequencies used in connection
with 3G technology. The significant cost of licenses and
wireless networks may slow the growth of the industry if
wireless operators are unable to obtain or service the
additional capital necessary to implement or expand 3G wireless
networks. Our growth could be adversely affected if this occurs.
</DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>If we experience product liability claims or recalls, we
    may incur significant expenses and experience decreased demand
    for our products.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Testing, manufacturing, marketing and use of our products and
those of our licensees and customers entails the risk of product
liability. Although we believe our product liability insurance
will be adequate to protect against product liability claims, we
cannot assure you that we will be able to continue to maintain
such insurance at a reasonable cost or in sufficient amounts to
protect us against losses due to product liability. Our
inability to maintain insurance at an acceptable cost or to
otherwise protect against potential product liability claims
could prevent or inhibit the commercialization of our products
and those of our licensees and customers and harm our future
operating results. Furthermore, not all losses associated with
alleged product failure are insurable. In addition, a product
liability claim or recall, whether against us, our licensees or
customers, could harm our reputation and result in decreased
demand for our products.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Concerns over the effects of radio frequency emissions, even if
unfounded, may have the effect of discouraging the use of
wireless phones, which would decrease demand for our products
and those of our
</DIV>

<P align="center" style="font-size: 10pt;">24

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<DIV align="left" style="font-size: 10pt;">
licensees and customers. In recent years, the FCC and foreign
regulatory agencies have updated the guidelines and methods they
use for evaluating radio frequency emissions from radio
equipment, including wireless phones. In addition, interest
groups have requested that the FCC investigate claims that
wireless communications technologies pose health concerns and
cause interference with airbags, hearing aids and medical
devices. Concerns have also been expressed over the possibility
of safety risks due to a lack of attention associated with the
use of wireless phones while driving. Any legislation that may
be adopted in response to these expressions of concern could
reduce demand for our products and those of our licensees and
customers in the United States as well as foreign countries.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our OmniTRACS system currently operates in the United States
market on leased Ku-band satellite transponders. Our primary
data satellite transponder and position reporting satellite
transponder lease runs through October 2006 and includes
transponder and satellite protection&nbsp;(back-up capacity in
the event of a transponder or satellite failure). Based on
system capacity analysis, we believe that the United States
OmniTRACS operations will not require additional transponder
capacity through fiscal 2006. We believe that in the event
additional transponder capacity would be required in fiscal 2006
or in future years, additional capacity will be available on
acceptable terms. However, we cannot assure you that we will be
able to acquire additional transponder capacity on acceptable
terms in a timely manner. A failure to maintain adequate
satellite capacity would harm our business, operating results,
liquidity and financial position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our OmniExpress, LINQ, T2 Untethered TrailerTRACS, GlobalTRACS,
QConnect and OmniOne systems are terrestrial-based products and
thus rely on various wireless terrestrial communications
networks operated by third parties. We believe these terrestrial
networks will be available for our products; however, we cannot
assure you that these networks will continue to be available to
us or that they will perform adequately for our needs. The
unavailability or nonperformance of these network systems could
harm our business.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Our business and operations would suffer in the event of
    system failures.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Despite system redundancy, the implementation of security
measures and the existence of a Disaster Recovery Plan for our
internal information technology networking systems, our systems
are vulnerable to damages from computer viruses, unauthorized
access, energy blackouts, natural disasters, terrorism, war and
telecommunication failures. Any system failure, accident or
security breach that causes interruptions in our operations or
to our customers&#146; or licensees&#146; operations could
result in a material disruption to our business. To the extent
that any disruption or security breach results in a loss or
damage to our customers&#146; data or applications, or
inappropriate disclosure of confidential information, we may
incur liability as a result. In addition, we may incur
additional costs to remedy the damages caused by these
disruptions or security breaches.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Message transmissions for domestic OmniTRACS, TruckMAIL, T2
Untethered TrailerTRACS, OmniExpress, GlobalTRACS, QConnect and
OmniOne operations are formatted and processed at the Network
Operations Center in San&nbsp;Diego, California, which we
operate, with a fully redundant backup Network Operations Center
located in Las Vegas, Nevada. Our Network Operations Center
operations are subject to system failures, which could interrupt
the services and have a material adverse effect on our operating
results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From time to time, we install new or upgraded business
management systems. To the extent such systems fail or are not
properly implemented, we may experience material disruptions to
our business that could have a material adverse effect on our
results of operations.
</DIV>

<P align="center" style="font-size: 10pt;">25
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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>We cannot provide assurance that we will continue to
    declare dividends at all or in any particular amounts.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We intend to continue to pay quarterly dividends subject to
capital availability and periodic determinations that cash
dividends are in the best interest of the stockholders. Our
dividend policy may be affected by, among other items, our views
on potential future capital requirements, including those
related to research and development, creation and expansion of
sales distribution channels and investments and acquisitions,
legal risks, stock repurchase programs, changes in federal
income tax law and changes to our business model. Our dividend
policy may change from time to time, and we cannot provide
assurance that we will continue to declare dividends at all or
in any particular amounts. A change in our dividend policy could
have a negative effect on our stock price.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Government regulation may adversely affect our
    business.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our products and those of our customers and licensees are
subject to various regulations, including FCC regulations in the
United States and other international regulations, as well as
the specifications of national, regional and international
standards bodies. Changes in the regulation of our activities,
including changes in the allocation of available spectrum by the
United States government and other governments or exclusion or
limitation of our technology or products by a government or
standards body, could have a material adverse effect on our
business, operating results, liquidity and financial position.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Our business and operating results will be harmed if we
    are unable to manage growth in our business.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain of our businesses have experienced periods of rapid
growth that have placed, and may continue to place, significant
demands on our managerial, operational and financial resources.
In order to manage this growth, we must continue to improve and
expand our management, operational and financial systems and
controls, including quality control and delivery and service
capabilities. We also need to continue to expand, train and
manage our employee base. We must carefully manage research and
development capabilities and production and inventory levels to
meet product demand, new product introductions and product and
technology transitions. We cannot assure you that we will be
able to timely and effectively meet that demand and maintain the
quality standards required by our existing and potential
customers and licensees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, inaccuracies in our demand forecasts, or failure of
the systems used to develop the forecasts, could quickly result
in either insufficient or excessive inventories and
disproportionate overhead expenses. If we ineffectively manage
our growth or are unsuccessful in recruiting and retaining
personnel, our business and operating results will be harmed.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>We may not be able to attract and retain qualified
    employees.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our future success depends largely upon the continued service of
our board members, executive officers and other key management
and technical personnel. Our success also depends on our ability
to continue to attract, retain and motivate qualified personnel.
In addition, implementing our product and business strategy
requires specialized engineering and other talent, and our
revenues are highly dependent on technological and product
innovations. Key employees represent a significant asset, and
the competition for these employees is intense in the wireless
communications industry. We continue to anticipate significant
increases in human resources, particularly in engineering
resources, through the remainder of fiscal 2005. If we are
unable to attract and retain the qualified employees that we
need, our business may be harmed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may have particular difficulty attracting and retaining key
personnel in periods of poor operating performance given the
significant use of incentive compensation by our competitors. We
do not have employment agreements with our key management
personnel and do not maintain key person life insurance on any
of our personnel. The loss of one or more of our key employees
or our inability to attract, retain and motivate qualified
personnel could negatively impact our ability to design, develop
and commercialize our products and technology.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since our inception, we have used stock options and other
long-term equity incentives as a fundamental component of our
employee compensation packages. We believe that stock options
and other long-term equity incentives directly motivate our
employees to maximize long-term stockholder value and, through
the use of long-term vesting, encourage employees to remain with
us. To the extent that new regulations make it less attractive
to grant options to employees, we may incur increased
compensation costs, change our equity compensation strategy or
find it difficult to attract, retain and motivate employees,
each of which could materially and adversely affect our business.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>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.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A change in accounting standards or practices or a change in
existing taxation rules or practices can have a significant
effect on our reported results and may even affect our reporting
of transactions completed before the change is effective. New
accounting pronouncements and taxation rules and varying
interpretations of accounting pronouncements and taxation
practice have occurred and may occur in the future. Changes to
existing rules or the questioning of current practices may
adversely affect our reported financial results or the way we
conduct our business.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Compliance with changing regulation of corporate
    governance and public disclosure may result in additional
    expenses.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changing laws, regulations and standards relating to corporate
governance and public disclosure, including the Sarbanes-Oxley
Act of 2002, new SEC regulations and NASDAQ National Market
rules, are creating uncertainty for companies such as ours.
These new or changed laws, regulations and standards are subject
to varying interpretations in many cases due to their lack of
specificity, and as a result, their application in practice may
evolve over time as new guidance is provided by regulatory and
governing bodies, which could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by
ongoing revisions to disclosure and governance practices. We are
committed to maintaining high standards of corporate governance
and public disclosure. As a result, our efforts to comply with
evolving laws, regulations and standards have resulted in, and
are likely to continue to result in, increased general and
administrative expenses and a diversion of management time and
attention from revenue-generating activities to compliance
activities. In particular, our efforts to comply with
Section&nbsp;404 of the Sarbanes-Oxley Act of 2002 and the
related regulations regarding our required assessment of our
internal controls over financial reporting and our independent
registered public accounting firm&#146;s audit of that
assessment has required the commitment of significant financial
and managerial resources. In addition, it has become more
difficult and more expensive for us to obtain director and
officer liability insurance, and we have purchased reduced
coverage at substantially higher cost than in the past. We
expect these efforts to require the continued commitment of
significant resources. Further, our board members, chief
executive officer and chief financial officer could face an
increased risk of personal liability in connection with the
performance of their duties. As a result, we may have difficulty
attracting and retaining qualified board members and executive
officers, which could harm our business. If our efforts to
comply with new or changed laws, regulations and standards
differ from the activities intended by regulatory or governing
bodies due to ambiguities related to practice, our reputation
may be harmed.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Our stockholder rights plan and certain provisions of our
    certificate of incorporation could adversely affect the
    performance of our stock.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our certificate of incorporation provides for cumulative voting
in the election of directors. In addition, our certificate of
incorporation provides for a classified board of directors and
includes a provision that generally requires the approval of
holders of at least
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of our voting stock as a condition to a merger or certain other
business transactions with, or proposed by, a holder of 15% or
more of our voting stock. This approval is not required in cases
where certain of our directors approve the transaction or where
certain minimum price criteria and other procedural requirements
are met. Our certificate of incorporation also requires the
approval of holders of at least
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of our voting stock to amend or change the provisions mentioned
relating to the
</DIV>

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<DIV align="left" style="font-size: 10pt;">
classified board, cumulative voting or the transaction approval.
Under our bylaws, stockholders are not permitted to call special
meetings of our stockholders. Finally, our certificate of
incorporation provides that any action required or permitted by
our stockholders must be effected at a duly called annual or
special meeting rather than by any consent in writing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The classified board, transaction approval, special meeting and
other charter provisions may discourage certain types of
transactions involving an actual or potential change in our
control. These provisions may also discourage certain types of
transactions in which our stockholders might otherwise receive a
premium for their shares over then current market prices and may
limit our stockholders&#146; ability to approve transactions
that they may deem to be in their best interests.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Further, we have distributed a dividend of one right for each
outstanding share of our common stock pursuant to the terms of
our stockholder rights agreement. These rights will cause
substantial dilution to the ownership of a person or group that
attempts to acquire us on terms not approved by our board of
directors and may have the effect of deterring hostile takeover
attempts. In addition, our board of directors has the authority
to fix the rights and preferences of and issue shares of
preferred stock. This right may have the effect of delaying or
preventing a change in our control without action by our
stockholders. For a detailed discussion of our preferred stock
and our stockholder rights agreement, see the section entitled
&#147;Description of QUALCOMM Capital Stock.&#148;
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='123'></A>
</DIV>

<!-- link1 "THE MERGER" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>THE MERGER</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This section of the prospectus/ information statement describes
material aspects of the proposed merger. While we believe that
the description covers the material terms of the merger, this
summary may not contain all of the information that is important
to you. You should read this entire document including the
appendices for a more complete understanding of the merger.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='124'></A>
</DIV>

<!-- link1 "Background of the Merger" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Background of the Merger</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The management and boards of directors of each of QUALCOMM and
Flarion continually review their companies&#146; respective
market positions in light of the changing competitive
environment of the wireless industry with the objective of
determining what strategic alternatives are available to enhance
stockholder value. From time to time, the management of each of
QUALCOMM and Flarion have had conversations with other companies
to explore opportunities to improve the companies&#146;
respective market positions, including through potential
acquisitions or dispositions of assets, joint ventures and other
strategic transactions. In particular, from time to time,
Flarion has received inquiries from third parties seeking to
discuss a potential acquisition of Flarion.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The provisions of the merger agreement are the result of
arm&#146;s-length negotiations conducted among representatives
of QUALCOMM and Flarion and their respective legal and financial
advisors. The following is a summary of the meetings,
negotiations and discussions between the parties that preceded
the execution of the merger agreement.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From February 2003 through May 2003, representatives of QUALCOMM
and Flarion engaged in preliminary discussions regarding a
potential business combination and entered into a
confidentiality agreement. At that time, the parties could not
agree on a preliminary price range and discussions ended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;2, 2005, Flarion engaged Evercore as its exclusive
financial advisor to assist the Flarion board of directors and
management in evaluating Flarion&#146;s strategic alternatives
for growing stockholder value, including strategic alliances,
joint ventures, technology licenses, divestitures or mergers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;13, 2005, Anthony Thornley, who then served as
QUALCOMM&#146;s President, called Raymond Dolan, Flarion&#146;s
Chief Executive Officer, to discuss QUALCOMM&#146;s potential
interest in renewing merger discussions with Flarion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;31, 2005, QUALCOMM sent a letter to Mr.&nbsp;Dolan
formally expressing QUALCOMM&#146;s interest in pursuing a
potential acquisition of Flarion.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;2, 2005, Irwin Jacobs, who then served as
QUALCOMM&#146;s Chief Executive Officer, and Mr.&nbsp;Thornley
met with Mr.&nbsp;Dolan and Rajiv Laroia, Flarion&#146;s Chief
Technology Officer, to receive an update on Flarion&#146;s
business and discuss the possibility of a business combination.
Representatives from Morgan Stanley and Evercore were in
attendance. Morgan Stanley served as QUALCOMM&#146;s exclusive
financial advisor to assist the QUALCOMM board of directors and
management in evaluating a potential strategic transaction with
Flarion.
</DIV>

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On June 6 and&nbsp;7, 2005, members of the QUALCOMM and Flarion
management teams, together with representatives of their
respective financial advisors, met to review and discuss
Flarion&#146;s strategy, technology and business model.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;14, 2005, representatives of QUALCOMM and Flarion
management met in San&nbsp;Diego, California, together with
representatives of their respective financial advisors, to
discuss valuation and the potential terms of a merger
transaction. At this meeting, Mr.&nbsp;Dolan communicated the
terms on which Flarion would be willing to consider a potential
business combination with QUALCOMM.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;15, 2005, Paul Jacobs, who then served as
QUALCOMM&#146;s Chief Executive Officer-elect, called
Mr.&nbsp;Dolan to suggest that the parties initiate due
diligence based on preliminary transaction terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the evening of June&nbsp;18, 2005, Paul Jacobs and Steven
Altman, who then served as President-elect, and Mr.&nbsp;Dolan,
together with representatives of their respective legal and
financial advisors, participated in a conference call at which
Paul Jacobs and Mr.&nbsp;Altman expressed QUALCOMM&#146;s
proposal to proceed with discussions regarding a potential
business combination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;21, 2005, the finance committee of QUALCOMM&#146;s
board of directors and the QUALCOMM board of directors held
meetings at which potential terms of a possible acquisition of
Flarion were discussed. Representatives of Morgan Stanley made
presentations regarding Flarion and a potential business
combination with Flarion at these meetings, and representatives
of DLA Piper Rudnick Gray Cary US LLP, or DLA Piper, legal
counsel to QUALCOMM, also participated in the meetings. At these
meetings, QUALCOMM management presented the results of
QUALCOMM&#146;s initial due diligence on Flarion, provided
additional background information regarding Flarion and reviewed
the strategic rationale for a business combination and proposed
business and financial terms. At this meeting, the board of
directors unanimously approved the authorization of management
to proceed with the negotiation of a potential transaction with
Flarion on the terms presented.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;21, 2005, representatives of Evercore and Morgan
Stanley discussed the terms of a potential transaction. On June
23 and&nbsp;24, 2005, representatives of Evercore and Morgan
Stanley had further discussions relating to potential
transaction terms, principally regarding the nature and amount
of the consideration and indemnification provisions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;25, 2005, on behalf of QUALCOMM, DLA Piper
delivered an initial draft of the merger agreement to Flarion
and its advisors, even though significant merger terms remained
unresolved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;27, 2005, Flarion management and QUALCOMM
management, as well as their respective legal and financial
advisors, met at QUALCOMM&#146;s offices in San&nbsp;Diego. At
this meeting, potential transaction terms and process were
discussed in detail. From this point until the signing of the
merger agreement, QUALCOMM and its advisors performed legal,
financial and technical due diligence review of Flarion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From June 28 through July&nbsp;4, 2005, QUALCOMM and Flarion and
their respective legal and financial advisors exchanged drafts
of the merger agreement and negotiated various provisions and
deal terms at multiple meetings at the offices of DLA Piper and
Latham&nbsp;&#38; Watkins LLP, legal counsel to Flarion, in
San&nbsp;Diego.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;5, 2005, the parties temporarily halted the
negotiations due to an impasse with respect to the amount and
nature of the proposed merger consideration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;6, 7 and&nbsp;8, 2005, Paul Jacobs, as
QUALCOMM&#146;s Chief Executive Officer, Mr.&nbsp;Altman, as
QUALCOMM&#146;s President, and Mr.&nbsp;Dolan held various
conversations relating to the structure and terms of
</DIV>

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<DIV align="left" style="font-size: 10pt;">
the transaction. In particular, a structure under which a
portion of the consideration would be subject to milestones was
discussed and negotiated. On July&nbsp;8,&nbsp;9, and&nbsp;10,
2005, QUALCOMM and Flarion and their respective legal and
financial advisors exchanged drafts of a proposal relating to
this type of structure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;13, 2005, at a meeting of the QUALCOMM board of
directors, the QUALCOMM board of directors reviewed and
discussed the proposed acquisition. The QUALCOMM board of
directors reviewed the status of the negotiations and key deal
terms, the status and findings of due diligence on Flarion, the
strategic rationale for the proposed acquisition, the potential
risks and potential benefits relative to the proposed
acquisition, regulatory and stockholder approval requirements in
connection with the proposed transaction, and the key business
and financial terms of the proposed transaction. Representatives
of Morgan Stanley and DLA Piper reviewed the deal terms and
relevant issues for the QUALCOMM board of directors, and Morgan
Stanley reviewed their updated financial analysis of the
proposed merger with the board members. Following this review
and discussion, the QUALCOMM board of directors unanimously
approved the merger agreement and the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;14, and through July&nbsp;22, 2005, management of
Flarion and QUALCOMM, as well as their respective legal advisors
and representatives of Proskauer Rose LLP, counsel to certain
Flarion stockholders, participated in various meetings and
discussions regarding the merger agreement and exchanged
multiple drafts of the merger agreement. In particular, the open
issues discussed were tax matters, the structure of the
assumption of Flarion stock options and the indemnification and
offset provisions of the merger agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;21, 2005, the board of directors of Flarion met to
discuss the merger agreement, Evercore&#146;s analysis of the
transaction and fiduciary duties under Delaware law.
Representatives from Evercore were present. Latham&nbsp;&#38;
Watkins and Richards, Layton&nbsp;&#38; Finger, P.A, special
Delaware counsel to Flarion, were present by telephone.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;23, 2005, management of Flarion and QUALCOMM, as
well as representatives of their respective legal and financial
advisors, participated in a conference call to discuss the
merger agreement. In particular, a telephone conference occurred
between Mr.&nbsp;Dolan and Mr.&nbsp;Altman regarding the
structure of the patent milestone provisions of the merger
agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;24, 2005, the board of directors of Flarion met by
telephone conference to discuss the merger agreement. Following
a presentation by Latham&nbsp;&#38; Watkins and the receipt of
an oral fairness opinion and presentation from Evercore, the
Flarion board of directors unanimously adopted and approved the
merger agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;25, 2005, the parties executed and delivered the
merger agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;26, 2005, stockholders of Flarion adopted and
approved the merger agreement by written consent.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='125'></A>
</DIV>

<!-- link1 "QUALCOMM&#146;s Reasons for the Merger" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>QUALCOMM&#146;s Reasons for the Merger</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM believes a business combination with Flarion will
enhance its already strong position in OFDMA technology and
establish QUALCOMM as a leader in designing and licensing OFDMA
systems, components and products for operators interested in
OFDMA or hybrid CDMA/ OFDMA networks. The combination of
Flarion&#146;s and QUALCOMM&#146;s engineering resources will
establish a world class&nbsp;OFDMA technology team focused on
developing leading technologies for the wireless market. The
combination of QUALCOMM&#146;s and Flarion&#146;s patent
portfolios establishes an industry-leading OFDMA/OFDM
intellectual property portfolio. QUALCOMM will continue to
invest in development of CDMA advancements that it believes will
provide the most advanced, spectrally efficient wide area
wireless mobile networks for the foreseeable future. The
acquisition of Flarion, however, will enable QUALCOMM to support
operators who may prefer OFDMA-based networks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM&#146;s board of directors has determined that the
merger is in the best interests of QUALCOMM and its stockholders
and has approved the merger agreement, the merger, the issuance
of shares of QUALCOMM common stock to be issued pursuant to the
merger and the other transactions
</DIV>

<P align="center" style="font-size: 10pt;">30

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<DIV align="left" style="font-size: 10pt;">
contemplated by the merger agreement. In reaching its
determination, QUALCOMM&#146;s board of directors considered a
number of factors, including the factors discussed above and
listed below. The conclusions reached by QUALCOMM&#146;s board
of directors with respect to the following factors supported its
determination that the merger and the issuance of shares of
QUALCOMM common stock pursuant to the merger were fair to, and
in the best interests of, QUALCOMM and its stockholders:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the judgment, advice and analysis of QUALCOMM&#146;s management
    and its financial and legal advisors with respect to the
    potential strategic, financial and operational benefits of the
    transaction, including management&#146;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    management&#146;s expectations regarding the anticipated timing
    for the commercial development of Flarion&#146;s technology and
    the costs associated with additional development of
    Flarion&#146;s intellectual property;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the expected qualification of the transactions contemplated by
    the merger agreement as a reorganization within the meaning of
    Section&nbsp;368(a) of the Internal Revenue Code;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the opinion and presentation of QUALCOMM&#146;s financial
    advisor;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the results of operations and financial condition of QUALCOMM
    and Flarion;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM&#146;s board of directors also considered a number of
risks and potentially negative factors in its deliberation
concerning the merger, including in particular:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the risk that the transaction might not be completed in a timely
    manner or at all;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the potential loss of key Flarion employees critical to the
    ongoing success of Flarion&#146;s business and to the successful
    integration of QUALCOMM&#146;s business and Flarion&#146;s
    business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the general difficulties of integrating products, technologies
    and companies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the risk that the benefits sought to be achieved by the
    transaction, including those outlined above, will not be
    achieved;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the effect of public announcement of the transaction on
    QUALCOMM&#146;s common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the other risks and uncertainties discussed above in the section
    entitled &#147;Risk Factors;&#148;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the risk of diverting management resources from other strategic
    opportunities and operational matters for a period of time.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The above discussion of information and factors considered by
QUALCOMM&#146;s board of directors is not intended to be
exhaustive but is believed to include all material factors
considered by QUALCOMM&#146;s board of directors. In view of the
wide variety of factors considered by QUALCOMM&#146;s board of
directors, the board did not find it practicable to quantify or
otherwise assign relative weight to the specific factors
considered. In addition, QUALCOMM&#146;s board of directors did
not reach any specific conclusion on each factor considered, or
any aspect of any particular factor, but conducted an overall
analysis of these factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Individual members of QUALCOMM&#146;s board of directors may
have given different weight to different factors. However, after
taking into account all of the factors described above,
QUALCOMM&#146;s board of directors determined that the merger,
the merger agreement, the issuance of shares of QUALCOMM&#146;s
common stock to be issued pursuant to the merger and the other
agreements related to the merger were fair to, and in the best
interests of, QUALCOMM and QUALCOMM&#146;s stockholders, and
that QUALCOMM should proceed with the merger.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='126'></A>
</DIV>

<!-- link1 "Flarion&#146;s Reasons for the Merger; Recommendation of the Flarion Board of Directors" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion&#146;s Reasons for the Merger; Recommendation of the
Flarion Board of Directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Flarion board of directors unanimously approved the merger
and the merger agreement and believes that the terms of the
merger are fair to, and in the best interests of, Flarion and
its stockholders. In the course of reaching its decision to
approve the merger agreement, the Flarion board of directors
consulted with Flarion&#146;s management, as well as its legal,
accounting and other advisors, and considered the following
material factors:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the risks and potential rewards associated with, as an
    alternative to the merger, continuing to execute Flarion&#146;s
    strategic plan as an independent entity. These risks include,
    among others, Flarion&#146;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&#146; 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&#146;s financial resources and its ability to fund a
    greater number of long-term growth projects and to compete
    effectively;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the presentation and opinion of Evercore;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the ability to complete the merger as a reorganization for
    United States federal income tax purposes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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 &#147;The Merger&nbsp;&#151; Interests of
    Flarion&#146;s Directors and Management in the Merger;&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&#146;s ability to bring technology
    to market;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the availability of appraisal rights under Section&nbsp;262 of
    the DGCL.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In view of the wide variety of factors considered in connection
with its evaluation of the merger and the complexity of these
matters, the Flarion board of directors did not find it useful
to and did not attempt to quantify, rank or otherwise assign
relative weights to these factors. In addition, the Flarion
board of directors did not undertake to make any specific
determination as to whether any particular factor, or any aspect
of any particular factor, was favorable or unfavorable to the
ultimate determination of the Flarion board of directors, but
rather the Flarion board of directors conducted an overall
analysis of the factors described above, including discussions
with and questioning of Flarion&#146;s management and legal,
accounting and other advisors.
</DIV>

<P align="center" style="font-size: 10pt;">32

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<DIV align="left" style="font-size: 10pt;">
<A name='127'></A>
</DIV>

<!-- link1 "Opinion of Flarion&#146;s Financial Advisor" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Opinion of Flarion&#146;s Financial Advisor</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;24, 2005, Evercore rendered its oral opinion to the
Flarion board of directors, subsequently confirmed in writing,
that as of such date and, based upon and subject to the matters
stated in its opinion, from a financial point of view, the
consideration in aggregate to be paid by QUALCOMM to the holders
of Flarion common stock, preferred stock, options and warrants
pursuant to the merger agreement was fair to such security
holders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The full text of Evercore&#146;s written opinion, dated
July&nbsp;24, 2005, is attached as Annex&nbsp;B to this
prospectus/ information statement. You are encouraged to read
Evercore&#146;s opinion carefully in its entirety for a
description of the assumptions made, factors considered and
limitations upon the review undertaken by Evercore in rendering
its opinion. The following is a summary of Evercore&#146;s
opinion and analyses that Evercore considered in rendering its
opinion. This summary is qualified in its entirety by reference
to the full text of the opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore&#146;s advisory services and opinion were provided for
the information and assistance of the Flarion board of directors
in connection with its consideration of the merger.
Evercore&#146;s opinion was not intended to be and did not
constitute a recommendation to any holder of securities of
Flarion or any other person as to how such person should vote or
act on any matter in connection with the merger. Evercore was
not requested to opine as to, and Evercore&#146;s opinion did
not address, Flarion&#146;s underlying business decision to
proceed with or effect the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with rendering its opinion, Evercore, among other
things:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    analyzed financial projections concerning Flarion prepared by
    and furnished to Evercore by the management of Flarion;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    discussed the past and current operations and financial
    condition and the prospects of Flarion with the management of
    Flarion;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    compared the financial performance of Flarion and QUALCOMM with
    publicly traded companies and their securities that Evercore
    deemed relevant;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    reviewed the financial terms, to the extent publicly available,
    of other business combinations and other transactions that
    Evercore deemed relevant;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    participated in discussions and negotiations among
    representatives of Flarion and QUALCOMM and their financial and
    legal advisors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&#146;s
    analysis;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    analyzed publicly available projections and operating data for
    QUALCOMM prepared by Wall Street analysts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    analyzed publicly available financial statements and other
    information relating to QUALCOMM;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    reviewed with Flarion management the scope and results of the
    transaction process to the date of its opinion;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    performed such other analyses and examinations and considered
    such other factors as Evercore has in Evercore&#146;s sole
    judgment deemed appropriate for purposes of its opinion.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For purposes of Evercore&#146;s analysis and opinion, Evercore
assumed and relied upon, without assuming any responsibility for
independently verifying, the accuracy and completeness of all
the financial and other information publicly available and the
information furnished to Evercore by Flarion management or
otherwise
</DIV>

<P align="center" style="font-size: 10pt;">33
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<DIV align="left" style="font-size: 10pt;">
discussed with or reviewed by or for Evercore, and Evercore did
not assume any liability thereof. Evercore further relied on the
assurances of the management of Flarion that it was not aware of
any facts that would make such information inaccurate or
misleading. Flarion management informed Evercore that they
expected to achieve the patent milestone, and consequently for
the purposes of Evercore&#146;s opinion, Evercore assumed, with
Flarion management&#146;s permission, that the additional
consideration payable upon achievement of the patent milestone
would be paid to the former holders of Flarion securities. For
purposes of rendering its opinion, the management of Flarion
provided Evercore and discussed with Evercore certain financial
projections. With respect to these financial projections,
Evercore assumed that they were reasonably prepared on bases
reflecting the best currently available estimates and good faith
judgments of the future competitive, operating and regulatory
environments and related financial performance of Flarion.
Evercore further assumed that, in all material respects, such
financial projections would be realized in the amounts and at
the times indicated. Evercore expressed no view as to such
financial projections, or the assumptions on which they were
based. Evercore also assumed, with Flarion&#146;s approval, that
the merger will qualify as a tax-free reorganization for United
States federal income tax purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore did not make nor assume any responsibility for making
any independent valuation or appraisal of the assets or
liabilities of Flarion, nor was Evercore furnished with any such
appraisals, nor did Evercore evaluate the solvency or fair value
of Flarion under any state or federal laws relating to
bankruptcy, insolvency or similar matters. Evercore&#146;s
opinion was necessarily based on economic, market and other
conditions as in effect on, and the information made available
to and discussed with Evercore as of the date of its opinion.
Evercore&#146;s opinion noted that subsequent developments could
affect its opinion and that Evercore does not have any
obligation to update, revise, or reaffirm its opinion. Evercore
was not asked to pass upon, and expressed no opinion with
respect to, any matter other than the fairness, from a financial
point of view as of the date of its opinion, of the
consideration in aggregate to be paid by QUALCOMM to the holders
of Flarion common stock, preferred stock, options and warrants
pursuant to the merger agreement. Evercore expressed no opinion
as to the underlying decision by Flarion and QUALCOMM to engage
in the merger. Evercore expressed no opinion in its opinion as
to the price at which Flarion common stock, Flarion preferred
stock or QUALCOMM common stock will trade at any future time.
Evercore did not render any accounting, legal or tax advice to
Flarion and understood that Flarion would be relying upon other
advisors as to accounting, legal and tax matters in connection
with the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore requested from QUALCOMM management, but did not
receive, financial projections for QUALCOMM or QUALCOMM&#146;s
estimates of synergies expected to result from the merger.
Flarion management did not independently prepare financial
projections for QUALCOMM or estimates of synergies expected to
result from the merger. Consequently, with Flarion
management&#146;s permission, Evercore relied upon consensus
Wall Street research estimates for financial and operational
projection information regarding QUALCOMM. With respect to these
Wall Street research estimates, Evercore assumed that they were
reasonably prepared on bases reflecting the best currently
available estimated and good faith judgments of the future
competitive, operating and regulatory environments. Evercore
assumed no responsibility for independent verification of these
research estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For purposes of rendering its opinion, Evercore assumed that the
representations and warranties of each party contained in the
merger agreement were true and correct, that each party would
perform all of its respective covenants and agreements contained
in the merger agreement, that all conditions to the consummation
of the merger will be satisfied without waiver thereof and that
no material indemnification payments will be made to QUALCOMM,
and that no working capital adjustment will be required that
would reduce the consideration payable to holders of Flarion
securities. Evercore further assumed that all governmental,
regulatory or other consents and approvals (contractual or
otherwise) necessary for the consummation of the merger will be
obtained without any adverse effect on Flarion or QUALCOMM or on
the contemplated benefits of the merger. Flarion also advised
Evercore, and Evercore assumed that any third party contractual
rights in connection with the merger and the other transactions
contemplated by the merger agreement will not have any adverse
effect on Flarion or QUALCOMM or on the contemplated benefits of
the merger.
</DIV>

<P align="center" style="font-size: 10pt;">34

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Transaction Terms</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of Flarion common stock, stock options (other than
with respect to directed options), preferred stock and warrants
will have the right to receive, in the aggregate, merger
consideration of $805&nbsp;million consisting of:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    approximately $3.93&nbsp;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&nbsp;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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    additional consideration of approximately $1.34&nbsp;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&nbsp;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.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion Peer Group Trading Analysis</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to assess how the public market values shares of
similar publicly traded companies, Evercore, based on its
experience, reviewed and compared specific financial and
operating data relating to Flarion with that of selected
companies that Evercore deemed to have characteristics in common
with Flarion:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Communications Semiconductor</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Diversified Semiconductor</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Wireless Infrastructure</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Companies</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Analog Devices Incorporated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Intel Corporation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Cisco Systems Inc.</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Maxim Integrated Products, Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Texas Instruments Inc.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Nokia Corporation</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Broadcom Corporation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    STMicroelectronics N.V.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Siemens Aktiengesellschaft</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Freescale Semiconductor, Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Motorola, Inc.</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Silicon Laboratories Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    LM Ericsson Telephone Company</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Skyworks Solutions, Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Alcatel</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    RF Micro Devices, Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Lucent Technologies Inc.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Nortel Networks Corp.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Alvarion Ltd.</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its peer group analysis, Evercore calculated and
analyzed each company&#146;s ratio of current stock price to its
historical and projected earnings per share (commonly referred
to as a price earnings ratio, or P/E). Evercore also calculated
and analyzed various financial multiples, including each peer
group company&#146;s enterprise value to certain historical and
projected financial metrics such as revenue and earnings before
interest, taxes, depreciation and amortization (EBITDA). The
enterprise value of each company was obtained by adding its
short- and long-term debt and minority interest to the sum of
the market value of its common equity and subtracting its cash
and cash equivalents (including cash from the exercise of
options and warrants). All of these calculations for the peer
group and for QUALCOMM were performed, and based on publicly
available financial data (including I/B/E/S International, Inc.
and Wall Street research estimates) and closing prices, as of
July&nbsp;22, 2005, the last trading date prior to the delivery
of Evercore&#146;s opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on Evercore&#146;s analysis of enterprise value as a
multiple of projected 2005 and 2006 revenues, for the companies
above, Evercore selected revenue trading multiple ranges for
2005 and 2006 of 2.0x to 4.5x and 1.5x to 4.0x, respectively.
Based on the projections and assumptions set forth above, the
peer group trading analysis of Flarion yielded implied equity
valuation ranges for Flarion of $159&nbsp;million to
$279&nbsp;million, and $276&nbsp;million to $631&nbsp;million,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore selected the peer group companies above because their
businesses and operating profiles are reasonably similar to that
of Flarion. However, because of the inherent differences between
the business,
</DIV>

<P align="center" style="font-size: 10pt;">35

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<DIV align="left" style="font-size: 10pt;">
operations and prospects of Flarion and the businesses,
operations and prospects of the selected peer group companies,
no peer group company is exactly the same as Flarion.
Accordingly, Evercore believed that it was inappropriate to, and
therefore did not, rely solely on the quantitative results of
the peer group company analysis. Accordingly, Evercore also made
qualitative judgments concerning differences between the
financial and operating characteristics and prospects of Flarion
and the companies included in the peer group company analysis
that would affect the public trading values of each in order to
provide a context in which to consider the results of the
quantitative analysis. These qualitative judgments related
primarily to the differing sizes, growth prospects,
profitability levels and degree of operational risk between
Flarion and the companies included in the peer group trading
analysis.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion Relevant Precedent Transaction Analysis</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Using publicly available information, Evercore reviewed and
compared the purchase prices and financial multiples paid in
sixteen acquisitions of peer group companies that Evercore,
based on its experience with merger and acquisition
transactions, deemed relevant to arriving at its opinion. While
none of the target companies and transactions were perfectly
comparable to Flarion and the characteristics of this
transaction, Evercore attempted to select transactions where the
target companies were reasonably comparable based on size,
product mix, margins and other characteristics of their
businesses. Evercore reviewed the following transactions:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Cisco Systems, Inc.&#146;s acquisition of Airespace, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Cisco Systems, Inc.&#146;s acquisition of Latitude
    Communications, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Cisco Systems, Inc.&#146;s acquisition of Linksys;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    3Com Corp.&#146;s acquisition of TippingPoint Technologies, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Alcatel&#146;s acquisition of Spatial Wireless;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Avaya Inc.&#146;s acquisition of Spectel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Broadcom Corporation&#146;s acquisition of Zyray Wireless, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Broadcom Corporation&#146;s acquisition of Mobilink Telecom Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Lucent Technologies Inc.&#146;s acquisition of Telica, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Tellabs, Inc.&#146;s acquisition of Advanced Fibre
    Communications, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Juniper Network, Inc.&#146;s acquisition of NetScreen
    Technologies, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Polycom, Inc.&#146;s acquisition of Voyant Technologies, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Motorola, Inc.&#146;s acquisition of Winphoria Networks;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    UTStarcom, Inc.&#146;s acquisition of CommWorks;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Juniper Networks, Inc.&#146;s acquisition of Unisphere Networks,
    Inc.;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    QUALCOMM&#146;s acquisition of SnapTrack, Inc.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on Evercore&#146;s analysis of enterprise value as a
multiple of forward revenues for the selected precedent
transactions, and taking into consideration differences that may
exist between the above transactions and Flarion&#146;s
strategic combination with QUALCOMM, Evercore selected forward
revenue multiple ranges from 10x to 15x. Based on the
projections and assumptions set forth above, the relevant
precedent transaction analysis of Flarion yielded implied equity
valuation ranges for Flarion of $544&nbsp;million to
$784&nbsp;million.
</DIV>

<P align="center" style="font-size: 10pt;">36

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion Discounted Cash Flow Analysis</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its analysis, and in order to estimate the present
value of Flarion common stock, Evercore prepared a five-year
discounted cash flow analysis for Flarion of after-tax unlevered
free cash flows for fiscal years 2005 through 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A discounted cash flow analysis is a traditional valuation
methodology used to derive a valuation of an asset by
calculating the &#147;present value&#148; of estimated future
cash flows of the asset. &#147;Present value&#148; refers to the
current value of future cash flows or amounts and is obtained by
discounting those future cash flows or amounts by a discount
rate that takes into account macro-economic assumptions and
estimates of risk, the opportunity cost of capital, expected
returns and other appropriate factors. Evercore performed a
discounted cash flow analysis for Flarion by adding the present
value of Flarion&#146;s projected after-tax unlevered free cash
flows for fiscal years 2005 through 2010, based on Flarion
management&#146;s projections, to the present value of the
&#147;terminal value&#148; of Flarion as of 2010. &#147;Terminal
value&#148; refers to the estimated value of an enterprise at a
particular point in time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore estimated, after taking into account selected peer
group enterprise values to last twelve months EBITDA multiples,
a range of terminal values in 2010 calculated based on selected
last twelve months EBITDA multiples of 10x to 13x. Evercore
discounted the unlevered free cash flow streams and the
estimated terminal value to a present value at a range of
discount rates from 20% to 30%. The discount rates utilized in
this analysis were chosen by Evercore based on its expertise and
experience with early stage companies in the technology
industry. Evercore calculated implied equity values by first
determining a range of enterprise values of Flarion by adding
the present values of the after-tax unlevered free cash flows
and terminal values for each EBITDA terminal multiple and
discount rate scenario, and then subtracting from the enterprise
values the net debt (which is total debt plus minority interest
minus cash and equivalents, including cash from the exercise of
options and warrants) of Flarion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on the projections and assumptions set forth above,
Evercore selected equity valuation ranges for Flarion of
$735&nbsp;million to $1,486&nbsp;million.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>QUALCOMM Historical Share Price Analysis</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore considered historical data with regard to the trading
prices of QUALCOMM common stock for the period from
January&nbsp;1, 1997 to July&nbsp;22, 2005. During this period
the closing stock price of QUALCOMM ranged from a low of $2.40
to a high of $89.66&nbsp;per share. Evercore also considered the
relative stock price performances during the period from
July&nbsp;22, 2000 to July&nbsp;22, 2005 of (1)&nbsp;QUALCOMM,
(2)&nbsp;the Nasdaq Composite Index, (3)&nbsp;a composite of
communications semiconductor equities comprised of the common
stocks of Analog Devices Incorporated; Maxim Integrated Products
Inc.; Broadcom Corporation; Freescale Semiconductor, Inc.;
Silicon Laboratories Inc.; Skyworks Solutions Inc.; and RF Micro
Devices, Inc., and (4)&nbsp;a composite of diversified
semiconductor equities comprised of the common stocks of Intel
Corporation, Texas Instruments Inc., and STMicroelectronics N.V.
Evercore noted the outperformance of QUALCOMM common stock in
the period reviewed relative to the Nasdaq Composite Index and
each of the composites considered. The foregoing historical
share price analysis was presented to Flarion&#146;s board of
directors to provide it with background information and
perspective with respect to the historical share prices of
QUALCOMM common stock.
</DIV>

<P align="center" style="font-size: 10pt;">37

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>QUALCOMM Peer Group Trading Analysis</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to assess how the public market values shares of
similar publicly traded companies, Evercore reviewed and
compared specific financial and operating data relating to
QUALCOMM with selected companies that Evercore deemed as peers
to QUALCOMM:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Communications Semiconductor Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Diversified Semiconductor Companies</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Analog Devices Incorporated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Intel Corporation</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Maxim Integrated Products, Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Texas Instruments Inc.</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Broadcom Corporation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    STMicroelectronics N.V.</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Freescale Semiconductor, Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Silicon Laboratories Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Skyworks Solutions, Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    RF Micro Devices, Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its peer group analysis, Evercore calculated and
analyzed each peer group company&#146;s ratio of current stock
price to its historical and projected earnings per share
(commonly referred to as a price earnings ratio, or P/ E).
Evercore also calculated and analyzed various financial
multiples, including each peer group company&#146;s enterprise
value to certain historical and projected financial metrics such
as revenue and EBITDA. All of these calculations for the peer
group and for QUALCOMM were performed, and based on publicly
available financial data (including I/B/E/S International, Inc.
and Wall Street research estimates) and closing prices, as of
July&nbsp;22, 2005, the last trading date prior to the delivery
of Evercore&#146;s opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on Evercore&#146;s analysis of enterprise value as a
multiple of projected 2006 revenues, for the selected QUALCOMM
peer group companies, Evercore selected revenue trading multiple
ranges for 2006 from 6.5x to 8.5x.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on Evercore&#146;s analysis of current stock price to
projected 2006 earnings, for the selected QUALCOMM peer group
companies, Evercore selected price to earnings per share
multiple ranges for 2006 from 18x to 25x.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on the projections and assumptions set forth above, the
peer group trading analysis of QUALCOMM yielded implied
valuation ranges of QUALCOMM common stock of $30.69 to
$38.74&nbsp;per share and $25.57 to $35.51&nbsp;per share,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore selected the peer group companies referenced above
because their businesses and operating profiles are reasonably
similar to that of QUALCOMM. However, because of the inherent
differences between the business, operations and prospects of
QUALCOMM and the businesses, operations and prospects of the
selected peer group companies, no peer group company is exactly
the same as QUALCOMM. Therefore, Evercore believed that it was
inappropriate to, and therefore did not, rely solely on the
quantitative results of the peer group company analysis.
Accordingly, Evercore also made qualitative judgments concerning
differences between the financial and operating characteristics
and prospects of QUALCOMM and the companies included in the peer
group company analysis that would affect the public trading
values of each in order to provide a context in which to
consider the results of the quantitative analysis. These
qualitative judgments related primarily to the differing sizes,
growth prospects, profitability levels and degree of operational
risk between QUALCOMM and the companies included in the peer
group company analysis.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>QUALCOMM Discounted Cash Flow Analysis</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its analysis, and in order to estimate the present
value of QUALCOMM common stock, Evercore also prepared a
five-year discounted cash flow analysis for QUALCOMM, based on
Wall Street research analyst estimates of QUALCOMM&#146;s
after-tax unlevered free cash flows for fiscal years 2005
through 2010. Evercore performed a discounted cash flow analysis
for QUALCOMM by adding the present value of QUALCOMM&#146;s
projected after-tax unlevered free cash flows for fiscal years
2005 through 2010, based on
</DIV>

<P align="center" style="font-size: 10pt;">38

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<DIV align="left" style="font-size: 10pt;">
Wall Street research analyst projections for QUALCOMM, to the
present value of the terminal value of QUALCOMM as of 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore, after taking into account selected peer group
enterprise values to last twelve months EBITDA multiples,
estimated a range of terminal values in 2010 calculated based on
selected last twelve months EBITDA multiples of 13x to 15x.
Evercore discounted the unlevered free cash flow streams and the
estimated terminal value to a present value at a range of
discount rates from 10% to 13%. The discount rates utilized in
this analysis were chosen by Evercore based on its expertise and
experience with the technology and semiconductor industry and
also on an analysis of the weighted average cost of capital of
QUALCOMM and other peer group companies. Evercore calculated per
share equity values by first determining a range of enterprise
values of QUALCOMM by adding the present values of the after-tax
unlevered free cash flows and terminal values for each EBITDA
terminal multiple and discount rate scenario, and then
subtracting from the enterprise values the net debt (which is
total debt plus minority interest minus cash and equivalents) of
QUALCOMM, and dividing those amounts by the number of fully
diluted shares of QUALCOMM.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on the projections and assumptions set forth above,
relating to its discounted cash flow analysis of QUALCOMM,
Evercore selected valuation ranges of QUALCOMM common stock of
$33.15 to $41.01&nbsp;per share.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>QUALCOMM Research Analyst Price Targets</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore compared recent publicly available research analyst
price targets from selected firms who published price targets
for QUALCOMM as of July&nbsp;24, 2005. In performing this
analysis, Evercore utilized research analyst price targets from
the following firms:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Bank of America Securities LLC;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Merrill Lynch &#38; Co., Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Citigroup Global Markets, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Deutsche Bank Securities, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Credit Suisse First Boston, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    CIBC World Markets Corp.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Morgan Stanley &#38; Co.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Bear Stearns &#38; Co. Inc.;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Lehman Brothers Inc.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on its research analyst price target analysis, Evercore
selected valuation ranges of QUALCOMM common stock of $36.00 to
$53.00&nbsp;per share.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>General</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the review of the merger by Flarion&#146;s
board of directors, Evercore performed a variety of financial
and comparative analyses for purposes of rendering its opinion.
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. In arriving at its opinion, Evercore considered the
results of all of its analyses as a whole. Furthermore, Evercore
believes that the summary provided and the analyses described
above must be considered as a whole and that selecting any
portion of its analyses, without considering all of them, would
create an incomplete view of the process underlying its analyses
and opinion. In addition, Evercore may have given various
analyses and factors more or less weight than other analyses and
factors and may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of
valuations resulting from any particular analysis described
above should not be taken to be Evercore&#146;s view of the
actual value of Flarion or QUALCOMM.
</DIV>

<P align="center" style="font-size: 10pt;">39

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In performing its analyses, Evercore made numerous assumptions
with respect to industry risks associated with industry
performance, general business and economic conditions and other
matters, many of which are beyond the control of Flarion or
QUALCOMM. Any estimates contained in Evercore&#146;s analyses
are not necessarily indicative of future results or actual
values, which may be significantly more or less favorable than
those suggested by such estimates. The analyses performed were
prepared solely as part of Evercore&#146;s analysis of fairness,
from a financial point of view as of the date of its opinion, of
the consideration in aggregate to be paid by QUALCOMM to the
holders of Flarion common stock, preferred stock, options and
warrants pursuant to the merger agreement and were prepared in
connection with the delivery by Evercore of its opinion, dated
July&nbsp;24, 2005, to Flarion&#146;s board of directors. The
analyses do not purport to be appraisals or to reflect the
prices at which QUALCOMM common stock would trade following
announcement of the merger or the prices at which QUALCOMM
common stock might trade following consummation of the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The terms of the merger were determined through arm&#146;s
length negotiations between Flarion and QUALCOMM and were
unanimously approved by Flarion&#146;s and QUALCOMM&#146;s
boards of directors. Evercore&#146;s opinion does not address
any other aspect of the proposed merger and does not constitute
a recommendation to any holder of securities or any other person
as to how to vote or to take any other action with respect to
the merger. Evercore&#146;s opinion was one of the many factors
taken into consideration by Flarion&#146;s board of directors in
making its unanimous determination to approve the merger
agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Evercore is a nationally recognized investment banking firm that
is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions and
similar transactions. The Flarion board of directors retained
Evercore based on these qualifications as well as its
familiarity with Flarion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As compensation for its services in connection with the merger,
Flarion paid Evercore $500,000 upon the delivery of
Evercore&#146;s opinion. Additional compensation of $4,500,000
will be payable on completion of the merger. In addition,
Flarion has agreed to reimburse Evercore for reasonable
out-of-pocket expenses incurred in connection with the merger
and to indemnify Evercore for certain liabilities that may arise
out of its engagement by Flarion and the rendering of
Evercore&#146;s opinion.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='128'></A>
</DIV>

<!-- link1 "Interests of Flarion&#146;s Directors and Management in the Merger" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Interests of Flarion&#146;s Directors and Management in the
Merger</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You should be aware that, as described below, the directors and
officers of Flarion may have interests in the merger that may be
different from, or in addition to, the general interests of the
other stockholders of Flarion. The Flarion board of directors
was aware of these interests to the extent they existed at the
time and considered them, among other matters, in approving the
merger, the merger agreement and the transactions contemplated
by the merger agreement. These other interests, to the extent
material, include the following:
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Director and Officer Indemnification</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM has agreed to assume, honor and fulfill all of the
indemnification obligations of Flarion to its current and former
executive officers and directors arising pursuant to written
indemnification agreements, including indemnification
obligations with respect to matters arising out of the merger
agreement. In addition, QUALCOMM has agreed that no amendment or
modification of the provisions of the certificate of
incorporation or the bylaws of the company surviving the merger
as compared to the certificate of incorporation or bylaws of
Flarion in effect immediately prior to the merger, shall apply
in any way that would adversely affect any right of
indemnification, exculpation, advancement of expenses or similar
protection of any Flarion executive officer or director.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock Ownership by Executive Officers and Directors</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of the close of business on August&nbsp;5, 2005, executive
officers and directors of Flarion beneficially owned
approximately 55.3% of the outstanding shares of Flarion&#146;s
capital stock, assuming exercise of all options and warrants
exercisable for shares of Flarion capital stock within
60&nbsp;days of August&nbsp;5, 2005.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">40
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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock Options and Change of Control</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon the completion of the merger, QUALCOMM will assume all
outstanding options to purchase shares of Flarion common stock,
including options held by executive officers and directors,
whether vested or unvested, and convert them into options to
purchase shares of QUALCOMM common stock subject to
substantially the same terms and conditions as were applicable
to the Flarion stock options prior to the merger. The number of
shares of QUALCOMM common stock issuable upon the exercise of
these stock options, and the exercise price of the stock
options, will be adjusted according to an option exchange ratio
set forth in the merger agreement. Each of these options, other
than the directed options described below, will also include the
right to receive, upon or following the exercise of such option,
additional shares of QUALCOMM common stock on a pro rata basis
to the extent that the patent milestone is achieved and
additional consideration is extended or paid to the former
Flarion stockholders as a result. At the close of business on
August&nbsp;5, 2005:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Raymond Dolan, Rajiv Laroia, Michael Gallagher, Edward Jordan,
    Edward Knapp and Theresa McCarthy held options to
    purchase&nbsp;1,500,000, 1,500,000, 1,200,000, 350,000, 581,250
    and 150,000&nbsp;shares of Flarion common stock, respectively;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&nbsp;80,000,
    85,000, 80,000, 60,000 and 80,000&nbsp;shares of Flarion common
    stock, respectively;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    all executive officers and directors of Flarion as a group held
    options to purchase&nbsp;5,666,250&nbsp;shares of Flarion common
    stock.</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the close of business on August&nbsp;5, 2005, the
non-employee members of the Flarion board of directors as a
group held options to purchase&nbsp;385,000&nbsp;shares of
Flarion common stock. Effective as of September&nbsp;6, 2005,
Mr.&nbsp;Gallagher terminated his employment with Flarion. In
connection with the termination of his employment, his options
to purchase 600,000&nbsp;shares of Flarion common stock
terminated, and accordingly as of September&nbsp;6, 2005,
Mr.&nbsp;Gallagher held options to purchase 600,000&nbsp;shares
of Flarion common stock.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To some extent, the outstanding options to purchase Flarion
common stock held by executive officers or members of the
Flarion board of directors will accelerate and become vested,
with respect to some or all of the shares of common stock
subject to such options, in connection with the completion of
the merger. In particular,
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Raymond Dolan, Rajiv Laroia, Michael Gallagher, Edward Jordan,
    Edward Knapp and Theresa McCarthy held options to
    purchase&nbsp;1,500,000, 1,500,000, 600,000 (these options were
    terminated in connection with Mr.&nbsp;Gallagher&#146;s
    termination of employment with Flarion), 350,000, 581,250 and
    150,000&nbsp;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;&nbsp;and</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Directed Options</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To enhance QUALCOMM&#146;s ability to retain certain Flarion
employees after the merger, Flarion has agreed to grant, prior
to the effective date of the merger, options to purchase Flarion
common stock having an aggregate intrinsic value (initial per
share consideration in the merger allocable to such Flarion
common stock less the exercise price) of up to $26&nbsp;million
to its employees, including certain Flarion executives, in
amounts to be specified by QUALCOMM. In particular, Raymond
Dolan and Rajiv Laroia will each be granted options to purchase
Flarion common stock having on the date of grant an intrinsic
value of $7.5&nbsp;million, which options will vest over a five
year period and pursuant to such other terms and conditions
specified by QUALCOMM.
</DIV>

<P align="center" style="font-size: 10pt;">41

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Employment Offer Letters</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM has offered employment to Raymond Dolan and Rajiv
Laroia and intends to enter into employment offer letters, which
shall include terms and conditions which have yet to be
determined, with Mr.&nbsp;Dolan and Mr.&nbsp;Laroia. QUALCOMM
and Mr.&nbsp;Dolan have agreed that Mr.&nbsp;Dolan will receive
an initial salary of $285,000 and be eligible to receive an
annual bonus with a target of $85,500. QUALCOMM and
Mr.&nbsp;Laroia have agreed that Mr.&nbsp;Laroia will receive an
initial salary of $240,000 and be eligible to receive an annual
bonus with a target of $72,000.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Non-Competition and Non-Solicitation Agreements</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of Mr.&nbsp;Dolan and Mr.&nbsp;Laroia has agreed that for a
period of three years following the completion of the merger, he
will not:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    divert or interfere with any orders for the products or services
    of QUALCOMM&#146;s or Flarion&#146;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;&nbsp;or</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of Mr.&nbsp;Dolan and Mr.&nbsp;Laroia have also agreed, for
a period of three years commencing on the date of the completion
of the merger not to compete in the restricted business anywhere
in the world.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock Restriction Agreements</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of Mr.&nbsp;Dolan and Mr.&nbsp;Laroia entered into a stock
restriction agreement providing QUALCOMM with a right of
repurchase (at the average of the closing prices of a share of
QUALCOMM&#146;s common stock for all trading days between
July&nbsp;25, 2005 and the date which is three trading days
prior to the trading date on which the merger is effective, plus
interest at the rate of 4%&nbsp;per annum thereon from the date
of such agreement) with respect to up to two-thirds of the
shares of QUALCOMM common stock that each will hold following
the completion of the merger upon (i)&nbsp;termination of their
employment by QUALCOMM for &#147;cause,&#148; (ii)&nbsp;a
voluntary termination without &#147;good reason&#148; or
(iii)&nbsp;an attempted transfer of such shares in violation of
the agreement. Such repurchase right lapses with respect to
one-third of the shares on the first anniversary of the
completion of the merger and with respect to the remaining
one-third of the shares on the second anniversary of the
completion of the merger, so long as such executive is at such
time employed by QUALCOMM, and shall lapse in full upon such
executive&#146;s (a)&nbsp;termination without &#147;cause&#148;
by QUALCOMM, (b)&nbsp;resignation in writing of employment for
&#147;good reason&#148; and the failure of QUALCOMM to cure the
event constituting &#147;good reason&#148; within 45&nbsp;days
following receipt of such resignation, (c)&nbsp;death or
(d)&nbsp;&#147;disability&#148; (each term as defined in the
agreement).
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Waiver of Acceleration of Option Vesting and Amendment of
    Stock Option Agreement</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of Mr.&nbsp;Dolan and Mr.&nbsp;Laroia entered into an
agreement waiving any right to the acceleration of vesting of
the unvested portion of their outstanding option to purchase
shares of Flarion common stock as a result of a constructive
termination in connection with the completion of the merger.
Such agreement also provided for the amendment of their
respective stock option agreements to provide for full
acceleration of all then-unvested options upon a termination of
such executive&#146;s employment by QUALCOMM without
&#147;cause&#148; or by such executive upon his resignation in
writing of employment for &#147;good reason&#148; and the
failure of QUALCOMM to cure the event constituting &#147;good
reason&#148; within 45&nbsp;days following receipt of notice of
such resignation (each term as defined in the agreement).
</DIV>

<P align="center" style="font-size: 10pt;">42

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='129'></A>
</DIV>

<!-- link1 "Management of QUALCOMM after the Merger" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Management of QUALCOMM after the Merger</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The management of QUALCOMM will not change as a result of the
merger. Information about the current directors and executive
officers of QUALCOMM can be found in QUALCOMM&#146;s
Form&nbsp;10-K for the year ended September&nbsp;26, 2004 and
Current Reports on Form&nbsp;8-K filed March&nbsp;11, 2005 and
June&nbsp;8, 2005, which are incorporated by reference into this
prospectus/ information statement. See the section entitled
&#147;Where You Can Find More Information.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='130'></A>
</DIV>

<!-- link1 "Material United States Federal Income Tax Consequences of the Mergers" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Material United States Federal Income Tax Consequences of the
Mergers</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>General</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following general discussion summarizes the material United
States federal income tax consequences of the mergers to
QUALCOMM, its merger subsidiaries, Flarion, and to holders of
common stock and preferred stock (&#147;capital stock&#148;) of
Flarion. This discussion is based on existing provisions of the
Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;), existing Treasury regulations, including
temporary and proposed regulations, current administrative
rulings and court decisions, all in effect as of the date of
this prospectus/ information statement and all of which are
subject to change. Any such change, which may or may not be
retroactive, could alter the tax consequences described below
and could adversely affect Flarion stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This discussion, insofar as it relates to matters of United
States federal tax law and regulations or legal conclusions with
respect thereto, constitutes the opinion of DLA Piper Rudnick
Gray Cary US LLP as to the material United States federal income
tax consequences of the mergers to QUALCOMM and the opinion of
Latham&nbsp;&#38; Watkins LLP as to the material United States
federal income tax consequences of the mergers to Flarion and
its stockholders. The opinions of counsel are based on the
facts, representations and certain customary factual
assumptions, including representations contained in tax
certificates executed by officers of QUALCOMM and Flarion. If
any of those representations or assumptions is inaccurate, the
tax consequences of the mergers could differ materially from
those summarized below. The opinions are not binding on the
Internal Revenue Service (&#147;IRS&#148;) and there can be no
assurance that the IRS, will not take a contrary view.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This section does not discuss all of the United States federal
income tax considerations that may be relevant to a particular
stockholder in light of his or her individual circumstances or
to stockholders subject to special treatment under the federal
income tax laws, including, without limitation:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    brokers or dealers in securities or foreign currencies;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    traders;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    stockholders who are subject to the alternative minimum tax
    provisions of the Code;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    tax-exempt organizations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    stockholders who are foreign persons, including those who are
    not citizens or residents of the U.S.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    expatriates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    stockholders treated as partnerships for United States federal
    income tax purposes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    stockholders that have a functional currency other than the
    United States dollar;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    stockholders who do not hold their Flarion stock as a capital
    asset within the meaning of Section&nbsp;1221 of the Code;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    banks, mutual funds, financial institutions or insurance
    companies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    stockholders who acquired Flarion capital stock in connection
    with stock option or stock purchase plans or in other
    compensatory transactions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">43

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    stockholders who acquired their shares through Flarion&#146;s
    401(k) plan, deferred compensation plan or other retirement
    plan;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    stockholders whose Flarion capital stock is &#147;qualified
    small-business stock&#148; for purposes of Section&nbsp;1202 of
    the Code.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No ruling has been or will be sought from the IRS as to the
United States federal income tax consequences of the mergers,
and the following summary is not binding on the IRS or the
courts. This summary does not address the tax consequences of
the mergers under state, local and foreign laws or under United
States federal tax law other than income tax law. In addition,
the following discussion does not address the tax consequences
of transactions effectuated before, after, or at the same time
as the mergers, whether or not they are in connection with the
mergers, including, without limitation, the exercise or
cancellation of options, warrants or similar rights to purchase
stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Flarion stockholders are strongly urged to consult their own
tax advisors as to the specific tax consequences to them of the
mergers, including any applicable federal, state, local and
foreign tax consequences.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
It is a condition to the obligation of QUALCOMM to consummate
the mergers that QUALCOMM receive an opinion from its counsel,
DLA Piper Rudnick Gray Cary US LLP, and it is a condition to the
obligation of Flarion to consummate the mergers that Flarion
receive an opinion from its counsel, Latham&nbsp;&#38; Watkins
LLP, to the effect that, based upon certain facts,
representations and assumptions, the mergers should or will be
treated as a &#147;reorganization&#148; within the meaning of
Section&nbsp;368(a) of the Code and such opinion shall not have
been withdrawn. QUALCOMM and Flarion will undertake to
recirculate this prospectus/ information statement if either
QUALCOMM or Flarion waives the receipt of the opinion as a
condition to closing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The mergers are intended and expected to constitute one
integrated transaction for United States federal income tax
purposes and to qualify as a &#147;reorganization&#148; within
the meaning of Section&nbsp;368(a) of the Code. Subject to the
limitations and qualifications referred to herein and assuming
that the mergers will be completed as described in the merger
agreement and this prospectus/ information statement, assuming
the mergers constitute a &#147;reorganization&#148; within the
meaning of Section&nbsp;368(a) of the Code, the following United
States federal income tax consequences will result:
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion Common Stockholders Who Receive Solely QUALCOMM
    Common Stock</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the merger agreement, stockholders who exchange
solely shares of Flarion common stock in the merger have the
right to receive: (i)&nbsp;shares of QUALCOMM common stock at
the closing date of the merger, and (ii)&nbsp;contingent cash
consideration paid pursuant to the patent milestone (the
&#147;earn-out&#148;). If a Flarion holder of common stock does
not receive any cash under the earn-out, and assuming the
applicability of the installment method rules discussed below,
such stockholder, as of the closing date of the merger, would
not recognize gain or loss upon receipt of shares of QUALCOMM
common stock solely in exchange for Flarion common stock, except
with respect to cash received in lieu of a fractional share of
QUALCOMM common stock (as discussed below). The aggregate tax
basis of the shares of QUALCOMM common stock received (including
any fractional shares deemed received and exchanged for cash)
would be equal to the aggregate tax basis in the shares of
Flarion capital stock surrendered. The holding period of the
QUALCOMM common stock received (including any fractional shares
deemed received and exchanged for cash) would include the
holding period of the shares of Flarion capital stock
surrendered.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion Preferred Stockholders and Flarion Common
    Stockholders Who Receive a Combination of QUALCOMM Common Stock
    and Cash</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the merger agreement, stockholders who exchange
Flarion preferred stock have the right to receive: (i)&nbsp;a
combination of shares of QUALCOMM common stock and cash at the
closing date of the merger, and (ii)&nbsp;contingent cash
consideration paid pursuant to the earn-out. A holder of Flarion
common
</DIV>

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</FONT></DIV>

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<DIV align="left" style="font-size: 10pt;">
stock may receive a combination of shares of QUALCOMM stock and
cash (if contingent cash amounts are distributed to Flarion
stockholders pursuant to the earn-out).
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to the potential applicability of the installment method
rules discussed below, a Flarion stockholder who receives a
combination of stock and cash in the mergers will recognize gain
equal to the lesser of: (i)&nbsp;the amount of cash received
(plus, if the installment method of reporting does not apply, as
described below in the section of the prospectus/ information
statement entitled &#147;Certain Terms of the Merger
Agreement&nbsp;&#151; Material United States Federal Income Tax
Consequences of the Mergers&nbsp;&#151; Installment Method
(Treatment of Contingent Cash Consideration),&#148; the value of
the stockholder&#146;s contingent right to receive cash pursuant
to the earn-out), or (ii)&nbsp;the gain realized. The gain
realized will be the excess of (i)&nbsp;the sum of the fair
market value of shares of QUALCOMM common stock received in the
mergers, the amount of cash received in the mergers and, if the
installment method of reporting does not apply, the value of the
stockholder&#146;s contingent right to receive cash under the
earn-out, over (ii)&nbsp;the stockholder&#146;s adjusted tax
basis in the Flarion stock surrendered in the mergers. Thus, if
the fair market value of the shares of QUALCOMM stock received
is in excess of the basis of the Flarion stock exchanged, all
cash proceeds will be taxable. However, if a stockholder&#146;s
adjusted tax basis in the Flarion stock surrendered is greater
than the sum of the amount of cash and the fair market value of
the QUALCOMM common stock received, the stockholder&#146;s loss
will not be currently allowed or recognized for United States
federal income tax purposes.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a holder of shares of Flarion stock acquired different blocks
of shares of Flarion stock at different times or different
prices, the stockholder should consult the stockholder&#146;s
own tax advisor regarding the manner in which gain or loss
should be determined. Any recognized gain will generally be
long-term capital gain if, as of the effective date of the
mergers, the stockholder&#146;s holding period with respect to
the shares of Flarion stock surrendered exceeds one year. In
some cases, the recognized gain could be treated as having the
effect of the distribution of a dividend under Sections&nbsp;302
or 356(a)(2) of the Code, in which case such gain would be
treated as dividend income. The IRS has indicated in rulings,
however, that any reduction in the interest of a minority
stockholder that owns a small number of shares (less than 1%) of
a publicly and widely held corporation (e.g., QUALCOMM) and that
exercises no control over the corporate affairs would receive
capital gain rather than dividend treatment.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to the potential applicability of the installment method
rules discussed below, the aggregate tax basis of the shares of
QUALCOMM common stock received (including any fractional shares
deemed received and exchanged for cash) by a stockholder that
exchanges its shares of Flarion capital stock for a combination
of shares of QUALCOMM common stock and cash will be equal to the
aggregate adjusted tax basis of the shares of Flarion stock
surrendered, reduced by the amount of cash received by the
stockholder (excluding any cash received instead of fractional
shares of QUALCOMM common stock), reduced by the value of the
stockholder&#146;s contingent right to receive cash under the
earn-out (if the installment method of reporting does not
apply), and increased by the amount of gain recognized by the
stockholder (excluding any gain recognized with respect to cash
received in lieu of fractional shares of QUALCOMM common stock)
on the exchange, including any portion of the gain that is
treated as a dividend.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holding period of the shares of QUALCOMM common stock
received (including any fractional share deemed received and
exchanged for cash) will include the holding period of the
shares of Flarion capital stock surrendered. Flarion
stockholders receiving a combination of shares of QUALCOMM
common stock and cash should consult their own tax advisors
regarding the manner in which cash and shares of QUALCOMM common
stock should be allocated among the stockholder&#146;s shares of
Flarion stock and the manner in which the above rules would
apply in the stockholder&#146;s particular circumstances,
including the applicability of the installment method rules.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Installment Method (Treatment of Contingent Cash
    Consideration)</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the merger agreement, the Flarion stockholders as a group
may be paid additional contingent cash consideration based upon
the achievement of a milestone relating to Flarion patent
technology, which we also refer to as the earn-out. Under the
installment method rules (Section&nbsp;453 of the Code), a
Flarion stockholder who receives cash consideration under the
earn-out in a taxable year after the closing date of the mergers
</DIV>

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<DIV align="left" style="font-size: 10pt;">
should generally be able to defer the reporting of the gain
attributable to such cash until received. Thus, unless a
stockholder timely and properly elects out of the installment
method, or the receipt of cash consideration in the mergers has
the effect of the distribution of a dividend (under 356(a)(2) of
the Code), a stockholder recognizing a gain will recognize a
portion of the capital gain from the mergers on a deferred basis
as amounts are received under the earn-out. A Flarion
stockholder may elect out of the installment method generally by
reporting the full amount of gain recognized in the mergers on a
timely filed United States federal income tax return for the
taxable year in which the mergers occur and taking into account
the fair market value, as of the closing date of the mergers, of
such stockholder&#146;s contingent right to receive cash in the
earn-out.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the installment method, gain recognized by a Flarion
stockholder from the receipt of any cash payment under the
earn-out will be equal to the lesser of (i)&nbsp;the amount of
cash received (less any amount attributable to imputed interest,
discussed below), or (ii)&nbsp;such Flarion stockholder&#146;s
&#147;proportionate amount of total gain realized&#148; not
previously included in taxable income. The &#147;proportionate
amount of total gain realized&#148; by a Flarion stockholder
should be computed based on the assumption that such stockholder
will receive his, her or its proportionate share of the maximum
amount payable pursuant to the earn-out. If less than the
maximum amount of such stockholder&#146;s proportionate share of
the earn-out is ultimately received, appropriate adjustments to
such stockholder&#146;s tax reporting will be required. Any gain
recognized should be capital gain and will be long-term capital
gain if the Flarion stockholder held his, her or its shares of
Flarion capital stock exchanged in the merger for more than one
year as of the effective time of the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the installment method, although not free from doubt, the
adjusted tax basis of a former Flarion stockholder&#146;s old
stock (Flarion stock) is allocated first to the new stock
(QUALCOMM stock) permitted to be received tax-free in the
mergers, up to the new stock&#146;s fair market value. Any
excess basis is allocated to the cash that is received or
expected to be received in the mergers (including the
stockholder&#146;s portion of the full amount of contingent cash
consideration under the earn-out that could be potentially
received) thereby reducing the amount of gain recognized upon
the receipt of any cash consideration in the mergers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the installment method applies, a portion of any cash paid to
a Flarion stockholder pursuant to the earn-out may be deemed to
be interest income. The interest amount will equal the excess of
the amount received over its present value at the effective time
of the mergers, calculated using the short-term applicable
federal rate (the &#147;AFR&#148;) as the discount rate. The AFR
is a rate reflecting an average of market yields on Treasury
debt obligations that is published monthly by the Internal
Revenue Service. Any such amount treated as interest will be
ordinary income and will not be treated as consideration
received pursuant to the mergers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event a Flarion stockholder&#146;s maximum potential
share of the earn-out, plus such stockholder&#146;s other
installment sale receivables, exceeds $5&nbsp;million at the end
of any taxable year, such stockholder may be required to pay
interest on the deferred tax attributable to the gain related to
the amount of such installment receivables in excess of
$5&nbsp;million. For certain Flarion stockholders, this interest
charge may not be deductible for federal income tax purposes.
These rules are set forth in Section&nbsp;453A of the Code, and
their application to earn-outs is subject to a number of
uncertainties. Accordingly, each Flarion stockholder is
encouraged to consult with his, her or its tax advisors
regarding the potential application of these rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Because the application of the installment method rules are
quite complex and not free from doubt, all Flarion stockholders
should consult with their own tax advisors regarding the
application of the installment method provisions of the Code,
the potential benefits and consequences of electing not to use
the installment method, the effect of using the installment
method on the stockholder&#146;s alternative minimum tax
computation, the amount of gain to be recognized in the year of
the mergers under the installment method, the computation of a
Flarion stockholder&#146;s adjusted tax basis in his, her or its
stock received in the mergers, the computation of contingent
cash consideration to be treated as imputed interest income, and
the possible application of rules requiring the payment of an
interest charge on deferred tax liabilities arising in
connection with certain installment sales pursuant to
Section&nbsp;453A of the Code.</B>
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Cash in Lieu of Fractional Shares</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A holder of Flarion capital stock who receives cash in lieu of a
fractional share of QUALCOMM common stock generally will be
treated as having received such fractional share in the mergers
and then as having received cash in exchange for such fractional
share. Gain or loss generally will be recognized based on the
difference between the amount of cash received in lieu of the
fractional share and the tax basis allocated to such fractional
share of QUALCOMM common stock. Such gain or loss generally will
be long-term capital gain or loss if, as of the effective date
of the mergers, the holding period for such shares is greater
than one year.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Dissenting Stockholders</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A dissenting stockholder of Flarion capital stock who perfects
appraisal rights should generally be treated as having received
a distribution in redemption of his, her or its stock subject to
the provisions and limitations of Sections&nbsp;302 and
356(a)(2) of the Code. While the tax consequences of such a
redemption depend on a stockholder&#146;s particular
circumstances, a dissenting stockholder who, after the mergers,
does not own (actually or constructively) any capital stock of
QUALCOMM will generally recognize gain or loss with respect to a
share of Flarion capital stock equal to the difference between
the amount of cash received and his, her or its basis in such
share. This gain or loss will be capital gain or loss.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Tax Consequences to QUALCOMM, its Merger Subsidiaries and
    Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Neither QUALCOMM, its merger subsidiaries, nor Flarion will
recognize gain or loss as a result of the mergers.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Backup Withholding</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A holder of Flarion stock may be subject to information
reporting and 28% backup withholding on any cash payments
received in the mergers, including cash received in lieu of a
fractional share interest in QUALCOMM common stock. Such
stockholders will not be subject to backup withholding, however,
if they:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    furnish a correct taxpayer identification number and certify
    that they are not subject to backup withholding on the
    substitute Form&nbsp;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&nbsp;W-8, as applicable);&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    are otherwise exempt from backup withholding.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any amounts withheld under the backup withholding rules should
be allowed as a refund or credit against a Flarion
stockholder&#146;s United States federal income tax liability,
provided they furnish the required information to the Internal
Revenue Service.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Tax Return Reporting Requirements</I></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a Flarion stockholder receives shares of QUALCOMM common
stock as a result of the mergers, the stockholder will be
required to retain records pertaining to the mergers and will be
required to file with his, her or its United States federal
income tax return for the year in which the transaction takes
place a statement setting forth certain facts relating to the
mergers as provided in Treasury Regulations
Section&nbsp;1.368-3(b).
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>The preceding discussion does not purport to be a complete
analysis or discussion of all potential tax effects relevant to
the mergers. Flarion stockholders are urged to consult their own
tax advisors as to the specific consequences of the mergers to
them, including tax return reporting requirements, the
applicability and effect of federal, state, local, foreign and
other tax laws and the effects of any proposed changes in the
tax laws.</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

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<A name='131'></A>
</DIV>

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<B>Regulatory Approvals</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other than clearance under the antitrust laws applicable to the
transaction which are described below, the Securities and
Exchange Commission declaring this registration statement
effective, the filing of an amendment to Flarion&#146;s
certificate of incorporation, the filing of a certificate of
merger under Delaware law with respect to the merger and a
certificate of merger under Delaware law with respect to the
second merger, QUALCOMM does not believe that any additional
material governmental filings are required with respect to the
mergers.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This merger is subject to review by the Department of Justice
and the Federal Trade Commission to determine whether it is in
compliance with applicable antitrust laws. Under the provisions
of the HSR Act, the merger may not be consummated until the
specified waiting period requirements of the HSR Act have been
satisfied. QUALCOMM and Flarion will file all required
notification reports, together with requests for early
termination for the waiting period, with the Department of
Justice and the Federal Trade Commission under the HSR Act. In
response to the pre-merger notification filings made by QUALCOMM
and Flarion, on September&nbsp;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.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='132'></A>
</DIV>

<!-- link1 "Relationships Between QUALCOMM and Flarion" -->

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<B>Relationships Between QUALCOMM and Flarion</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Except as otherwise described in this prospectus/ information
statement, neither QUALCOMM nor, to the best of QUALCOMM&#146;s
knowledge, any of its directors, executive officers or other
affiliates has any contract, arrangement, understanding or
relationship with any other person with respect to any
securities of Flarion, including, but not limited to, any
contract, arrangement, understanding or relationship concerning
the transfer or the voting of any securities, joint ventures,
loan or option arrangements, guaranties of loans, guaranties
against loss or the giving or withholding of proxies. Except as
described in this prospectus/ information statement, there have
been no contacts, negotiations or transactions since May 2003,
between QUALCOMM or, to the best of QUALCOMM&#146;s knowledge,
any of its directors, executive officers or other affiliates on
the one hand, and Flarion or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, an
acquisition of securities, an election of directors, or a sale
or other transfer of a material amount of assets. Other than as
described below, neither QUALCOMM nor, to the best of
QUALCOMM&#146;s knowledge, any of its directors, executive
officers or other affiliates has ever had any transaction with
Flarion or any of its officers, directors or affiliates that
would require disclosure under the rules and regulations of the
Securities and Exchange Commission applicable to the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other than as described below, neither QUALCOMM nor, to the best
of QUALCOMM&#146;s knowledge, any of its directors, executive
officers or other affiliates beneficially owns or has any right
to acquire, directly or indirectly, any shares of Flarion common
stock or preferred stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Neither QUALCOMM nor, to the best of QUALCOMM&#146;s knowledge,
any of its directors, executive officers or other affiliates has
effected any transaction in shares of Flarion common stock
during the past 60&nbsp;days.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Peter Sacerdote, a director of QUALCOMM, is a minority limited
partner in a fund controlled by Pequot Capital which holds
shares of Flarion preferred stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Andrew J. Viterbi, a former director of QUALCOMM, is a member of
the Flarion board of directors and is the beneficial owner of
shares of Flarion common stock and Flarion preferred stock.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='133'></A>
</DIV>

<!-- link1 "Stock Ownership Following the Merger" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Stock Ownership Following the Merger</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on an assumed average last sale price per share of
QUALCOMM common stock of $40.21, which was the average of the
last sale prices per share of QUALCOMM common stock, as reported
on The Nasdaq National Market, for the trading days in the
period from July&nbsp;26, 2005 through September&nbsp;13, 2005,
and based upon the shares of Flarion common stock and Flarion
preferred stock outstanding as of August&nbsp;5, 2005, QUALCOMM
will issue approximately 6,768,189&nbsp;shares of QUALCOMM
common stock pursuant to the
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

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<DIV align="left" style="font-size: 10pt;">
merger. Additional shares of QUALCOMM common stock will be
issued or issuable upon the exercise of options to purchase
Flarion common stock assumed pursuant to the merger, and/or
exercise of warrants to purchase shares of QUALCOMM common stock
issued pursuant to the merger to replace the warrants to
purchase Flarion preferred stock, that remain outstanding
immediately prior to the effective time of the merger. The
actual number of shares of QUALCOMM common stock to be issued
pursuant to the merger will depend upon the calculations set
forth in the merger agreement and the exercise of Flarion
options and warrants prior to the effective time of the merger.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Immediately after the merger becomes effective, the former
holders of Flarion capital stock will hold in the aggregate
approximately 0.4% of the shares of QUALCOMM common stock to be
outstanding immediately after the consummation of the merger
(calculated on the basis of 1,638,543,915&nbsp;shares of
QUALCOMM common stock outstanding as of September&nbsp;13, 2005
and assuming the issuance of an aggregate of
6,768,189&nbsp;shares of QUALCOMM common stock to the Flarion
stockholders).
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">49
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<DIV align="left" style="font-size: 10pt;">
<A name='134'></A>
</DIV>

<!-- link1 "CERTAIN TERMS OF THE MERGER AGREEMENT" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN TERMS OF THE MERGER AGREEMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a summary of the material provisions of the
merger agreement. However, the following is not a complete
description of all provisions of the merger agreement. We urge
you to carefully read the entire merger agreement, which is
attached as Annex&nbsp;A to this prospectus/ information
statement and is incorporated herein by reference. This summary
is qualified in its entirety by reference to the full text of
the merger agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement has been included to provide you with
information regarding its terms. It is not intended to provide
any other factual information about us or Flarion. Such
information can be found elsewhere in this prospectus/
information statement and such information about QUALCOMM can
also be found in the other public filings QUALCOMM makes with
the Securities and Exchange Commission, which are available
without charge at www.sec.gov.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement contains representations and warranties
QUALCOMM and Flarion made to each other as of specific dates and
which may have been used for the purpose of allocating risk
between the parties rather than establishing matters as facts.
The assertions embodied in those representations and warranties
are qualified by information in confidential disclosure
schedules that we have exchanged in connection with signing the
merger agreement, which contain non-public information. While we
do not believe that they contain information securities laws
require us to publicly disclose other than information that has
already been so disclosed, the disclosure schedules do contain
information that modifies, qualifies and creates exceptions to
the representations and warranties set forth in the attached
merger agreement. Accordingly, you should not rely on the
representations and warranties as characterizations of the
actual state of facts, since they are modified in important part
by the underlying disclosure schedules. Except for the parties
themselves, under the terms of the merger agreement only certain
other specifically identified persons are third party
beneficiaries of the merger agreement who may enforce it and
rely on its terms. As stockholders, you are not third party
beneficiaries of the merger agreement and therefore may not
directly enforce or rely upon its terms and conditions, and you
should not rely on its representations, warranties or covenants
as characterizations of the actual state of facts or condition
of QUALCOMM, Flarion or any of their affiliates. Moreover,
information concerning the subject matter of the representations
and warranties may have changed since the date of the merger
agreement, which subsequent information may or may not be fully
reflected in QUALCOMM&#146;s public disclosures.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='135'></A>
</DIV>

<!-- link1 "General" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>General</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement provides for the merger of Fluorite
Acquisition Corporation, a wholly owned subsidiary of QUALCOMM
that was created to effect the merger, with and into Flarion. As
a result of the merger, Flarion will be the surviving entity
pursuant to the merger and will become a wholly owned subsidiary
of QUALCOMM. The stockholders of Flarion will be entitled to
become stockholders of QUALCOMM. In this prospectus/ information
statement we sometimes refer to this merger as the &#147;first
merger.&#148; References to the &#147;merger,&#148; unless
specified otherwise, shall also refer to this merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement also provides that immediately subsequent
to the merger, the surviving corporation will be merged with and
into Quartz Acquisition Corporation, a wholly owned subsidiary
of QUALCOMM that was created to effect this second merger. As a
result of this merger, which we sometimes refer to as the
&#147;second merger,&#148; Quartz Acquisition Corporation will
be the surviving entity. References to the &#147;mergers&#148;
refers to the first merger and the second merger, collectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
References to QUALCOMM and (or)&nbsp;its merger subsidiaries
shall mean QUALCOMM, Fluorite Acquisition Corporation and
(or)&nbsp;Quartz Acquisition Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='136'></A>
</DIV>

<!-- link1 "The Completion of the Merger" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The Completion of the Merger</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each merger will be completed upon the filing of a certificate
of merger with the Secretary of State of the State of Delaware.
The merger agreement provides that the mergers will be completed
no more than four
</DIV>

<P align="center" style="font-size: 10pt;">50

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<DIV align="left" style="font-size: 10pt;">
business days after all of the conditions to the merger
contained in the merger agreement are satisfied or waived.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='137'></A>
</DIV>

<!-- link1 "Manner and Basis of Converting Shares of Flarion Common Stock and Flarion Preferred Stock Pursuant to the Merger" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Manner and Basis of Converting Shares of Flarion Common Stock
and Flarion Preferred Stock Pursuant to the Merger</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the terms of the merger agreement, upon completion of the
merger, each outstanding share of Flarion common stock
immediately prior to the effective time of the first merger
(other than dissenting shares, treasury shares and shares held
by QUALCOMM or its subsidiaries) shall be converted into the
right to receive consideration, payable in shares of QUALCOMM
common stock, equal to a pro rata portion of $600&nbsp;million
(based upon the number of shares of Flarion common stock
outstanding on a fully diluted, as-converted basis including all
outstanding options, warrants and all other rights other than
options granted pursuant to the merger agreement at the
direction of QUALCOMM). Based upon the Flarion shares, options,
warrants and other rights outstanding as of August&nbsp;5, 2005,
the initial consideration per share of Flarion common stock
would be approximately $3.93. The QUALCOMM common stock to be
issued shall be determined based upon the average closing sales
price for QUALCOMM common stock, as reported on The Nasdaq
National Market, for all of the trading days between
July&nbsp;25, 2005 and the last trading day ending three trading
days prior to the closing date of the merger, which is referred
to herein as the &#147;average closing price.&#148;
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each outstanding share of Flarion preferred stock is convertible
into two shares of Flarion common stock and, accordingly, each
outstanding share of Flarion preferred stock outstanding
immediately prior to the effective time of the first merger
(other than dissenting shares, treasury shares and shares held
by QUALCOMM or its subsidiaries) will be converted into the
right to receive two times the amount that each such share of
Flarion common stock is entitled to receive, as described above.
The consideration that holders of such shares of Flarion
preferred stock will be entitled to receive upon the effective
time of the merger shall consist of a combination of shares of
QUALCOMM common stock and cash. The amount of shares of QUALCOMM
common stock will be determined in accordance with the merger
agreement, and is the amount of stock that, when considered
together with the shares of QUALCOMM common stock that the
holders of Flarion common stock are entitled to receive, causes
the total amount of QUALCOMM common stock that the holders of
Flarion common stock and Flarion preferred stock are entitled to
receive pursuant to the merger agreement to be approximately 40%
of the value of the maximum consideration to which such holders
could be entitled under the merger agreement. This ratio of
stock to cash could be subject to further adjustment if
necessary in order for the transaction to qualify as a tax-free
reorganization, as described below. Based upon the Flarion
shares, options, warrants and other rights outstanding as of
August&nbsp;5, 2005, the initial consideration per share of
Flarion preferred stock would be approximately $7.87, 45% of
which would be payable in shares of QUALCOMM stock (valued at
the average closing price) and 55% of which would be payable in
cash.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion stockholders, option holders (other than with respect to
directed options) and warrant holders will also be entitled to
receive additional consideration in connection with the
achievement of the patent milestone, subject to the holdback of,
and a potential offset against, $75&nbsp;million, as described
below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion stockholders will receive cash in lieu of fractional
shares which such stockholder would otherwise have the right
receive.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Of the consideration that Flarion stockholders are entitled to
receive, assuming payment in full of the patent milestone
amount, in the aggregate, approximately 60% of such
consideration shall be payable in cash and approximately 40%
shall be payable in QUALCOMM common stock.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='138'></A>
</DIV>

<!-- link1 "Initial Purchase Price Adjustments in Connection with Estimated Closing Working Capital and Expenses" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Initial Purchase Price Adjustments in Connection with
Estimated Closing Working Capital and Expenses</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The $600&nbsp;million initial purchase price may be reduced to
the extent Flarion&#146;s transaction expenses in connection
with the merger exceed the expense threshold of
$10&nbsp;million; or to the extent Flarion&#146;s estimate of
its closing working capital (as defined below) three
(3)&nbsp;business days prior to the closing date (but without
</DIV>

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<DIV align="left" style="font-size: 10pt;">
deduction of any paid, incurred or accrued transaction expenses)
is less than the working capital threshold, defined as
$46.5&nbsp;million, reduced by:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    $3.5&nbsp;million for each calendar month (or portion thereof)
    following June&nbsp;30, 2005 (pro-rated for partial months);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any employee severance or integration fee, cost, expense,
    payment or expenditure that is paid, incurred or accrued at the
    direction of QUALCOMM;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any expense paid, incurred or accrued relating to or arising out
    of the amended and restated investors&#146; 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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any expense paid, incurred or accrued to purchase certain
    inventory specified by QUALCOMM.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
However, to the extent Flarion&#146;s estimated closing working
capital three business days prior to the closing date exceeds
the working capital threshold, as adjusted, it will offset any
adjustments relating to transaction expenses.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='139'></A>
</DIV>

<!-- link1 "Procedure for Determining Closing Working Capital" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Procedure for Determining Closing Working Capital</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed above, the estimated closing working capital shall
be provided by Flarion to QUALCOMM on the date three business
days prior to the anticipated closing date of the merger, and
shall be used at the closing for purposes of determining whether
there is an adjustment amount that reduces the aggregate
purchase price. Additionally, to the extent the actual closing
working capital is less than the working capital threshold, the
merger agreement provides for a post-closing adjustment to the
aggregate amount of consideration payable to Flarion. As soon as
practicable (and in any event within 60&nbsp;days following the
closing), QUALCOMM shall prepare and deliver to the
stockholders&#146; agent, QF REP, LLC, a closing balance sheet,
a calculation of Flarion&#146;s working capital as of the
closing date based on such balance sheet and all work papers and
back-up materials relating thereto. As used herein, the closing
working capital shall mean the total current assets (excluding
deferred expenses) of Flarion at closing, including cash, cash
equivalents, accounts receivable, net of appropriate reserves,
inventory and prepaid expenses, less the total current
liabilities (excluding deferred revenue) of Flarion at closing,
all as defined under U.S.&nbsp;GAAP. If the stockholders&#146;
agent objects to the closing working capital calculation, the
stockholders&#146; agent is permitted to object within
30&nbsp;days after its receipt of the calculation and related
documentation. QUALCOMM and the stockholders&#146; agent shall
attempt in good faith to resolve such dispute, and any
resolution by them as to any disputed amounts shall be final. To
the extent QUALCOMM and the stockholders&#146; agent are unable
to resolve the dispute within 30&nbsp;days after the
stockholders&#146; agent&#146;s objection, then such matters
will be submitted to an independent accounting firm that is
mutually agreed upon. The determination by the independent
accounting firm as to the closing working capital shall take
place within 30&nbsp;days after submission of the dispute to
such accounting firm and shall be final, binding and conclusive
on QUALCOMM and the stockholders&#146; agent.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='140'></A>
</DIV>

<!-- link1 "Tax Adjustment" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Tax Adjustment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to ensure that the combination of the mergers meet the
&#147;continuity of proprietary interest&#148; requirement of
Treasury Regulations Section&nbsp;1.368-1(e), to qualify for
treatment as a tax-free reorganization, the number of shares of
QUALCOMM common stock issued in connection with the merger may
be increased and the initial cash consideration payable may be
decreased, provided that in no event will the assessable merger
consideration (as defined below) to be paid to holders of
Flarion stockholders be decreased. Using the lower of the
closing price per share of QUALCOMM common stock on The Nasdaq
National Market on the trading day immediately prior to the date
of the merger agreement and the trading day immediately prior to
</DIV>

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<DIV align="left" style="font-size: 10pt;">
the closing date, if the value of the total shares of QUALCOMM
common stock that the holders of shares of Flarion common stock
and preferred stock issued prior to May&nbsp;1, 2005 are
entitled to receive (referred to as the &#147;assessable equity
consideration&#148;) would be less than 40% of the amount of the
assessable merger consideration, then the number of shares of
QUALCOMM common stock that the holders of shares Flarion
preferred stock outstanding immediately prior to the closing
date are entitled to receive (other than dissenting shares,
treasury shares and shares held by QUALCOMM or its subsidiaries)
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 closing price per share of
QUALCOMM common stock on The Nasdaq National Market on the
trading day immediately prior to the date of the merger
agreement and the trading day immediately prior to the closing
date) of the assessable equity consideration is equal to 40% of
the sum of the assessable merger consideration. The assessable
merger consideration means the sum of (i)&nbsp;the value of the
aggregate equity consideration, (ii)&nbsp;the initial cash
consideration, and (iii)&nbsp;the maximum permitted additional
payment amount which the holders of shares of Flarion common
stock and preferred stock (other than dissenting shares,
treasury shares and shares held by QUALCOMM or its subsidiaries)
are entitled to receive assuming Flarion attains the patent
milestone, as described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event it is determined that there are any amounts paid or
payable to dissenting stockholders in excess of the dissenting
stockholders&#146; pro rata share of the assessable merger
consideration, additional shares of QUALCOMM common stock will
be issued to former holders of Flarion common stock and
preferred stock such that after such issuance, the value of the
assessable equity consideration (using the lower of the closing
price per share of QUALCOMM common stock on The Nasdaq National
Market on the trading day immediately prior to the date of the
merger agreement and the trading day immediately prior to the
closing date) is equal to 40% of the sum of the assessable
merger consideration, assuming inclusion of dissenting shares in
the calculation of assessable equity consideration and
assessable merger consideration. In such event, a corresponding
reduction will be made to the amount payable to each such holder
upon achievement of the patent milestone. Notwithstanding the
foregoing, no fractional share of QUALCOMM common stock shall be
issued pursuant to any such adjustment and in lieu thereof,
QUALCOMM shall pay cash equal to the product of such fraction
multiplied by the closing price of one share of QUALCOMM common
stock on the date thereof.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='141'></A>
</DIV>

<!-- link1 "Treatment of Options to Purchase Flarion Common Stock" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Treatment of Options to Purchase Flarion Common Stock</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the effective time of the merger, QUALCOMM will assume each
option to purchase Flarion common stock that was granted under
the Flarion stock option plan and is outstanding immediately
prior to the effective time of the merger, and (i)&nbsp;each
option shall thereby be converted into an option (an
&#147;assumed option&#148;) to purchase the number of shares of
QUALCOMM 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 the merger
multiplied by the option exchange ratio (obtained by dividing
(a)&nbsp;the initial consideration to which the holder of a
share of Flarion common stock is entitled to receive by
(b)&nbsp;the average of the closing prices of a share of
QUALCOMM common stock on The Nasdaq National Market for all of
the trading days between the date of the merger agreement and
the date that is three trading days prior to the trading date on
which the effective time of the merger falls), rounded down to
the nearest whole number of shares of QUALCOMM common stock, and
(ii)&nbsp;the per share exercise price for such assumed option
shall be equal to the quotient obtained by dividing the per
share exercise price of the Flarion option immediately prior to
the closing date of the merger by the option exchange ratio,
rounded up to the nearest whole cent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each assumed option (other than the options granted by Flarion
at QUALCOMM&#146;s direction pursuant to the merger agreement,
or the directed options) referred to herein as 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 Flarion&#146;s attainment of the patent
milestone, additional shares of QUALCOMM common stock, referred
to as
</DIV>

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<DIV align="left" style="font-size: 10pt;">
&#147;patent milestone shares,&#148; based upon the value of the
per share consideration to which the former Flarion stockholders
are entitled to receive upon attainment of the patent milestone.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event that amounts remain withheld for pending or future
indemnification claims of QUALCOMM in accordance with the merger
agreement on March 15 of the year following the calendar year in
which the patent milestone is achieved, then option patent
milestone shares shall be issued with respect to existing
options without regard to future or pending indemnification
claims, for which the former Flarion stockholders and warrant
holders shall then bear full responsibility. See the section
entitled &#147;Certain Terms of the Merger Agreement&nbsp;&#151;
Indemnification of QUALCOMM and Flarion.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Except for the foregoing adjustments and as otherwise provided
in the merger agreement, all the terms and conditions in effect
for each assumed option immediately prior to the effective time
of the merger shall continue in effect following the assumption
of such option in accordance with the merger agreement.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='142'></A>
</DIV>

<!-- link1 "Treatment of Warrants to Purchase Flarion Preferred Stock" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Treatment of Warrants to Purchase Flarion Preferred Stock</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the effective time of the merger, QUALCOMM will grant to each
holder of a warrant to purchase Flarion preferred stock, as
listed in the merger agreement (to the extent not exercised
prior to the effective time), a warrant to purchase the number
of shares of QUALCOMM common stock, equal to the product of the
number of shares of Flarion preferred stock that were issuable
upon the exercise of such assumed Flarion warrant (whether or
not then exercisable or vested) immediately prior to the
effective time of the merger multiplied by the warrant exchange
ratio (obtained by dividing two times the initial consideration
per share by the average closing price, as described above),
rounded down to the nearest whole number of shares of QUALCOMM
common stock, and the per share exercise price for the shares of
QUALCOMM common stock issuable upon exercise of each such
QUALCOMM warrant shall be equal to the quotient obtained by
dividing the exercise price of such assumed Flarion 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
QUALCOMM warrant shall be granted on the terms and conditions in
effect for such assumed Flarion warrant immediately prior to the
effective time of the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, each QUALCOMM warrant shall include the right to
receive, upon or following the exercise of such QUALCOMM warrant
and subject to the achievement of the patent milestone,
additional shares of QUALCOMM common stock, based upon the value
of the per share consideration to which the former Flarion
stockholders are entitled to receive upon attainment of the
milestone.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='143'></A>
</DIV>

<!-- link1 "Exchange of Flarion Stock Certificates; No Further Rights as Flarion Stockholder" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Exchange of Flarion Stock Certificates; No Further Rights as
Flarion Stockholder</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Promptly following completion of the merger, Computershare
Investor Services, LLC, the exchange agent for the merger, will
mail to each record holder of Flarion capital stock a letter of
transmittal and instructions for surrendering the record
holder&#146;s stock certificates in exchange for QUALCOMM common
stock and cash, as appropriate. Only those holders of Flarion
capital stock who properly surrender their Flarion stock
certificates in accordance with the exchange agent&#146;s
instructions will receive, as applicable upon completion of the
merger:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    QUALCOMM common stock (less shares deposited in the expenses
    fund on behalf of such holder, as described below);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the initial cash consideration (less the portion deposited in
    the expenses fund on behalf of such holder, as described below);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    cash in lieu of any fractional shares of QUALCOMM common
    stock;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    dividends or other distributions, if any, on QUALCOMM common
    stock to which they are entitled under the terms of the merger
    agreement.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After the effective time of the merger, each certificate
representing shares of Flarion capital stock that has not been
surrendered will represent only the right to receive upon
surrender of that certificate each of the items listed in the
preceding paragraph, as appropriate. The surrendered
certificates representing shares of
</DIV>

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<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
Flarion capital stock will be cancelled. After the effective
time of the merger, each dissenting stockholder will also no
longer have any rights as a stockholder of Flarion with respect
to his or her shares of Flarion capital stock, except for the
right to receive payment of the judicially determined fair value
of his or her shares pursuant to Delaware law if the stockholder
has validly perfected and not withdrawn such right, as described
in more detail in the section entitled &#147;Appraisal
Rights.&#148; Flarion will not register any transfers of Flarion
common stock outstanding on its stock transfer books after the
close of business on the date of the effective time of the
merger.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Holders of Flarion capital stock should not send in their
Flarion stock certificates until they receive a letter of
transmittal from the exchange agent, with instructions for the
surrender of Flarion stock certificates.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='144'></A>
</DIV>

<!-- link1 "Distributions with Respect to Unexchanged Shares" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Distributions with Respect to Unexchanged Shares</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Holders of Flarion capital stock are not entitled to receive any
dividends or other distributions on shares of QUALCOMM common
stock until the merger is completed. After the merger is
completed, holders of Flarion stock certificates will be
entitled to dividends and other distributions declared or made
after completion of the merger with respect to the number of
whole shares of QUALCOMM common stock which they are entitled to
receive upon exchange of their Flarion stock certificates, but
they will not be paid any dividends or other distributions on
the shares of QUALCOMM common stock until they surrender their
Flarion stock certificates to the exchange agent in accordance
with the exchange agent&#146;s instructions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='145'></A>
</DIV>

<!-- link1 "Transfers of Ownership and Lost Stock Certificates" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Transfers of Ownership and Lost Stock Certificates</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM only will issue (i)&nbsp;shares of QUALCOMM common
stock, (ii)&nbsp;the cash consideration, (iii)&nbsp;cash in lieu
of a fractional share and (iv)&nbsp;any dividends or
distributions on shares of QUALCOMM common stock that may be
applicable, in a name other than the name in which a surrendered
Flarion stock certificate is registered, if the person
requesting such exchange presents to the exchange agent all
documents required by the exchange agent to show and effect the
unrecorded transfer of ownership and to show that any applicable
stock transfer taxes have been paid. If a Flarion stock
certificate is lost, stolen or destroyed, the holder of such
certificate will need to execute an affidavit of that fact and
may need to post a bond, prior to receiving each of the items
listed in the preceding sentence.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='146'></A>
</DIV>

<!-- link1 "Stockholders&#146; Agent and Expenses Fund" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Stockholders&#146; Agent and Expenses Fund</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QF REP, LLC has been formed by certain stockholders of Flarion
as a Delaware limited liability company to act as the
stockholders&#146; agent in connection with the mergers. A
portion of the initial cash consideration and the shares of
QUALCOMM common stock to be exchanged for shares of Flarion
capital stock after the closing date will be deposited in an
&#147;expenses fund&#148; rather than distributed to Flarion
stockholders. The amount deposited in the expenses fund will
equal an aggregate value of $1.5&nbsp;million, a portion of
which is cash and a portion of which is QUALCOMM common stock,
valued at the average closing price. Such cash and shares will
be used to reimburse the costs and expenses of the
stockholders&#146; agent. To the extent not used for such
purposes, the expenses fund will be released to the Flarion
stockholders within five business days of the later of the
termination of and resolution of all indemnity claims and
disputes regarding the additional patent consideration and the
eighth anniversary of the closing date.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='147'></A>
</DIV>

<!-- link1 "Appraisal Rights" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Appraisal Rights</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement has already been adopted by written consent
by the stockholders of Flarion. Therefore, no further Flarion
stockholder approval is needed to consummate the merger.
However, holders of shares of Flarion capital stock who elect to
exercise their statutory appraisal rights in connection with the
merger shall be entitled, subject to the satisfaction of the
requirements therefor, to be paid in cash the fair value of
their 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 Delaware
Court of Chancery under Section&nbsp;262 of the DGCL.
</DIV>

<P align="center" style="font-size: 10pt;">55

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<DIV align="left" style="font-size: 10pt;">
<A name='148'></A>
</DIV>

<!-- link1 "Patent Milestone Payment" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Patent Milestone Payment</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the initial purchase price described above, the
merger agreement provides for additional consideration payable
to Flarion stockholders, option holders (other than with respect
to directed options) and warrant holders if Flarion, at any time
on or prior to the eighth anniversary of the closing date of the
merger, attains a milestone related to the issuance of 20
U.S.&nbsp;patents of the approximately 125 U.S.&nbsp;patent
applications that are pending as of July&nbsp;21, 2005 (provided
that this number of patent applications is subject to change
from time to time as a result of the filing of any 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). The
additional payment upon achievement of the patent milestone, in
aggregate, will be paid 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
(issuable only upon or following the exercise of such options
and warrants), and will be equal to such holder&#146;s pro rata
portion of $205&nbsp;million (based upon the number of shares of
Flarion common stock outstanding immediately prior to the
effective time, on a fully diluted, as-converted basis, assuming
the exercise of all outstanding Flarion options and warrants,
other than the directed options), less a holdback of
$75&nbsp;million if the patent milestone occurs prior to the
indemnification termination date (eighteen months after the
closing date). See &#147;Certain Terms of the Merger
Agreement&nbsp;&#151; Indemnification of QUALCOMM and
Flarion&#148; and &#147;&#151;&nbsp;Indemnification Holdback
Amount.&#148; In addition, with respect to option holders and
warrant holders, see the sections entitled &#147;Certain Terms
of the Merger Agreement&nbsp;&#151; Treatment of Options to
Purchase Flarion Common Stock&#148; and &#147;Certain Terms of
the Merger Agreement&nbsp;&#151; Treatment of Warrants to
Purchase Flarion Preferred Stock&#148; for more information.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Of the approximately 125 pending U.S.&nbsp;patents, QUALCOMM has
selected 15 to prosecute, and Flarion has selected 60 others to
prosecute. Prosecution of the QUALCOMM selected patents will be
undertaken by QUALCOMM or its agent, and prosecution of the
Flarion selected patents will be undertaken by Flarion&#146;s
patent counsel upon instruction from QUALCOMM. The applications
other than the QUALCOMM selected applications and the Flarion
selected applications will be prosecuted by QUALCOMM or its
agent. Prosecution of all patents shall be by utilizing
reasonably diligent efforts and in good faith to achieve
issuance of U.S.&nbsp;patents from such applications.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A patent shall be deemed to have issued from an application in
the event of the actual issuance of any patent by the United
States Patent and Trademark Office with respect to such
application as of the date of such issuance, or the abandonment,
by QUALCOMM or its agent of the prosecution of any QUALCOMM
selected applications or any of the applications being
prosecuted by QUALCOMM or its agent and not selected by QUALCOMM
or Flarion.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='149'></A>
</DIV>

<!-- link1 "Representations and Warranties" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Representations and Warranties</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement contains customary representations and
warranties of QUALCOMM and its merger subsidiaries, and Flarion
that are subject, in some cases, to specified exceptions and
qualifications contained in the merger agreement or in the
disclosure schedules delivered in connection therewith. The
representations and warranties of both parties relate to, among
other things:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the respective businesses and assets of the parties and their
    ability to complete the merger;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    their due organization, valid existence and good standing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the accuracy of information provided in their financial
    statements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    brokers&#146; and finders&#146; fees;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the absence of material litigation;&nbsp;and</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">56

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the accuracy and completeness of information they supply for
    inclusion in this registration statement.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The representations and warranties made by Flarion include,
among others, customary representations and warranties relating
to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    its subsidiaries;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the existence of any required consent from any governmental
    entities required for the operation of its business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    its capital structure;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the absence of certain changes or events;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the absence of any material obligations or liabilities, other
    than those expressly disclosed in the disclosure schedule;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    intellectual property rights and agreements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    inbound license rights, outbound license rights and related
    agreements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    compliance with filing and maintenance requirements of
    applicable governmental entities with respect to its patent
    rights, copyrights, domain names and trademark rights;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the absence of infringement of the intellectual property rights
    of any person in the conduct of its business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the absence of any interested party transactions with any of its
    directors, officers, employees or agents;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the accuracy and completeness information provided in the
    disclosure schedule and in its financial statements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the validity and enforceability of each material contract;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&nbsp;per annum;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    compliance with all environmental laws applicable to properties
    and facilities it uses or occupies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    tax matters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    its compliance with all laws (including ERISA) applicable to its
    employee benefits plans;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    its compliance with all applicable laws with respect to
    employment practices;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the existence of insurance policies appropriate for its type of
    business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    its compliance with all federal, state, local and foreign
    statutes with respect to the conduct of its business, including
    any international trade laws;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the absence of any payments by Flarion or person acting on
    Flarion&#146;s behalf in order to obtain favorable treatment in
    securing business;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the stockholder votes required to approve the merger and the
    merger agreement.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The representations made by QUALCOMM and its merger subsidiaries
include, among others, representations relating to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the timely filing of all forms and reports required to be filed
    with the SEC since October&nbsp;1, 2002, as well as the
    conformance of these filings to the requirements of the
    Securities Act or Exchange Act (whichever applies);&nbsp;and</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">57

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the existence of all necessary authorization of corporate action
    to issue and deliver the QUALCOMM&#146;s common stock pursuant
    to the merger agreement.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='150'></A>
</DIV>

<!-- link1 "Conduct of Flarion&#146;s Business Before Completion of the Merger" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Conduct of Flarion&#146;s Business Before Completion of the
Merger</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion has agreed to restrictions on its activities until
either the completion of the merger or the termination of the
merger agreement. In general, Flarion and its subsidiaries are
required to conduct their business in the ordinary course in
substantially the same manner and consistent with past practice.
Flarion and it subsidiaries have also agreed to do the following
with respect to the conduct of their business:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    continue the prosecution and registration process with respect
    to any intellectual property rights consistent with past
    practice;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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).</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion has also agreed that, in addition to customary
restrictions found in transactions of this type, without
QUALCOMM&#146;s prior written consent, neither Flarion nor its
subsidiaries will do any of the following prior to the
completion of the merger:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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)&nbsp;Flarion may, in the ordinary course of business
    consistent with past practice, grant options for the purchase of
    its common stock under Flarion&#146;s option plan not to exceed
    an aggregate of 200,000&nbsp;shares; and (ii)&nbsp;Flarion
    shall, effective immediately prior to the consummation of the
    first merger, grant options to purchase Flarion common stock to
    Flarion&#146;s employees, in the amounts and subject to the
    terms and conditions specified by QUALCOMM, under Flarion&#146;s
    option plan, having an aggregate intrinsic value of up to
    $26&nbsp;million (see the section entitled &#147;Certain Terms
    of the Merger Agreement&nbsp;&#151; Directed Options&#148;);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&#146;s or the subsidiary&#146;s proposed products (other
    than such licenses and rights implied by the sale of products to
    customers) or Flarion&#146;s intellectual property rights;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    enter into, terminate or amend (i)&nbsp;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)&nbsp;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&#146;s or its subsidiaries&#146; products or
    (iii)&nbsp;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;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">58

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    make any capital expenditures, capital additions or capital
    improvements, in excess of $75,000 individually or $500,000 in
    the aggregate;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    commence a lawsuit (with certain exceptions);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    present, deliver or otherwise communicate to any customers (or
    potential customers) any proposals in any way related to
    Flarion&#146;s or its subsidiaries&#146; business or prospects,
    including, but not limited to, Flarion&#146;s or its
    subsidiaries&#146; current or future intellectual property
    rights, technology, products or potential business or other
    strategic relationships; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding the above provisions, Flarion (or any of its
subsidiaries) may:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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
    &#147;parachute payment&#148; under Section&nbsp;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)&nbsp;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)&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    support deployments in certain countries (listed on a schedule
    to the merger agreement) to the extent provided in the merger
    agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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)&nbsp;limit liability under or arising out of such
    agreement and (ii)&nbsp;disclaim and exclude all liability for
    any loss of profits or incidental, consequential, indirect,
    special, punitive, exemplary or other similar damages.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='151'></A>
</DIV>

<!-- link1 "Additional Agreements" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Additional Agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the merger agreement, the parties have made the
following additional agreements, among others:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Each party shall use all reasonable efforts to take, or cause to
    be taken, all actions necessary to effectuate the mergers and
    related transactions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">59

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&nbsp;S-3 with the SEC with respect to such shares as soon
    as reasonably practicable;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion shall, through the consummation of the merger, apprise
    QUALCOMM of material operational matters and the general status
    of Flarion&#146;s ongoing operations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    QUALCOMM and Flarion shall, as promptly as practicable,
    (i)&nbsp;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)&nbsp;use all reasonable efforts to obtain any consent
    required to be obtained by such party in connection with the
    mergers, and (iii)&nbsp;use all reasonable efforts to lift any
    restraint, injunction or other legal bar to the mergers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&#146;s option plan assumed by QUALCOMM. No later than
    ten (10)&nbsp;business days after the consummation of the
    mergers, QUALCOMM shall file a registration statement on
    Form&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&#146;s
    option plan and the grant of the QUALCOMM warrants;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&nbsp;368(a)
    of the Code;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    QUALCOMM shall assume the written obligations of Flarion to
    defend, indemnify and hold harmless Flarion&#146;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;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">60

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='152'></A>
</DIV>

<!-- link1 "Directed Options" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Directed Options</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To enhance QUALCOMM&#146;s ability to retain certain Flarion
employees after the merger, Flarion has agreed to grant, prior
to the effective date of the merger, options to purchase Flarion
common stock having an aggregate intrinsic value of up to
$26&nbsp;million to its employees, including certain Flarion
executives, in amounts to be specified by QUALCOMM. In
particular, Raymond Dolan and Rajiv Laroia will each be granted
options to purchase Flarion common stock having on the date of
grant an intrinsic value of $7.5&nbsp;million, which options
will vest over a five year period and pursuant to such other
terms and conditions specified by QUALCOMM.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='153'></A>
</DIV>

<!-- link1 "Employee Matters" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Employee Matters</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Following the consummation of the mergers, the employees of
Flarion will be eligible to receive benefits under QUALCOMM
employee compensation and benefits plans which are no less
favorable than those provided to QUALCOMM&#146;s similarly
situated employees immediately prior to the consummation of the
mergers.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM will not, at any time prior to 90&nbsp;days after the
effective time of the merger, effectuate a &#147;plant
closing&#148; or &#147;mass layoff,&#148; as those terms are
defined in the Worker Adjustment and Retraining Notification
Act, or WARN, without complying with the provisions thereof.
QUALCOMM will provide a full defense to, and indemnify the
Flarion stockholders for any loss, liability, claim, damage or
expense (including attorney&#146;s fees and other costs of
defense) which the stockholders may incur in connection with,
any suit or claim of violation brought against the surviving
corporation under WARN for any actions taken by QUALCOMM with
regard to any site of employment, facility, operating unit or
employee affected by the merger agreement on or after the
effective time of the mergers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM and the corporation surviving the mergers remain liable
for all notices and benefits required to be provided to Flarion
employees under COBRA on or after the effective time of the
merger and shall be responsible for all liabilities and
obligations with respect to the provision of any notice and
benefits to any Flarion employees that arise under COBRA on or
after the effective time of the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion will seek the approval of its stockholders in connection
with payments or distributions that could reasonably be
considered a &#147;parachute payment&#148; pursuant to
Section&nbsp;280G of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='154'></A>
</DIV>

<!-- link1 "Conditions to the Closing of the Merger" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Conditions to the Closing of the Merger</B>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Conditions to Obligations of Each Party</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The obligations of each party to effectuate the merger are
subject to the satisfaction or waiver, at or prior to the
closing date of the merger, of the following conditions:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">61

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the adoption and approval of the merger agreement, the mergers
    and the necessary amendments to Flarion&#146;s certificate of
    incorporation by Flarion&#146;s stockholders.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Conditions to Obligations of QUALCOMM and its Merger
    Subsidiaries</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The obligations of QUALCOMM and its merger subsidiaries to
effectuate the merger are subject to the satisfaction or waiver,
at or prior to the closing date of the merger, of the following
conditions:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion shall deliver to QUALCOMM a certificate executed on its
    behalf by Flarion&#146;s chief executive officer and chief
    financial officer certifying that the previous two conditions
    have been satisfied;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion shall deliver to QUALCOMM, a certificate executed by
    Flarion&#146;s secretary containing Flarion&#146;s certificate
    of incorporation, bylaws, resolutions of its board of directors
    authorizing the merger and the executed written consents of
    Flarion&#146;s stockholders adopting the merger agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion shall deliver any and all written notification required
    pursuant to the Open Base Station Architecture Initiative
    Supporter Agreement dated September&nbsp;3, 2004, in order to
    withdraw Flarion from participation therein;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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)&nbsp;challenges the consummation of the mergers,
    (ii)&nbsp;relates to the mergers and seeks damages or other
    relief from any of the parties to the merger agreement,
    (iii)&nbsp;seeks to prohibit or limit QUALCOMM&#146;s ability to
    vote or otherwise exercise ownership rights with respect to
    Flarion&#146;s capital stock, or (iv)&nbsp;will materially and
    adversely affect QUALCOMM or Flarion&#146;s right to own
    Flarion&#146;s assets or operate Flarion&#146;s business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    QUALCOMM&#146;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&nbsp;368(a) of the Code (this opinion shall not be
    waivable without Flarion&#146;s approval);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    there shall not be issued any order of any governmental agency
    which (i)&nbsp;prohibits or limits QUALCOMM&#146;s ability to
    vote or otherwise exercise ownership rights with respect to
    Flarion&#146;s capital stock or (ii)&nbsp;adversely affects the
    right of QUALCOMM or Flarion to own Flarion&#146;s assets or
    operate Flarion&#146;s business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    specified individuals and at least 65% of Flarion&#146;s
    engineers shall have agreed to maintain employment with the
    surviving corporation or accept employment with QUALCOMM on
    terms reasonably acceptable to QUALCOMM;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion shall not have entered into any agreements, arrangements
    or understandings, except as specified in the merger agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    no material adverse effect shall have occurred with respect to
    Flarion;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">62

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion&#146;s legal counsel shall have delivered to QUALCOMM an
    opinion commensurate with the form attached to the merger
    agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    agreements providing for the termination of certain Flarion
    contracts identified in the merger agreement shall have been
    executed and delivered to QUALCOMM;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion shall have terminated each of its 401(k) plans that is
    required to be terminated;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion shall execute and deliver to QUALCOMM a statement and
    notice in connection with &#147;FIRPTA&#148;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion shall have delivered to QUALCOMM the closing payment
    schedule, the closing option schedule and the updated disclosure
    schedule specified in the merger agreement;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    certain liens on certain patents held by Flarion shall have been
    released.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Conditions to Obligations of Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The obligations of Flarion to effectuate the merger are subject
to the satisfaction or waiver, at or prior to the closing date
of the merger, of the following conditions:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Flarion&#146;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&nbsp;368(a) of the Code (this opinion shall not be
    waivable without QUALCOMM&#146;s approval);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    QUALCOMM&#146;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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='155'></A>
</DIV>

<!-- link1 "Indemnification of QUALCOMM and Flarion" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Indemnification of QUALCOMM and Flarion</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the merger agreement, QUALCOMM, the corporation
surviving the mergers, and their respective affiliates,
officers, directors, employees, representatives, attorneys,
consultants and agents are indemnified, severally and not
jointly, by the stockholders of Flarion, against losses and
damages, whether directly or indirectly, arising out of or
resulting from, among other things:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&nbsp;months (and thereafter until
    resolved if a claim is made prior to such date);</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">63

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&nbsp;months (and
    thereafter until resolved if a claim is made prior to such date);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the exercise by any dissenting stockholder of appraisal rights
    under the DGCL (provided that such dissenting stockholder&#146;s
    pro rata portion of the initial merger consideration and the
    patent milestone amount shall be deducted from such damages);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    certain other matters specified in the disclosure schedule to
    the merger agreement.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the merger agreement, Flarion and its stockholders,
and each of their respective affiliates, officers, directors,
employees, representatives, attorneys, consultants and agents
are indemnified, severally and not jointly, by QUALCOMM, against
losses and damages, whether directly or indirectly, arising out
of or resulting from, among other things:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any nonfulfillment or breach of, or default in connection with,
    any covenant or agreement by QUALCOMM or its merger subsidiaries
    under the merger agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any breach by Flarion of, or any claim against Flarion under,
    the Flarion amended and restated investors&#146; rights
    agreement with respect to (i)&nbsp;any covenants therein other
    than any claim from, or relating to, NV Partners&nbsp;II LP or
    any of its affiliates, (ii)&nbsp;certain notice requirements
    arising out of or related to the execution and delivery of this
    Agreement, (iii)&nbsp;the execution and delivery of the
    Exclusivity Agreement between Flarion and QUALCOMM dated
    June&nbsp;27, 2005, or (iv)&nbsp;the performance by Flarion or
    any Flarion stockholder of the transactions contemplated by the
    merger agreement;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    actions taken by Flarion in connection with the grant or
    issuance of the directed options.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='156'></A>
</DIV>

<!-- link1 "Limitations on Indemnification" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Limitations on Indemnification</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM will not be entitled to indemnification for any damages
which exceed $75&nbsp;million and will only be entitled to
indemnification if the patent milestone is met, except, in each
case, in connection with Flarion&#146;s fraud or willful breach
of the merger agreement. Additionally, QUALCOMM will not be
entitled to indemnification until the total of all losses to
QUALCOMM or the other indemnitees exceeds $1.5&nbsp;million. If
the total amount of losses exceeds $1.5&nbsp;million, then
QUALCOMM and the other indemnitees will be indemnified for all
such losses in excess of $1.5&nbsp;million. However,
indemnification claims related to the working capital
post-closing adjustment and certain matters specified in the
disclosure schedule are not subject to the foregoing limitation,
and, other than with respect to such indemnification claims and
indemnification claims regarding dissenting stockholder
appraisal rights, QUALCOMM and its indemnitees are not entitled
to indemnification for individual claims that are less than
$50,000.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='157'></A>
</DIV>

<!-- link1 "Indemnification Holdback Amount" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Indemnification Holdback Amount</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the patent milestone is achieved before the expiration of
18&nbsp;months following the closing date, which is referred to
herein as the &#147;indemnification termination date,&#148; then
$75&nbsp;million, referred to as the &#147;indemnification
holdback amount,&#148; shall be withheld from the
$205&nbsp;million additional patent consideration that would
otherwise be payable upon the patent milestone date. Upon the
indemnification termination date, the indemnification holdback
amount will be delivered to the Flarion stockholders, option
holders (other than with respect to directed options) and
warrant holders (in the case of option holders and warrant
holders issuable only upon or following the exercise of such
options and warrants) minus (i)&nbsp;any amounts necessary to
</DIV>

<P align="center" style="font-size: 10pt;">64

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<DIV align="left" style="font-size: 10pt;">
offset QUALCOMM&#146;s indemnifiable damages that are
conclusively determined in accordance with the procedures
specified in the merger agreement, and (ii)&nbsp;any amounts
reasonably determined necessary to offset any of QUALCOMM&#146;s
pending indemnification claims. Upon resolution of any such
pending indemnification claims (or when it is determined a
portion of the indemnification holdback amount is no longer
necessary to satisfy claims), if the patent milestone is
reached, the remaining indemnification holdback amount (or
portion thereof) will be delivered to Flarion stockholders,
option holders (other than with respect to directed options) and
warrant holders (in the case of option holders and warrant
holders issuable only upon or following the exercise of such
options and warrants) minus any amounts used to offset
QUALCOMM&#146;s indemnifiable damages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the patent milestone is reached after the indemnification
termination date, the $205&nbsp;million additional patent
consideration is payable to Flarion stockholders, option holders
(other than with respect to directed options) and warrant
holders (in the case of option holders and warrant holders
issuable only upon or following the exercise of such options and
warrants) minus up to $75&nbsp;million to satisfy
QUALCOMM&#146;s indemnification claims and any pending
indemnification claims.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='158'></A>
</DIV>

<!-- link1 "Determination of Damages" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Determination of Damages</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The amount of any damages with respect to any claim for
indemnification under the merger agreement shall be determined
net of any insurance proceeds and any indemnity, contribution or
other similar payment actually received by the indemnified party
or any of its affiliates with respect to such claim.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='159'></A>
</DIV>

<!-- link1 "Stockholders&#146; Agent" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Stockholders&#146; Agent</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In adopting the merger agreement, Flarion&#146;s stockholders
appointed QF REP, LLC as agent and attorney-in-fact for and on
behalf of the Flarion stockholders. The stockholders&#146; agent
has full power and authority to represent all of the
stockholders with respect to all matters arising under the
merger agreement. The stockholders&#146; agent was appointed for
purposes of, among others, overseeing the expenses fund, giving
and receiving notices, instructions and communications permitted
or required under the merger agreement, authorizing payments to
be made with respect thereto, defending all indemnity claims
against the stockholders, reviewing, negotiating and determining
the closing working capital calculation, authorizing the offset
of claims by QUALCOMM against the holdback indemnification
funds, objecting to such deliveries, agreeing to, negotiating
and entering into settlements and compromises of, demanding
arbitration or other legal proceedings and complying with orders
of courts and awards of arbitrators, with respect to such
claims, engaging counsel or accountants or other representatives
in connection with the foregoing matters, and taking all actions
necessary or appropriate in the judgment of the
stockholders&#146; agent for the accomplishment of the
foregoing. The stockholders have authorized the
stockholders&#146; agent to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    deliver to QUALCOMM at the effective time of the merger all
    certificates and documents to be delivered by any of the
    stockholders;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    take such action on behalf of any of the stockholders as the
    stockholders&#146; agent may in its sole discretion deem
    appropriate to carry out the intent of the merger agreement.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
All actions, decisions and instructions of the
stockholders&#146; agent are conclusive and binding upon all of
the stockholders and the stockholders will not have a claim or
cause of action against the stockholders&#146; agent, and the
stockholders&#146; agent will have no liability to any
stockholder, except in the case of the stockholders&#146;
agent&#146;s willful misconduct.
</DIV>

<P align="center" style="font-size: 10pt;">65

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The stockholders&#146; agent shall incur no liability to the
stockholders with respect to any action taken or suffered by it
in reliance upon any note, direction, instruction, consent,
statement or other documents reasonably believed by the
stockholders&#146; agent to be genuinely and duly authorized by
at least a majority in interest of the stockholders (or the
successors or assigns thereto), nor for other action or inaction
taken or omitted in good faith in connection herewith, in any
case except for liability to the stockholders for its own
willful misconduct. The stockholders have agreed to indemnify
the stockholders&#146; agent, except in connection with the
stockholders&#146; agent&#146;s willful misconduct, for all
losses, liabilities or expenses (including fees in connection
with enforcing this right of indemnification). The costs of such
indemnification come from the expenses fund and then pro rata
from the merger consideration payable to the stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='160'></A>
</DIV>

<!-- link1 "Termination of the Merger Agreement" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Termination of the Merger Agreement</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM and Flarion may terminate the merger agreement at any
time prior to the closing of the merger by mutual written
consent. Additionally, either party may terminate the merger
agreement if:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the closing of the merger has not taken place on or before
    January&nbsp;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;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement may also be terminated:
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&#146;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&nbsp;days after Flarion&#146;s receipt of notice
    of such breach;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&nbsp;days after QUALCOMM&#146;s
    receipt of notice of such breach.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='161'></A>
</DIV>

<!-- link1 "Amendments and Waiver" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Amendments and Waiver</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement may be amended and any term may be waived
only in writing signed by each of the parties to the agreement
or by the party to be charged with such waiver, provided,
however, that any amendment that requires the further approval
of the Flarion stockholders under Delaware law shall not be made
without such stockholder approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='162'></A>
</DIV>

<!-- link1 "Termination Fee" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Termination Fee</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event that prior to the closing date QUALCOMM makes a
public announcement with respect to a transaction or potential
transaction between QUALCOMM or any of its subsidiaries and an
entity identified by QUALCOMM to Flarion, and thereafter, the
merger agreement is terminated by Flarion or QUALCOMM
(a)&nbsp;by mutual written consent, (b)&nbsp;as a result of the
transaction not being consummated by January&nbsp;21, 2006,
(c)&nbsp;because a court or governmental entity has restrained,
enjoined or otherwise prohibited the mergers (provided that
Flarion has not complied in all material respects with its
obligations under the merger agreement), as a result of a court
order or the failure to achieve the required clearance under HSR
to
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">66

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<DIV align="left" style="font-size: 10pt;">
consummate the transactions contemplated hereby due to QUALCOMM
or its subsidiaries entering into such transactions, then
QUALCOMM shall pay Flarion a termination fee of $50&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='163'></A>
</DIV>

<!-- link1 "Expenses" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Expenses</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Whether or not the mergers are consummated, all costs and
expenses (other than with respect to HSR filings, which shall be
borne by QUALCOMM) incurred in connection with the merger
agreement and the transactions contemplated thereby shall be
paid by the party incurring such expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='164'></A>
</DIV>

<!-- link1 "Agreements with Certain Executive Officers" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Agreements with Certain Executive Officers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM has offered employment to Raymond Dolan and Rajiv
Laroia and will enter into employment offer letters with
Mr.&nbsp;Dolan and Mr.&nbsp;Laroia which shall be effective as
of the closing of the merger. QUALCOMM and Mr.&nbsp;Dolan have
agreed that Mr.&nbsp;Dolan will receive an initial salary of
$285,000 and be eligible to receive an annual bonus with a
target of $85,500 pursuant to the terms to be agreed upon in his
employment offer letter. QUALCOMM and Mr.&nbsp;Dolan have also
entered into a Non-Competition and Non-Solicitation Agreement
which provides for, among other things, restrictions on
Mr.&nbsp;Dolan&#146;s ability to compete in the restricted
business, interfere with business or solicit other employees.
See the section entitled &#147;The Merger&nbsp;&#151; Interests
of Flarion&#146;s Directors and Management in the
Merger&nbsp;&#151; Non-Competition and Non-Solicitation
Agreements.&#148; Further, QUALCOMM and Mr.&nbsp;Dolan have
entered into a stock restriction agreement pursuant to which the
shares of QUALCOMM common stock to be issued to Mr.&nbsp;Dolan
in exchange for the shares of Flarion common stock he holds
shall vest over a two-year period, with one-third of the shares
being fully vested upon the closing of the merger and, subject
to Mr.&nbsp;Dolan&#146;s continued employment with QUALCOMM,
one-third vesting on the first anniversary of the closing date
and the balance vesting on the second anniversary. See the
section entitled &#147;The Merger&nbsp;&#151; Interests of
Flarion&#146;s Directors and Management in the
Merger&nbsp;&#151; Stock Restriction Agreement.&#148; QUALCOMM
and Mr.&nbsp;Dolan have also entered into an agreement waiving
the acceleration of vesting of the unvested portion of his
outstanding Flarion stock options and amending his stock option
agreement to provide for full acceleration of unvested options
in certain circumstances following the closing of the merger.
See the section entitled &#147;The Merger&nbsp;&#151; Interests
of Flarion&#146;s Directors and Management in the
Merger&nbsp;&#151; Waiver of Acceleration of Option Vesting and
Amendment of Stock Option Agreement.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM and Mr.&nbsp;Laroia have agreed that Mr.&nbsp;Laroia
will receive an initial salary of $240,000 and be eligible to
receive an annual bonus with a target of $72,000 pursuant to the
terms to be agreed upon in his employment offer letter. QUALCOMM
and Mr.&nbsp;Laroia have also entered into a Non-Competition and
Non-Solicitation Agreement which provides for, among other
things, restrictions on Mr.&nbsp;Laroia&#146;s ability to
compete in the restricted business, interfere with business or
solicit other employees. See the section entitled &#147;The
Merger&nbsp;&#151; Interests of Flarion&#146;s Directors and
Management in the Merger&nbsp;&#151; Non-Competition and
Non-Solicitation Agreements.&#148; Further, QUALCOMM and
Mr.&nbsp;Laroia have entered into a stock restriction agreement
pursuant to which the shares of QUALCOMM common stock to be
issued to Mr.&nbsp;Laroia in exchange for the shares of Flarion
common stock he holds shall vest over a two-year period, with
one-third of the shares being fully vested upon the closing of
the merger and, subject to Mr.&nbsp;Laroia&#146;s continued
employment with QUALCOMM, one-third vesting on the first
anniversary of the closing date and the balance vesting on the
second anniversary. See the section entitled &#147;The
Merger&nbsp;&#151; Interests of Flarion&#146;s Directors and
Management in the Merger&nbsp;&#151; Stock Restriction
Agreement.&#148; QUALCOMM and Mr.&nbsp;Laroia have also entered
into an agreement waiving the acceleration of vesting of the
unvested portion of his outstanding Flarion stock options and
amending his stock option agreement to provide for full
acceleration of unvested options in certain circumstances
following the closing of the merger. See the section entitled
&#147;The Merger&nbsp;&#151; Interests of Flarion&#146;s
Directors and Management in the Merger&nbsp;&#151; Waiver of
Acceleration of Option Vesting and Amendment of Stock Option
Agreement.&#148;
</DIV>

<P align="center" style="font-size: 10pt;">67

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<DIV align="left" style="font-size: 10pt;">
<A name='165'></A>
</DIV>

<!-- link1 "FLARION&#146;S BUSINESS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FLARION&#146;S BUSINESS</B>
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='166'></A>
</DIV>

<!-- link1 "Overview" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion Technologies, Inc. is a developer of Orthogonal
Frequency Division Multiple Access (OFDMA)&nbsp;technology and
the inventor of FLASH-OFDM (Fast Low-Latency Access with
Seamless Handoff-OFDM) technology for wireless mobile
communications. The technology offers a wide-area mobile
broadband voice and data solution through an all-IP (Internet
Protocol) packet-switched wireless communication network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s technology is targeted toward deployment in
networks of mobile operators using licensed wireless spectrum.
Flarion has trialed its FLASH-OFDM mobile broadband solution
with wireless network operators in North America, Asia and
Europe. The FLASH-OFDM network consists of RadioRouter base
stations, subscriber terminal devices such as PC Cards and
desktop modems, and network system software. Flarion also sells
chipsets and licenses the FLASH-OFDM technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
FLASH-OFDM was initially developed at Bell Labs and later spun
off as part of Flarion. Innovations by Flarion led to the
development of the first high-speed mobile OFDM air interface
for wide area broadband networks. FLASH-OFDM is designed to
support all existing IP-based applications. The technology
provides important attributes for wireless mobile deployment
such as power and spectrum-efficient operation, mobility
handoff, quality of service (QoS), and a path to providing next
generation converged voice and data services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion became an independent company in February 2000, and its
significant stockholders include a group of financial and
strategic investors, including Bessemer Venture Partners,
Charles River Ventures, New Venture Partners, and Pequot
Capital, as well as Cisco Systems, T-Mobile Venture Fund and
Nextel Communications.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='167'></A>
</DIV>

<!-- link1 "Customers and Products" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Customers and Products</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion sells its end-to-end FLASH-OFDM solutions to wireless
network operators directly and through OEM partners. As of
August&nbsp;5, 2005, Flarion&#146;s wireless carriers who have
deployed FLASH-OFDM for trials and/or commercial networks
include High Plains Wireless d/b/a Cellular One of Amarillo,
Japan Telecom, Nextel Communications, Inc., OCTO (Office of the
Chief Technical Officer for Washington, DC), Selectec, Inc.,
T-Mobile International AG &#38; Co. KG, Telestra Corporation
Limited, Vodafone Group Services Limited, TELUS Mobility, SK
Telecom Co., Ltd. and Waller Inc.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion Products:</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s products include RadioRouter base stations,
subscriber terminal devices, such as PC Cards and desktop
modems, and network system software.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>RadioRouter Base Station:</I> Performs like an IP-based
    router in a Local Area Network (LAN), but with Wide Area Network
    (WAN)&nbsp;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)&nbsp;provisioning;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>FlashView Element Management System:</I> An integrated
    provisioning and element management tool for the Flarion
    RadioRouter base station, offering Fault, Configuration,
    Accounting, Performance and Security (FCAPS)&nbsp;management
    functions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>PC Card:</I> The Flarion wireless network PC Card
    (PCMCIA)&nbsp;can be plugged into IP-based end-user devices
    (laptop, PDA, digital camera, etc.) for connectivity to the
    Flarion network;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Desktop Modem:</I> Flarion&#146;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</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">68

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Mobile Chipset Solution:</I> Flarion&#146;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&#146;s
    technical team.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='168'></A>
</DIV>

<!-- link1 "Sales and Marketing" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Sales and Marketing</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion sells its FLASH-OFDM products and technology to
operators directly through an internal sales force and through a
network of partners. Such partners include suppliers to the
wireless communications industry, original equipment
manufacturers, distributors, systems integrators and resellers.
Flarion has direct sales force teams located in North America,
Europe and Asia Pacific.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October of 2004, Flarion entered into a partnership with
Siemens Aktiengesellschaft to integrate FLASH-OFDM into
Siemens&#146; portfolio of mobile broadband solutions that is
focused initially on the 450MHz frequency band. Siemens and
Flarion have subsequently been awarded contracts to deploy
FLASH-OFDM networks in Slovakia with T-Mobile Slovakia and in
Finland with Digita.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October of 2004, Flarion entered into a partnership with
Netgear, Inc. to integrate FLASH-OFDM into Netgear&#146;s
portfolio of wireless networking products.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='169'></A>
</DIV>

<!-- link1 "Manufacturing and Supply" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Manufacturing and Supply</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion has supply relationships with contract manufacturing and
silicon fabrication partners for all of Flarion&#146;s
manufacturing and supply. Flarion has no internal manufacturing
or production capabilities. Flarion has a global partnership
with Flextronics for the manufacturing and supply of
infrastructure products, with World Electronic for the
manufacturing and supply of mobile terminal devices, and with
Texas Instruments and Philips Semiconductor for the fabrication
and supply of FLASH-OFDM chipsets for integration in mobile
terminal devices.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='170'></A>
</DIV>

<!-- link1 "Research and Development" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Research and Development</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s research and development team has spent many
years developing OFDM-based wireless communications
technologies. Flarion continues to invest in extensive research
and development to both enhance the current FLASH-OFDM system
and to offer a technology roadmap containing additional
functionality and improved performance in future versions of
FLASH-OFDM.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='171'></A>
</DIV>

<!-- link1 "Competition" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Competition</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Competition in the wireless communications industry in the
United States and worldwide is intense and continues to increase
as subscriber demand for wireless communications expands.
FLASH-OFDM competes for wireless operators&#146; capital
expenditures with other available wireless technologies and
their planned evolutions that are designed for deployment in
licensed wireless spectrum including CDMA2000 1xRTT and 1xEV-DO,
WCDMA (UMTS), TD-CDMA, TD-SCDMA, WiMAX and certain other
proprietary solutions.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='172'></A>
</DIV>

<!-- link1 "Intellectual Property" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Intellectual Property</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to protect Flarion&#146;s proprietary rights in
products and technologies, Flarion relies on a combination of
patents, copyrights, trade secrets, trademarks and proprietary
information to maintain and enhance its competitive position.
Flarion has been granted and has patent applications pending for
patents
</DIV>

<P align="center" style="font-size: 10pt;">69

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<DIV align="left" style="font-size: 10pt;">
relating primarily to OFDM/ OFDMA digital wireless
communications technology and FLASH-OFDM in particular. In
addition, Flarion&#146;s patent portfolio contains patents in
related technologies, such as Low Density Parity Check
(LDPC)&nbsp;Forward Error Correction. Flarion has and continues
to file for patent protection in the United States and in other
global markets where Flarion is or expects to have business in
the future.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='173'></A>
</DIV>

<!-- link1 "Employees" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Employees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of August&nbsp;5, 2005, Flarion had 173 employees worldwide,
of which 114 were engaged in research and development and other
engineering activities, 45 were engaged in sales, marketing and
business development activities, and 14 were engaged in general
corporate and administrative functions.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='174'></A>
</DIV>

<!-- link1 "Legal Proceedings" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Legal Proceedings</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;6, 2005, Flarion was served with a summons
with respect to a civil action commenced by a former Flarion
employee alleging that Flarion engaged in various discriminatory
and unfair employment practices and other related matters,
claiming damages in the amount of $90.7&nbsp;million. Flarion
believes that these allegations are without merit and intends to
vigorously defend itself in any proceedings related to this
action.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the industry in which Flarion operates is the
subject of frequent litigation, in particular relating to
allegations of patent infringement. As a result, in the normal
course of business, Flarion may become subject to litigation
relating to possible patent infringement or other matters.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">70
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<DIV align="left" style="font-size: 10pt;">
<A name='175'></A>
</DIV>

<!-- link1 "FLARION&#146;S MANAGEMENT PRIOR TO THE MERGER" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FLARION&#146;S MANAGEMENT PRIOR TO THE MERGER</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a list of Flarion&#146;s senior executive
officers and directors and their respective ages as of
September&nbsp;19, 2005:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Position</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Raymond P. Dolan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman and Chief Executive Officer</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rajiv Laroia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Founder, Chief Technology Officer, and Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Edward B. Jordan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President and Chief Financial Officer</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Edward M. Knapp</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President, Product Marketing and Market Development</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Theresa L. McCarthy</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Vice President and General Counsel</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Matthew J. Desch</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert P. Goodman</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Martin D. Hale,&nbsp;Jr.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert E. LaBlanc</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bruce I. Sachs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Daniel C. Stanzione</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Joseph S. Tibbetts,&nbsp;Jr.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Andrew J. Viterbi</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">71
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<A name='176'></A>
</DIV>

<!-- link1 "FLARION&#146;S PRINCIPAL STOCKHOLDERS PRIOR TO THE MERGER" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FLARION&#146;S PRINCIPAL STOCKHOLDERS PRIOR TO THE MERGER</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information with respect to the
beneficial ownership of Flarion&#146;s common stock and
preferred stock as of August&nbsp;5, 2005 for:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    each stockholder known by Flarion to beneficially own more than
    5% of Flarion&#146;s capital stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    each of Flarion&#146;s directors and named executive
    officers;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    all of Flarion&#146;s directors and executive officers as a
    group.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The percentage of ownership indicated in the following table is
based on 20,716,060&nbsp;shares of common stock and
54,085,778&nbsp;shares of preferred stock outstanding as of
August&nbsp;5, 2005. Beneficial ownership is determined in
accordance with the rules of the SEC. These rules generally
attribute beneficial ownership of securities to persons who
possess sole or shared voting power or investment power with
respect to those securities and include shares of capital stock
issuable upon the exercise of stock options and warrants that
are immediately exercisable or exercisable within 60&nbsp;days.
The beneficial ownership information in the table does not give
effect to the acceleration of vesting of certain options that
would occur upon consummation of the merger. Each share of
Flarion&#146;s preferred stock is convertible into two shares of
Flarion common stock. Except as otherwise indicated, all persons
listed below have sole voting and investment power with respect
to the shares beneficially owned by them, subject to applicable
community property laws. The information is not necessarily
indicative of beneficial ownership for any other purpose.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Rights to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Rights to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Acquire</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Acquire</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock within</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock within</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>60 Days of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>60 Days of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Preferred</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name and Address of Beneficial Owner(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>August&nbsp;5, 2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>August&nbsp;5, 2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    5% Stockholders, Directors and Executive Officers:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Entities affiliated with Bessemer Venture Partners(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>178,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,360,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Entities affiliated with Charles River Partners(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,360,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Coastdock&nbsp;&#38; Co.(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,878,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,939,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Nextel Data Investments&nbsp;1, Inc.(5)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,156,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,078,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Entities affiliated with New Venture Partners(6)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,360,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Entities affiliated with Pequot Capital Management(7)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,824,553</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    T-Mobile Venture Fund&nbsp;GmbH&nbsp;&#38; Co. KG(8)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,051,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,025,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Matthew J. Desch(9)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Raymond P. Dolan(10)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,444,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert P. Goodman(11)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>178,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,360,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Martin D. Hale,&nbsp;Jr.(12)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,824,553</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert E. LaBlanc</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rajiv Laroia(13)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,611,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Michael K. Gallagher(14)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Edward B. Jordan(15)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>650,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>350,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Edward M. Knapp(16)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>238,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>281,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Theresa L. McCarthy</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>800,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bruce I. Sachs(17)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,360,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Daniel C. Stanzione(18)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>640,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>280,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Joseph S. Tibbetts,&nbsp;Jr.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">72

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Rights to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Rights to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Acquire</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Acquire</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock within</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock within</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>60 Days of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>60 Days of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Preferred</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name and Address of Beneficial Owner(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>August&nbsp;5, 2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>August&nbsp;5, 2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Andrew J. Viterbi(19)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,114,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>517,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All executive officers and directors as a group (14&nbsp;persons)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,910,974</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,112,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,342,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>54.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*</TD>
    <TD align="left">
    Represents beneficial ownership of less than 1.0% of the
    outstanding shares of common stock or preferred stock, as
    applicable.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Unless otherwise indicated, the address for each person or
    entity named below is c/o&nbsp;Flarion Technologies, Inc., 135
    Route 202/ 206 South, Bedminster, NJ 07921.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;6,720&nbsp;shares of common stock,
    345,800&nbsp;shares of Series&nbsp;A preferred stock and
    325,234&nbsp;shares of Series&nbsp;B preferred stock held by
    Bessemer Venture Investors&nbsp;II L.P.,
    (b)&nbsp;35,268&nbsp;shares of common stock,
    2,529,280&nbsp;shares of Series&nbsp;A preferred stock and
    1,706,921&nbsp;shares of Series&nbsp;B preferred stock held by
    Bessemer Venture Partners V L.P., (c)&nbsp;39,772&nbsp;shares of
    common stock, 1,916,720&nbsp;shares of Series&nbsp;A preferred
    stock and 1,924,829&nbsp;shares of Series&nbsp;B preferred stock
    held by Bessec Ventures V L.P., (d)&nbsp;972&nbsp;shares of
    common stock and 47,033&nbsp;shares of Series&nbsp;B preferred
    stock held by BVE 2001 LLC, (e)&nbsp;15,828&nbsp;shares of
    common stock and 766,046&nbsp;shares of Series&nbsp;B preferred
    stock held by BVE 2001 (Q)&nbsp;LLC, (f)&nbsp;13,440&nbsp;shares
    of common stock and 650,466&nbsp;shares of Series&nbsp;B
    preferred stock held by BIP 2001 L.P.,
    (g)&nbsp;66,666&nbsp;shares of common stock held by Bessemer
    Search Group and (h)&nbsp;148,200&nbsp;shares of Series&nbsp;A
    preferred stock held by BVE LLC. The address for each of these
    entities is 1865 Palmer Avenue, Suite&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;101,364&nbsp;shares of common stock,
    4,471,129&nbsp;shares of Series&nbsp;A preferred stock and
    4,905,839&nbsp;shares of Series&nbsp;B preferred stock held by
    Charles River Partnership&nbsp;X, a limited partnership,
    (b)&nbsp;2,784&nbsp;shares of common stock, 122,740&nbsp;shares
    of Series&nbsp;A preferred stock and 134,708&nbsp;shares of
    Series&nbsp;B preferred stock held by Charles River
    Partnership&nbsp;X-A, a limited partnership,
    (c)&nbsp;6,692&nbsp;shares of common stock, 294,961&nbsp;shares
    of Series&nbsp;A preferred stock and 323,722&nbsp;shares of
    Series&nbsp;B preferred stock held by Charles River Friends X-B,
    LLC and (d)&nbsp;1,160&nbsp;shares of common stock,
    51,170&nbsp;shares of Series&nbsp;A preferred stock and
    56,260&nbsp;shares of Series&nbsp;B preferred stock held by
    Charles River Friends X-C, LLC. The address for each of these
    entities is 1000 Winter Street, Suite&nbsp;3300, Waltham,
    MA&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Consists of shareholdings of Series&nbsp;B preferred stock of
    Cisco Systems, Inc. The address for this entity is 170&nbsp;West
    Tasman Drive, Building Number&nbsp;10, San&nbsp;Jose, CA 95134.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;6,078,425&nbsp;shares of Series&nbsp;B
    preferred stock and (b)&nbsp;a fully vested warrant to
    purchase&nbsp;1,000,000&nbsp;shares of Series&nbsp;B preferred
    stock. The address for Nextel Data Investments 1, Inc. is 2001
    Edmund Halley Drive, Reston, VA 20191.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;5,555,600&nbsp;shares of Series&nbsp;A
    preferred stock and 2,779,143&nbsp;shares of Series&nbsp;B
    preferred stock held by NV Partners&nbsp;II LP and
    (b)&nbsp;2,025,786&nbsp;shares of Series&nbsp;B preferred stock
    held by NVP&nbsp;II-B LP. The address for these entities is 98
    Floral Avenue, Suite&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;76,000&nbsp;shares of common stock,
    2,470,000&nbsp;shares of Series&nbsp;A preferred stock and
    4,935,174&nbsp;shares of Series&nbsp;B preferred stock held by
    Pequot Private Equity Fund&nbsp;II, L.P.,
    (b)&nbsp;367,564&nbsp;shares of Series&nbsp;B preferred stock
    held by Pequot Private Equity Fund&nbsp;III, L.P. and</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">73
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    (c)&nbsp;51,815&nbsp;shares of Series&nbsp;B preferred stock
    held by Pequot Offshore Private Equity Partners&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;2,025,786&nbsp;shares of Series&nbsp;B
    preferred stock, (b)&nbsp;a fully vested warrant to
    purchase&nbsp;1,000,000&nbsp;shares of Series&nbsp;B preferred
    stock and (c)&nbsp;an unvested warrant to
    purchase&nbsp;1,000,000&nbsp;shares of Series&nbsp;B preferred
    stock, for which vesting is based on performance which could
    occur within 60&nbsp;days after August&nbsp;5, 2005. The address
    of T-Mobile Venture Fund&nbsp;GmbH&nbsp;&#38; Co. KG is
    Gotenstrabe 156, Bonn, D53175, Germany.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(9)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;100,000&nbsp;shares of common stock,
    (b)&nbsp;fully vested options to
    purchase&nbsp;75,625&nbsp;shares of common stock and
    (c)&nbsp;unvested options to purchase&nbsp;9,375&nbsp;shares of
    common stock with rights of early exercise.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(10)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;3,444,444&nbsp;shares of common stock held
    by Raymond P. Dolan and (b)&nbsp;1,000,000&nbsp;shares of common
    stock held by R&nbsp;&#38; V Dolan, L.L.C. Mr.&nbsp;Dolan serves
    Flarion&#146;s Chairman and Chief Executive Officer.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(11)&nbsp;</TD>
    <TD align="left">
    Consists of the shares of capital stock as described in footnote
    (2) above. Mr.&nbsp;Goodman is the member of the Flarion board
    of directors representing Bessemer Venture Partners.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(12)&nbsp;</TD>
    <TD align="left">
    Consists of the shares of capital stock as described in footnote
    (7) above. Mr.&nbsp;Hale is the member of the Flarion board of
    directors representing Pequot Capital Management.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(13)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;2,759,114&nbsp;shares of common stock held
    by Rajiv Laroia, (b)&nbsp;22,000&nbsp;shares of common stock
    held by Tarana Laroia, (c)&nbsp;22,000&nbsp;shares of common
    stock held by Ishaan Laroia, (d)&nbsp;22,000&nbsp;shares of
    common stock held by Krishan Kumar Laroia,
    (e)&nbsp;22,000&nbsp;shares of common stock held by Anuradha
    Laroia-Batta, (f)&nbsp;22,000&nbsp;shares of common stock held
    by Sanjeev Laroia, (g)&nbsp;22,000&nbsp;shares of common stock
    held by Sanjdeep Laroia and (h)&nbsp;720,000&nbsp;shares of
    common stock held by the Rajiv Laroia Grantor Retained Annuity
    Trust. Mr.&nbsp;Laroia is a founder of Flarion and serves as the
    Chief Technology Officer and as a director of Flarion.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(14)&nbsp;</TD>
    <TD align="left">
    As of August&nbsp;5, 2005, Michael Gallagher served as President
    of Flarion. Mr.&nbsp;Gallagher terminated his employment with
    Flarion effective as of September&nbsp;6, 2005.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(15)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;416,666&nbsp;shares of common stock,
    (b)&nbsp;233,334&nbsp;shares of common stock subject to
    repurchase rights of Flarion and (c)&nbsp;unvested options to
    purchase&nbsp;350,000&nbsp;shares of common stock with rights of
    early exercise.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(16)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;238,750&nbsp;share of common stock,
    (b)&nbsp;fully vested options to
    purchase&nbsp;31,250&nbsp;shares of common stock and
    (c)&nbsp;unvested options to purchase&nbsp;250,000&nbsp;shares
    of common stock with rights of early exercise.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(17)&nbsp;</TD>
    <TD align="left">
    Consists of the shares of capital stock as described in footnote
    (3) above. Mr.&nbsp;Sachs is the member of the Flarion board of
    directors representing Charles River Ventures.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(18)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;100,000&nbsp;shares of common stock,
    (b)&nbsp;200,000&nbsp;shares of Series&nbsp;A preferred stock,
    (c)&nbsp;80,085&nbsp;shares of Series&nbsp;B preferred stock,
    (d)&nbsp;fully vested options to
    purchase&nbsp;70,625&nbsp;shares of common stock and
    (e)&nbsp;unvested options to purchase&nbsp;9,375&nbsp;shares of
    common stock with rights of early exercise.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(19)&nbsp;</TD>
    <TD align="left">
    Consists of (a)&nbsp;100,000&nbsp;shares of common stock held by
    Mr.&nbsp;Viterbi, (b)&nbsp;100,000&nbsp;shares of Series&nbsp;A
    preferred stock and 158,514&nbsp;shares of Series&nbsp;B
    preferred stock held by Andrew James Viterbi, Trustee of the
    Andrew James Viterbi Flarion Annuity Trust dated April&nbsp;11,
    2005, (c)&nbsp;100,000&nbsp;shares of Series&nbsp;A preferred
    stock and 158,514&nbsp;shares of Series&nbsp;B preferred stock
    held by Andrew James Viterbi, Trustee of the Erna Finci Viterbi
    Flarion Annuity Trust dated April&nbsp;11, 2005, (d)&nbsp;fully
    vested options to purchase&nbsp;70,625&nbsp;shares of common
    stock and (e)&nbsp;unvested options to
    purchase&nbsp;9,375&nbsp;shares of common stock with rights of
    early exercise.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

</TABLE>

<P align="center" style="font-size: 10pt;">74

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<DIV align="left" style="font-size: 10pt;">
 <A name='177'></A>
</DIV>

<!-- link1 "DESCRIPTION OF QUALCOMM CAPITAL STOCK" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DESCRIPTION OF QUALCOMM CAPITAL STOCK</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of September&nbsp;13, 2005, our authorized capital stock
consisted of 6,000,000,000&nbsp;shares of common stock,
$0.0001&nbsp;par value per share, and 8,000,000&nbsp;shares of
preferred stock, $0.0001&nbsp;par value per share.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='178'></A>
</DIV>

<!-- link1 "Common Stock" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Common Stock</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of September&nbsp;13, 2005 there were
1,638,543,915&nbsp;shares of common stock outstanding held of
record by 10,152&nbsp;stockholders. The holders of our common
stock are entitled to one vote for each one share held of record
on all matters submitted to a vote of the stockholders. Subject
to preferences that may be applicable to any then outstanding
preferred stock, holders of our common stock are entitled to
receive ratably such dividends as may be declared by our board
of directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of QUALCOMM,
holders of our common stock are entitled to share ratably in all
assets remaining after payment of liabilities and the
liquidation preference of any then outstanding preferred stock.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Holders of our common stock have no preemptive rights and no
right to convert their common stock into any other securities.
There are no redemption or sinking fund provisions applicable to
our common stock. All outstanding shares of our common stock
are, and all shares of our common stock issuable upon conversion
of the preferred stock, when and if issued, will be fully paid
and nonassessable.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='179'></A>
</DIV>

<!-- link1 "Preferred Stock" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Preferred Stock</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors has the authority, without further action
by the stockholders, to issue up to 8,000,000&nbsp;shares of
preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including
dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences and the number of shares
constituting any series or the designation of such series,
without any further vote or action by the stockholders. The
issuance of preferred stock could adversely affect the voting
power of holders of our common stock and could have the effect
of delaying, deferring or preventing a change in control of the
company.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with our stockholder rights agreement, as
described below, our board of directors has designated
1,500,000&nbsp;shares of our preferred stock &#147;Series&nbsp;A
Junior Participating Preferred Stock,&#148; or Series&nbsp;A. We
may issue the shares of Series&nbsp;A under certain
circumstances if, as discussed below, the rights distributed to
our stockholders pursuant to the rights agreement become
exercisable. Among other rights, in the event of any merger,
consolidation or other transaction in which our common stock is
exchanged, each share of Series&nbsp;A will be entitled to
receive 1,600 times the amount of consideration received per
share of our common stock. These rights are protected by
customary anti-dilution provisions. Because of the nature of the
dividend and liquidation rights of the Series&nbsp;A, the value
of one sixteenth of one-hundredth of a share of Series&nbsp;A
should approximate the value of one share of our common stock.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='180'></A>
</DIV>

<!-- link1 "Rights Agreement" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Rights Agreement</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We adopted a stockholder rights agreement in September 1995. In
connection with the rights agreement, our board of directors
declared and paid a dividend of one preferred share purchase
right for each share of our common stock then outstanding and
that would be issued after the date thereof. Each right entitles
the holder, under specified circumstances, to purchase from us
one sixteenth of one-hundredth of a share of our Series&nbsp;A,
par value $0.0001&nbsp;per share, at a price of $25&nbsp;per one
sixteenth of one-hundredth of a share of Series&nbsp;A, subject
to adjustment, subject to future stock splits, dividends,
consolidations and similar events. Unless our board of directors
extends the expiration date, the rights expire on the earliest
of September&nbsp;26, 2005, or an exchange or redemption of the
rights described herein.
</DIV>

<P align="center" style="font-size: 10pt;">75

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Initially, the rights are attached to outstanding certificates
representing our common stock, and no separate certificates
representing the rights are distributed. The rights will
separate from our common stock, be represented by separate
certificates and will become exercisable upon the earlier of:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the rights become exercisable, each right (other than rights
held by an acquiring party) will entitle the holder to purchase,
at a price equal to the adjusted exercise price of the right, a
number of shares of our common stock having a then-current value
of twice the adjusted exercise price of the right. If, after the
rights become exercisable, we agree to merge into another entity
or we sell, mortgage or transfer more than 50% of our assets to
another entity, each right (other than rights held by an
acquiring party) will entitle the holder to purchase, at a price
equal to the adjusted exercise price of the right, a number of
shares of common stock of such entity having a then-current
value of twice the adjusted exercise price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may exchange the rights (other than rights held by an
acquiring party) at a ratio of one-sixteenth of one share of
common stock for each right at any time after a person or group
acquires 15% or more of our common stock but before such person
acquires 50% or more of our common stock. We may also redeem the
rights at our option at a price of one-sixteenth of
$0.01&nbsp;per right at any time before a person or group
announces it has acquired or intends to acquire 15% or more of
our common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The rights agreement approved by our board of directors is
designed to protect and maximize the value of our outstanding
equity interests in the event of an unsolicited attempt to
acquire us in a manner or on terms not approved by our board of
directors and that prevents our stockholders from realizing the
full value of their shares of our common stock. However, the
rights may have the effect of rendering more difficult or
discouraging an acquisition of us that is deemed undesirable by
our board of directors. The rights may cause substantial
dilution to a person or group that attempts to acquire us on
terms or in a manner not approved by our board of directors,
except pursuant to an offer conditioned upon the negation,
purchase or redemption of the rights.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='181'></A>
</DIV>

<!-- link1 "Transfer Agent and Registrar" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Transfer Agent and Registrar</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The transfer agent and registrar for our common stock is
Computershare Investor Services, LLC, located at 2 North LaSalle
Street, Chicago, Illinois 60602, and its telephone number is
(312)&nbsp;588-4990.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='182'></A>
</DIV>

<!-- link1 "Delaware Law and Certain Charter Provisions" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Delaware Law and Certain Charter Provisions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are subject to Section&nbsp;203 of the DGCL, which, with
certain exceptions, prohibits a Delaware corporation from
engaging in any &#147;business combination&#148; with an
&#147;interested stockholder&#148; for a period of three years
following the time that such stockholder became an interested
stockholder, unless:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">76

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    affirmative vote of at least two-thirds of the outstanding
    voting stock that is not owned by the interested stockholder.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In general, Section&nbsp;203 defines a business combination to
include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any merger or consolidation involving the corporation and the
    interested stockholder;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any sale, transfer, pledge or other disposition of 10% or more
    of the assets of the corporation involving the interested
    stockholder;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In general, Section&nbsp;203 defines an interested stockholder
as an entity or person beneficially owning 15% or more of the
outstanding voting stock of the corporation and any entity or
person affiliated with or controlling or controlled by such
entity or person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our certificate of incorporation contains a &#147;fair price
provision&#148; that requires the approval of the holders of at
least
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of our voting stock (voting together as a single class) as a
condition to a merger or certain other business transactions
with, or proposed by, a holder of 15% or more of our voting
stock, except in cases where certain directors approve the
transaction or certain minimum price criteria and other
procedural requirements are met. We believe that the fair price
provision will help assure that all of our stockholders will be
treated similarly if certain kinds of business combinations are
effected. However, the fair price provision may make it more
difficult to accomplish transactions that could be beneficial to
stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our certificate of incorporation also requires that any action
required or permitted to be taken by our stockholders must be
effected at a duly called annual or special meeting of the
stockholders and may not be effected by any consent in writing.
In addition, special meetings of our stockholders may be called
only by our board of directors, or chairman of our board of
directors or our president. Our certificate of incorporation
also provides for a classified board of directors consisting of
three classes of directors. In addition, the certificate of
incorporation provides that the authorized number of directors
may be changed only by resolution of the board of directors.
These provisions may have the effect of deterring hostile
takeovers or delaying changes in control or management of
QUALCOMM.
</DIV>

<P align="center" style="font-size: 10pt;">77

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<DIV align="left" style="font-size: 10pt;">
<A name='183'></A>
</DIV>

<!-- link1 "COMPARISON OF RIGHTS OF QUALCOMM STOCKHOLDERS AND FLARION STOCKHOLDERS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMPARISON OF RIGHTS OF QUALCOMM STOCKHOLDERS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AND FLARION STOCKHOLDERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This section describes material differences between the rights
of holders of QUALCOMM common stock and the rights of holders of
Flarion capital stock. The rights compared are those found in
the respective companies&#146; certificates of incorporation,
bylaws and corporate law provisions of Delaware, which is the
state in which both companies are incorporated. While QUALCOMM
and Flarion believe that this description covers the material
differences between the two, this summary is not intended to be
a complete discussion of the certificate of incorporation and
bylaws of QUALCOMM and the certificate of incorporation and
bylaws of Flarion and is qualified in its entirety by reference
to the applicable document and applicable Delaware law. Flarion
stockholders should carefully read this entire document and the
documents referred to in this summary for a more complete
understanding of the differences between the rights of holders
of QUALCOMM common stock and the rights of holders of Flarion
capital stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM and Flarion are both organized under the laws of the
State of Delaware. Therefore, any differences in the rights of
holders of QUALCOMM capital stock and Flarion capital stock
arise primarily from differences in their respective
certificates of incorporation and bylaws. Upon completion of the
merger, holders of Flarion capital stock will become holders of
QUALCOMM capital stock and their rights will be governed by
Delaware law, as well as the certificate of incorporation and
bylaws of QUALCOMM. The following discussion summarizes material
differences between the rights of QUALCOMM stockholders and
Flarion stockholders under the certificate of incorporation and
bylaws of QUALCOMM and of Flarion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because this summary does not provide a complete description of
these documents, all Flarion stockholders are urged to carefully
read the relevant provisions of Delaware law, as well as the
certificates of incorporation and bylaws of both QUALCOMM and
Flarion. Copies of the certificates of incorporation and bylaws
of Flarion and QUALCOMM will be sent to Flarion stockholders
upon request. See &#147;Where You Can Find More
Information&#148; for more information.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='184'></A>
</DIV>

<!-- link1 "Capitalization" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Capitalization</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The authorized capital stock of QUALCOMM consists of:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    6,000,000,000&nbsp;shares of common stock, par value
    $0.0001&nbsp;per share;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    8,000,000&nbsp;shares of preferred stock, par value
    $0.0001&nbsp;per share.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The authorized capital stock of Flarion consists of:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    173,000,000&nbsp;shares of common stock, par value
    $0.001&nbsp;per share;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    18,436,225&nbsp;shares of Series&nbsp;A preferred stock, par
    value $0.001&nbsp;per share;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    41,466,416&nbsp;shares of Series&nbsp;B preferred stock, par
    value $0.001&nbsp;per share.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='185'></A>
</DIV>

<!-- link1 "Classification, Number and Election of Directors" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Classification, Number and Election of Directors</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The QUALCOMM board of directors is divided into three classes,
with each class serving a staggered three-year term. Currently,
QUALCOMM&#146;s authorized number of directors is&nbsp;13,
including four Class&nbsp;I directors, five Class&nbsp;II
directors, and four Class&nbsp;III directors. The Class&nbsp;I
directors have a term expiring at the 2007 annual meeting of
stockholders, the Class&nbsp;II directors have a term expiring
at the 2008 annual meeting of stockholders, and the
Class&nbsp;III directors have a term expiring at the 2006 annual
meeting of stockholders. The QUALCOMM bylaws provide that its
board of directors will consist of a number of directors to be
fixed from
</DIV>

<P align="center" style="font-size: 10pt;">78

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<DIV align="left" style="font-size: 10pt;">
time to time by a resolution duly adopted by the QUALCOMM board
of directors. The number of directors currently serving is 13.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Currently, Flarion&#146;s authorized number of directors is
eleven. The number of directors currently serving is ten
directors, with one vacancy, each of whom serves a one year
term. Flarion&#146;s bylaws provide that the number of directors
shall be fixed from time to time by the Flarion board of
directors or by the stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='186'></A>
</DIV>

<!-- link1 "Vacancies on the Board of Directors and Removal of Directors" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Vacancies on the Board of Directors and Removal of
Directors</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>General</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Delaware law provides that if, at the time of filling of any
vacancy or newly created directorship, the directors then in
office constitute less than a majority of the authorized number
of directors, the Delaware Court of Chancery may, upon
application of any stockholder or stockholders holding at least
10% of the voting stock of the corporation then outstanding
having the right to vote for such directors, order an election
to be held to fill the vacancy or replace the directors selected
by the directors then in office.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Vacancies on the board of directors of QUALCOMM resulting from
death, resignation, disqualification, removal or other causes
may be filled by either (i)&nbsp;affirmative vote of a majority
of the voting power of outstanding shares entitled to vote
generally in the election of directors voting together as a
single class, or (ii)&nbsp;affirmative vote of a majority of the
remaining directors then in office, even if less than a quorum
of the board of directors. Newly created directorships resulting
from any increase in the number of directors shall be filled by
the affirmative vote of the directors then in office (unless the
board of directors determines by resolution that any such newly
created directorship shall be filled by the stockholders).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM&#146;s bylaws provide that a director may be removed
from office at any time with cause by the affirmative vote of
the holders of at least a majority of the outstanding shares
entitled to vote at an election of directors. A director may be
removed from office at any time without cause by the affirmative
vote of the holders of at least
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the outstanding shares entitled to vote at an election of
directors.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Vacancies on Flarion&#146;s board of directors resulting from
death, resignation, removal, disqualification or any other cause
may be filled for the remaining portion of the term by a
majority vote of the board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s bylaws do not provide a method for removal of a
director. However, Section&nbsp;141(k) of the DGCL provides that
any director or the entire board of directors may be removed,
with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='187'></A>
</DIV>

<!-- link1 "Committees of the Board of Directors" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Committees of the Board of Directors</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM&#146;s board of directors may, by resolution passed by
a majority of the whole board, appoint an Executive Committee
consisting of one or more members of the board. When the board
of directors is not in session, the Executive Committee shall
have and may exercise all powers of the board in the management
of the business of the corporation, except: (i)&nbsp;the power
to amend the certificate of incorporation; (ii)&nbsp;the power
to adopt an agreement of merger or consolidation; (iii)&nbsp;the
power to amend the bylaws; and (iv)&nbsp;the power to recommend
to the stockholders the sale of all or substantially all of the
corporation&#146;s assets or a dissolution of the corporation.
There is currently no sitting Executive Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM&#146;s board of directors may, by resolution passed by
a majority of the whole board, appoint such other committees as
may be permitted by law, consisting of one or more members of
the board. Any such
</DIV>

<P align="center" style="font-size: 10pt;">79

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<DIV align="left" style="font-size: 10pt;">
other committee shall have the powers and duties as may be
prescribed by the resolution creating such committee. However,
such committee will in no event have the powers denied to the
Executive Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each member of a committee shall serve a term on the committee
coexistent with the member&#146;s term on the board of
directors. The QUALCOMM board of directors may at any time
increase or decrease the number of members of a committee or
terminate the existence of a committee. QUALCOMM currently has
sitting audit, governance, compensation, strategic and finance
committees.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD>
    <B><I>Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s board of directors may, by resolution passed by a
majority of the whole board, appoint an Executive Committee
consisting of two or more members of the board. When the Flarion
board of directors is not in session, the Executive Committee
shall have and may exercise all powers of the board in the
management of the business of the corporation to the extent
authorized by resolution adopted by a majority of the whole
board.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s board of directors may, by resolution passed by a
majority of the whole board, appoint such other committees as it
deems desirable. Any such other committee shall have the powers
and duties as may be assigned to it by the Flarion board of
directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Flarion board of directors may at any time increase or
decrease the number of members of a committee or terminate the
existence of a committee.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='188'></A>
</DIV>

<!-- link1 "Amendments to the Certificate of Incorporation" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Amendments to the Certificate of Incorporation</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <B><I>General</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Delaware law, an amendment to the certificate of
incorporation of a corporation generally requires the approval
of the corporation&#146;s board of directors and the approval of
the holders of a majority of the outstanding stock entitled to
vote upon the proposed amendment (unless a higher vote is
required by the corporation&#146;s certificate of incorporation).
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM&#146;s certificate of incorporation provides that that
affirmative vote of the holders of at least
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the voting power of all outstanding shares, voting as a
single class, is required to amend Article&nbsp;VI, VII, VIII,
or IX of the certificate of incorporation. Articles&nbsp;VI
through IX govern the following: (i)&nbsp;number and class of
board of directors and their powers; (ii)&nbsp;indemnification
of directors; (iii)&nbsp;approval of business combinations, sale
of assets, liquidation, etc.; and (iv)&nbsp;procedure for
amendment of the certificate of incorporation.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, amendment of the certificate of incorporation in
any manner that would materially alter or change the powers,
preferences, or special rights of the Series&nbsp;A preferred
stock so as to affect them adversely requires the affirmative
vote of at least
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the outstanding shares of Series&nbsp;A preferred stock,
voting together as a single class.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD></TD>
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    <B><I>Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s certificate of incorporation provides that the
corporation reserves the right to amend, alter, change or repeal
any provision in its certificate of incorporation in the manner
prescribed by statute.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s certificate of incorporation further provides
that when shares of Series&nbsp;A preferred stock are
outstanding, a majority vote of the holders of Series&nbsp;A is
required (in addition to any other required vote) in several
situations, such as amending the certificate of incorporation or
taking any action that would materially detract from the rights
of the holders of Series&nbsp;A preferred. If shares of
Series&nbsp;B preferred stock are outstanding, a separate
majority vote is required in these situations as well.
</DIV>

<P align="center" style="font-size: 10pt;">80

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<DIV align="left" style="font-size: 10pt;">
<A name='189'></A>
</DIV>

<!-- link1 "Amendments to Bylaws" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Amendments to Bylaws</B>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD></TD>
    <TD>
    <B><I>General</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Delaware law, stockholders entitled to vote have the power
to adopt, amend or repeal bylaws. In addition, a corporation
may, in its certificate of incorporation, confer this power on
the board of directors. The stockholders always have the power
to adopt, amend or repeal the bylaws, even though the board of
directors may also be delegated the power.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD></TD>
    <TD>
    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM&#146;s bylaws provide that amendment to the bylaws
requires the affirmative vote of the holders of at least
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the voting power of all outstanding shares of the voting
stock. The bylaws may also be amended by the QUALCOMM board of
directors if such power is conferred via the certificate of
incorporation. QUALCOMM&#146;s certificate of incorporation
expressly confers this power.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD></TD>
    <TD>
    <B><I>Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s bylaws provide that amendment to the bylaws may
be made by either the stockholders or the Flarion board of
directors.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='190'></A>
</DIV>

<!-- link1 "Ability to Call Special Meetings of Stockholders" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Ability to Call Special Meetings of Stockholders</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Special meetings of the QUALCOMM stockholders may be called for
any purpose by: (i)&nbsp;the chairman of the board of directors;
(ii)&nbsp;the president; or (iii)&nbsp;the QUALCOMM board of
directors pursuant to a resolution adopted by a majority of the
total number of authorized directors.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD></TD>
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    <B><I>Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Special meetings of the Flarion stockholders may be called at
any time by: (i)&nbsp;order of the Flarion board of directors;
or (ii)&nbsp;by the chief executive officer, secretary, or
assistant secretary at the written request of the holders of at
least 50% of the total number of shares of outstanding stock
entitled to vote, stating the specific purpose(s) of the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='191'></A>
</DIV>

<!-- link1 "Notice of Stockholder Action" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notice of Stockholder Action</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD></TD>
    <TD>
    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to QUALCOMM&#146;s bylaws, at annual meetings of the
stockholders only such business shall be conducted as has been
properly brought before the meeting. To be properly brought
before an annual meeting, business must be: (i)&nbsp;specified
in the notice of the meeting given by or at the direction of the
board of directors; (ii)&nbsp;otherwise properly brought before
the meeting by or at the direction of the board of directors; or
(iii)&nbsp;otherwise properly brought before the meeting by a
stockholder who has given timely notice in writing to the
secretary of the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To be timely, the stockholder&#146;s notice must be received at
the corporation&#146;s principal executive offices not less than
120&nbsp;days in advance of the first anniversary of the date
that the corporation&#146;s proxy statement was released to
stockholders in connection with the previous year&#146;s annual
meeting. If no annual meeting was held in the previous year or
the date of the annual meeting is more than 30 calendar days
earlier than the date of the prior year&#146;s annual meeting,
notice by the stockholders, to be timely, must be received no
later than the close of business on the tenth day following the
day on which the date of the annual meeting is publicly
announced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A stockholder&#146;s notice to the secretary shall set forth the
following information as to each matter the stockholder proposes
to bring before the annual meeting: (i)&nbsp;a brief description
of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual
meeting;
</DIV>

<P align="center" style="font-size: 10pt;">81

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<DIV align="left" style="font-size: 10pt;">
(ii)&nbsp;the name and address, as they appear on the
corporation&#146;s books, of the stockholder proposing such
business; (iii)&nbsp;the class and number of shares of the
corporation which are beneficially owned by the stockholder;
(iv)&nbsp;any material interest of the stockholder in such
business, and (v)&nbsp;any other information that is required to
be provided by the stockholder pursuant to Regulation&nbsp;14A
under the Exchange Act in his capacity as a proponent to a
stockholder proposal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Nominations of persons for election to the QUALCOMM board of
directors may be made at a meeting of stockholders by or at the
direction of the board of directors, or by any stockholder of
the corporation entitled to vote in the election of directors at
the meeting who complies with certain notice procedures. Such
nominations made by stockholders shall be made by timely notice
(same requirements as notice of proposed business to be
conducted at an annual meeting) in writing to the secretary of
the corporation. Timely notice shall also be given of any
stockholder&#146;s intention to accumulate votes in the election
of directors at a meeting, setting forth as to each person, if
any, whom the stockholder proposes to nominate for election or
re-election of a director the following information:
(i)&nbsp;the name, age, business address and residence address
of such person; (ii)&nbsp;the principal occupation or employment
of such person; (iii)&nbsp;the class and number of shares of the
corporation which are beneficially owned by such person;
(iv)&nbsp;a description of all arrangements or understandings
between the stockholder and each nominee; and (v)&nbsp;any other
information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to
Regulation&nbsp;14A under the Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
With respect to special meetings of QUALCOMM&#146;s
stockholders, if the special meeting is called by any person(s)
other than the board of directors, the request shall be in
writing, specifying the general nature of the business proposed
to be transacted, and shall be delivered personally or sent by
registered mail or by telegraphic or other facsimile
transmission to the chairman of the board of directors, the
president, or the secretary of the corporation. No business
shall be conducted at such special meeting unless specified in
such notice.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to Flarion&#146;s bylaws, annual meetings of the
stockholders shall be held each year for the election of
directors and the transaction of such other business as may
properly come before the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For special meetings of Flarion&#146;s stockholders, written
notice of the time, place and specific purposes of the meeting
shall be given by mail to each stockholder entitled to vote
thereat at his address as it appears on the records of the
corporation pursuant to the DGCL, unless such notice is waived.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='192'></A>
</DIV>

<!-- link1 "Indemnification of Directors and Officers" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Indemnification of Directors and Officers</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD>
    <B><I>General</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Delaware law, a corporation may generally indemnify
directors, officers, employees and agents in connection with any
proceeding (other than an action by or in the right of the
corporation):
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    with respect to any criminal proceeding, if they had no
    reasonable cause to believe that their conduct was unlawful.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, Delaware law provides that a corporation may
advance to a director or officer expenses incurred in defending
any action upon receipt of an undertaking by the director or
officer to repay the amount advanced if it is ultimately
determined that he or she is not entitled to indemnification.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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</TR>

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    <TD></TD>
    <TD>
    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The indemnification provisions in QUALCOMM&#146;s bylaws provide
that QUALCOMM shall indemnify its directors and executive
officers to the fullest extent not prohibited by the DGCL.
However,
</DIV>

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<DIV align="left" style="font-size: 10pt;">
QUALCOMM&#146;s bylaws also provide that QUALCOMM may limit the
extent of such indemnification by individual contracts with its
directors and executive officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, QUALCOMM&#146;s bylaws provide that QUALCOMM shall
not be required to indemnify any director or executive officer
in connection with any proceeding initiated by such person
against QUALCOMM or its directors, officers, employees or other
agents unless: (i)&nbsp;such indemnification is expressly
required to be made by law; (ii)&nbsp;the proceeding was
authorized by the QUALCOMM board of directors; or
(iii)&nbsp;such indemnification is provided by QUALCOMM, in its
sole discretion, pursuant to the powers vested in QUALCOMM under
the DGCL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM&#146;s bylaws also provide that QUALCOMM shall have the
power to indemnify its other officers, employees and other
agents as set forth in the DGCL.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <B><I>Flarion</I></B></TD>
</TR>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s bylaws provide that Flarion shall indemnify, to
the full extent and under the circumstances permitted by the
DGCL in effect from time to time, any person made or threatened
to be made a party to any threatened, pending or completed
action, suit, or proceeding, by reason of the fact that he is or
was a director, officer of Flarion or designated officer of an
operating division of Flarion, or is or was an employee or agent
of Flarion as a director, officer, employee or agent of another
company or other enterprise in which Flarion owns, directly or
indirectly, an equity interest or of which it may be a creditor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion&#146;s bylaws further provide that the Flarion board of
directors, on behalf of Flarion, may grant indemnification to
any individual other than a person defined above to such extent
and in such manner as the board may determine in its sole
discretion.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='193'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Certain Business Combination Restrictions</B>
</DIV>

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    <TD>
    <B><I>QUALCOMM</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM is subject to Section&nbsp;203 of the DGCL, which, with
certain exceptions, prohibits a Delaware corporation from
engaging in any &#147;business combination&#148; with an
&#147;interested stockholder,&#148; as discussed in the section
entitled &#147;Description of QUALCOMM&#146;s Capital
Stock&nbsp;&#151; Delaware Law and Certain Charter
Provisions.&#148;
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD>
    <B><I>Flarion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion is not subject to Section&nbsp;203 of the DGCL.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='194'></A>
</DIV>

<!-- link1 "APPRAISAL RIGHTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>APPRAISAL RIGHTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM stockholders are not entitled to vote on the merger and
do not have appraisal rights in connection the merger or the
issuance of QUALCOMM common stock pursuant to the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The merger agreement has already been adopted by the
stockholders of Flarion. However, holders of Flarion shares who
properly demand appraisal of their shares may be entitled to
receive consideration for their shares in accordance with
Subchapter IX, Section&nbsp;262 of the DGCL. Section&nbsp;262 is
attached as Annex&nbsp;C to this prospectus/ information
statement.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following discussion is not a complete statement of the law
pertaining to appraisal rights under Section&nbsp;262 and is
qualified in its entirety by the full text of Section&nbsp;262,
which is attached hereto. All references in Section&nbsp;262 and
in this summary to a &#147;stockholder&#148; are to the record
holder of the shares of Flarion capital stock as to which
appraisal rights are asserted. A person having a beneficial
interest in shares of Flarion capital stock held of record in
the name of another person, such as a broker, fiduciary,
depositary or other nominee, must act promptly to cause the
record holder to follow the steps summarized below properly and
in a timely manner to perfect appraisal rights.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Section&nbsp;262, persons who hold shares of Flarion
capital stock who follow the procedures set forth in
Section&nbsp;262 will be entitled to have their shares appraised
by the Delaware Court of Chancery and to receive payment of the
&#147;fair value&#148; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Section&nbsp;262, where a merger is approved by written
consent of the stockholders pursuant to Section&nbsp;228, as in
the case of the adoption of the merger agreement and approval of
the merger by the Flarion stockholders, the constituent
corporation (or as applicable, the surviving corporation) must
notify each stockholder entitled to appraisal rights of the
approval of the merger and that appraisal rights are available
to them. The notification must be made within ten days of the
effective time of the merger. Any stockholder entitled to
appraisal rights may demand appraisal of their shares by written
notice to the surviving corporation within 20&nbsp;days of the
mailing of the notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The disclosure contained herein shall constitute Flarion&#146;s
notice of appraisal rights under Section&nbsp;262, and the full
text of Section&nbsp;262 is attached hereto. Any holder of
Flarion capital stock who wishes to exercise appraisal rights or
who wishes to preserve such holder&#146;s right to do so, should
review the following discussion and the full text of
Section&nbsp;262 carefully because failure to timely and
properly comply with the procedures specified will result in the
loss of appraisal rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any Flarion stockholder wishing to exercise appraisal rights
must deliver to Flarion a written demand for the appraisal of
the stockholder&#146;s shares as described above. Such
stockholder must not have voted its shares of capital stock in
favor of adoption of the merger agreement and approval of the
mergers. A holder of shares of Flarion capital stock wishing to
exercise appraisal rights must hold of record the shares on the
date the written demand for appraisal is made and must continue
to hold the shares of record through the effective time of the
merger. Written demand for appraisal must reasonably inform
Flarion of the identity of the holder as well as the intention
of the holder to demand an appraisal of the &#147;fair
value&#148; of the shares held by the holder. A
stockholder&#146;s failure to make the written demand within
20&nbsp;days of the mailing of this notice will constitute a
waiver of appraisal rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Only a holder of record of shares of Flarion capital stock is
entitled to assert appraisal rights for the shares registered in
that holder&#146;s name. A demand for appraisal in respect of
shares of Flarion capital stock should be executed by or on
behalf of the holder of record, fully and correctly, as the
holder&#146;s name appears on the holder&#146;s stock
certificates, and must state that the person intends thereby to
demand appraisal of the holder&#146;s shares pursuant to the
merger agreement. If the shares are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian,
execution of the demand should be made in that capacity, and if
the shares are owned of record by more than one person, as in a
joint tenancy and tenancy in common, the demand should be
executed by or on behalf of all joint owners. An authorized
agent, including an agent for two or more joint owners, may
execute a demand for appraisal on behalf of a holder of record;
however, the agent must
</DIV>

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<DIV align="left" style="font-size: 10pt;">
identify the record owner or owners and expressly disclose the
fact that, in executing the demand, the agent is acting as agent
for the record owner or owners. A record holder such as a broker
who holds shares as nominee for several beneficial owners may
exercise appraisal rights with respect to the shares held for
one or more beneficial owners while not exercising the rights
with respect to the shares held for other beneficial owners. In
such case, however, the written demand should set forth the
number of shares as to which appraisal is sought and where no
number of shares is expressly mentioned the demand will be
presumed to cover all shares of Flarion capital stock held in
the name of the record owner. Stockholders who hold their shares
in brokerage accounts or other nominee forms and who wish to
exercise appraisal rights are urged to consult with their
brokers to determine the appropriate procedures for the making
of a demand for appraisal by such a nominee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All written demands for appraisal pursuant to Section&nbsp;262
should be sent or delivered to Flarion Technologies, Inc., 135
Route 202/206 South, Bedminster, New Jersey 07921, Attention:
Chief Executive Officer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within ten days after the effective time of the mergers, the
corporation surviving the mergers (or its successor in interest,
which we refer to generally as the surviving corporation) must
notify each holder of Flarion capital stock who has complied
with Section&nbsp;262 and who has not voted in favor of the
adoption of the merger agreement and approval of the mergers
that the mergers have become effective. Within 120&nbsp;days
after the effective time of the mergers, but not thereafter, the
surviving corporation or any holder of Flarion capital stock who
has so complied with Section&nbsp;262 and is entitled to
appraisal rights under Section&nbsp;262 may file a petition in
the Delaware Court of Chancery demanding a determination of the
fair value of the holder&#146;s shares. The surviving
corporation is under no obligation to and has no present
intention to file a petition. Accordingly, it is the obligation
of the holders of Flarion capital stock to initiate all
necessary action to perfect their appraisal rights in respect of
shares of Flarion capital stock within the time prescribed in
Section&nbsp;262.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within 120&nbsp;days after the effective time of the mergers,
any holder of Flarion capital stock who has complied with the
requirements for exercise of appraisal rights will be entitled,
upon written request, to receive from the surviving corporation
a statement setting forth the aggregate number of shares of
Flarion common stock not voted in favor of the adoption of the
merger agreement and approval of the mergers and with respect to
which demands for appraisal have been received and the aggregate
number of holders of such shares. The statement must be mailed
within ten days after a written request has been received by the
surviving corporation or within ten days after the expiration of
the period for delivery of demands for appraisal, whichever is
later.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a petition for an appraisal is timely filed by a holder of
shares of Flarion capital stock and a copy thereof is served
upon the surviving corporation, the surviving corporation will
then be obligated within 20&nbsp;days to file with the Delaware
Register in Chancery a duly verified list containing the names
and addresses of all stockholders who have demanded an appraisal
of their shares and with whom agreements as to the value of
their shares have not been reached. After notice to the
stockholders as required by the Court, the Delaware Court of
Chancery is empowered to conduct a hearing on the petition to
determine those stockholders who have complied with
Section&nbsp;262 and who have become entitled to appraisal
rights thereunder. The Delaware Court of Chancery may require
the stockholders who demanded appraisal of their shares to
submit their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceeding;
and if any stockholder fails to comply with the direction, the
Court of Chancery may dismiss the proceedings as to the
stockholder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After determining the holders of Flarion common stock and
Flarion preferred stock entitled to appraisal, the Delaware
Court of Chancery will appraise the &#147;fair value&#148; of
their shares, exclusive of any element of value arising from the
accomplishment or expectation of the mergers, together with a
fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. Stockholders considering
seeking appraisal should be aware that the fair value of their
shares as so determined could be more than, the same as or less
than the consideration they would receive pursuant to the merger
if they did not seek appraisal of their shares and that an
investment banking opinion as to fairness from a financial point
of view is not necessarily an opinion as to fair value under
Section&nbsp;262. You should not expect the surviving
corporation to offer more than the applicable merger
consideration to any stockholder exercising appraisal rights and
Flarion and
</DIV>

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<DIV align="left" style="font-size: 10pt;">
QUALCOMM reserve the right to assert, in any appraisal
proceeding, that for purposes of Section&nbsp;262, the
&#147;fair value&#148; of a share of Flarion capital stock is
less than the applicable merger consideration. The Delaware
Supreme Court has stated that &#147;proof of value by any
techniques or methods which are generally considered acceptable
in the financial community and otherwise admissible in
court&#148; should be considered in the appraisal proceedings.
In addition, Delaware courts have decided that the statutory
appraisal remedy, depending on factual circumstances, may or may
not be a dissenter&#146;s exclusive remedy. The Delaware Court
of Chancery will also determine the amount of interest, if any,
to be paid upon the amounts to be received by persons whose
shares of Flarion capital stock have been appraised. The costs
of the action may be determined by the Court and taxed upon the
parties as the Court deems equitable. The Court may also order
that all or a portion of the expenses incurred by any
stockholder in connection with an appraisal, including, without
limitation, reasonable attorneys&#146; fees and the fees and
expenses of experts utilized in the appraisal proceeding, be
charged pro rata against the value of all the shares entitled to
be appraised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any holder of shares of Flarion capital stock who has duly
demanded an appraisal in compliance with Section&nbsp;262 will
not, after the effective time of the merger, be entitled to vote
the shares subject to the demand for any purpose or be entitled
to the payment of dividends or other distributions on those
shares (except dividends or other distributions payable to
holders of record of Flarion capital stock as of a record date
prior to the effective time of the merger).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If any stockholder who demands appraisal of shares of Flarion
capital stock under Section&nbsp;262 fails to perfect, or
effectively withdraws or loses, such holder&#146;s right to
appraisal, the stockholder&#146;s shares of Flarion capital
stock will be deemed to have been converted at the effective
time of the merger into the right to receive the merger
consideration such stockholder would have received if such
stockholder had not demanded appraisal. A stockholder will fail
to perfect, or effectively lose or withdraw, the
stockholder&#146;s right to appraisal if no petition for
appraisal is filed within 120&nbsp;days after the effective time
of the merger, or if the stockholder delivers to the surviving
corporation a written withdrawal of the holder&#146;s demand for
appraisal and an acceptance of the merger, except that any
attempt to withdraw made more than 60&nbsp;days after the
effective time of the merger will require the written approval
of the surviving corporation and, once a petition for appraisal
is filed, the appraisal proceeding may not be dismissed as to
any holder absent court approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Failure to follow the steps required by Section&nbsp;262 for
perfecting appraisal rights may result in the loss of these
rights.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='195'></A>
</DIV>

<!-- link1 "NOTICE TO FLARION STOCKHOLDERS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTICE TO FLARION STOCKHOLDERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This prospectus/ information statement serves as notice to
Flarion stockholders pursuant to Section&nbsp;228(e) of the DGCL
that on July&nbsp;26, 2005, the holders of a majority of the
outstanding shares of Flarion common stock, the holders of a
majority of the outstanding shares of Flarion preferred stock,
voting as a single class on an as-converted basis, and the
holders of a majority of the outstanding shares of each of the
Flarion Series&nbsp;A preferred stock and Flarion Series&nbsp;B
preferred stock, each voting as a separate class, took the
following actions by written consent without a meeting:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    adopted the merger agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    elected that the merger shall not constitute a liquidation,
    dissolution or winding up of Flarion for purposes of
    Flarion&#146;s certificate of incorporation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    approved an amendment to Flarion&#146;s certificate of
    incorporation to amend and restate paragraph&nbsp;5(g) of
    Section&nbsp;A of Article&nbsp;FOURTH of the certificate of
    incorporation to read as follows:</TD>
</TR>

</TABLE>

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    <TD width="5%"></TD>
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</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;(g)<I>&nbsp;<U>Merger or Sale of Assets</U>.</I> 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&#146;s properties and assets to any other person
    (other than an event described in paragraph&nbsp;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&#146;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&nbsp;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 (&#147;Acquiror&#148;), 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&#146; Agent), and the Corporation,
    as such Agreement and Plan of Reorganization may be amended from
    time to time.&#148;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The election and the amendment to the certificate of
incorporation were intended to enable the holders of Flarion
common stock to be eligible to receive QUALCOMM common stock as
merger consideration and the holders of Flarion preferred stock
to be eligible to receive a combination of cash and QUALCOMM
common stock as merger consideration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, pursuant to the written consent, the consenting
stockholders:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    waived and released claims against Flarion and its affiliates
    relating to ownership of Flarion securities or status as a
    Flarion stockholder;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    amended the Flarion amended and restated stockholders agreement
    and the Flarion amended and restated investors&#146; rights
    agreement to terminate automatically upon a change of control of
    Flarion;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    appointed QF REP, LLC as the stockholders&#146; agent.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
A copy of the form of the written consent is attached to this
prospectus/ information statement as Annex&nbsp;D.
</DIV>

<P align="center" style="font-size: 10pt;">87

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<DIV align="left" style="font-size: 10pt;">
<A name='196'></A>
</DIV>

<!-- link1 "LEGAL MATTERS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LEGAL MATTERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
DLA Piper Rudnick Gray Cary US LLP will pass on the validity of
the shares of QUALCOMM common stock to be issued to the Flarion
stockholders pursuant to the merger. Certain tax consequences of
the transaction will be passed upon for QUALCOMM by DLA Piper
Rudnick Gray Cary US LLP and for Flarion by Latham&nbsp;&#38;
Watkins LLP.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='197'></A>
</DIV>

<!-- link1 "EXPERTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXPERTS</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The financial statements, financial statement schedule, and
management&#146;s assessment of the effectiveness of internal
control over financial reporting (which is included in
Management&#146;s Report on Internal Control over Financial
Reporting) of QUALCOMM which are incorporated in this
prospectus/ information statement by reference to the Current
Report on Form&nbsp;8-K dated August&nbsp;19, 2005 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The consolidated financial statements of Flarion as of
December&nbsp;31, 2004 and 2003 and the two years then ended and
for the period January&nbsp;21, 2000 (date of inception) through
December&nbsp;31, 2004 included in this prospectus/information
statement have been audited by Ernst &#38; Young LLP,
independent auditors, as set forth in their report appearing
elsewhere herein, and are included in reliance upon such report
given on the authority of such firm as experts in accounting and
auditing.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='198'></A>
</DIV>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>WHERE YOU CAN FIND MORE INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
QUALCOMM is subject to the informational requirements of the
Exchange Act and therefore files reports, proxy and information
statements and other information with the SEC. You can inspect
many of such reports, proxy and information statements and other
information on the SEC&#146;s Internet website at
http://www.sec.gov.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You can also inspect and copy such reports, proxy and
information statements and other information at the SEC&#146;s
Public Reference Room, 450&nbsp;Fifth Street, N.W.,
Washington,&nbsp;D.C. 20549. You can obtain information on the
operation of the Public Reference Room by calling the SEC at:
1-800-SEC-0330. The common stock of QUALCOMM is listed on The
Nasdaq National Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This prospectus/ information statement constitutes part of a
registration statement on Form&nbsp;S-4 filed by QUALCOMM with
the SEC under the Securities Act. This prospectus/ information
statement does not contain all of the information set forth in
the registration statement. For further information with respect
to QUALCOMM and its shares you should refer to the registration
statement either at the SEC&#146;s website or at the address set
forth in the preceding paragraph. Statements in this prospectus/
information statement concerning any document attached as an
annex to this prospectus/ information statement or filed as an
exhibit to the registration statement are not necessarily
complete, and, in each instance, you should refer to the copy of
such document which has been attached as an annex to this
prospectus/ information statement or filed as an exhibit to the
registration statement. Each such statement is qualified in its
entirety by such reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Securities and Exchange Commission allows QUALCOMM to
&#147;incorporate by reference&#148; information into this
prospectus/ information statement, which means that it can
disclose important information to you by referring you to
another document filed separately with the Securities and
Exchange Commission. Any statement contained in any document
incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded, for purposes of
this prospectus/ information statement, to the extent that a
statement contained in or omitted from this prospectus/
information statement, or in any other subsequently filed
document which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of
this prospectus/ information statement. This prospectus/
information statement incorporates by reference the documents
described below that QUALCOMM has
</DIV>

<P align="center" style="font-size: 10pt;">88

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<DIV align="left" style="font-size: 10pt;">
previously filed with the Securities and Exchange Commission.
These documents contain important information about QUALCOMM.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following documents listed below, that QUALCOMM has
previously filed with the Securities and Exchange Commission,
are incorporated by reference:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Annual Report on Form&nbsp;10-K for the year ended
    September&nbsp;26, 2004</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Quarterly Report on Form&nbsp;10-Q for the period ended
    June&nbsp;26, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Quarterly Report on Form&nbsp;10-Q for the period ended
    March&nbsp;27, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Quarterly Report on Form&nbsp;10-Q for the period ended
    December&nbsp;26, 2004</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Current Report on Form&nbsp;8-K filed August&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Current Report on Form&nbsp;8-K filed July&nbsp;8, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Current Report on Form&nbsp;8-K filed June&nbsp;8, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Current Report on Form&nbsp;8-K/ A filed May&nbsp;6, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Current Report on Form&nbsp;8-K filed March&nbsp;11, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Current Report on Form&nbsp;8-K filed February&nbsp;25, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Current Report on Form&nbsp;8-K filed January&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Current Report on Form&nbsp;8-K filed December&nbsp;13, 2004</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All documents and reports that QUALCOMM files pursuant to
Sections&nbsp;13(a), 13(c), 14 or 15(d) of the Exchange Act
(excluding any information furnished pursuant to Item&nbsp;9,
Item&nbsp;12, Item&nbsp;2.02 or Item&nbsp;7.01 of any Current
Report on Form&nbsp;8-K) after the date of this prospectus/
information statement and to the date on which the transaction
is to be consummated shall be deemed to be incorporated by
reference into this prospectus/ information statement and to be
a part of it from the date of filing of those documents.
Further, all documents and reports that QUALCOMM files pursuant
to Sections&nbsp;13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this prospectus/ information statement and
prior to the effectiveness of the registration statement, of
which this prospectus/ information statement is a part, shall be
deemed to be incorporated by reference into this prospectus/
information statement and to be a part of it from the date of
filing of these documents. Any statement contained in a document
incorporated into this prospectus/ information statement by
reference shall be deemed to be modified or superseded for
purposes of this prospectus/ information statement to the extent
that a statement contained in this prospectus/ information
statement or in any other subsequently filed document which also
is or is deemed to be incorporated by reference in this
prospectus/ information statement modifies or supersedes such
earlier statement. Any statement modified or superseded shall
not be deemed, except as modified or superseded, to constitute a
part of this prospectus/ information statement.
</DIV>

<P align="center" style="font-size: 10pt;">89

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<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Index To Consolidated Financial Statements</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated Financial Statements as of December&nbsp;31,
    2004 and 2003 and for the Two Years Ended December&nbsp;31, 2004
    and for the period January&nbsp;21, 2000 (date of inception)
    through December&nbsp;31, 2004:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#302'>Report of Independent Auditors</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#303'>Consolidated Balance Sheets at
    December&nbsp;31, 2004 and 2003</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#304'>Consolidated Statements of Operations for
    the two years ended December&nbsp;31, 2004 and 2003 and for the
    period January&nbsp;21, 2000 (date of inception) through
    December&nbsp;31, 2004</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#306'>Consolidated Statements of Redeemable
    Convertible Preferred Stock, Stockholder&#146;s Equity (Deficit)
    and Comprehensive Income (Loss) for the period January&nbsp;21,
    2000 (date of inception) through December&nbsp;31, 2004</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#305'>Consolidated Statements of Cash Flows for
    the two years ended December&nbsp;31, 2004 and 2003 and for the
    period January&nbsp;21, 2000 (date of inception) through
    December&nbsp;31, 2004</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#307'>Notes to Consolidated Financial
    Statements</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Condensed Consolidated Financial Statements as of
    June&nbsp;30, 2005 and for the Six Months Ended June&nbsp;30,
    2005:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#309'>Condensed Consolidated Balance Sheet at
    June&nbsp;30, 2005(unaudited)</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-20</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#310'>Condensed Consolidated Statement of
    Operations for the six months ended June&nbsp;30, 2005
    (unaudited)</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#311'>Condensed Consolidated Statement of Cash
    Flows for the six months ended June&nbsp;30, 2005 (unaudited)</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-22</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#312'>Notes to Condensed Consolidated Financial
    Statements (unaudited)</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-23</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">F-1
<!-- PAGEBREAK -->
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<DIV align="left" style="font-size: 10pt;">
<A name='302'></A>
</DIV>

<!-- link1 "Report of Independent Auditors" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Report of Independent Auditors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
To the Board of Directors and Stockholders
</DIV>

<DIV align="left" style="font-size: 10pt;">
Flarion Technologies, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have audited the accompanying consolidated balance sheets of
Flarion Technologies, Inc. (A Development Stage Company) as of
December&nbsp;31, 2004 and 2003, and the related consolidated
statements of operations, redeemable convertible preferred
stock, stockholders&#146; equity (deficit)&nbsp;and
comprehensive income (loss), and cash flows for the years then
ended and for the period January&nbsp;21, 2000 (date of
inception) through December&nbsp;31, 2004. These financial
statements are the responsibility of the Company&#146;s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. We were not engaged to perform an audit
of the Company&#146;s internal control over financial reporting.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Flarion Technologies, Inc. (A Development
Stage Company) as of December&nbsp;31, 2004 and 2003 and the
consolidated results of its operations and its cash flows for
the years then ended and for the period January&nbsp;21, 2000
(date of inception) through December&nbsp;31, 2004, in
conformity with accounting principles generally accepted in the
United States.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    /s/ Ernst &#38; Young LLP</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
March&nbsp;4, 2005
</DIV>

<DIV align="left" style="font-size: 10pt;">
MetroPark, New Jersey
</DIV>

<P align="center" style="font-size: 10pt;">F-2

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='303'></A>
</DIV>

<!-- link1 "Consolidated Balance Sheets" -->

<DIV align="center" style="font-size: 10pt;">
<B>Consolidated Balance Sheets</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="11" align="center" valign="top">
    <B>ASSETS</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>61,777,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>15,756,598</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable&nbsp;&#151; trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>781,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,092,911</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable&nbsp;&#151; related party</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>753,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,514,800</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventories</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,174,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,429,421</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred cost of sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,909,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,744,305</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid expenses and other current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,038,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>542,532</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,434,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,080,567</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Restricted cash</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fixed assets, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,070,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,016,324</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>80,605,009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>29,196,891</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="11">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="11" align="center" valign="top">
    <B>LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS&#146; EQUITY (DEFICIT)</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,222,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,915,706</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,470,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,611,478</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,019,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,330,700</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current portion of long-term debt and capital lease obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>170,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>868,385</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,882,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,726,269</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital lease obligations, less current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>198,524</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred rent obligation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>110,756</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Series&nbsp;A Redeemable Convertible Preferred Stock
    (liquidation value $18,370,600 at December&nbsp;31, 2004),
    $.001&nbsp;par value; shares authorized: 18,436,225 in 2004 and
    2003, issued and outstanding: 18,370,600 in 2004 and 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,323,908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,311,733</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Series&nbsp;B Redeemable Convertible Preferred Stock
    (liquidation value $176,302,818 at December&nbsp;31, 2004),
    $.001&nbsp;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</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>176,206,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,174,740</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; equity (deficit):</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock, $.001&nbsp;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</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,158</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional paid-in capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,890,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,329,601</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes receivable from employee stockholder</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,276</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(107,728</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28,596</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,710</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deficit accumulated during development stage</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(149,490,142</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(97,362,952</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total stockholders&#146; equity (deficit)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(142,807,644</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(94,325,131</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>80,605,009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>29,196,891</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes.
</DIV>

<P align="center" style="font-size: 10pt;">F-3

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='304'></A>
</DIV>

<!-- link1 "Consolidated Statements of Operations" -->

<DIV align="center" style="font-size: 10pt;">
<B>Consolidated Statements of Operations</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>For the Period</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>January&nbsp;21, 2000</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Year Ended December&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Date of Inception)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>to December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,569,725</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>383,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,013,125</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Research and development expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,759,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,760,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80,128,622</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acquired in-process research and development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,555,600</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Selling, general and administrative expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,448,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,615,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69,261,019</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>229,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>757,227</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(622,906</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(177,863</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,609,832</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on sale of marketable securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(199,405</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(52,127,190</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(38,044,372</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(148,880,106</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes.
</DIV>

<P align="center" style="font-size: 10pt;">F-4

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<!-- LANDSCAPE -->
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='306'></A>
</DIV>

<!-- link1 "Consolidated Statements of Redeemable Convertible Preferred Stock, Stockholders&#146; Equity (Deficit) and Comprehensive Income (Loss)" -->

<DIV align="center" style="font-size: 10pt;">
<B>Consolidated Statements of Redeemable Convertible Preferred
Stock, Stockholders&#146;</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Equity (Deficit) and Comprehensive Income (Loss)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 6pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD><!-- Right VRule -->
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Series&nbsp;A Redeemable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Series&nbsp;B Redeemable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Notes</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Deficit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Convertible Preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Convertible Preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Receivable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Common Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>from</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>During</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Treasury Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Paid-in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Employee</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Deferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Development</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stockholders</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Loss)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stage</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of preferred stock in connection with subscription and
    contribution agreement</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,555,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,555,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sale of preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,815,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,705,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of common stock in connection with:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise of stock options</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,873,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>164,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(111,111</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,720</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of restricted stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,331,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,806</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of warrant in exchange for services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,250</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred non-cash compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>460,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(460,722</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of non- cash compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,249</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion to redemption value of redeemable convertible
    preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,301,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(691,405</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(610,036</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,301,441</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,765,971</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,765,971</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance, December&nbsp;31, 2000</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,370,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,562,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,204,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(111,111</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(408,473</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,376,007</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,883,387</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sale of preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,190,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,197,835</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of common stock in connection with:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise of stock options</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,239,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>524,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>340,164</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of treasury stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>795,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19,875</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19,875</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of warrant in exchange for services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>146,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>146,556</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred non-cash compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>469,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(469,823</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Vested portion of non-employee stock awards</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,423</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of non- cash compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>237,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>237,926</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-cash compensation related to option modifications</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,422</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustment to deferred compensation for terminations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(71,071</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion on redeemable convertible preferred stock, net of
    reversal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,274,658</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,367</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,253,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,253,291</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20,289,913</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20,289,913</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gain on securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,429</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20,121,484</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance, December&nbsp;31, 2001</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,370,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,287,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,190,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,219,202</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,444,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,433,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(298,611</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(569,299</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(32,665,920</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>795,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19,875</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(30,935,964</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sale of preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>607,736</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,000,001</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of common stock in connection with:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise of stock options</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>677,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>678</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114,562</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(795,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>246,226</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Vested portion of non-employee stock awards</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,315</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of non- cash compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>239,286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>239,286</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-cash compensation related to option modifications</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,985</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustment to deferred compensation for terminations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22,196</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion to redemption value of redeemable convertible
    preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,175</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(37,350</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(37,350</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26,652,660</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26,652,660</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gain on securities prior to disposition</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,925</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less reclassification adjustment for gains included in net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,354</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,354</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,781</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,781</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26,824,870</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance, December&nbsp;31, 2002</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,370,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,299,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,797,983</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,244,378</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,121,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,550,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(307,817</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,781</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(59,318,580</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(57,251,372</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-5
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<!-- LANDSCAPE -->
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Consolidated Statements of Redeemable Convertible Preferred
Stock, Stockholders&#146;</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Equity (Deficit) and Comprehensive Income
(Loss)&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 6pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
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    <TD width="2%">&nbsp;</TD><!-- Right VRule -->
    <TD width="2%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Series&nbsp;A Redeemable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Series&nbsp;B Redeemable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Notes</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Deficit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Convertible Preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Convertible Preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Receivable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Common Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>from</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>During</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Treasury Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Paid-in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Employee</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Deferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Development</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stockholders</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Loss)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stage</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance, December&nbsp;31, 2002 (carried forward)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,370,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,299,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,797,983</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>48,244,378</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,121,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,550,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(187,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(307,817</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3,781</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(59,318,580</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(57,251,372</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sale of preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,698,014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,898,926</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of common stock in connection with:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise of stock options</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,035,624</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>166,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,003</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Vested portion of non-employee stock awards</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>174,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>174,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Vested portion of warrant issued in connection with trial
    agreement</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>467,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>467,822</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of non- cash compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>171,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>171,804</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-cash compensation related to option modifications</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,124</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustment to deferred compensation for terminations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28,285</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion to redemption value of redeemable convertible
    preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,436</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(43,611</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(43,611</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(38,044,372</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(38,044,372</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,929</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,929</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(38,054,301</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance, December&nbsp;31, 2003</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,370,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,311,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,495,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,174,740</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,157,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,329,601</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(107,728</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,710</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(97,362,952</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(94,325,131</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sale of preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,219,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84,998,215</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of common stock in connection with:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise of stock options</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,024,072</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>325,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>328,107</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of treasury stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,250</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,875</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,875</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Vested portion of non-employee stock awards</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134,258</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Vested portion of warrant issued in connection with trial
    agreement</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,149,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,149,233</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of non- cash compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,075</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustment to deferred compensation for terminations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,377</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,377</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion to redemption value of redeemable convertible
    preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,060</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(45,235</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(45,235</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(52,127,190</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(52,127,190</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14,886</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14,886</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(52,142,076</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance, December&nbsp;31, 2004</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,370,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,323,908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,715,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>176,206,015</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,181,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,890,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(187,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(10,276</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(28,596</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(149,490,142</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(142,807,644</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes.
</DIV>

<P align="center" style="font-size: 10pt;">F-6
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='305'></A>
</DIV>

<!-- link1 "Consolidated Statements of Cash Flows" -->

<DIV align="center" style="font-size: 10pt;">
<B>Consolidated Statements of Cash Flows</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>For the Period</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>January&nbsp;21, 2000</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Year Ended December&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Date of Inception)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>to December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Cash flows from operating activities</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(52,127,190</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(38,044,372</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(148,880,106</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustments to reconcile net loss to net cash used in operating
    activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,978,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,164,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,484,863</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acquired in-process research and development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,555,600</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-cash compensation and interest</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,918,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>540,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,296,551</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred rent</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(110,756</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(159,616</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on sale of fixed assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,824</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on sale of marketable securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,354</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in operating assets and liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,072,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,572,711</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,534,926</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventories</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>254,678</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,429,421</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,174,743</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred cost of sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,165,139</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,744,305</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,909,444</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid expenses and other current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(541,138</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(138,945</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(965,270</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Restricted cash</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable and accrued liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,773,862</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,674,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,506,145</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,118,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,798,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,916,839</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(36,375,244</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,798,441</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(119,980,021</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Cash flows from investing activities</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,032,018</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,396,803</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,095,787</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of marketable securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28,142,183</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sale of marketable securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,329,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,032,018</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,396,803</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,908,433</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Cash flows from financing activities</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from sale of preferred stock, net of expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84,998,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,898,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188,799,977</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from sale of common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>328,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,076,915</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from note receivable from employee stockholder</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,111</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of treasury stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,875</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21,750</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from sale leaseback</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,684,197</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal payments on capital lease</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(889,712</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(974,507</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,957,413</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Payment of note payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,986</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,135</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27,498</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84,427,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,085,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>189,665,539</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46,020,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,890,043</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,777,085</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents, beginning of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,756,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,866,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents, end of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>61,777,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>15,756,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>61,777,085</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Supplemental disclosures of cash flow information</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash paid during the period for interest</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>77,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>173,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>584,448</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acquisition of fixed assets under capital lease obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>146,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>443,427</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes.
</DIV>

<P align="center" style="font-size: 10pt;">F-7

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='307'></A>
</DIV>

<!-- link1 "Notes to Consolidated Financial Statements" -->

<DIV align="center" style="font-size: 10pt;">
<B>Notes to Consolidated Financial Statements</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Years ended December&nbsp;31, 2004 and 2003 and for the
period</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>January&nbsp;21, 2000 (date of inception) to
December&nbsp;31, 2004</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>1.</B></TD>
    <TD>
    <B>Organization and Business</B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Flarion Technologies, Inc., formerly RadioRouter, Inc., (the
&#147;Company&#148;), a Delaware corporation, was formed on
January&nbsp;21, 2000 to acquire and develop wireless technology
that will make mobile broadband access affordable to the mass
market (see Note&nbsp;9).
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>2.</B></TD>
    <TD>
    <B>Basis of Presentation</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s efforts have been devoted to financial and
organization planning, raising capital and development of its
wireless technology. The Company has not generated any
significant operating revenues and, accordingly, the
accompanying financial statements are presented in accordance
with guidance provided by the Statement of Financial Accounting
Standards (&#147;FAS&#148;) No.&nbsp;7<I>, Accounting and
Reporting by Development Stage Enterprises.</I>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.</B></TD>
    <TD>
    <B>Summary of Significant Accounting Policies</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Principles of Consolidation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, Flarion
Technologies Limited and Flarion Technologies Pty Ltd. All
significant intercompany accounts and transactions are
eliminated in consolidation.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Use of Estimates</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual
results could differ from those estimates.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Cash and Equivalents</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents. At December&nbsp;31, 2004 and 2003, the Company has
substantially all of its cash and cash equivalents deposited
with one financial institution.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Accounts Receivable</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounts receivable are uncollateralized customer obligations
due under normal trade terms. Accounts receivable are stated at
the amount billed to the customer.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Inventories</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories are stated at the lower of cost (first-in, first-out
basis) or market.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Deferred Cost of Sales</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred cost of sales includes cost of products and services
delivered to customers for which the corresponding revenue has
not been recognized.
</DIV>

<P align="center" style="font-size: 10pt;">F-8

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Marketable Securities</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Investments in marketable securities are classified as available
for sale. Available for sale securities, which consist of
investments in mutual funds, are carried at fair value as of the
balance sheet date. During 2002, the Company sold its
available-for-sale securities and realized a gain of $187,354.
At December&nbsp;31, 2004 and 2003, the Company held no
investments in marketable securities.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Fixed Assets</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fixed assets are stated at cost. Depreciation is computed using
the straight-line method over the assets&#146; estimated useful
lives, which range from two to seven years, and amortization of
leasehold improvements is computed using the straight-line
method over the shorter of the related asset life or lease term.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Foreign Currency Translation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Assets and liabilities of non-U.S.&nbsp;operations that operate
in a local currency are translated to U.S.&nbsp;dollars using
current exchange rates in effect at the balance sheet date and
for revenue and expense accounts using an average exchange rate
for the period. The gains or losses resulting from translation
are included as a component of accumulated other comprehensive
income (loss) within stockholders&#146; equity.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Accretion</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The carrying value of the Series&nbsp;A and Series&nbsp;B
Redeemable Convertible Preferred Stock is increased by accretion
of the difference between the initial recorded value and their
redemption value over a period concluding with their redemption
dates.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Revenue Recognition</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenue includes amounts recognized from licensing, hardware and
services rendered in connection with trials and commercial
deployments. Revenue from perpetual licensed software and
technology is recognized at the inception of the license term
provided there are no further obligations to the licensee.
Revenue from term-based licenses is recognized on a subscription
basis over the license period. Revenue from hardware sales is
recognized when the product is shipped to the customer and when
there are no unfulfilled obligations of the Company that affect
customer acceptance. Revenue from maintenance and support is
recognized over the period such items are delivered. Revenues
for other services are recognized as the services are provided.
In multiple element revenue arrangements, the Company allocates
revenue to each element based on its relative fair value. In the
absence of fair value for a delivered element, the Company
allocates revenue to the fair value of the undelivered elements
and the residual revenue to the delivered elements. Where the
fair value for an undelivered element cannot be determined, the
Company defers revenue for the delivered elements until the
undelivered elements are delivered. Amounts invoiced in advance
of acceptance of goods or services (classified as deferred
revenue on the consolidated balance sheet) and the related costs
thereof (recorded as deferred cost of sales on the consolidated
balance sheet) are deferred until the Company&#146;s obligations
under the related agreements are satisfied.
</DIV>

<P align="center" style="font-size: 10pt;">F-9

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Research and Development</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development costs are expensed as incurred.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Income Taxes</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Income taxes have been provided using the liability method.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock Split</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004, the Company amended its certificate of
incorporation to increase the number of common shares authorized
to 173,000,000. On May&nbsp;10, 2004, the Company&#146;s Board
of Directors declared a 2 for 1 split of its common stock. All
share and per share data related to the Company&#146;s common
stock included in the financial statements have been
retroactively adjusted to reflect the stock split and the
amendment to the certificate of incorporation.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock-Based Compensation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At December&nbsp;31, 2004, the Company maintains a stock option
and restricted stock purchase plan which is described more fully
in Note&nbsp;11. The Company accounts for the options and
restricted stock granted to employees under the recognition and
measurement principles of Accounting Principles Board Opinion
No.&nbsp;25, <I>Accounting for Stock Issued to Employees
</I>(&#147;APB&nbsp;25&#148;), and related Interpretations. No
stock-based employee compensation cost is reflected in net loss,
to the extent that options granted under the plan have an
exercise price equal to the market value of the underlying
common stock on the date of grant. The following table
illustrates the effect on net loss if the Company had applied
the fair value recognition provisions of FASB Statement
No.&nbsp;123, <I>Accounting for Stock-Based Compensation
</I>(&#147;FAS&nbsp;123&#148;), to stock-based employee
compensation.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>For the Period</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>January&nbsp;21, 2000</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Year Ended December&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Date of Inception)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>to December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss, as reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(52,127,190</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(38,044,372</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(148,880,106</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deduct: stock-based employee compensation expense included in
    reported net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>213,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>897,871</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Add: total stock-based employee compensation expense determined
    under fair value based method for all awards</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(696,040</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(497,580</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,065,299</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss, as adjusted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(52,728,155</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(38,328,024</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(150,047,534</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The pro forma information presented above has been determined as
if the Company had accounted for its employees stock options
under the fair value method provided by FAS&nbsp;123. The fair
value of the options was estimated at the date of grant using a
minimum value method assuming an expected option life of five
years, an expected dividend yield of 0% and a weighted-average
risk-free interest rate of 3.40% and 3.31% in 2004 and 2003,
respectively.
</DIV>

<P align="center" style="font-size: 10pt;">F-10

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Reclassifications</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain prior year information has been reclassified to conform
with current year presentation.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>4.</B></TD>
    <TD>
    <B>Inventories</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories consist of the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Raw materials</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>833,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>789,220</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Finished goods</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,947,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,698,975</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,781,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,488,195</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserves for excess and obsolete inventory</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(606,490</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(58,774</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,174,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,429,421</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.</B></TD>
    <TD>
    <B>Fixed Assets</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fixed assets consist of the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,150,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,643,222</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Software</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,621,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,325,523</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Leasehold improvements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>389,645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>264,047</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Furniture and fixtures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>293,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>220,644</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Automobiles</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,440</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,489,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,486,876</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less accumulated depreciation and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,419,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,470,552</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,070,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,016,324</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fixed assets include assets under capital leases aggregating
$814,524 and $3,157,336 at December&nbsp;31, 2004 and 2003,
respectively. The accumulated amortization related to these
assets under capital leases was $688,682 and $2,532,446 at
December&nbsp;31, 2004 and 2003, respectively.
</DIV>

<P align="center" style="font-size: 10pt;">F-11

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.</B></TD>
    <TD>
    <B>Accrued Liabilities</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accrued liabilities consist of the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Compensation and benefits</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>761,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>967,152</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consulting fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>494,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>767,598</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounting and legal fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>374,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>306,202</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Utilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>328,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>210,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,628</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>378,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>336,898</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,470,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,611,478</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.</B></TD>
    <TD>
    <B>Debt</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company is obligated under capital leases for equipment,
software, leasehold improvements and furniture that expire at
various dates through October 2005 with interest rates ranging
from 6.2% to 14.19%. As of December&nbsp;31, 2004, future
minimum capital lease payments total $178,158 (inclusive of
$7,947 representing interest) and are payable in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2000, pursuant to the terms of one of its leases, the
Company issued to the lessor, a warrant to
purchase&nbsp;65,625&nbsp;shares of its Series&nbsp;A Redeemable
Convertible Preferred Stock for $1.00&nbsp;per share. The
warrant was exercisable on the date of issuance and expires at
the earlier of five years from the date of issuance or two years
from the effective date of an initial public offering of the
Company&#146;s stock. The Company recognized the fair value of
the warrant over 42&nbsp;months. All such warrants remain
outstanding as of December&nbsp;31, 2004. The warrant had an
estimated fair market value at the date of issuance of $26,250
of which $1,875, $7,500 and $26,250 was recognized by the
Company as interest expense during the years ended
December&nbsp;31, 2004 and 2003, and during the period
January&nbsp;21, 2000 to December&nbsp;31, 2004, respectively.
In addition, the Company granted the lessor an option to invest
$100,000 in its Series&nbsp;B Preferred Stock equity financing
on the same terms and conditions as other investors
participating in the financing. The fair value of such option
was determined to be de minimis. Upon sale of the Series&nbsp;B
Preferred Stock, the lessor declined to exercise this option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2001, pursuant to the terms of one of its leases, the
Company issued to the lessor, a warrant to
purchase&nbsp;39,503&nbsp;shares of its Series&nbsp;B Redeemable
Convertible Preferred Stock for $4.94&nbsp;per share. The
warrant was exercisable on the date of issuance and expires at
the earlier of seven years from the date of issuance or three
years from the effective date of an initial public offering of
the Company&#146;s stock. The Company recognized the fair value
of the warrant over 36&nbsp;months. All such warrants remain
outstanding as of December&nbsp;31, 2004. The warrant had an
estimated fair market value at the date of issuance of $146,556
of which $32,568, $48,852 and $146,556 was recognized by the
Company as interest expense during the years ended
December&nbsp;31, 2004 and 2003, and during the period
January&nbsp;21, 2000 to December&nbsp;31, 2004, respectively.
In addition, the Company granted the lessor an option to invest
$750,000 in its next private equity financing round on the same
terms and conditions as other investors participating in the
financing. The fair value of such option was determined to be de
minimis.
</DIV>

<P align="center" style="font-size: 10pt;">F-12

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.</B></TD>
    <TD>
    <B>Income Taxes</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. The Company&#146;s deferred tax
assets at December&nbsp;31, 2004 and 2003 have been reduced by a
valuation allowance because it is more likely than not that a
portion of the deferred tax asset will not be realized.
Significant components of the Company&#146;s net deferred assets
are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net operating loss carryforward</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>54,472,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,690,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,736,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Research tax credit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,715,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,597,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of deferred compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>439,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>385,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventory reserves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>243,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,644,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,856,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Valuation allowances</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(58,930,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(37,856,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,714,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred cost of sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,466,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(248,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total deferred tax liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,714,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net deferred tax assets and liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At December&nbsp;31, 2004, the Company has federal and state net
operating loss (&#147;NOL&#148;) carryforwards of approximately
$136&nbsp;million. The federal NOL carryforwards expire in 2020
through 2024 and the state NOL carryforwards expire in 2007
through 2013.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.</B></TD>
    <TD>
    <B>Contribution and Subscription Agreement</B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to a Contribution and Subscription agreement between
the Company and Lucent Technologies, Inc. and Lucent
Technologies Guardian Corporation (collectively,
&#147;Lucent&#148;) dated February&nbsp;9, 2000, Lucent made
non-cash contributions of $5,555,600 consisting principally of
in-process research and development in exchange for
5,555,600&nbsp;shares of Series&nbsp;A Redeemable Convertible
Preferred Stock (&#147;Series&nbsp;A Preferred Stock&#148;). The
amount allocated to the in-process research and development
contributed to the Company by Lucent represents its estimated
fair value based on the negotiations of two parties.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Contributed in-process research and development was early
development stage property, which did not have commercial
viability or any alternative future use and which required
substantial additional expenditures to commercialize.
Accordingly, the assigned value was charged to operations at the
time the Company was formed.
</DIV>

<P align="center" style="font-size: 10pt;">F-13

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.</B></TD>
    <TD>
    <B>Series&nbsp;A and B Redeemable Convertible Preferred Stock</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the shares issued in connection with the
Contribution and Subscription agreement, during 2000, the
Company sold 12,815,000&nbsp;shares of Series&nbsp;A Preferred
Stock to various investors at a purchase price of $1.00&nbsp;per
share resulting in net proceeds of approximately $12,705,000.
During 2001, the Company sold 9,190,247&nbsp;shares of
Series&nbsp;B Redeemable Convertible Preferred Stock
(&#147;Series&nbsp;B Preferred Stock&#148;) to various investors
at a purchase price of $4.94&nbsp;per share resulting in net
proceeds of approximately $45,198,000. During 2002, 2003 and
2004, the Company sold an additional 607,736, 8,698,014 and
17,219,181&nbsp;shares, respectively, of Series&nbsp;B Preferred
Stock to various investors at a purchase price of $4.94&nbsp;per
share resulting in net proceeds of approximately $3,000,000,
$42,899,000 and $84,998,000, respectively. The Series&nbsp;A
Preferred Stock and the Series&nbsp;B Preferred Stock are herein
referred to collectively as the &#147;Preferred Stock&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each share of Preferred Stock has an initial liquidation value
equal to its initial purchase price per share plus any unpaid
but declared dividends and is convertible into shares of common
stock at an initial conversion price equal to its initial
purchase price per share, subject to adjustment under certain
circumstances. Potential adjustments to the initial conversion
price would result principally from the issuance or sale of
certain equity instruments, as defined, at less than the initial
conversion price per share by the Company prior to the date of
such conversions. In connection with the 2 for 1 split of the
Company&#146;s common stock in 2004, the conversion price of the
Preferred Stock has been adjusted to one-half its initial
purchase price per share. The Preferred Stock is automatically
converted into common stock upon the consummation of a qualified
initial public offering of the Company&#146;s common stock, as
defined.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of the Series&nbsp;A Preferred Stock were entitled
to receive dividends at a simple rate of 8%&nbsp;per annum of
the original purchase price per share only upon the declaration
of such dividends by the Company&#146;s Board of Directors or
upon any liquidation or redemption of the securities. In
connection with the issuance of the Series&nbsp;B Preferred
Stock the dividend rights of the Series&nbsp;A Preferred Stock
were amended such that the holders of the Preferred Stock shall
have the right to receive dividends only upon declaration by the
Company&#146;s Board of Directors. Accordingly, all dividends
accrued by the Company were reversed to additional paid-in
capital during 2001. In addition, the Preferred Stock holders
are entitled to participate in any dividends paid to the holders
of the Company&#146;s common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of the Preferred Stock vote together with all other
classes of stock on all actions taken by the stockholders of the
Company as a single class. Each holder of Preferred Stock is
entitled to that number of votes such holder would be entitled
to if the holder had converted the shares of Preferred Stock
into shares of common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the election of at least two thirds of the holders of the
then outstanding Preferred Stock, on or after February&nbsp;1,
2006, February&nbsp;1, 2007 and February&nbsp;1, 2008, the
Company shall redeem
33<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the shares each year, in cash, if not previously converted
into shares of common stock, at the original purchase price plus
any declared but unpaid dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of the Preferred Stock have registration rights
under an agreement dated March&nbsp;30, 2001, as amended, which
provides for the registration of common stock held by such
stockholders within the periods specified by such agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of the Preferred Stock have anti-dilution rights
granted pursuant to an agreement dated March&nbsp;30, 2001, as
amended, which allows such stockholders to purchase additional
securities of the Company upon the issuance or sale of certain
equity instruments, as defined. In addition, certain holders of
the Preferred Stock have rights exercisable upon events
constituting a change of control, as defined, including sale of
the Company, certain of its technology, which allows such
stockholders the right of first negotiation and the right of
first refusal to acquire the Company or its assets and, in
certain circumstances, requires the Company to cause the
purchaser to purchase securities held by the stockholder.
</DIV>

<P align="center" style="font-size: 10pt;">F-14

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with a market trial agreement with a customer, in
June 2003, the Company issued to the customer a warrant to
purchase&nbsp;1,500,000&nbsp;shares of its Series&nbsp;B
Preferred Stock for $4.94&nbsp;per share. The warrant vests as
the customer purchases certain products from the Company over
time periods specified in the related agreements and expires
seven years from the date of issuance. The warrant also vests
upon the occurrence of certain events constituting a change of
control, as defined, including sale of the Company, certain of
its technology, or closing of an initial public offering of the
Company&#146;s common stock. As of December&nbsp;31, 2003,
warrants to acquire 231,595&nbsp;shares with an estimated fair
market value of approximately $467,800 were vested. During 2004,
warrants to acquire an additional 768,405&nbsp;shares with an
estimated fair market value of approximately $1,429,233 vested.
The Company recorded the estimated fair market value of the
vested shares as reductions to deferred revenue as no revenues
have been recognized under the market trial agreement through
December&nbsp;31, 2004. At December&nbsp;31, 2004, the remaining
warrants to acquire 500,000&nbsp;shares of Series&nbsp;B
Preferred Stock expired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with a market trial agreement with a customer, in
July 2004 the Company issued two warrants to purchase an
aggregate of 2,000,000&nbsp;shares of its Series&nbsp;B
Preferred Stock. Warrants to purchase&nbsp;1,000,000&nbsp;shares
Series&nbsp;B Preferred Stock for $4.94&nbsp;per share vested
upon the execution of a binding commitment from the customer to
purchase certain products from the Company over time periods
specified in the related agreements as well as other
requirements stated therein. The warrant to purchase the
remaining 1,000,000&nbsp;shares vests as the customer purchases
additional products from the Company over time periods specified
in the warrant agreement. The exercise price of the remaining
warrants ranges from $4.94&nbsp;per share to $7.50&nbsp;per
share based upon the timing of purchases made pursuant to the
warrant agreement. These warrants expire five years from the
date of issuance. During 2004, the Company recorded the
estimated fair market value of the vested shares as a reduction
to revenue generated from sales to the customer of approximately
$1,495,000 and the excess of the estimated fair market value or
$225,000 as additional selling, general and administrative
expense. The vesting requirements of remaining warrants have not
been fulfilled as of December&nbsp;31, 2004.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>11.</B></TD>
    <TD>
    <B>Stock Option Plans and Other Stock-Based Compensation</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2000, the Company established the 2000 Stock Option and
Restricted Stock Purchase Plan (the &#147;Plan&#148;) under
which the Company may grant options and awards of the right to
purchase restricted shares of its common stock to directors,
employees and consultants. As of December&nbsp;31, 2004, the
Company reserved 44,341,588 common shares for the exercise of
options under the Plan and 3,611,114 common shares for options
and rights awarded by the Company prior to the adoption of the
Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Compensation Committee of the Board of Directors is
responsible for determining the type of award, when and to whom
awards are granted, the number of shares and terms of the awards
and the exercise price. Options to acquire shares under the Plan
generally expire after ten years and normally vest over a four
year period. In addition, certain options granted under the Plan
provide for the early exercise of such options subject to
repurchase by the Company at the lower of the fair market value
of the shares or original exercise price thereof. Any shares
repurchased will be available for reissuance under the Plan.
During the period January&nbsp;21, 2000 to December&nbsp;31,
2000 and for the years ended December&nbsp;31, 2001 and 2002,
the Company issued shares of common stock upon the early
exercise of options and restricted stock purchase rights issued
under the Plan totaling 12,204,358, 2,670,000 and 168,376,
respectively, at prices ranging from $0.0005 to $0.50&nbsp;per
share. During 2001, the Company repurchased 795,000&nbsp;shares
upon termination of an employee. At December&nbsp;31, 2004,
70,000 of the shares issued pursuant to the exercise of options
and rights under the Plan remain subject to repurchase.
</DIV>

<P align="center" style="font-size: 10pt;">F-15

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Activity in the Plan as well as activity prior to the adoption
of the Plan is summarized as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options/</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Awards</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise Price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Granted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,158,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.02</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,204,358</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.02</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(250,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.03</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at December&nbsp;31, 2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,703,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.04</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Granted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,246,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,239,912</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.16</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,054,250</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.08</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at December&nbsp;31, 2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,656,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Granted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,407,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,472,618</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.09</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,276,276</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.41</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,314,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.34</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Granted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,613,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.40</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,035,624</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.16</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(765,002</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,126,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.63</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Granted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,015,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,025,322</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.32</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,534,455</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.34</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,582,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.02</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercisable at:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,837,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.61</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,831,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Available for grant at December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,188,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Information regarding the options outstanding under the Plan at
December&nbsp;31, 2004 is as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Number of Options</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Currently</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Currently</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Contractual</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Exercise Price</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Outstanding</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercisable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Life</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $0.025</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,566,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,566,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.5&nbsp;years</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;0.125</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>975,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>894,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.9&nbsp;years</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;0.500</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,442,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,083,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.0&nbsp;years</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;1.000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>504,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>189,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.3&nbsp;years</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;1.500</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,094,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,104,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.3&nbsp;years</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-16

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table discloses the number of options and rights
granted and certain weighted-average information:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Period January&nbsp;21, 2000 to December&nbsp;31, 2000</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price less than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,645,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.02</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price equals market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,513,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.03</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price greater than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Year ended December&nbsp;31, 2001</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price less than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,092,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price equals market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,154,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price greater than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Year ended December&nbsp;31, 2002</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price less than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price equals market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,407,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price greater than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Year ended December&nbsp;31, 2003</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price less than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price equals market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,613,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.40</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price greater than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Year ended December&nbsp;31, 2004</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price less than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price equals market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,015,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise price greater than market price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For certain options and awards granted to employees during the
period from January&nbsp;21, 2000 to December&nbsp;31, 2000 and
for the year ended December&nbsp;31, 2001, the Company has
recorded pursuant to APB&nbsp;25 $460,722 and $469,823,
respectively, of deferred compensation expense representing the
difference between the exercise price thereof and the estimated
fair market value of the common stock as of the date of grant.
No such compensation was recorded on options and awards granted
during the years ended December&nbsp;31, 2002, 2003 and 2004.
This deferred compensation expense is amortized over the vesting
period of each option granted. Amortization of deferred
compensation under the Plans for the years ended
December&nbsp;31, 2004 and 2003, and during the period
January&nbsp;21, 2000 to December&nbsp;31, 2004 amounted to
$95,075, $171,804 and $796,340, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Additionally, in connection with the severance and other
arrangements for certain employees terminated during the year
ended December&nbsp;31, 2003, and during the period
January&nbsp;21, 2000 to December&nbsp;31, 2004, the Company
modified the vesting and exercise periods of certain stock
options resulting in non-cash compensation charges of $42,124
and $101,531, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004, the Company granted to certain
non-employee consultants and advisors options to purchase an
aggregate of 723,416&nbsp;shares under the Plan. During the
years ended December&nbsp;31, 2004 and 2003, and during the
period January&nbsp;21, 2000 to December&nbsp;31, 2004, the
Company recognized $69,226, $270,491 and $505,873, respectively,
of non-cash charges related to these grants pursuant to
FAS&nbsp;123 and EITF No.&nbsp;96-18, <I>Accounting for Equity
Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services.</I>
</DIV>

<P align="center" style="font-size: 10pt;">F-17

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004, the Company had reserved shares of
common stock for issuance as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock option plan:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,582,957</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserved for future grant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,188,161</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of Series&nbsp;A Preferred Stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,741,200</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of Series&nbsp;B Preferred Stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,430,356</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of Series&nbsp;A Preferred Stock warrants</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>131,250</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of Series&nbsp;B Preferred Stock warrants</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,079,006</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,152,930</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.</B></TD>
    <TD>
    <B>Related Party Transactions</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2000 and 2001, the Company received notes issued by
employees in connection with the purchase of a total of
5,944,444 restricted shares of the Company&#146;s common stock.
Such notes are full recourse, bear interest at rates ranging
from 6.4% to 8.0%&nbsp;per annum and are due at various dates
between May 2005 and March 2006. During 2002, one of the notes
receivable was paid in full, including interest. At
December&nbsp;31, 2004 and 2003, the principal amount of the
remaining note, $187,500, was included as notes receivable from
employee stockholder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2003, the Company entered into a market trial agreement
with a customer who, at December&nbsp;31, 2004 and 2003, owned
6,078,425 and 4,051,572&nbsp;shares, respectively, of the
Company&#146;s Series&nbsp;B Preferred Stock. Included in
accounts receivable-related party at December&nbsp;31, 2004 and
2003 was approximately $753,000 and $1,515,000, respectively,
due from this customer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2003, the Company entered into a trial agreement with
another customer who owned 607,736&nbsp;shares of the
Company&#146;s Series&nbsp;B Preferred Stock at
December&nbsp;31, 2004 and 2003. During 2004 and 2003, the
Company recognized revenues of $200,000, in each year, related
to services rendered in connection with the trial agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004, the Company entered into a trial market agreement
with another customer who owned 2,025,786 and
607,736&nbsp;shares of the Company&#146;s Series&nbsp;B
Preferred Stock at December&nbsp;31, 2004 and 2003,
respectively. During 2004, revenues recognized in connection
with the trial agreement were offset by the fair value of
warrants granted to the customer (see Note&nbsp;10).
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>13.</B></TD>
    <TD>
    <B>Commitments and Contingencies</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company is obligated under non-cancelable operating leases
for minimum annual office rental payments aggregating $1,223,801
payable in 2005. Rent expense for the years ended
December&nbsp;31, 2004 and 2003 was $1,525,729 and $1,398,297,
respectively, and $5,717,429 for the period January&nbsp;21,
2000 to December&nbsp;31, 2004. A standby letter of credit for
$100,000 has been issued to the landlord as a security deposit
(expires in 2005). As of December&nbsp;31, 2004, a bank-imposed
restriction has been placed on $100,000 in cash held in the
Company&#146;s account to secure the letter of credit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company is obligated under non-cancelable operating leases
for certain software aggregating $560,000, payable as follows:
2005&nbsp;&#151; $230,000, 2006&nbsp;&#151; $190,000 and
2007&nbsp;&#151; $140,000. In addition, at December&nbsp;31,
2004 the Company had purchase commitments of approximately
$2,080,000 for the purchase of equipment and services.
</DIV>

<P align="center" style="font-size: 10pt;">F-18

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(A Development Stage Company)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company provides certain indemnification provisions within
its trial and other agreements, to protect the other party from
any liabilities or damages resulting from a claim of
misappropriation or infringement by third parties relating to
its products and services. The Company has not incurred a
liability relating to any of these indemnification provisions in
the past and management believes that the likelihood of any
future payout relating to these provisions is unlikely.
Therefore, the Company has not recorded a liability during any
period for these indemnification provisions.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>14.</B></TD>
    <TD>
    <B>Employee Benefit Plan</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has established a defined contribution plan under
Section&nbsp;401(k) of the Internal Revenue Code which provides
for voluntary employee contributions of up to 60&nbsp;percent of
compensation for employees meeting certain eligibility
requirements. The plan provides that the Company may, at the
sole discretion of its Board of Directors, contribute to the
plan. The Company did not make any contributions to the plan
during the period January&nbsp;21, 2000 to December&nbsp;31,
2004.
</DIV>

<P align="center" style="font-size: 10pt;">F-19

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='309'></A>
</DIV>

<!-- link1 "Condensed Consolidated Balance Sheet" -->

<DIV align="center" style="font-size: 10pt;">
<B>Condensed Consolidated Balance Sheet</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>June&nbsp;30, 2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Unaudited)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="7" align="center" valign="top">
    <B>ASSETS</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>46,329,993</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable&nbsp;&#151; trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>806,054</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable&nbsp;&#151; related party</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>840,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventories</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,223,341</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred cost of sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,536,229</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>863,779</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>223,136</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,822,532</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fixed assets, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,325,172</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>65,147,704</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="7" align="center" valign="top">
    <B>LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND<BR>
    STOCKHOLDERS&#146; DEFICIT</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>863,856</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,287,350</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,242,828</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current portion of long-term debt and capital lease obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,338</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,429,372</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Series&nbsp;A Redeemable Convertible Preferred Stock
    (liquidation value $18,370,600), $.001&nbsp;par value; shares
    authorized: 18,436,225, issued and outstanding: 18,370,600</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,330,549</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Series&nbsp;B Redeemable Convertible Preferred Stock
    (liquidation value $176,302,818), $.001&nbsp;par value; shares
    authorized: 41,466,416, issued and outstanding: 35,715,178</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>176,222,033</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; deficit:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock, $.001&nbsp;par value; shares authorized:
    173,000,000, issued and outstanding: 18,364,835</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,365</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional paid-in capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,565,196</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes receivable from employee stockholder</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,126</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated deficit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(167,223,185</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total stockholders&#146; deficit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(158,834,250</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="3"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>65,147,704</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes.
</DIV>

<P align="center" style="font-size: 10pt;">F-20

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='310'></A>
</DIV>

<!-- link1 "Condensed Consolidated Statement of Operations" -->

<DIV align="center" style="font-size: 10pt;">
<B>Condensed Consolidated Statement of Operations</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Six Months</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ended June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Unaudited)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,775,298</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,190,845</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Research and development expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,785,253</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Selling, general and administrative expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,202,323</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,502</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(678,582</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(17,733,043</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes.
</DIV>

<P align="center" style="font-size: 10pt;">F-21

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='311'></A>
</DIV>

<!-- link1 "Condensed Consolidated Statement of Cash Flows" -->

<DIV align="center" style="font-size: 10pt;">
<B>Condensed Consolidated Statement of Cash Flows</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Six Months</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ended June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Unaudited)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Cash flows from operating activities</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(15,324,238</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Cash flows from investing activities</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(105,349</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(105,349</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Cash flows from financing activities</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from sale of common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117,369</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal payments on capital lease</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(134,874</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17,505</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net decrease in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15,447,092</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents, beginning of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,777,085</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents, end of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>46,329,993</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes.
</DIV>

<P align="center" style="font-size: 10pt;">F-22

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='312'></A>
</DIV>

<!-- link1 "Notes to Condensed Consolidated Financial Statements" -->

<DIV align="center" style="font-size: 10pt;">
<B>Notes to Condensed Consolidated Financial Statements</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>June&nbsp;30, 2005</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(Unaudited)</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>1.</B></TD>
    <TD>
    <B>Basis of Presentation</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The unaudited condensed consolidated financial statements of
Flarion Technologies, Inc. (the &#147;Company&#148;) have been
prepared by management and reflect all adjustments, consisting
of only normal and recurring adjustments, that in the opinion of
management are necessary for a fair presentation of the results
of operations. These condensed consolidated financial statements
should be read in conjunction with the Company&#146;s
consolidated financial statements and notes for the year ended
December&nbsp;31, 2004. Operating results for the interim period
are not necessarily indicative of operating results for the
entire year ending December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Through December&nbsp;31, 2004, the Company&#146;s efforts had
been primarily devoted to financial and organization planning,
raising capital and development of its wireless technology and
its financial statements were presented in accordance with
guidance provided by the Statement of Financial Accounting
Standards (&#147;FAS&#148;) No.&nbsp;7<I>, Accounting and
Reporting by Development Stage Enterprises.</I> During 2005, the
Company began to generate significant operating revenues and,
accordingly, it is no longer in the development stage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that
affect the reported amounts and the disclosure of contingent
amounts in the Company&#146;s financial statements and the
accompanying notes. Actual results could differ from those
estimates.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock-Based Payments</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company accounts for options and restricted stock granted to
employees under the recognition and measurement principles of
Accounting Principles Board Opinion No.&nbsp;25, <I>Accounting
for Stock Issued to Employees </I>(&#147;APB&nbsp;25&#148;), and
related Interpretations. No stock-based employee compensation
cost is reflected in net loss, to the extent that options
granted under the plan have an exercise price equal to the
market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net loss if
the Company had applied the fair value recognition provisions of
FASB Statement No.&nbsp;123, <I>Accounting for Stock-Based
Compensation </I>(&#147;FAS&nbsp;123&#148;), to stock-based
employee compensation.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Six Months</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ended June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss, as reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(17,733,043</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deduct: stock-based employee compensation expense included in
    reported net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,590,257</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Add: total stock-based employee compensation expense determined
    under fair value based method for all awards</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(319,263</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss, as adjusted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(16,462,049</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The pro forma information presented above has been determined as
if the Company had accounted for its employees stock options
under the fair value method provided by FAS&nbsp;123. The fair
value of the options was estimated at the date of grant using a
minimum value method assuming an expected option life of five
years, an expected dividend yield of 0% and a weighted-average
risk-free interest rate of 3.87% for the six months ended
June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the six month period ended June&nbsp;30, 2005, the
Company recorded approximately $1,580,000 of non-cash
compensation charges resulting from the modification of exercise
periods of certain options pursuant to severance arrangements
with terminated employees.
</DIV>

<P align="center" style="font-size: 10pt;">F-23

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Condensed Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>2.</B></TD>
    <TD>
    <B>Composition of Certain Financial Statement Items</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories are stated at the lower of cost (first-in, first-out
basis) or market and consist of the following at June&nbsp;30,
2005:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Raw materials</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,795,052</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Finished goods</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,890,805</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,685,857</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserves for excess and obsolete inventory</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(462,516</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,223,341</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accrued liabilities consist of the following at June&nbsp;30,
2005:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Compensation and benefits</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,775,226</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consulting fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>255,931</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounting and legal fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>661,851</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>164,604</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>429,738</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total accrued liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,287,350</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.</B></TD>
    <TD>
    <B>Income Taxes</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. The Company&#146;s deferred tax
assets at June&nbsp;30, 2005 have been reduced by a valuation
allowance because it is more likely than not that a portion of
the deferred tax asset will not be realized. At
December&nbsp;31, 2004, the Company has federal and state net
operating loss (&#147;NOL&#148;) carryforwards of approximately
$136&nbsp;million. The federal NOL carryforwards expire in 2020
through 2024 and the state NOL carryforwards expire in 2007
through 2013.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>4.</B></TD>
    <TD>
    <B>Series&nbsp;A and B Redeemable Convertible Preferred Stock</B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2000, the Company issued 18,436,225&nbsp;shares of
Series&nbsp;A Preferred Stock to various investors at a purchase
price of $1.00&nbsp;per share resulting in net proceeds of
approximately $12,705,000 and the receipt of non-cash
contributions of $5,555,600 consisting principally of in-process
research and development. During 2001 through 2004, the Company
sold 35,715,178&nbsp;shares of Series&nbsp;B Redeemable
Convertible Preferred Stock (&#147;Series&nbsp;B Preferred
Stock&#148;) to various investors at a purchase price of
$4.94&nbsp;per share resulting in net proceeds of approximately
$176,095,000. The Series&nbsp;A Preferred Stock and the
Series&nbsp;B Preferred Stock are herein referred to
collectively as the &#147;Preferred Stock.&#148;
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each share of Preferred Stock has an initial liquidation value
equal to its initial purchase price per share plus any unpaid
but declared dividends and is convertible into shares of common
stock at an initial conversion price equal to its initial
purchase price per share, subject to adjustment under certain
circumstances. Potential adjustments to the initial conversion
price would result principally from the issuance or sale of
certain equity instruments, as defined, at less than the initial
conversion price per share by the Company prior to the date of
such conversions. In connection with the 2 for 1 split of the
Company&#146;s common stock in 2004, the conversion price of the
Preferred Stock has been adjusted to one-half its initial
purchase price per share. The Preferred Stock is automatically
converted into common stock upon the consummation of a qualified
initial public offering of the Company&#146;s common stock, as
defined.
</DIV>

<P align="center" style="font-size: 10pt;">F-24

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Condensed Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of the Series&nbsp;A Preferred Stock were entitled
to receive dividends at a simple rate of 8%&nbsp;per annum of
the original purchase price per share only upon the declaration
of such dividends by the Company&#146;s Board of Directors or
upon any liquidation or redemption of the securities. In
connection with the issuance of the Series&nbsp;B Preferred
Stock the dividend rights of the Series&nbsp;A Preferred Stock
were amended such that the holders of the Preferred Stock shall
have the right to receive dividends only upon declaration by the
Company&#146;s Board of Directors. Accordingly, all dividends
accrued by the Company were reversed to additional paid-in
capital during 2001. In addition, the Preferred Stock holders
are entitled to participate in any dividends paid to the holders
of the Company&#146;s common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of the Preferred Stock vote together with all other
classes of stock on all actions taken by the stockholders of the
Company as a single class. Each holder of Preferred Stock is
entitled to that number of votes such holder would be entitled
to if the holder had converted the shares of Preferred Stock
into shares of common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the election of at least two thirds of the holders of the
then outstanding Preferred Stock, on or after February&nbsp;1,
2006, February&nbsp;1, 2007 and February&nbsp;1, 2008, the
Company shall redeem
33<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the shares each year, in cash, if not previously converted
into shares of common stock, at the original purchase price plus
any declared but unpaid dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of the Preferred Stock have registration rights
under an agreement dated March&nbsp;30, 2001, as amended, which
provides for the registration of common stock held by such
stockholders within the periods specified by such agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of the Preferred Stock have anti-dilution rights
granted pursuant to an agreement dated March&nbsp;30, 2001, as
amended, which allows such stockholders to purchase additional
securities of the Company upon the issuance or sale of certain
equity instruments, as defined. In addition, certain holders of
the Preferred Stock have rights exercisable upon events
constituting a change of control, as defined, including sale of
the Company, certain of its technology, which allows such
stockholders the right of first negotiation and the right of
first refusal to acquire the Company or its assets and, in
certain circumstances, requires the Company to cause the
purchaser to purchase securities held by the stockholder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with a market trial agreement with a customer, in
June 2003, the Company issued to the customer a warrant to
purchase&nbsp;1,500,000&nbsp;shares of its Series&nbsp;B
Preferred Stock for $4.94&nbsp;per share. The warrant vests as
the customer purchases certain products from the Company over
time periods specified in the related agreements and expires
seven years from the date of issuance. The warrant also vests
upon the occurrence of certain events constituting a change of
control, as defined, including sale of the Company, certain of
its technology, or closing of an initial public offering of the
Company&#146;s common stock. As of December&nbsp;31, 2004,
warrants to acquire 1,000,000&nbsp;shares were vested. At
December&nbsp;31, 2004, the remaining warrants to acquire
500,000&nbsp;shares of Series&nbsp;B Preferred Stock expired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with a market trial agreement with a customer, in
July 2004 the Company issued two warrants to purchase an
aggregate of 2,000,000&nbsp;shares of its Series&nbsp;B
Preferred Stock. Warrants to purchase&nbsp;1,000,000&nbsp;shares
Series&nbsp;B Preferred Stock for $4.94&nbsp;per share vested
upon the execution of a binding commitment from the customer to
purchase certain products from the Company over time periods
specified in the related agreements as well as other
requirements stated therein. The warrant to purchase the
remaining 1,000,000&nbsp;shares vests as the customer purchases
additional products from the Company over time periods specified
in the warrant agreement. The exercise price of the remaining
warrants ranges from $4.94&nbsp;per share to $7.50&nbsp;per
share based upon the timing of purchases made pursuant to the
warrant agreement. These warrants expire five years from the
date of issuance. The vesting requirements of remaining warrants
have not been fulfilled as of June&nbsp;30, 2005.
</DIV>

<P align="center" style="font-size: 10pt;">F-25

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>Flarion Technologies, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notes to Condensed Consolidated Financial
Statements&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.</B></TD>
    <TD>
    <B>Stockholders&#146; Equity</B></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock outstanding at December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,181,584</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of common stock in connection with the exercise of
    stock options</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>183,251</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock outstanding at June&nbsp;30, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,364,835</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.</B></TD>
    <TD>
    <B>Comprehensive Loss</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Comprehensive loss is comprised of net loss and other
comprehensive loss. Other comprehensive loss includes certain
changes in equity that are excluded from net income, such as
foreign currency translation adjustments. The following table
presents the components of total comprehensive loss for the six
months ended June&nbsp;30, 2005.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(17,733,043</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income (loss):</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#CCEEFF">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,470</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(17,711,573</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.</B></TD>
    <TD>
    <B>Commitments and Contingencies</B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;6, 2005, the Company was served with a summons
with respect to a civil action commenced by a former employee
alleging that the Company engaged in various discriminatory and
unfair employment practices and other related matters, claiming
damages in the amount of $90.7&nbsp;million. The Company
believes that these allegations are without merit and intends to
vigorously defend itself in any proceedings relating to this
action.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company provides certain indemnification provisions within
its trial and other agreements, to protect the other party from
any liabilities or damages resulting from a claim of
misappropriation or infringement by third parties relating to
its products and services. The Company has not incurred a
liability relating to any of these indemnification provisions in
the past and management believes that the likelihood of any
future payout relating to these provisions is unlikely.
Therefore, the Company has not recorded a liability during any
period for these indemnification provisions.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.</B></TD>
    <TD>
    <B>Related Party Transactions</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2000 and 2001, the Company received notes issued by
employees in connection with the purchase of a total of
5,944,444 restricted shares of the Company&#146;s common stock.
Such notes are full recourse, bear interest at rates ranging
from 6.4% to 8.0%&nbsp;per annum and are due at various dates
between May 2005 and March 2006. During 2002, one of the notes
receivable was paid in full, including interest. At
June&nbsp;30, 2005, the principal amount of the remaining note,
$187,500, was included as notes receivable from employee
stockholder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2003, the Company entered into a market trial agreement
with a customer who, at June&nbsp;30, 2005, owned
6,078,425&nbsp;shares of the Company&#146;s Series&nbsp;B
Preferred Stock. Included in accounts receivable&nbsp;&#151;
related party at June&nbsp;30, 2005 was approximately $840,000,
due from this customer.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.</B></TD>
    <TD>
    <B>Subsequent Events</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;25, 2005, the Company entered into an agreement to
be acquired by QUALCOMM Incorporated (&#147;QUALCOMM&#148;).
Upon the closing of the merger, the initial purchase price of
$600&nbsp;million, subject to certain adjustments, will be paid
in a combination of shares of QUALCOMM common stock and cash.
QUALCOMM has agreed to pay up to an additional $205&nbsp;million
in a combination of shares of QUALCOMM common stock and cash
upon the achievement of certain milestones. The closing of the
merger is subject to certain conditions defined in the
agreement. No assurance can be given that the conditions of the
merger will be satisfied or that the merger will be consummated.
</DIV>

<P align="center" style="font-size: 10pt;">F-26
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<A name='199'></A>
</DIV>

<!-- link1 "Annex A" -->

<DIV align="right" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Annex&nbsp;A</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 21pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AGREEMENT AND PLAN OF REORGANIZATION</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>BY AND AMONG</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>QUALCOMM INCORPORATED,</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>FLUORITE ACQUISITION CORPORATION,</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>QUARTZ ACQUISITION CORPORATION,</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>FLARION TECHNOLOGIES, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AND</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>QF REP, LLC AS STOCKHOLDERS&#146; AGENT</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>JULY&nbsp;25, 2005</B>
</DIV>

<P align="center" style="font-size: 10pt;">A-1

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TABLE OF CONTENTS</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    DEFINITIONS</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    THE MERGERS</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    The Mergers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Closing; Effective Time</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Effect of the Mergers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certificate of Incorporation; Bylaws</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Directors and Officers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Effect on Capital Stock in Merger I</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Surrender of Certificates</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-22</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Effect on Capital Stock in Merger&nbsp;II</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-24</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    No Further Ownership Rights in Target Capital Stock</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-24</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Lost, Stolen or Destroyed Certificates</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Tax Consequences</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Taking of Necessary Action; Further Action</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    3.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    REPRESENTATIONS AND WARRANTIES OF TARGET</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Organization, Standing and Power</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Authority</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Governmental Authorization</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-27</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Financial Statements</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-27</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Capitalization</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-27</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Absence of Certain Changes</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-29</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Absence of Undisclosed Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-29</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Litigation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-29</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Delivery of Notice</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-30</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Intellectual Property</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-30</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Prior License Grants</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-34</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Interested Party Transactions</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-34</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Minute Books</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-35</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Written Consent Action</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-35</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Material Contracts</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-35</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Accounts Receivable</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-36</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Customers and Suppliers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-36</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employees and Consultants</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-36</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Title to Property</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-36</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Real Estate</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-37</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Environmental Matters</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-37</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Taxes</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-38</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employee Benefit Plans and Employment Matters</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-40</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Insurance</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Compliance With Laws</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Brokers&#146; and Finders&#146; Fee</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Bank Accounts</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employee Agreements</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-43</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">A-2

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Reserved</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    International Trade Matters</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certain Payments</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Registration Statement; Information Statement/ Prospectus</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Vote Required</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Subsidiaries</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    4.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    REPRESENTATIONS AND WARRANTIES OF ACQUIROR, MERGER SUB I AND
    MERGER SUB&nbsp;II</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Organization, Standing and Power</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Authority</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    SEC Documents; Financial Statements</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-45</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Issuance of Shares</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-46</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Merger Sub I and Merger Sub&nbsp;II</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-46</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Investigation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-46</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Brokers&#146; and Finders&#146; Fee</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-46</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Litigation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-46</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Information Supplied</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-46</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    5.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    CONDUCT PRIOR TO THE EFFECTIVE TIME OF MERGER I</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-47</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Conduct of Business of Target and Subsidiaries</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-47</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    No Solicitation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Deployments</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    6.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    ADDITIONAL AGREEMENTS</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Information Statement/ Prospectus</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Access to Information</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-53</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Confidentiality</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-54</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Public Disclosure</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-54</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Regulatory Approval; Further Assurances</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-54</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Cancellation of Warrants</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-55</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form&nbsp;S-8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-55</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Blue Sky Laws</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-55</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Reserved</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Listing of Additional shares</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employees</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Duty to Supplement</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Tax Treatment</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Termination of Agreements</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Tax Matters</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Resignation of Directors</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    FIRPTA Matters</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Closing Working Capital</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Approval of Stockholders</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indemnification</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Required Contract Consents</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Expenses</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-57</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">A-3

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Notification of Certain Parties</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Release and Termination of Security Interests</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Delivery of Written Notice</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employee Benefits</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    WARN; COBRA</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-59</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Stockholder Approval Regarding Section&nbsp;280G Payments</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-59</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment of Target Option Plan</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-59</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    7.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    CONDITIONS TO THE MERGER</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-60</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>7.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Conditions to Obligations of Each Party to Effect the Mergers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-60</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>7.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Additional Conditions to the Obligations of Acquiror, Merger Sub
    I and Merger Sub&nbsp;II</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-60</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>7.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Additional Conditions to Obligations of Target</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-62</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    TERMINATION, EXTENSION AND WAIVER</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-63</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>8.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Termination</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-63</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>8.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Effect of Termination</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-63</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>8.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Extension; Waiver</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-63</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    9.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    INDEMNIFICATION</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Reserved</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indemnification</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Offset of Claims Period; Release of Holdback Indemnification
    Funds</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Offset of Claims; Sole Remedy</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Objections to Claims</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Resolution of Conflicts</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Stockholders&#146; Agent</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Third-Party Claims</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-71</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    10.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" align="left" valign="top">
    GENERAL PROVISIONS</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-71</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Notices</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-71</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Counterparts</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-72</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Entire Agreement; Nonassignability; Parties in Interest</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-72</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Severability</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Remedies Cumulative</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Governing Law</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Rules of Construction</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Specific Enforcement</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Guarantee</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment; Waiver</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-74</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Incorporation of Exhibits and Schedules</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-74</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">A-4

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LIST OF EXHIBITS AND SCHEDULES</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Exhibits</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT A</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certificate of Merger</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT B</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Certificate of Merger</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT C</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Action by Written Consent of the Stockholders</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT D</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certificate of Incorporation of Surviving Corporation I</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT E-1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Waiver of Accelerated Option Vesting and Amendment of Stock
    Option Agreement</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT E-2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Waiver of Accelerated Option Vesting and Amendment of Stock
    Option Agreement</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT F-1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Non-Competition and Non-Solicitation Agreement</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT F-2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Non-Competition and Non-Solicitation Agreement</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT G-1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Stock Restriction Agreement</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT G-2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Stock Restriction Agreement</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT H</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Legal Opinion</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT I</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Certificate Amendment</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EXHIBIT J</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certificate of Incorporation of Surviving Corporation</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Schedules</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    TARGET DISCLOSURE SCHEDULE</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE A</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Persons with Knowledge with Respect to Target</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE B</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Persons Executing the Executed Written Consents</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 2.6(a)(i)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Sample Calculation</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 2.6(e)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Target Representatives</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 2.6(f)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Schedule of Target Options</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 2.6(g)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Assumed Target Warrants</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 3.11</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certain IP Rights</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 3.12</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Specified Third Party Licensor</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 3.28</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Identified Employees</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 5.1(D)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Directed Options to Named Individuals</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 5.1(X)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Schedule of Deployments</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 6.14</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Target Contracts Requiring Termination</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 6.26</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Target Employee Plans Remaining in Effect</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 7.2(I)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Target Employees</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SCHEDULE 8.2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Fee Transaction Party</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">A-5

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AGREEMENT AND PLAN OF REORGANIZATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This AGREEMENT AND PLAN OF REORGANIZATION (the
&#147;Agreement&#148;) is made and entered into as of
July&nbsp;25, 2005 by and among QUALCOMM Incorporated, a
Delaware corporation (&#147;Acquiror&#148;), Fluorite
Acquisition Corporation, a Delaware corporation and wholly owned
subsidiary of Acquiror (&#147;Merger Sub I&#148;), Quartz
Acquisition Corporation, a Delaware corporation and wholly owned
subsidiary of Acquiror (&#147;Merger Sub&nbsp;II&#148;), Flarion
Technologies, Inc., a Delaware corporation (&#147;Target&#148;),
and, solely with respect to Sections&nbsp;2.6, 6.1 and 9 hereof,
QF REP, LLC, a limited liability company organized under the
laws of the state of Delaware (&#147;Stockholders&#146;
Agent&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RECITALS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A.&nbsp;The Boards of Directors of Target, Acquiror, Merger Sub
I and Merger Sub&nbsp;II believe it is in the best interests of
their respective companies and the stockholders of their
respective companies that (i)&nbsp;Merger Sub I merge with and
into Target with Target as the surviving corporation
(&#147;Merger I&#148;) and (ii)&nbsp;immediately following the
effectiveness of Merger&nbsp;I, Target merge with and into
Merger Sub&nbsp;II with Merger Sub&nbsp;II as the surviving
corporation (&#147;Merger&nbsp;II&#148; and together with
Merger&nbsp;I, collectively, the &#147;Mergers&#148;) and, in
furtherance thereof, have approved and declared advisable this
Agreement and the transactions contemplated hereby, including
the Mergers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
B.&nbsp;Pursuant to Merger&nbsp;I, among other things, the
outstanding shares of Target preferred stock, $0.001&nbsp;par
value (&#147;Target Preferred Stock&#148;), and Target common
stock, $0.001&nbsp;par value (&#147;Target Common Stock&#148;)
(collectively, the Target Preferred Stock and Target Common
Stock are referred to herein as &#147;Target Capital
Stock&#148;), shall be converted into the right to receive the
Merger Consideration (as defined below) upon the terms and
subject to the conditions set forth herein, and Acquiror will
assume all outstanding options to purchase shares of Target
Capital Stock in accordance with the terms and conditions of
this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
C.&nbsp;Promptly after the execution of this Agreement, in order
to induce Acquiror, Merger Sub I and Merger Sub&nbsp;II to enter
into this Agreement, the Stockholders of Target identified on
Schedule&nbsp;B attached hereto shall deliver to Acquiror an
executed Action by Written Consent of the Stockholders in the
form attached hereto as Exhibit&nbsp;C (the &#147;Executed
Written Consents&#148;) adopting, among other things, this
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
D.&nbsp;Target, Acquiror, Merger Sub I and Merger Sub&nbsp;II
desire to make certain representations and warranties and other
agreements in connection with the Mergers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
E.&nbsp;The parties intend, by executing this Agreement, to
adopt a plan of reorganization within the meaning of
Section&nbsp;368 of the Internal Revenue Code of 1986, as
amended (the &#147;Code&#148;), and to cause the Mergers to
qualify as a reorganization under the provisions of
Section&nbsp;368(a) of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOW, THEREFORE, in consideration of the covenants and
representations set forth herein, and for other good and
valuable consideration, the parties agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Definitions.</I> As used in
this Agreement, the following terms shall have the following
meanings:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror&#148;</I> has the meaning set forth in the
    introductory paragraph.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror Common Stock&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(a)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror Financial Statements&#148;</I> has the meaning
    set forth in Section&nbsp;4.3(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror Indemnified Person&#148;</I> and
    <I>&#147;Acquiror Indemnified Persons&#148;</I> have the
    meanings set forth in Section&nbsp;9.2(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror Indemnitee&#148;</I> has the meaning set forth
    in Section&nbsp;6.1(b)(v).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror Material Adverse Effect&#148;</I> has the
    meaning set forth in Section&nbsp;4.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror SEC Documents&#148;</I> has the meaning set
    forth in Section&nbsp;4.3(a).</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-6

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror Selected Applications&#148;</I> has the
    meaning set forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror Selection Date&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquiror Warrant&#148;</I> has the meaning set forth in
    Section&nbsp;2.6(g).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Acquisition Proposal&#148;</I> has the meaning set
    forth in Section&nbsp;5.2(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Additional Expenses Fund&nbsp;Shares&#148;</I> has the
    meaning set forth in Section&nbsp;9.7(j)(iii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Additional Patent Consideration&#148;</I> has the
    meaning set forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Additional Payment Amount&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Additional Payment Per Share Price&#148;</I> has the
    meaning set forth in Section&nbsp;2.6(m).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Adjustment Amount&#148;</I> has the meaning set forth
    in Section&nbsp;2.6(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Aggregate Equity Consideration&#148;</I> means the
    aggregate number of shares of Acquiror Common Stock delivered as
    part of the Initial Purchase Price.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Aggregate Purchase Price&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Agreement&#148;</I> has the meaning set forth in the
    introductory paragraph.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Applications&#148;</I> has the meaning set forth in
    Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Assessable Equity Consideration&#148;</I> has the
    meaning set forth in Section&nbsp;2.6(c).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Assessable Merger Consideration&#148;</I> has the
    meaning set forth in Section&nbsp;2.6(c).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Assumed Option&#148;</I> has the meaning set forth in
    Section&nbsp;2.6(f)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Assumed Target Warrant&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(g).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Average Closing Price&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(f)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;CERCLA&#148;</I> has the meaning set forth in
    Section&nbsp;3.21(a)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Certificate&#148;</I> has the meaning set forth in
    Section&nbsp;2.7(c).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Certificate Amendment&#148;</I> has the meaning set
    forth in Section&nbsp;5.1(w).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Certificate of Merger&#148;</I> has the meaning set
    forth in Section&nbsp;2.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Closing&#148;</I> has the meaning set forth in
    Section&nbsp;2.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Closing Balance Sheet&#148;</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Closing Date&#148;</I> has the meaning set forth in
    Section&nbsp;2.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Closing Date Price&#148;</I> has the meaning set forth
    in Section&nbsp;2.6(c).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Closing Option Schedule&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(f)(iii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Closing Payment Schedule&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(e).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Closing Target Common Stock Consideration&#148;</I>
    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&nbsp;2.6(a)(ii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Closing Working Capital&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(d).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Closing Working Capital Calculation&#148;</I> has the
    meaning set forth in Section&nbsp;2.6(d).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;COBRA&#148;</I> has the meaning set forth in
    Section&nbsp;3.23(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Code&#148;</I> has the meaning set forth in Recital E.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-7

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Common Exchange Ratio&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(a)(ii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Confidentiality Agreement&#148;</I> has the meaning set
    forth in Section&nbsp;6.3.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Contemplated Transactions&#148;</I> shall mean the
    transactions and other matters contemplated by this Agreement,
    including the Mergers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Contractor Invention Agreement&#148;</I> has the
    meaning set forth in Section&nbsp;3.10(p).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Copyrights&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(a)(ii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Core IP Rights&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(e).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Damages&#148;</I> has the meaning set forth in
    Section&nbsp;9.2(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Deductible Amount&#148;</I> has the meaning set forth
    in Section&nbsp;9.2(e).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;De Minimis Damages&#148;</I> has the meaning set forth
    in Section&nbsp;9.2(e).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;DGCL&#148;</I> has the meaning set forth in
    Section&nbsp;2.1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Directed Inventory&#148;</I> has the meaning set forth
    in Section&nbsp;5.3.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Directed Options&#148;</I> has the meaning set forth in
    Section&nbsp;5.1(d).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Dissenting Shares&#148;</I> has the meaning set forth
    in Section&nbsp;2.6(l).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Dissenting Stockholder&#148;</I> and
    <I>&#147;Dissenting Stockholders&#148;</I> have the meanings set
    forth in Section&nbsp;2.6(l).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;DLA&#148;</I> has the meaning set forth in
    Section&nbsp;6.15.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Domain Names&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(a)(iii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Effective Time&#148;</I> has the meaning set forth in
    Section&nbsp;2.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Effective Time of Merger I&#148;</I> has the meaning
    set forth in Section&nbsp;2.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Effective Time of Merger&nbsp;II&#148;</I> has the
    meaning set forth in Section&nbsp;2.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Employee Benefits&#148;</I> has the meaning set forth
    in Section&nbsp;6.26.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Employee/ Officer Invention Agreement&#148;</I> has the
    meaning set forth in Section&nbsp;3.10(p).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Encumbrances&#148;</I> has the meaning set forth in
    Section&nbsp;3.19.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Environmental Laws&#148;</I> has the meaning set forth
    in Section&nbsp;3.21(a)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;ERISA Affiliate&#148;</I> has the meaning set forth in
    Section&nbsp;3.23(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Estimated Closing Working Capital&#148;</I> has the
    meaning set forth in Section&nbsp;6.18.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Excess Dissenters Consideration&#148;</I> has the
    meaning set forth in Section&nbsp;2.6(c).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Excess Expenses Certificate&#148;</I> has the meaning
    set forth in Section&nbsp;9.7(n).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Exchange Act&#148;</I> has the meaning set forth in
    Section&nbsp;3.4(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Exchange Agent&#148;</I> has the meaning set forth in
    Section&nbsp;2.7(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Exchange Fund&#148;</I> has the meaning set forth in
    Section&nbsp;2.7(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Executed Written Consents&#148;</I> has the meaning set
    forth in Recital C.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Existing Option&#148;</I> has the meaning set forth in
    Section&nbsp;2.6(f)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Expenses Fund&#148;</I> has the meaning set forth in
    Section&nbsp;2.7(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Expenses Fund&nbsp;Cash&#148;</I> has the meaning set
    forth in Section&nbsp;2.7(i).</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-8

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Expenses Fund&nbsp;Shares&#148;</I> has the meaning set
    forth in Section&nbsp;2.7(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Fee Transaction&#148;</I> has the meaning set forth in
    Section&nbsp;8.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Fully Diluted Share Number&#148;</I> means the sum
    (without duplication) of (i)&nbsp;the total number of shares of
    Target Common Stock issued and outstanding immediately prior to
    the Effective Time of Merger&nbsp;I, (ii)&nbsp;the total number
    of shares of Target Common Stock issuable, immediately prior to
    the Effective Time of Merger&nbsp;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)&nbsp;the total
    number of shares of Target Common Stock issuable, immediately
    prior to the Effective Time of Merger&nbsp;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).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Governmental Entity&#148;</I> has the meaning set forth
    in Section&nbsp;3.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;GPL&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(a)(viii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Hazardous Materials&#148;</I> has the meaning set forth
    in Section&nbsp;3.21(a)(ii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Holdback Indemnification Funds&#148;</I> has the
    meaning set forth in Section&nbsp;9.2(e).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Holder&#148;</I> has the meaning set forth in
    Section&nbsp;6.1(b)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Holder Indemnity&#148;</I> has the meaning set forth in
    Section&nbsp;6.1(b)(iv)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;HSR&#148;</I> has the meaning set forth in
    Section&nbsp;3.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Inbound License Rights&#148;</I> has the meaning set
    forth in Section&nbsp;3.10(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;In-Bound Material License&#148;</I> has the meaning set
    forth in Section&nbsp;3.15.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Indemnification Termination Date&#148;</I> has the
    meaning set forth in Section&nbsp;9.3.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Indemnified Person&#148;</I> has the meaning set forth
    in Section&nbsp;6.1(b)(vi)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Indemnified Persons&#148;</I> has the meaning set forth
    in Section&nbsp;9.2(c).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Indemnifying Person&#148;</I> has the meaning set forth
    in Section&nbsp;6.1(b)(vi)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Independent Accounting Firm&#148;</I> means an
    independent accounting firm of national reputation (other than
    an accounting firm regularly used by Acquiror unless otherwise
    agreed to by Stockholders&#146; Agent) mutually agreed upon by
    Acquiror and the Stockholders&#146; Agent.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Information Statement/ Prospectus&#148;</I> has the
    meaning set forth in Section&nbsp;3.32.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Initial Cash Consideration&#148;</I> has the meaning
    set forth in Section&nbsp;2.6(a)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Initial Purchase Price&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;International Trade Law&#148;</I> has the meaning set
    forth in Section&nbsp;3.30.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Intrinsic Value&#148;</I> means the difference between
    the Per Share Purchase Price and the exercise price of each
    share of Target Common Stock underlying a Directed Option.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;IP Encumbrance&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(l) .</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;IP Rights&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(a)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Knowledge,&#148;</I> <I>&#147;Known&#148;</I> or
    <I>&#147;Know&#148;</I> means (i)&nbsp;with respect to an
    individual, that individual&#146;s actual awareness of the fact
    or other matter, and (ii)&nbsp;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</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-9

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    of the fact or other matter; provided, further, that Target
    shall be deemed to have &#147;Knowledge&#148;, &#147;Known&#148;
    or &#147;Know&#148; a fact or other matter if any director of
    Target, any executive officer of Target or any of the
    individuals listed on Schedule&nbsp;A attached hereto has
    &#147;Knowledge&#148;, &#147;Known&#148; or &#147;Knows&#148; of
    such fact or matter.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Lease&#148;</I> and <I>&#147;Leases&#148;</I> have the
    meanings set forth in Section&nbsp;3.20(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;LGPL&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(a)(viii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;LW&#148;</I> has the meaning set forth in
    Section&nbsp;6.15.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Material Contract&#148;</I> has the meaning set forth
    in Section&nbsp;3.15(c).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Merger I&#148;</I> has the meaning set forth in Recital
    A.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Merger&nbsp;II&#148;</I> has the meaning set forth in
    Recital A.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Mergers&#148;</I> has the meaning set forth in Recital
    A.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Merger Consideration&#148;</I> means the Initial Cash
    Consideration, the Aggregate Equity Consideration and the
    Additional Payment Amount.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Merger Sub I&#148;</I> has the meaning set forth in the
    introductory paragraph.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Merger Sub&nbsp;II&#148;</I> has the meaning set forth
    in the introductory paragraph.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Named Individuals&#148;</I> has the meaning set forth
    in Section&nbsp;7.2(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;NASD&#148;</I> has the meaning set forth in
    Section&nbsp;4.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Notice Parties&#148;</I> has the meaning set forth in
    Section&nbsp;6.23(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Notice Period&#148;</I> has the meaning set forth in
    Section&nbsp;6.23(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;NVP&#148;</I> means NV Partners&nbsp;II LP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Offer&#148;</I> has the meaning set forth in
    Section&nbsp;6.23(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Offer Notification&#148;</I> has the meaning set forth
    in Section&nbsp;6.23(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Officer&#146;s Certificate&#148;</I> has the meaning
    set forth in Section&nbsp;9.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Option Earn-out Shares&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(f)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Option Exchange Ratio&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(f)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Outbound License Rights&#148;</I> has the meaning set
    forth in Section&nbsp;3.10(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Patent Milestone Date&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Patent Milestone Option Issuance Date&#148;</I> shall
    mean March 15 of the year following the calendar year in which
    the Patent Milestone Date occurs.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Patent Rights&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(a)(vi).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Pension Plan&#148;</I> has the meaning set forth in
    Section&nbsp;3.23(d).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Per Share Additional Patent Consideration&#148;</I> has
    the meaning set forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Per Share Purchase Price&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Person&#148;</I> means any individual, corporation,
    partnership, limited liability company, joint venture,
    association, joint-stock company, trust, unincorporated
    organization or Governmental Entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Preferred Equity Amount&#148;</I> means the amount
    equal to (i)&nbsp;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</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-10

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Patent Consideration (assuming no offsets pursuant to
    Section&nbsp;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&nbsp;2.6(h) and Dissenting Shares), less (ii)&nbsp;the
    Closing Target Common Stock Consideration.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Preferred Equity Percentage&#148;</I> has the meaning
    set forth in Section&nbsp;2.6(a)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Preferred Exchange Ratio&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(a)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Prosecution Standard&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Prosecution Instructions&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Public Software&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(a)(viii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Purchase Price Objection Notice&#148;</I> has the
    meaning set forth in Section&nbsp;2.6(d).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Purchase Price Resolution Period&#148;</I> has the
    meaning set forth in Section&nbsp;2.6(d).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;RCRA&#148;</I> has the meaning set forth in
    Section&nbsp;3.21(a)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Real Estate&#148;</I> has the meaning set forth in
    Section&nbsp;3.20(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Record Date&#148;</I> shall mean the record date for
    the written consents of the stockholders of Target adopting this
    Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Registrable Securities&#148;</I> has the meaning set
    forth in Section&nbsp;6.1(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Registration Statement&#148;</I> has the meaning set
    forth in Section&nbsp;3.32.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Remaining Applications&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m)(i)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Representatives&#148;</I> shall mean officers,
    directors, partners, trustees, executors, employees, agents,
    attorneys, accountants and advisors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Required Approvals&#148;</I> has the meaning set forth
    in Section&nbsp;9.2(c)(iv).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Required Contract Consents&#148;</I> has the meaning
    set forth in Section&nbsp;3.15(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Required Certificate Amendment Vote&#148;</I> has the
    meaning set forth in Section&nbsp;3.33(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Required Merger Stockholder Vote&#148;</I> has the
    meaning set forth in Section&nbsp;3.33(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Resumption Notice&#148;</I> has the meaning set forth
    in Section&nbsp;6.1(b)(ii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Returns&#148;</I> has the meaning set forth in
    Section&nbsp;3.22(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Rights Agreement&#148;</I> shall mean the Amended and
    Restated Investors&#146; Rights Agreement dated as of
    March&nbsp;30, 2001, by and among Target and certain
    Stockholders, as amended.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;S-3&#148;</I> has the meaning set forth in
    Section&nbsp;6.1(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;SEC&#148;</I> has the meaning set forth in
    Section&nbsp;4.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Second Certificate of Merger&#148;</I> has the meaning
    set forth in Section&nbsp;2.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Securities Act&#148;</I> has the meaning set forth in
    Section&nbsp;3.12.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Signing Date Price&#148;</I> has the meaning set forth
    in Section&nbsp;2.6(c).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Standardized Licenses&#148;</I> has the meaning set
    forth in Section&nbsp;3.10(f).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Stockholder&#148;</I> has the meaning set forth in
    Section&nbsp;2.6(e).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Stockholder Indemnified Person&#148;</I> and
    <I>&#147;Stockholder Indemnified Persons&#148; </I>have the
    meanings set forth in Section&nbsp;9.2(c).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Stockholders&#146; Agent&#148;</I> has the meaning set
    forth in the introductory paragraph.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-11

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Stockholders&#146; Agreement&#148;</I> shall mean the
    Amended and Restated Stockholders&#146; Agreement dated as of
    March&nbsp;30, 2001, by and among Target and certain
    Stockholders, as amended.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Subsequent Patent Firm&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m)(ii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Subsidiary&#148;</I> has the meaning set forth in
    Section&nbsp;3.1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Superior Proposal&#148;</I> has the meaning set forth
    in Section&nbsp;6.23(d).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Survival Period&#148;</I> has the meaning set forth in
    Section&nbsp;9.2(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Surviving Corporation&#148;</I> has the meaning set
    forth in Section&nbsp;2.1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Suspension Notice&#148;</I> has the meaning set forth
    in Section&nbsp;6.1(b)(ii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Suspension Right&#148;</I> has the meaning set forth in
    Section&nbsp;6.1(b)(ii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Surviving Corporation I&#148;</I> has the meaning set
    forth in Section&nbsp;2.1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target&#148;</I> has the meaning set forth in the
    introductory paragraph.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target 401(k) Plan&#148;</I> has the meaning set forth
    in Section&nbsp;7.2(n).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Balance Sheet&#148;</I> has the meaning set
    forth in Section&nbsp;3.7.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Balance Sheet Date&#148;</I> has the meaning set
    forth in Section&nbsp;3.6.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Capital Stock&#148;</I> has the meaning set
    forth in Recital B.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Common Stock&#148;</I> has the meaning set forth
    in Recital B.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Disclosure Schedule&#148;</I> has the meaning
    set forth in Section&nbsp;3.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Employee Plans&#148;</I> has the meaning set
    forth in Section&nbsp;3.23(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Financial Statements&#148;</I> has the meaning
    set forth in Section&nbsp;3.4(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Material Adverse Effect&#148;</I> has the
    meaning set forth in Section&nbsp;3.1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Option&#148;</I> has the meaning set forth in
    Section&nbsp;2.6(f)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Option Plan&#148;</I> has the meaning set forth
    in Section&nbsp;3.5(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Preferred Stock&#148;</I> has the meaning set
    forth in Recital B.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Selected Applications&#148;</I> has the meaning
    set forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Selection Date&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target Warrants&#148;</I> has the meaning set forth in
    Section&nbsp;3.5(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target&#146;s Closing Working Capital&#148;</I> shall
    mean shall mean (i)&nbsp;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)&nbsp;the total current
    liabilities (excluding deferred revenue) of Target at Closing,
    all as defined under GAAP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target&#146;s Current Facilities&#148;</I> has the
    meaning set forth in Section&nbsp;3.21(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target&#146;s Facilities&#148;</I> has the meaning set
    forth in Section&nbsp;3.21(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Target&#146;s Patent Firm&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(m)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Tax&#148;</I> and <I>&#147;Taxes&#148;</I> have the
    meanings set forth in Section&nbsp;3.22(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Ten Day Notice&#148;</I> has the meaning set forth in
    Section&nbsp;6.23(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Thirty Day Notice&#148;</I> has the meaning set forth
    in Section&nbsp;6.23(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Topping Offer&#148;</I> has the meaning set forth in
    Section&nbsp;6.23(b).</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-12

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Trademark Rights&#148;</I> has the meaning set forth in
    Section&nbsp;3.10(a)(vii).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Trade Secret Information&#148;</I> has the meaning set
    forth in Section&nbsp;3.10(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Transaction Expenses&#148;</I> 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 &#147;Transaction Expenses&#148; shall
    in no event include (i)&nbsp;any employee severance or
    integration fee, cost, expense, payment or expenditure incurred
    at the direction of Acquiror, (ii)&nbsp;the Directed Options
    (including any amounts required to be withheld as a result of
    the issuance of the Directed Options), (iii)&nbsp;any expense
    paid or payable relating to or arising out of the Rights
    Agreement or (iv)&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Transaction Expense Threshold&#148;</I> has the meaning
    set forth in Section&nbsp;2.6(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Updated Schedule&#148;</I> has the meaning set forth in
    Section&nbsp;6.12.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;USPTO&#148;</I> shall mean the United States Patent and
    Trademark Office.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Warrant Earn-out Shares&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(g).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Warrant Exchange Ratio&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(g).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;WARN&#148;</I> has the meaning set forth in
    Section&nbsp;3.23(k).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>&#147;Working Capital Threshold&#148;</I> has the meaning set
    forth in Section&nbsp;2.6(b).</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The Mergers.</I>
</DIV>

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2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The Mergers.</I> At the
Effective Time of Merger I and subject to and upon the terms and
conditions of this Agreement and the applicable provisions of
the General Corporation Law of the State of Delaware
(&#147;DGCL&#148;), Merger Sub I shall be merged with and into
Target, the separate corporate existence of Merger Sub I shall
cease and Target shall continue as the surviving corporation in
Merger I (&#147;Surviving Corporation&nbsp;I&#148;). At the
Effective Time of Merger&nbsp;II and subject to and upon the
terms and conditions of this Agreement and the applicable
provisions of the DGCL, Surviving Corporation I shall be merged
with and into Merger Sub&nbsp;II, the separate corporate
existence of Surviving Corporation I shall cease and Merger
Sub&nbsp;II shall continue as the surviving corporation in
Merger&nbsp;II (the &#147;Surviving Corporation&#148;). The
Mergers shall be structured as back-to-back Mergers (reverse
triangular merger under Code Sections&nbsp;368(a)(1)(A) and
368(a)(2)(E) followed immediately by a forward triangular merger
of Surviving Corporation I into Merger Sub&nbsp;II under Code
Section&nbsp;368(a)(1)(A) and 368(a)(2)(D)).
</DIV>

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2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Closing; Effective Time.</I>
Unless this Agreement has been previously terminated pursuant to
its terms, the closing of the transactions contemplated hereby
(the &#147;Closing&#148;) shall take place as soon as
practicable, but no later than four (4)&nbsp;business days,
after the satisfaction or waiver of each of the conditions set
forth in Section&nbsp;7 hereof (excluding provisions that, by
their nature, cannot be satisfied until the Closing Date), or at
such other time as the parties hereto agree (the &#147;Closing
Date&#148;). The Closing shall take place at the offices of DLA
Piper Rudnick Gray Cary US LLP, 4365 Executive Drive,
Suite&nbsp;1100, San&nbsp;Diego, California 92121-2133, or at
such other location as the parties hereto agree. In connection
with the Closing, the parties hereto shall cause Merger I to be
consummated by the filing of a Certificate of Merger for Merger
I in substantially the form attached hereto as Exhibit&nbsp;A
(the &#147;Certificate of Merger&#148;), together with any
required certificates, with the Secretary of State of the State
of Delaware, in accordance with the relevant provisions of the
DGCL (the time of such filing being the &#147;Effective Time of
Merger I&#148;). Subject to the provisions of this Agreement, a
Certificate of Merger for Merger&nbsp;II, satisfying the
applicable requirements of the DGCL and in substantially the
form attached hereto as Exhibit&nbsp;B (the &#147;Second
Certificate of Merger&#148;), shall be duly executed by Merger
Sub&nbsp;II and concurrently with or as soon as practicable
following the Effective Time of Merger I filed with the
Secretary of State of State of Delaware in accordance with the
relevant provisions of the DGCL (the time of such filing with
the Secretary of State of State of Delaware (or such later time
as may be agreed in writing by the parties and specified in the
Second Certificate of Merger))
</DIV>

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<DIV align="left" style="font-size: 10pt;">
being the &#147;Effective Time of Merger&nbsp;II&#148;  and,
together with Effective Time of Merger&nbsp;I, the
&#147;Effective Time.&#148;
</DIV>

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2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effect of the Mergers.</I>
The Mergers shall have the effects set forth in this Agreement
and in the applicable provisions of DGCL.
</DIV>

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2.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certificate of
Incorporation; Bylaws.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;At the Effective Time of Merger&nbsp;I, the Certificate
of Incorporation of Target shall be amended to read in its
entirety as set forth on Exhibit&nbsp;D attached hereto and as
so amended, shall be the Certificate of Incorporation of
Surviving Corporation&nbsp;I, until thereafter amended in
accordance with DGCL and as provided in such Certificate of
Incorporation.
</DIV>

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(b)&nbsp;At the Effective Time of Merger&nbsp;I, the Bylaws of
Surviving Corporation I shall be amended and restated in their
entirety to be identical to the Bylaws of Merger Sub&nbsp;I, as
in effect immediately prior to the Effective Time of
Merger&nbsp;I, until thereafter amended in accordance with the
DGCL and as provided in such Bylaws.
</DIV>

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(c)&nbsp;At the Effective Time of Merger&nbsp;II, the
Certificate of Incorporation of Merger Sub&nbsp;II shall be
amended to read in its entirety as set forth on Exhibit&nbsp;J
attached hereto and as so amended, shall be the Certificate of
Incorporation of the Surviving Corporation, until thereafter
amended in accordance with DGCL and as provided in such
Certificate of Incorporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;The Bylaws of the Surviving Corporation shall be
amended and restated consistent with Section&nbsp;2.4(b) of this
Agreement.
</DIV>

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2.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Directors and Officers.</I>
At the Effective Time of Merger&nbsp;I, the directors and
officers of Merger Sub I immediately prior to the Effective Time
of Merger I shall be the directors and officers of the Surviving
Corporation&nbsp;I, to serve until their respective successors
are duly elected or appointed and qualified. At the Effective
Time of Merger&nbsp;II, the directors and officers of Surviving
Corporation I immediately prior to the Effective Time of
Merger&nbsp;II shall be the directors and officers of the
Surviving Corporation, to serve until their respective
successors are duly elected or appointed and qualified.
</DIV>

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2.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effect on Capital Stock in
Merger I.</I> At the Effective Time of Merger&nbsp;I, by virtue
of Merger I and without any action on the part of Merger
Sub&nbsp;I, Target or the holders of any of the following
securities:
</DIV>

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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;The per share price shall equal the amount obtained by
    dividing (A)&nbsp;$600,000,000, as adjusted pursuant to
    Section&nbsp;2.6(b) (the &#147;Initial Purchase Price&#148;) by
    (B)&nbsp;the Fully Diluted Share Number (the &#147;Per Share
    Purchase Price&#148;).</TD>
</TR>

</TABLE>

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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;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&nbsp;2.6(h) and Dissenting Shares) shall be converted
    and exchanged into the right to receive an amount equal to two
    (2)&nbsp;times the Per Share Purchase Price, a portion of which,
    equal to the Preferred Equity Percentage, shall be payable with
    a fraction (the &#147;Preferred Exchange Ratio&#148;) of a share
    of validly issued, fully paid and nonassessable common stock,
    $0.0001&nbsp;par value, of Acquiror (&#147;Acquiror Common
    Stock&#148;) which equals the amount obtained by
    (A)&nbsp;dividing two (2)&nbsp;times the Per Share Purchase
    Price by the Average Closing Price and (B)&nbsp;multiplying the
    quotient of (A)&nbsp;by the Preferred Equity Percentage, and the
    remainder of which shall be payable in cash (the &#147;Initial
    Cash Consideration&#148;). The &#147;Preferred Equity
    Percentage&#148; shall mean the percentage resulting from
    (I)&nbsp;the Preferred Equity Amount divided by (II)&nbsp;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&nbsp;2.6(h) and Dissenting
    Shares), based on the Per Share Purchase Price.
    Schedule&nbsp;2.6(a)(i) attached hereto reflects a sample
    calculation pursuant to this Section&nbsp;2.6.</TD>
</TR>

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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;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&nbsp;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 &#147;Common Exchange Ratio&#148;) 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.</TD>
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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;To the extent (i)&nbsp;Target&#146;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)&nbsp;$3,500,000 for each calendar
    month (or portion thereof) following June&nbsp;30, 2005
    (pro-rated for partial months), (B)&nbsp;any employee severance
    or integration fee, cost, expense, payment or expenditure that
    is paid, incurred or accrued at the direction of Acquiror,
    (C)&nbsp;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)&nbsp;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)&nbsp;any expense paid, incurred or accrued
    to purchase Directed Inventory, such applicable amount being the
    &#147;Working Capital Threshold,&#148;  or
    (ii)&nbsp;Target&#146;s Transactions Expenses exceed $10,000,000
    in the aggregate (the &#147;Transaction Expense
    Threshold&#148;), the Initial Purchase Price shall be reduced by
    an amount equal to the sum of (I)&nbsp;the amount, if any, by
    which the Working Capital Threshold exceeds Target&#146;s
    Estimated Closing Working Capital at the Closing Date pursuant
    to Section&nbsp;6.18 (and as determined in accordance with this
    Section&nbsp;2.6), and (II)&nbsp;the amount, if any, by which
    Target&#146;s Transaction Expenses exceed the Transaction
    Expense Threshold (the sum of (I)&nbsp;and (II)&nbsp;being the
    &#147;Adjustment Amount&#148;); provided, however, that the
    amount, if any by which Target&#146;s Estimated Closing Working
    Capital at the Closing Date exceeds the Working Capital
    Threshold shall be offset against the Adjustment Amount.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;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
    &#147;Signing Date Price&#148;) 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
    &#147;Closing Date Price&#148;), 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&nbsp;1, 2005 are entitled to receive (the &#147;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&nbsp;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&#146; pro-rata share of the Assessable Merger
    Consideration (the &#147;Excess Dissenters Consideration&#148;),
    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&nbsp;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&nbsp;1, 2005 is equal to forty</TD>
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    <TD align="left">
    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&nbsp;2.6(m) hereof. Notwithstanding the foregoing, no
    fractional shares of Acquiror Common Stock shall be issued
    pursuant to this Section&nbsp;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 &#147;Fractional Share
    Payments&#148;). The intent of this Section&nbsp;2.6(c) is to
    ensure that the &#147;continuity of proprietary interest&#148;
    requirement of Treasury Regulations Section&nbsp;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&nbsp;2.6(c) reduce the
    aggregate amount of consideration paid by Acquiror to the
    Stockholders hereunder. As used herein &#147;Assessable Merger
    Consideration&#148; 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&nbsp;2.6(h)) are entitled to receive
    (assuming the occurrence of the Patent Milestone Date).</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;As soon as practicable (and in any event within sixty
    (60)&nbsp;days following the Closing), Acquiror shall prepare
    and deliver to the Stockholders&#146; Agent the Closing Balance
    Sheet, a calculation of Target&#146;s Closing Working Capital
    based on such Closing Balance Sheet (the &#147;Closing Working
    Capital Calculation&#148;) 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&#146;
    Agent gives written notice of any objections thereto setting
    forth in reasonable detail the amounts in dispute and the basis
    for such dispute (a &#147;Purchase Price Objection Notice&#148;)
    to Acquiror within thirty (30)&nbsp;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&#146; 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&#146; Agent delivers a Purchase Price Objection
    Notice as provided above, Acquiror and the Stockholders&#146;
    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&#146; Agent are unable to resolve, despite good
    faith negotiations, all disputes reflected in the Purchase Price
    Objection Notice within thirty (30)&nbsp;days thereafter (the
    &#147;Purchase Price Resolution Period&#148;), then Acquiror and
    the Stockholders&#146; Agent will, within thirty (30)&nbsp;days
    after the expiration of the Purchase Price Resolution Period,
    submit any such unresolved dispute to the Independent Accounting
    Firm. Acquiror and the Stockholders&#146; 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&#146; Agent or its
    Representatives. Acquiror and the Stockholders&#146; 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&#146; Agent. The determination by the
    Independent Accounting Firm, as set forth in a notice to be
    delivered to Acquiror and the Stockholders&#146; Agent within
    thirty (30)&nbsp;days after the submission of the unresolved
    disputes to the Independent Accounting Firm, shall be final,
    binding and conclusive on Acquiror and the Stockholders&#146;
    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)&nbsp;the Closing Balance Sheet and Closing Working
    Capital Calculation were prepared in accordance with GAAP and,
    to the</TD>
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    <TD align="left">
    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)&nbsp;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&#146; Agent. Target&#146;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&#146; Agent and/or the
    Independent Accounting Firm, shall be deemed to be the
    &#147;Closing Working Capital.&#148;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;<I>Closing Payment Schedule.</I> At the Closing, Target
    shall deliver to Acquiror a definitive closing payment schedule
    (the &#147;Closing Payment Schedule&#148;) accurately setting
    forth: (i)&nbsp;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
    &#147;Stockholder&#148;); (ii)&nbsp;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)&nbsp;the cash amount of the Additional Patent
    Consideration to which each Stockholder may be entitled assuming
    the terms and conditions of Section&nbsp;2.6(m)(i) are satisfied
    and that there has been no offset of any portion of the
    Additional Patent Consideration pursuant to Section&nbsp;9
    hereof; (iv)&nbsp;the cash amount to be withheld and contributed
    to the Expenses Fund on behalf of each such Stockholder pursuant
    to Section&nbsp;2.7(i); (v)&nbsp;the shares of Acquiror Common
    Stock to be withheld and contributed to the Expenses Fund on
    behalf of each such Stockholder pursuant to Section&nbsp;2.7(i);
    (vi)&nbsp;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&nbsp;2.6
    (after deduction of the Expenses Fund&nbsp;Cash and Expenses
    Fund&nbsp;Shares to be withheld and contributed to the Expenses
    Fund on behalf of such Stockholder pursuant to
    Section&nbsp;9.7); and (vii)&nbsp;the estimated aggregate amount
    of Target&#146;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&nbsp;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).</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (f)&nbsp;<I>Target Stock Options.</I></TD>
</TR>

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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;At the Effective Time of Merger&nbsp;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
    &#147;Target Option&#148;) and (A)&nbsp;each Target Option shall
    thereby be converted into an option (an &#147;Assumed
    Option&#148;) 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)&nbsp;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 &#147;Existing Option&#148;) 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 (&#147;Option
    Earn-out Shares&#148;), 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)&nbsp;the Per Share Additional Patent
    Consideration multiplied by (b)&nbsp;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</TD>
</TR>

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    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    below, the Per Share Additional Patent Consideration shall be
    determined without regard to any pending or future claims for
    indemnification pursuant to Section&nbsp;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)&nbsp;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)&nbsp;if the Patent Milestone Date occurs prior to the
    Indemnification Termination Date, (A)&nbsp;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)&nbsp;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&nbsp;2.6(f), the term
    &#147;Option Exchange Ratio&#148; shall mean an amount equal to
    the quotient obtained by dividing (x)&nbsp;the Per Share
    Purchase Price by (y)&nbsp;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)&nbsp;trading days prior to the
    trading date on which the Effective Time of Merger I occurs (the
    &#147;Average Closing Price&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;Prior to the Effective Time of Merger&nbsp;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&nbsp;2.6(f) and to ensure that, from
    and after the Effective Time of Merger&nbsp;I, holders of Target
    Options have no rights with respect to such Target Options other
    than those specifically provided in this Section&nbsp;2.6.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;Target has represented and warranted in
    Section&nbsp;3.5 to Acquiror that Schedule&nbsp;2.6(f)
    accurately sets forth the following information as of
    July&nbsp;19, 2005: (i)&nbsp;the name of the holder of each
    outstanding Target Option; (ii)&nbsp;the Target Option Plan
    pursuant to which such Target Option was granted; (iii)&nbsp;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)&nbsp;the vesting schedule applicable to such
    Target Option; (v)&nbsp;to the extent applicable, a description
    of any acceleration of vesting provisions to which such Target
    Option is subject; (vi)&nbsp;the expiration date of such Target
    Option; and (vii)&nbsp;the tax status of such Target Option. At
    the Closing, Target shall deliver to Acquiror a definitive
    closing option schedule (the &#147;Closing Option
    Schedule&#148;) accurately setting forth: (A)&nbsp;the
    information described in clauses &#147;(i)&#148; through
    &#147;(vi)&#148; of the preceding sentence immediately prior to
    the Effective Time of Merger&nbsp;I, (B)&nbsp;the Option
    Exchange Ratio and (C)&nbsp;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&nbsp;I, and the applicable exercise price per
    share of Acquiror Common Stock.</TD>
</TR>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (g)&nbsp;<I>Target Warrants.</I> At the Effective Time of
    Merger&nbsp;I, Acquiror will grant to each holder of a warrant
    to purchase Target Preferred Stock described on
    Schedule&nbsp;2.6(g) (to the extent not exercised prior to the
    Effective Time of Merger I) (the &#147;Assumed Target
    Warrants&#148;) a warrant (each, an &#147;Acquiror Warrant&#148;
    and collectively, the &#147;Acquiror Warrants&#148;) 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</TD>
</TR>

</TABLE>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    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&nbsp;2.6(g), the term &#147;Warrant
    Exchange Ratio&#148; shall mean an amount equal to the quotient
    obtained by dividing (x)&nbsp;two (2)&nbsp;times the Per Share
    Purchase Price by (y)&nbsp;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 (&#147;Warrant Earn-out
    Shares&#148;), 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)&nbsp;two
    (2)&nbsp;times the Per Share Additional Patent Consideration
    multiplied by (ii)&nbsp;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)&nbsp;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)&nbsp;if the Patent Milestone Date occurs
    prior to the Indemnification Termination Date, (A)&nbsp;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)&nbsp;with respect to the remainder of the Per Share
    Additional Patent Consideration, the Indemnification Termination
    Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (h)&nbsp;<I>Cancellation of Target Capital Stock Owned by
    Acquiror and Treasury Stock.</I> At the Effective Time of
    Merger&nbsp;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&nbsp;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.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;<I>Capital Stock of Merger Sub I.</I> At the Effective
    Time of Merger&nbsp;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&nbsp;I.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (j)&nbsp;<I>Adjustments to Exchange Ratio.</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (k)&nbsp;<I>Fractional Shares.</I> 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)&nbsp;such
    fraction, multiplied by (ii)&nbsp;the Average Closing Price. The
    fractional share</TD>
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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (l)&nbsp;<I>Appraisal Rights.</I> 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
    &#147;Dissenting Shares&#148;), which Stockholders comply with
    all of the relevant provisions of the DGCL to exercise appraisal
    rights (each, a &#147;Dissenting Stockholder&#148; and
    collectively, the &#147;Dissenting Stockholders&#148;), 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 &#147;fair value&#148; 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&#146;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&nbsp;I, the Merger Consideration to
    which it is entitled. Target shall give Acquiror (a)&nbsp;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&#146; rights of appraisal, and
    (b)&nbsp;the opportunity, subject to reasonable consultation
    with the Stockholders&#146; 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (m)&nbsp;In addition to the Initial Purchase Price set forth in
    Section&nbsp;2.6(a) above, Acquiror shall pay to the
    Stockholders in cash the additional amounts set forth in this
    Section&nbsp;2.6(m) (the &#147;Additional Payment Amount&#148;
    and, together with the Initial Purchase Price, the
    &#147;Aggregate Purchase Price&#148;), in each case less amounts
    subject to offset pursuant to Section&nbsp;9 hereof, subject to
    and in accordance with the following:</TD>
</TR>

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    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;Target represents and warrants to Acquiror that Target
    has an aggregate of at least one hundred twenty-five
    (125)&nbsp;U.S.&nbsp;patent applications pending as of
    July&nbsp;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&#146;s pending U.S.&nbsp;patent applications,
    continuation and divisional applications of Target&#146;s
    pending U.S.&nbsp;patent applications and utility applications
    which claim benefit to at least one of Target&#146;s pending
    U.S.&nbsp;patent applications, collectively the
    &#147;Applications&#148;). Following Acquiror&#146;s review and
    analysis of the published Applications, Acquiror will select, in
    its sole discretion, fifteen (15)&nbsp;of the Applications (the
    &#147;Acquiror Selected Applications&#148;) by written notice to
    Target no later than ten (10)&nbsp;days after the date of this
    Agreement (the &#147;Acquiror Selection Date&#148;). Following
    the Closing Date, the Acquiror Selected Applications will be
    prosecuted by Acquiror or Acquiror&#146;s agent as selected by
    Acquiror (which may include Target&#146;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.&nbsp;patents from such applications (the
    &#147;Prosecution Standard&#148;). 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</TD>
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    <TD width="6%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">
    Patents, Target shall select by written notice to Acquiror sixty
    (60)&nbsp;of the Applications other than the Acquiror Selected
    Applications (the &#147;Target Selected Applications&#148;).
    Target shall make such selection by no later thirty
    (30)&nbsp;days after the Acquiror Selection Date (the
    &#147;Target Selection Date&#148;). 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&#146;s
    current patent counsel (&#147;Target&#146;s Patent Firm&#148;),
    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 &#147;Remaining
    Applications&#148;) will be prosecuted in accordance with the
    Prosecution Standard by Acquiror or an agent selected by
    Acquiror (which agent may include Target&#146;s Patent Firm).
    From and after the Closing Date, Acquiror, consistent with
    Target&#146;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&#146;s Patent Firm or the
    Subsequent Patent Firm (as defined below). With respect to the
    Target Selected Applications, Target&#146;s Patent Firm or any
    Subsequent Patent Firm shall be instructed by Acquiror (for
    itself and on behalf of the Stockholders&#146; 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&#146;s professional
    judgment (and taking Acquiror&#146;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
    &#147;Prosecution Instructions&#148;). For the period be tween
    the date of this Agreement and the Closing Date, Target shall
    instruct Target&#146;s Patent Firm to prosecute all Applications
    in accordance with the Prosecution Instructions; provided,
    however, that (i)&nbsp;such instructions shall not apply with
    respect to the Acquiror Selected Applications after the Acquiror
    Selection Date, and (ii)&nbsp;during such period Target&#146;s
    Patent Firm shall not be required to (but may) seek
    Acquiror&#146;s guidance. For the purposes of this
    Section&nbsp;2.6(m), a patent shall be deemed to have issued
    from an Application in the event of (i)&nbsp;the actual issuance
    of any patent by the USPTO with respect to such Application as
    of the date of such issuance or (ii)&nbsp;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&#146; Agent with a quarterly written update
    informing the Stockholders&#146; Agent as to (x)&nbsp;the
    issuance by the USPTO of any patents, (y)&nbsp;the receipt by
    Acquiror, its agent or Target&#146;s Patent Firm of any Notice
    of Allowance, and (z)&nbsp;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&nbsp;21, 2005 and
    prior to the Closing Date, and Acquiror, in addition to the
    quarterly reports described above, shall notify the
    Stockholders&#146; 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. &#147;Patent
    Milestone Date&#148; 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)&nbsp;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&nbsp;2.6(h) and Dissenting Shares) an amount equal
    to two (2)&nbsp;times the Per Share Additional Patent
    Consideration and (B)&nbsp;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&nbsp;2.6(h) and Dissenting Shares) an amount equal to
    the Per Share Additional Patent Consideration. Within thirty
    (30)&nbsp;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</TD>
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    <TD width="94%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">
    preceding sentence (the &#147;Additional Patent
    Consideration&#148;). The &#147;Per Share Additional Patent
    Consideration&#148; shall be equal to $205,000,000 (or such
    lesser amounts following any offsets pursuant to Section&nbsp;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)&nbsp;days of the Patent Milestone Date Acquiror
    shall deliver via wire transfer to the Exchange Agent for
    distribution to the Stockholders (I)&nbsp;the amount of the
    Additional Patent Consideration, less (II)&nbsp;$75,000,000, and
    less (III)&nbsp;amounts delivered to the Stockholders&#146;
    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&nbsp;9 or amounts delivered to the Stockholders&#146;
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;Notwithstanding the foregoing, if (A)&nbsp;at any time
    the attorney(s) at Target&#146;s Patent Firm who, as of the date
    of this Agreement, principally work with Target to prepare and
    file Target&#146;s U.S.&nbsp;patent applications, leave
    Target&#146;s Patent Firm to practice at another law firm or
    otherwise become unable or unwilling to prosecute the Target
    Selected Applications or (B)&nbsp;at any time following the
    first anniversary of the Closing Date, the Stockholders&#146;
    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&#146; 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
    &#147;Subsequent Patent Firm&#148;) to prosecute the Target
    Selected Applications as provided herein. Promptly after receipt
    of such designation from Stockholders&#146; Agent and so as to
    not compromise prosecution of the Target Selected Applications,
    Acquiror shall provide Target&#146;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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Surrender of
Certificates.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;<I>Exchange Agent.</I> Computershare Investor Services
shall act as exchange agent (the &#147;Exchange Agent&#148;) in
the Merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;<I>Acquiror to Provide Common Stock and Cash.</I>
Promptly after the Effective Time of Merger&nbsp;I, Acquiror
shall supply or cause to be supplied to the Exchange Agent for
the benefit of the holders of the Certificates for exchange in
accordance with this Section&nbsp;2.7 through such reasonable
procedures as Acquiror may adopt and as are reasonably
acceptable to Target (i)&nbsp;certificates evidencing the shares
of Acquiror Common Stock issuable pursuant to Section&nbsp;2.6
in exchange for shares of Target Capital Stock outstanding
immediately prior to the Effective Time of Merger&nbsp;I, less
the number of shares of Acquiror Common Stock to be deposited
into an expenses fund for use by the Stockholders&#146; Agent
(the &#147;Expenses Fund&#148;) pursuant to the requirements of
Section&nbsp;2.7(i) and Section&nbsp;9.7, (ii)&nbsp;cash in an
amount sufficient to permit the payment of the Initial Cash
Consideration to be paid pursuant to Section&nbsp;2.6(a) in
exchange for shares of Target Capital Stock outstanding
immediately prior to the Effective Time of Merger&nbsp;I, less
the portion of the Initial Cash Consideration to be deposited
into the Expenses Fund, and (iii)&nbsp;cash in an amount
sufficient to permit payment of cash in lieu of fractional
shares pursuant to Section&nbsp;2.6(k) (collectively, (i),
(ii)&nbsp;and (iii)&nbsp;shall be referred to as the
&#147;Exchange Fund&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;<I>Exchange Procedures.</I> Promptly after the
Effective Time of Merger&nbsp;I, Acquiror shall direct the
Exchange Agent to mail to each holder of record of Target
Capital Stock, whose shares were converted into
</DIV>

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<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
the right to receive the Merger Consideration pursuant to
Section&nbsp;2.6, (i)&nbsp;a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the stock certificates representing shares of Target
Capital Stock (each a &#147;Certificate&#148;) shall pass, only
upon receipt of the Certificates by the Exchange Agent and which
shall be in customary form and have such other provisions as
Acquiror may reasonably specify and as are reasonably acceptable
to Target); (ii)&nbsp;such other customary documents as may be
required pursuant to such instructions; and
(iii)&nbsp;instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration,
provided that Acquiror and the Surviving Corporation shall use
reasonable efforts to cause the Exchange Agent to make such
letter of transmittal, documents and instructions available at
the Effective Time of Merger I at the location of the Closing
and use reasonable efforts to facilitate the payment of the
Merger Consideration, via wire transfer and as instructed in
writing by such Stockholder (subject to withholding of any
amounts required to be deposited into the Expenses Fund as set
forth herein), to any Stockholder holding shares of Target
Capital Stock which convert into the right to receive at least
$500,000 of Initial Cash Consideration excluding amounts to be
contributed to the Expenses Fund, promptly following the
Effective Time of Merger I to any holder of a Certificate or
Certificates who is prepared as of that date to surrender its
Certificate or Certificates and deliver such documents. Upon
surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by
Acquiror, together with such letter of transmittal and other
documents, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Certificate
shall be entitled to receive in exchange therefor (i)&nbsp;the
number of whole shares of Acquiror Common Stock, less the number
of shares of Acquiror Common Stock to be deposited in the
Expenses Fund on such holder&#146;s behalf pursuant to
Section&nbsp;2.7(i) and Section&nbsp;9.7 hereof; (ii)&nbsp;any
dividends or other distributions to which such holder is
entitled pursuant to Section&nbsp;2.7(d); (iii)&nbsp;a check in
the amount equal to the portion of the Initial Cash
Consideration that such holder has the right to receive pursuant
to this Section&nbsp;2, less the amount of such portion of the
Initial Cash Consideration to be deposited in the Expenses Fund
on such holder&#146;s behalf pursuant to Section&nbsp;2.7(i) and
Section&nbsp;9.7 hereof; and (iv)&nbsp;cash (without interest)
in respect of fractional shares as provided in
Section&nbsp;2.6(k), and the Certificate so surrendered shall
forthwith be canceled. Until so surrendered, each outstanding
Certificate that prior to the Effective Time of Merger I
represented shares of Target Capital Stock will be deemed from
and after the Effective Time of Merger&nbsp;I, for all corporate
purposes other than the payment of dividends (subject to
Section&nbsp;2.7(d)), to evidence the ownership of the number of
full shares of Acquiror Common Stock into which such shares of
Target Capital Stock shall have been so converted, the right to
receive the portion of the Initial Cash Consideration which
shall be issued for such Target Capital Stock, the right to
receive an amount in cash in lieu of the issuance of any
fractional shares in accordance with Section&nbsp;2.6(k), the
right to receive any shares of Acquiror Common Stock in respect
of Excess Dissenters Consideration as set forth in
Section&nbsp;2.6(c) and the right to receive any Additional
Payment Amount. Notwithstanding anything to the contrary in this
Agreement, in no event shall any Stockholder be enti tled to
receive any of the Aggregate Purchase Price until such
Stockholder has surrendered a Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be
appointed by Acquiror, together with such letter of transmittal
and other documents, duly completed and validly executed in
accordance with the instructions thereto.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;<I>Distributions With Respect to Unexchanged
Shares.</I> No dividends or other distributions with respect to
Acquiror Common Stock with a record date after the Effective
Time of Merger I will be paid to the holder of any unsurrendered
Certificate with respect to the shares of Acquiror Common Stock
represented thereby until the holder of record of such
Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate,
there shall be paid to the record holder of the certificates
representing whole shares of Acquiror Common Stock issued in
exchange therefor, without interest at the time of such
surrender, the amount of any such dividends or other
distributions with a record date after the Effective Time of
Merger I theretofore payable (but for the provisions of this
Section&nbsp;2.7(d)) with respect to such shares of Acquiror
Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;<I>Transfers of Ownership.</I> At the close of business
on the date of the Effective Time of Merger&nbsp;I, the stock
transfer books of Target shall be closed, and there shall be no
further registration of transfers of Target Capital Stock
thereafter on the records of Target. If any certificate for
shares of Acquiror Common Stock is to be issued in a name other
than that in which the Certificate surrendered in exchange
therefor is registered, it
</DIV>

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<DIV align="left" style="font-size: 10pt;">
will be a condition of the issuance thereof that the Certificate
so surrendered will be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange
will have paid to Acquiror or any agent designated by it any
transfer or other taxes required by reason of the issuance of a
certificate for shares of Acquiror Common Stock in any name
other than that of the registered holder of the Certificate
surrendered, or established to the satisfaction of Acquiror or
any agent designated by it that such tax has been paid or is not
payable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;<I>Termination of Exchange Fund.</I> Any portion of the
Exchange Fund which remains undistributed to the Stockholders
eighteen (18)&nbsp;months after the Effective Time of Merger I
shall be delivered to Acquiror, upon demand, and any
Stockholders who have not previously complied with this
Section&nbsp;2.7 shall thereafter look only to Acquiror for
payment of their claim for the Merger Consideration and any
dividends or distributions with respect to Acquiror Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;<I>No Liability.</I> Notwithstanding anything to the
contrary in this Section&nbsp;2.7, none of the Exchange Agent,
the Surviving Corporation or any party hereto shall be liable to
any person for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or
similar law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;<I>Dissenting Shares.</I> The provisions of this
Section&nbsp;2.7 shall also apply to Dissenting Shares that lose
their status as such, except that the obligations of Acquiror
under this Section&nbsp;2.7 shall commence on the date of loss
of such status and the holder of such shares shall be entitled
to receive in exchange for such shares the Merger Consideration
to which such holder is entitled pursuant to Section&nbsp;2.6
hereof.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;<I>Expenses Fund.</I> As soon as practicable after the
Effective Time of Merger&nbsp;I, and subject to and in
accordance with the provisions of Section&nbsp;9.7 hereof,
Acquiror shall cause to be delivered an aggregate amount of
$1,500,000 of the Merger Consideration to the account or escrow
designated by the Stockholders&#146; Agent on a pro rata basis
based upon the Aggregate Equity Consideration and Initial Cash
Consideration delivered by Acquiror as part of the Initial
Purchase Price, a portion of which shall be represented by a
certificate or certificates representing shares of Acquiror
Common Stock to be issued at the Closing (the &#147;Expenses
Fund&nbsp;Shares&#148;) (which shall be registered in the name
of the Stockholders&#146; Agent as nominee for the holders of
Certificates canceled pursuant to this Section&nbsp;2.7) and the
remainder of which shall be out of the Initial Cash
Consideration to be paid at the Closing (the &#147;Expenses
Fund&nbsp;Cash&#148;). For the purpose of valuing Acquiror
Common Stock which shall be Expenses Fund&nbsp;Shares, the value
of such shares shall be equal to the Average Closing Price. Such
shares shall be beneficially owned by such holders and such
shares and cash shall be held in the fund and shall be available
to reimburse the costs and expenses of the Stockholders&#146;
Agent as provided in Section&nbsp;9.7. To the extent not used
for such purposes, such shares and cash shall be released, all
as provided in Section&nbsp;9.7.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effect on Capital Stock in
Merger&nbsp;II.</I> At the Effective Time of Merger II, each
share of common stock of Surviving Corporation I issued and
outstanding immediately prior to the Effective Time of
Merger&nbsp;II shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation. Each stock certificate of
Surviving Corporation I evidencing ownership of any such shares
shall continue to evidence ownership of such shares of capital
stock of the Surviving Corporation. At the Effective Time of
Merger&nbsp;II, each share of common stock of Merger Sub&nbsp;II
issued and outstanding immediately prior to the Effective Time
of Merger&nbsp;II shall be canceled and shall no longer be
deemed to be issued or outstanding.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No Further Ownership Rights
in Target Capital Stock.</I> The Merger Consideration delivered
upon the surrender for exchange of Certificates for shares of
Target Capital Stock in accordance with the terms hereof
(including any dividends, distributions or cash paid in lieu of
fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Target
Capital Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares
of Target Capital Stock which were outstanding immediately prior
to the Effective Time of Merger I. If, after the Effective Time
of Merger&nbsp;I, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged
as provided in this Section&nbsp;2.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lost, Stolen or Destroyed
Certificates.</I> In the event any Certificates shall have been
lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof
such Merger Consideration (and dividends, distributions and cash
in lieu of fractional shares) as may be required pursuant to
Section&nbsp;2.6; provided, however, that Acquiror may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificates
to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Acquiror,
the Surviving Corporation or the Exchange Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tax Consequences.</I> For
federal income tax purposes, the Mergers are intended to
constitute a reorganization within the meaning of
Section&nbsp;368 of the Code. The parties to this Agreement
hereby adopt this Agreement as a &#147;plan of
reorganization&#148; within the meaning of
Sections&nbsp;1.368-2(g) and 1.368-3(a) of the United States
Treasury Regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taking of Necessary Action;
Further Action.</I> Each of Acquiror, Merger Sub&nbsp;I, Merger
Sub&nbsp;II and Target will take all such reasonable and lawful
action as may be necessary or desirable in order to effectuate
the Mergers in accordance with this Agreement as promptly as
possible. If, at any time after the Effective Time of Merger I
or the Effective Time of Merger&nbsp;II, any further action is
necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right,
title and possession to all assets, property, rights,
privileges, powers and franchises of Target, Merger Sub I and
Merger Sub&nbsp;II, the officers and directors of Target, Merger
Sub and Merger Sub&nbsp;II are fully authorized in the name of
their respective corporations or otherwise to take, and will
take, all such lawful and necessary action, so long as such
action is not inconsistent with this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.&nbsp;<I>Representations and Warranties of Target.</I> Target
represents and warrants to Acquiror, Merger Sub&nbsp;I and
Merger Sub&nbsp;II that the statements contained in this
Section&nbsp;3 are true and correct, except as specifically
disclosed in a document of even date herewith and delivered by
Target to Acquiror on the date hereof referring to the
representations and warranties in this Agreement (the
&#147;Target Disclosure Schedule&#148;). For purposes of all
representation and warranties in this Section&nbsp;3 (unless the
context clearly indicates otherwise), the &#147;Target&#148;
shall be deemed to include any Subsidiaries (as defined below)
of Target. The Target Disclosure Schedule will be arranged in
paragraphs corresponding to the numbered and lettered paragraphs
contained in this Section&nbsp;3, and the disclosure in any such
numbered and lettered section of the Target Disclosure Schedule
shall qualify only the corresponding subsection in this
Section&nbsp;3 (except (i)&nbsp;to the extent disclosure in any
numbered and lettered section of the Target Disclosure Schedule
is specifically cross-referenced in another numbered and
lettered section and (ii)&nbsp;that any matter disclosed with
respect to one section of this Section&nbsp;3 shall also be
deemed to constitute an exception to other sections of this
Section&nbsp;3, other than Sections&nbsp;3.10 or 3.15 which
require specific disclosure thereunder of any exception to the
representations and warranties set forth therein, if the
relevance of such matter to such other sections is readily
apparent from the specific content of the disclosure set forth
in the Target Disclosure Schedule). The description or listing
of a matter, event or thing within any section of the Target
Disclosure Schedule (whether in response, as a description or
listing or material items or otherwise) shall not be deemed an
admission or acknowledgement that such matter, event or thing is
&#147;material&#148; for the purposes of this Agreement. Matters
reflected on the Target Disclosure Schedule are not necessarily
limited to matters required by this Agreement to be reflected
therein and the inclusion of such matters shall not be deemed an
admission that such matters were required to be reflected on
such Target Disclosure Schedule. Such additional matters are set
forth for informational purposes only and do not necessarily
include other matters of a similar nature.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization, Standing and
Power.</I> Target is a corporation duly organized, validly
existing and in good standing under the laws of the state of
Delaware. Target has the corporate power to own its properties
and to carry on its business as it is now being conducted and as
proposed to be conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the
failure to be so qualified and in good standing would reasonably
be expected to have a Target Material Adverse Effect (as defined
below). Target has delivered or made available to Acquiror a
true and correct copy of the Certificate of Incorporation and
Bylaws of Target, each as amended to date. Target is not in
violation of any of the provisions of its Certificate of
Incorporation or Bylaws. Target has no Subsidiaries (as defined
below). Target does not directly or
</DIV>

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<DIV align="left" style="font-size: 10pt;">
indirectly own any equity or similar interest in, or any
interest convertible or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership,
joint venture or other business association or entity. As used
herein, the term &#147;Target Material Adverse Effect&#148;
shall mean the occurrence of any event, change, circumstance or
effect that individually or in the aggregate (taking into
account all other such events, changes, circumstances or
effects) (a)&nbsp;would prevent Target&#146;s ability to
consummate the transactions contemplated herein (and is not
cured in a manner that would enable Target to consummate the
transactions contemplated herein) or (b)&nbsp;is materially
adverse to the financial condition, properties, assets
(including intangible assets), liabilities, business, operations
or results of operations of Target, other than an event, change,
circumstance or effect primarily attributable to (i)(A) general
economic conditions or events, changes, circumstances or effects
arising out of or affecting the securities or financial markets
generally, (B)&nbsp;changes or events arising from or as a
result of the consummation of the transactions contemplated by,
or the execution, announcement or performance of, this
Agreement, (C)&nbsp;events, changes, circumstances or effects
generally affecting the telecommunications industry,
(D)&nbsp;changes in laws or GAAP or in the authoritative
interpretations thereof, (E)&nbsp;acts of war, hostilities,
sabotage or terrorism or any escalation thereof or earthquakes,
floods or other acts of nature or (F)&nbsp;any change, event,
condition or effect that is cured, including by the payment of
money (without any breach of any other provision of this
Agreement), and (ii)&nbsp;for purposes of Sections&nbsp;7 and 8
hereof only, (x)&nbsp;any suit, action, proceeding or other
claim that is pending or threatened (A)&nbsp;at any time by any
Notice Party or (B)&nbsp;by any other Person following the
public announcement of this Agreement and the transactions
contemplated hereby (or following such Person becoming aware of
this Agreement or the transactions contemplated hereby through
lawful means not involving disclosure by Target or any officer,
director, employee, agent, representative or affiliate of Target
without the prior written consent of Acquiror), in each case
where such suit, action, proceeding or other claim is primarily
based upon allegations that Target or its Subsidiaries has
infringed or is infringing any IP Rights of any Person,
(y)&nbsp;any breach, default or termination by any third party
under any contract or agreement with Target or any of its
Subsidiaries, or any actual or prospective loss of business or
customers of Target or any of its Subsidiaries, where such,
breach, default, termination or action causing a loss of
business (A)&nbsp;occurs at any time and is by any Notice Party
or (B)&nbsp;is by any other Person and occurs following the
public announcement of this Agreement and the transactions
contemplated hereby (or following such Person becoming aware of
this Agreement or the transactions contemplated hereby through
lawful means not involving disclosure by Tar get or any officer,
director, employee, agent, representative or affiliate of Target
without the prior written consent of Acquiror), or (z)&nbsp;any
agreement or transaction between or among third parties in the
telecommunications industry. As used herein, an entity shall be
deemed to be a &#147;Subsidiary&#148; of a party if such party
directly or indirectly owns, beneficially or of record, at least
50% of the outstanding equity interests of such entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority.</I> Target has
all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on
the part of Target, subject only to the adoption of this
Agreement and approval of the Certificate Amendment by the
Stockholders as contemplated herein. The Board of Directors of
Target has unanimously (a)&nbsp;approved this Agreement, Merger
I and the Certificate Amendment; (b)&nbsp;determined that in its
opinion the Mergers are in the best interests of the
Stockholders and are on terms that are fair to such
Stockholders; and (c)&nbsp;recommended that the Stockholders
adopt this Agreement. This Agreement has been duly executed and
delivered by Target and, assuming this Agreement constitutes the
valid and binding obligation of the other parties thereto, this
Agreement constitutes the valid and binding obligation of Target
enforceable against Target in accordance with its terms, except
that such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or
relating to creditors&#146; rights generally, and is subject to
general principles of equity. The execution and delivery of this
Agreement by Target does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or
result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any material
obligation or loss of any material benefit under (a)&nbsp;any
provision of the Certificate of Incorporation or Bylaws of
Target, as amended (subject to the filing of the Certificate
Amendment); or (b)&nbsp;any mortgage, indenture, lease, contract
or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule
or
</DIV>

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<DIV align="left" style="font-size: 10pt;">
regulation applicable to Target or any of its properties or
assets, except in the case of clause&nbsp;(b) for such
conflicts, violations, defaults, rights of termination,
cancellation or acceleration as could not, individually or in
the aggregate, reasonably be expected to have a Target Material
Adverse Effect. No consent, approval, order or authorization of,
or registration, declaration or filing with, any court,
administrative agency or commission or other governmental
authority or instrumentality (&#147;Governmental Entity&#148;)
is required by or with respect to Target or its Subsidiaries in
connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except
for (a)&nbsp;the filing of the Certificate of Merger and the
Second Certificate of Merger, together with the required
officers&#146; certificates as provided in Section&nbsp;2.2;
(b)&nbsp;the filing of the Certificate Amendment, (c)&nbsp;such
consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable
state securities laws and the securities laws of any foreign
country; (d)&nbsp;such filings as may be required under the
Hart-Scott-Rodino Antitrust&nbsp;Improvements Act of 1976, as
amended (&#147;HSR&#148;) and foreign antitrust laws;
(e)&nbsp;the filing with the SEC of the Registration Statement
and such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated
hereunder, and (f)&nbsp;such other consents, approvals, orders,
authorizations, registrations, declarations and filings which,
if not obtained or made, could not be reasonably expected to
have a Target Material Adverse Effect and would not reasonably
be expected to prevent, or materially alter or delay, any of the
transactions contemplated by this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Governmental
Authorization.</I> Target has obtained each federal, state,
county, local or foreign governmental consent, license, permit,
grant, or other authorization of a Governmental Entity
(a)&nbsp;pursuant to which Target currently operates or holds
any interest in any of its properties; or (b)&nbsp;that is
required for the operation of the business of Target or the
holding of any such interest and all of such authorizations are
in full force and effect, with respect to
paragraphs&nbsp;(a)&nbsp;and (b)&nbsp;in each case except where
the failure to obtain or have any such consent, license, permit,
grant or other authorization would not reasonably be expected to
have a Target Material Adverse Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial Statements.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Target has delivered or made available to Acquiror its
audited financial statements for each of the fiscal years ended
December&nbsp;31, 2004, December&nbsp;31, 2003, and
December&nbsp;31, 2002, respectively, and its unaudited
financial statements (balance sheet, statement of operations and
statement of cash flows) on a consolidated basis as of and for
the six-month period ended June&nbsp;30, 2005 (collectively, the
&#147;Target Financial Statements&#148;). The Target Financial
Statements have been prepared in accordance with generally
accepted accounting principles (except that the unaudited
financial statements do not contain footnotes and are subject to
normal recurring year-end audit adjustments, the effect of which
will not, individually or in the aggregate, be materially
adverse to Target) applied on a consistent basis throughout the
periods covered thereby. The Target Financial Statements fairly
present in all material respects the consolidated financial
condition, operating results and cash flow of Target as of the
dates, and for the periods, indicated therein, subject to normal
year-end audit adjustments and the absence of footnotes in the
case of the unaudited Target Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Target maintains and will continue to maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (i)&nbsp;transactions are executed with
management&#146;s general or specific authorizations;
(ii)&nbsp;transactions are recorded as necessary to permit
preparation of financial statements of Target and to maintain
accountability for assets; and (iii)&nbsp;access to
Target&#146;s assets is permitted only in accordance with
management&#146;s authorization. Target is not party to or
otherwise involved in any &#147;off-balance sheet
arrangements&#148; (as defined in Item&nbsp;303 of
Regulation&nbsp;S-K under the Securities Exchange Act of 1934,
as amended (the &#147;Exchange Act&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capitalization.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;The authorized capital stock of Target consists of
173,000,000&nbsp;shares of Target Common Stock, par value
$0.001&nbsp;per share, of which 18,504,611&nbsp;shares are
issued and outstanding as of the date of this Agreement (other
than with respect to shares of Target Common Stock issued upon
exercise of Target Options after July&nbsp;19, 2005), and
59,902,641&nbsp;shares of Target Preferred Stock, par value
$0.001&nbsp;per share, of which as of that same date
18,436,225&nbsp;shares are designated as Series&nbsp;A Preferred
Stock, and 41,466,416&nbsp;shares are
</DIV>

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<DIV align="left" style="font-size: 10pt;">
designated as Series&nbsp;B Preferred Stock. As of that same
date, there were issued and outstanding 18,370,600&nbsp;shares
of Series&nbsp;A Preferred Stock, and 35,715,178&nbsp;shares of
Series&nbsp;B Preferred Stock. All outstanding shares of Target
Common Stock and Target Preferred Stock are duly authorized,
validly issued, fully paid and non-assessable and are free of
any liens or encumbrances other than any liens or encumbrances
created by or imposed upon the holders thereof, or arising under
applicable federal state or local securities laws. As of the
date of this Agreement (other than with respect to Target
Options exercised for shares of Target Capital Stock after
July&nbsp;19, 2005), there were 44,341,588&nbsp;shares of Common
Stock reserved for issuance under the Target 2000 Stock Option
and Restricted Stock Purchase Plan (the &#147;Target Option
Plan&#148;), of which 19,684,484&nbsp;shares were subject to
outstanding options and 9,763,607&nbsp;shares were reserved for
future option grants. Target has delivered to Acquiror true and
complete copies of each form of agreement and Target Option Plan
evidencing each Target Option. All of the information contained
in Schedule&nbsp;2.6(f) is accurate and complete as of the date
of this Agreement (other than with respect to Target Options
exercised for shares of Target Capital Stock after July&nbsp;19,
2005). As of the date of this Agreement, there were warrants to
purchase&nbsp;65,625&nbsp;shares of Series&nbsp;A Preferred
Stock and warrants to purchase&nbsp;3,039,503&nbsp;shares of
Series&nbsp;B Preferred Stock (collectively, the &#147;Target
Warrants&#148;) issued and outstanding. Section&nbsp;3.5(a) of
the Target Disclosure Schedule sets forth as of the date of this
Agreement the name of each Warrant holder, the class and series
and number of shares of Target Capital Stock subject to each
Warrant and the applicable exercise price for each Warrant.
Target has delivered or made available to Acquiror true and
complete copies of each form of agreement evidencing a Target
Warrant, and all arrangements regarding Target Warrants have
been reduced to writing by Target. Except for the rights created
pursuant to this Agreement and the rights disclosed in the
preceding sentences, there are no other options, warrants,
calls, rights, commitments or agreements of any character to
which Target is a party or by which it is bound, obligating
Target to issue, deliver, sell, repurchase or redeem or cause to
be issued, delivered, sold, repurchased or redeemed, any shares
of Target Capital Stock or obligating Target to grant, extend,
accelerate the vesting of, change the price of, or otherwise
amend or enter into any such option, warrant, call, right,
commitment or agreement. All shares of Target Common Stock
issuable upon conversion of the Target Preferred Stock or upon
exercise of the Target Options described in this
Section&nbsp;3.5(a), and all shares of Target Capital Stock
issuable upon exercise of Target Warrants described in this
Section&nbsp;3.5(a), will be, when issued pursuant to the
respective terms of such Target Preferred Stock, Target Options
or Target Warrants, duly authorized, validly issued, fully paid
and nonassessable. There are no other outstanding current
contracts, commitments or agreements relating to voting,
purchase or sale of Target Capital Stock (a)&nbsp;between or
among Target and any of the Stockholders; and (b)&nbsp;to
Target&#146;s Knowledge, between or among any of the
Stockholders. All shares of outstanding Target Common Stock and
Target Preferred Stock and rights to acquire Target Capital
Stock were issued in compliance in all material respects with
all applicable federal and state securities laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;With respect to each Stockholder, Section&nbsp;3.5(b)
of the Target Disclosure Schedule sets forth as of the date of
this Agreement the number of shares of Target Common Stock and
Target Preferred Stock that each Stockholder holds of record
(specifically listing the number of shares of Target Common
Stock any Target Preferred Stock owned by such Stockholder is
convertible into), and the address and state of residence of
such Stockholder, which address and state of residence is as set
forth in the books and records of Target.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;All of the information contained in the Closing Payment
Schedule and the Closing Option Schedule will be accurate and
complete immediately prior to the Effective Time of Merger I.
The allocation of the Merger Consideration as set forth in the
Closing Payment Schedule complies and is in accordance with the
Target Certificate of Incorporation (subject to the filing of
the Certificate Amendment) and the DGCL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;None of the outstanding shares of Target Capital Stock
is entitled or subject to any preemptive right, right of
participation or similar right. Other than the rights created
pursuant to this Agreement, none of the outstanding shares of
Target Capital Stock is subject to any right of first refusal or
similar right in favor of Target or any other Person. There is
no Target contract (other than this Agreement) relating to the
voting or registration of, or restricting any Person from
purchasing, selling, pledging or otherwise disposing of (or
granting any option or similar right with respect to), any
shares of Target Capital Stock.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;Each outstanding share of Target Preferred Stock and
each share of Target Preferred Stock issuable upon exercise of
an outstanding Target Warrant, as of the date of this Agreement
and immediately prior to the Effective Time of Merger&nbsp;I, is
convertible into two (2)&nbsp;shares of Target Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;As of May&nbsp;1, 2005, 18,275,834&nbsp;shares of
Target Common Stock were issued and outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Absence of Certain
Changes.</I> Since December&nbsp;31, 2004 (the &#147;Target
Balance Sheet Date&#148;), Target has conducted its business in
the ordinary course consistent with past practice and there has
not occurred (a)&nbsp;any change, event or condition (whether or
not covered by insurance) that has resulted in, or would
reasonably be expected to result in, a Target Material Adverse
Effect; (b)&nbsp;any acquisition, sale or transfer of any
material asset of Target other than in the ordinary course of
business and consistent with past practice; (c)&nbsp;any change
in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by Target or any
revaluation by Target of any of its assets; (d)&nbsp;any
declaration, setting aside, or payment of a dividend or other
distribution with respect to the shares of Target or any direct
or indirect redemption, purchase or other acquisition by Target
of any of its shares of Target Capital Stock; (e)&nbsp;any
Material Contract entered into by Target, other than in the
ordinary course of business or listed on the Target Disclosure
Schedule, or any material amendment or termination (other than
expiration in accordance with its terms) of, or default under,
any Material Contract to which Target is a party or by which it
is bound; (f)&nbsp;any amendment or change to the Certificate of
Incorporation or Bylaws of Target (other than the Certificate
Amendment); (g)&nbsp;any increase in or modification of the
compensation or benefits payable or to become payable by Target
to any of its directors or employees, other than in the ordinary
course of business and in amounts consistent with Target&#146;s
past business practices; or (h)&nbsp;any arrangement, commitment
or agreement by Target to do any of the things described in the
preceding clauses&nbsp;(a) through (g)&nbsp;(other than
negotiations with Acquiror and its Representatives regarding the
transactions contemplated by this Agreement). At the Effective
Time of Merger&nbsp;I, there will be no accrued but unpaid
dividends on shares of Target Capital Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Absence of Undisclosed
Liabilities.</I> Target does not have any material obligations
or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (a)&nbsp;those set forth or adequately
provided for in the balance sheet of Target included in the
Target Financial Statements prepared in accordance with GAAP
applied on a consistent basis with Target&#146;s historical
accounting practices as of the Target Balance Sheet Date (the
&#147;Target Balance Sheet&#148;); (b)&nbsp;those incurred in
the ordinary course of business and not required to be set forth
in the Target Balance Sheet under GAAP; (c)&nbsp;those incurred
in the ordinary course of business since the Target Balance
Sheet Date and consistent with past practice; (d)&nbsp;those
incurred in connection with the execution of this Agreement;
(e)&nbsp;those related solely to indemnification provisions in
any of the Material Contracts (as defined in
Section&nbsp;3.15(c) below) and (f)&nbsp;those that are
otherwise expressly disclosed (or within any materiality
threshold contained in any other representation) in
Section&nbsp;3.7 of the Target Disclosure Schedule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Litigation.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before
any Governmental Entity, foreign or domestic, or, to the
Knowledge of Target, explicitly threatened against Target or any
of its properties or any of its officers or directors (in their
capacities as such).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;There is no proceeding pending or, to Target&#146;s
Knowledge, explicitly threatened, nor has any claim or demand
been made that (i)&nbsp;challenges the right, title or interest
of Target in, to or under the IP Rights in which Target has (or
claims to have) any right, title or interest, or the validity,
enforceability or claim construction of any Patent Rights
comprising such IP Rights, or (ii)&nbsp;alleges infringement,
contributory infringement, inducement to infringe,
misappropriation or unlawful use by Target of IP Rights of any
other Person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;There is no judgment, decree or order against Target
or, to the Knowledge of Target, any of its directors or officers
(in their capacities as such), that (i)&nbsp;restricts in any
manner the use, transfer or licensing of any IP Rights in which
Target has (or claims to have) any right, title or interest;
(ii)&nbsp;could prevent, enjoin,
</DIV>

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<DIV align="left" style="font-size: 10pt;">
or materially alter or delay any of the transactions
contemplated by this Agreement, or (iii)&nbsp;that could
reasonably be expected to have a Target Material Adverse Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;All litigation to which Target is a party (or, to the
Knowledge of Target, to which Target has been explicitly
threatened to become a party) is described in Section&nbsp;3.8
of the Target Disclosure Schedule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Delivery of Notice.</I> As
of the date of this Agreement, Target has not delivered, or sent
for delivery, the notice set forth in Section&nbsp;5.3(a) of the
Rights Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Intellectual Property.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;For purposes of this Agreement, the following terms
shall be defined as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;<I>&#147;IP Rights&#148;</I> means any and all of the
    following in any country: (A)&nbsp;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)&nbsp;the right (whether at law, in equity, by contract
    or otherwise) to use or otherwise exploit any of the foregoing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;<I>&#147;Copyrights&#148;</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;<I>&#147;Domain Names&#148;</I> means all URL
    registrations for Internet websites.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;<I>&#147;Inbound License Rights&#148;</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (v)&nbsp;<I>&#147;Outbound License Rights&#148;</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (vi)&nbsp;<I>&#147;Patent Rights&#148;</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (vii)&nbsp;<I>&#147;Trademark Rights&#148;</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (viii)&nbsp;<I>&#147;Public Software&#148;</I> shall mean
    software subject to (i)&nbsp;any version of the GNU General
    Public License (the &#147;GPL&#148;), (ii)&nbsp;any version of
    the GNU Lesser Public License (formerly known as the GNU Library
    Public License) (the &#147;LGPL&#148;), (iii)&nbsp;any license
    that satisfies any version of the Open Source Definition of the
    Open Source Initiative, (iv)&nbsp;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)&nbsp;any other license of any
    computer program (or part thereof)</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    (the &#147;first computer program&#148;) 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&#146;s products.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Section&nbsp;3.10(b) of the Target Disclosure Schedule
lists all of the Patent Rights, the registered Copyrights, the
Domain Names, and the Trademark Rights owned by Target, setting
forth in each case the jurisdictions in which patents have been
issued, patent applications have been filed, Trademark Rights
and Domain Names have been registered, applications for
Trademark Rights have been filed, Copyrights have been
registered and Copyright registrations have been filed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;Other than pursuant to the agreements identified in
Section&nbsp;3.10(c) of the Target Disclosure Schedule, Target
does not jointly own or claim any joint ownership interest in,
to or under any IP Rights with any Person (i)&nbsp;in which
Target&#146;s freedom of action is impaired or otherwise
encumbered or subject to any involvement with such other Person
or (ii)&nbsp;where Target has either an obligation of accounting
or any limitations in its freedom to grant licenses or otherwise
alienate such rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;To the Knowledge of Target, (i)&nbsp;no Person has
challenged or has threatened to challenge, nor is there any
proceeding pending or threatened, nor has any claim or demand
been made that challenges Target&#146;s ownership interest in,
to or under the IP Rights which Target owns or claims to own,
the validity or enforceability of such IP Rights or that could
adversely affect Target&#146;s ownership of such IP Rights, and
(ii)&nbsp;there are no facts which would reasonably be expected
to give rise to any such challenge, proceeding, claim or demand.
Without regard to the Knowledge of Target, Target has not
received any written notice or written communication regarding
any such challenge, proceeding, claim or demand.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;To the Knowledge of Target (i)&nbsp;no Person has
challenged or has threatened to challenge in any material
respect, nor is there any proceeding pending or threatened, nor
has any claim or demand been made that challenges in any
material respect (A)&nbsp;any Inbound License Rights granted to
Target or benefiting Target or any ownership of the IP Rights of
Target&#146;s licensors with respect to Inbound License Rights
granted to or benefiting Target, in each case to use, practice
or otherwise exploit any Person&#146;s IP Rights that constitute
Patent Rights, Copyrights, or software embedded in, practiced by
or which are read upon by any product of Target (collectively,
&#147;Core IP Rights&#148;), (B)&nbsp;any agreement or contract
pursuant to which Target obtained any such Inbound License
Rights, (C)&nbsp;the validity or enforceability of such Core IP
Rights or (D)&nbsp;the claim construction of any Patent Rights
comprising such Core IP Rights, and (ii)&nbsp;there are no facts
which would reasonably be expected to give rise to any such
challenge, proceeding, claim or demand. Without regard to the
Knowledge of Target, Target has not received any written notice
or written communication regarding any such challenge,
proceeding, claim or demand related to the Core IP Rights.
Target has not received any written notice or written
communication from any Person challenging or threatening to
challenge or related to any proceeding pending or threatened, or
any claim or demand that challenges any Inbound License Rights
of Target to use, practice or otherwise exploit any
Person&#146;s IP Rights that are not Core IP Rights in
connection with Target&#146;s conduct of Target&#146;s business,
or the validity or enforceability of such non-Core IP Rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;Section&nbsp;3.10(f) of the Target Disclosure Schedule
lists all contracts, agreements, licenses and other arrangements
under which Target is granted or benefits from any Inbound
License Rights (and which agreement, license or other
arrangement is currently in effect or has material surviving
rights or obligations) to use, practice or otherwise exploit any
IP Rights (including without limitation Public Software) and/or
under which Target is the beneficiary of any covenant not to
assert IP Rights, in each case other than standardized
nonexclusive non-customized licenses that are available to the
public generally (other than Public Software) and were obtained
by Target in the ordinary course of business (&#147;Standardized
Licenses&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;All Patent Rights, registered Copyrights, Domain Names
and registered Trademark Rights owned by Target or in which
Target claims to have an ownership interest have been duly filed
or registered (as applicable) with the applicable Governmental
Entities, and maintained, including without limitation the
submission of all necessary filings and fees in accordance with
the legal and administrative requirements or the appropriate
jurisdictions, and have not lapsed, expired or been abandoned.
With respect to Patent Rights
</DIV>

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<DIV align="left" style="font-size: 10pt;">
owned by Target or in which Target claims to have an ownership
interest: (i)&nbsp;all such Patent Rights have been prosecuted
in good faith and are in good standing, (ii)&nbsp;to the
Knowledge of Target, there are no inventorship challenges to any
such Patent Rights nor does there exist any fact that could lead
to any such challenge, (iii)&nbsp;to the Knowledge of Target, no
interference been declared or provoked relating to any such
Patent Rights nor does there exist any fact that could lead to
any such interference, (iv)&nbsp;to the Knowledge of Target, no
opposition proceedings have been commenced in any jurisdictions
which such procedures are available nor does there exist any
fact that could lead to any such opposition, (v)&nbsp;to the
Knowledge of Target, all issued patents comprising such Patent
Rights are valid and enforceable nor does there exist any fact
that could lead to a finding of invalidity or unenforceability,
and (vi)&nbsp;all maintenance and annual fees have been fully
paid, and all fees paid during prosecution and after issuance of
any patent have been paid in the correct entity status amounts,
with respect to such Patent Rights. Without regard to
Target&#146;s Knowledge, Target has not received any written
notice of any such inventorship challenge, interference,
invalidity or unenforceability with respect to Patent Rights
owned by Target or in which Target claims to have an ownership
interest. To the Knowledge of Target, there does not exist any
fact with respect to any Patent Rights owned by Target or in
which Target claims to have an ownership interest that would
preclude the issuance of any patent from patent applications
included in such Patent Rights. For the purposes of this
Section&nbsp;3.10(g) only, IP Rights &#147;owned&#148; by Target
shall also be deemed to include IP Rights for which Target has
primary control of the prosecution and registration thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;Target is not subject to any covenant not to compete or
contract, agreement or other arrangement limiting its ability to
transact business in any market, field or geographical area or
with any Person. Target is not subject to any contract,
agreement or other arrangement that: (i)&nbsp;restricts the use,
transfer, delivery or licensing of IP Rights owned by Target or
in which Target claims to have an ownership interest or
(ii)&nbsp;grants Target any Inbound License Rights under any
Person&#146;s IP Rights that contains restrictions on use that
are inconsistent with Target&#146;s business as conducted as of
the date of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;Target has taken all reasonable measures and customary
precautions necessary to protect and maintain the
confidentiality of all of Target&#146;s information, or
information disclosed to Target, which information in each case
derives independent economic value, actual or potential, from
not being generally known to the public or to other Persons who
can obtain economic value from its disclosure or use and which,
if the secrecy or confidentiality of such information is
maintained, would constitute a trade secret, but excluding any
information which becomes part of the public record as a result
of the publication or issuance of any Patent Right (&#147;Trade
Secret Information&#148;). Target has not disclosed any Trade
Secret Information to any Person without having such Person
execute a written agreement regarding the non-disclosure and
non-use of the Trade Secret Information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;Target has not granted, licensed or conveyed to any
Person, pursuant to any contract, understanding, agreement,
license or other arrangement, any Outbound License Rights, or
any option or right to purchase or acquire any IP Rights owned
by Target or in which Target claims an ownership interest or any
Outbound License Rights, in each case for, to or under any
current or future IP Rights owned by Target or in which Target
claims any ownership interest or for any IP Rights for which
Target is the exclusive licensee. Without limiting the
foregoing, Target has not granted, licensed or conveyed to any
Person pursuant to any contract, agreement, license or other
arrangement, any Outbound License Rights with respect to
software, software object code, software source code,
application specific integrated circuit cores,
application-specific standard products, field programmable gate
arrays or other integrated circuit cores, in each case that are
owned by Target or in which Target claims any ownership
interest, including without limitation any Outbound License
Rights to sell, offer for sale, otherwise distribute, import,
directly or indirectly, any products incorporating Target&#146;s
source code or cores, other than sales to Target.
Section&nbsp;3.10(j) of the Target Disclosure Schedule includes
a complete and accurate list of all such contracts,
understandings, agreements, licenses and other arrangements
described in this Section&nbsp;3.10(j) setting forth in each
case, whether such contracts, understandings, agreements,
licenses or other arrangements include (i)&nbsp;an express
grant, express license or express conveyance of any Outbound
License Rights under any Patent Rights to make (or have made)
and sell products, including without limitation Outbound License
Rights to make and sell products to Target, (ii)&nbsp;an express
grant, express license or express conveyance of any Outbound
License Rights under any Copyrights,
</DIV>

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<DIV align="left" style="font-size: 10pt;">
(iii)&nbsp;an implied grant, implied license or implied
conveyance of any Outbound License Rights under any Patent
Rights, (iv)&nbsp;the exhaustion of Patent Rights in connection
with the sale of products sold by Target, including without
limitation the right to resell such products and (v)&nbsp;all
other grants, licenses or conveyances of Outbound License
Rights, provided that any disclosure made for subsections (i),
(ii)&nbsp;or (iii)&nbsp;above need not be included in the
disclosures of subsection&nbsp;(iv)&nbsp;or (v)&nbsp;above, even
if applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;Target has no ongoing obligation, contractual or
otherwise, to pay any license fees, royalties or other amounts
or provide other consideration to any other Person in connection
with any product made or sold by Target or any IP Rights owned
by Target or under which Target has any Inbound License Rights,
which products or IP Rights might be sold or otherwise disposed
of by Target or which Target otherwise has the right to use,
practice or otherwise exploit, in each case that is in excess of
$25,000&nbsp;per annum (in each case, other than indemnification
obligations).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;Target is the sole and exclusive owner of or has
legally enforceable Inbound License Rights in, to or under all
IP Rights used, practiced or otherwise exploited by Target in
the conduct of Target&#146;s business (including without
limitation the using, making, offering for sale, selling or
otherwise distributing and importing Target&#146;s products) as
conducted on the date of this Agreement. With regard to IP
Rights owned by Target or in which Target claims to have an
ownership right, such ownership is free of any IP Encumbrance
(as defined below). To Target&#146;s Knowledge, none of the IP
Rights in which Target has any Inbound License Rights are
subject to any IP Encumbrance. Target has not received any
written notice that any such IP Rights in which Target has any
Inbound License Rights are subject to an IP Encumbrance. All
Patent Rights licensed to Target or in which Target has the
right to use, practice or otherwise exploit are licensed to
Target on an exclusive basis. For purposes of the foregoing, the
term &#147;IP Encumbrance&#148; shall mean any and all security
interests, liens, claims, equitable interests, preemptive
rights, title retention or title reversion agreements,
hypothecations, encumbrances, pledges, mortgages, technology
escrows of Target&#146;s IP Rights, or rights of first refusal,
whether accrued, absolute, contingent or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(m)&nbsp;To the Knowledge of Target, the conduct of
Target&#146;s business as conducted prior to and on the Closing
Date, and the making, using, offering for sale, selling or
otherwise distributing or importing of Target&#146;s products or
technology does not infringe, or constitute contributory
infringement, inducement to infringe, misappropriation or
unlawful use of IP Rights of any Person. Without regard to the
Knowledge of Target, Target has not received any written notice
or written communication asserting or claiming any of the
foregoing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(n)&nbsp;To the Knowledge of Target, no IP Rights owned by
Target or in which Target claims to have an ownership interest
or which are licensed to Target on an exclusive basis have been
infringed or misappropriated by any Person. Without regard to
the Knowledge of Target, Target has not received any written
notice or written communication asserting or claiming any of the
foregoing. No current or former officer, manager, director,
employee, stockholder, consultant or independent contractor of
Target has any ownership interest or Outbound License Rights in
the IP Rights that are owned by Target (in which Target claims
to have an ownership interest) or the IP Rights contained in,
practiced by or which are read upon by Target&#146;s products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(o)&nbsp;Except as set forth in Section&nbsp;3.10(o) of the
Target Disclosure Schedule, Target has not entered into any
written or oral contract, agreement, license or other
arrangement to indemnify any other Person against any charge of
infringement of any Patent Right, other than Standardized
Licenses or indemnities implied under applicable law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(p)&nbsp;<I>Inventions Agreements.</I>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;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&#146;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 &#147;Employee/ Officer Invention
    Agreement&#148;).</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;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&nbsp;Rights arising
    from services performed for Target by such Persons (each a
    &#147;Contractor Invention Agreement&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;To Target&#146;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(q)&nbsp;Neither the execution, delivery or performance of this
Agreement, the consummation of the Mergers, any of the
transactions contemplated by this Agreement (including any
agreements executed in connection with this Agreement or at the
Effective Time of Merger I), nor the satisfaction of
Target&#146;s closing conditions will contravene, conflict with
or result in any limitation on Acquiror&#146;s right, title or
interest in or to any IP Rights owned by, claimed to be owned by
or in which Target has any Inbound License Rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(r)&nbsp;No Public Software forms part of any software embedded
in any product of Target, and no Public Software was or is used
in connection with the development of any software of Target or
is incorporated into, in whole or in part, or has been
distributed with, in whole or in part, any software of Target.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(s)&nbsp;No funding, facilities or personnel of any Governmental
Entity were used, directly or indirectly, to develop or create,
in whole or in part, any IP Rights owned by Target or in which
Target claims to have an ownership interest. To Target&#146;s
Knowledge, no funding, facilities or personnel of any
Governmental Entity were used, directly or indirectly, to
develop or create, in whole or in part, any Core IP Rights in
which Target has any Inbound License Rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(t)&nbsp;Target is not and has never been a member, supporter or
promoter of, a contributor to, or made any commitments to or
agreements regarding any patent pool, industry standards body or
standards setting organization, industry and other trade
associations or similar organization or association, in each
case that could or does require or obligate Target to grant or
offer to any other Person any Outbound License Rights to any IP
Rights owned by Target or in which Target claims to have an
ownership interest, including any future IP Rights developed,
conceived, made or reduced to practice by Target after the date
of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(u)&nbsp;Target is not a party to any written or oral contract,
agreement, understanding, or other arrangement, which is
currently in effect, and has not made any commitments, in each
case to sell or deploy Target&#146;s products or technology.
Target has not agreed to provide vendor financing with respect
to the sale of any of its products or technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Prior License Grants.</I>
To Target&#146;s Knowledge, (i)&nbsp;the party set forth on
Schedule&nbsp;3.11 has not informed Target that it or any of its
affiliates has licensed any of Target&#146;s IP Rights set forth
on Schedule&nbsp;3.11 to any third party and (ii)&nbsp;no third
party has informed Target that the party set forth on
Schedule&nbsp;3.11 or any of its affiliates has licensed
Target&#146;s IP Rights set forth on Schedule&nbsp;3.11 to such
third party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interested Party
Transactions.</I> Target is not indebted to any director,
officer, employee or agent of Target (except for amounts due as
normal salaries and bonuses and in reimbursement of expenses
incurred in the ordinary course of business), and no such Person
is indebted to Target. There have been no transactions since
January&nbsp;1, 2003 that would require disclosure if Target
were subject to disclosure under Item&nbsp;404 of
Regulation&nbsp;S-K under the Securities Act of 1933, as amended
(the &#147;Securities Act&#148;). Target (a)&nbsp;does not have
any license currently in effect of any IP Rights to the third
party identified on Schedule&nbsp;3.12 hereto or any affiliates
thereof, (b)&nbsp;has no obligation (contingent or otherwise) to
license any IP Rights to such third party in the future and
(c)&nbsp;has no current or future obligation (contingent or
otherwise) to license any
</DIV>

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<DIV align="left" style="font-size: 10pt;">
IP&nbsp;Rights to any other third party for the benefit of the
third party identified on Schedule&nbsp;3.12 hereto. All
agreements (including term sheets and memoranda of
understanding) between Target and the third party identified on
Schedule&nbsp;3.12 have been terminated, and except as described
in Section&nbsp;3.12 of the Target Disclosure Schedule, there
are no ongoing obligations or future commitments, contingent or
otherwise of Target to such third party or for the benefit of
such third party. To the Knowledge of Target, the third party
identified on Schedule&nbsp;3.12 hereto has not claimed or
threatened to claim that Target owes such third party any
obligations of the type described in the previous two sentences,
and Target has no Knowledge of any facts or circumstances that
would reasonably be expected to form the basis of such a claim.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Minute Books.</I> The
minute books of Target, copies of which have been delivered to
Acquiror or its legal Representatives (as redacted to omit
references to discussions and consideration of strategic
alternatives to the Mergers), contain a materially complete and
accurate summary of all meetings of directors and stockholders
or actions by written consent since the time of incorporation of
Target through the date of this Agreement, and reflect all
transactions referred to in such minutes accurately in all
material respects.
</DIV>

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3.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Written Consent Action.</I>
Each Stockholder who executes and delivers the Executed Written
Consents adopting this Agreement will be (a)&nbsp;an executive
officer, affiliate or director of Target, a founder of Target or
such founder&#146;s family member, or a holder of 5% or more of
the outstanding voting equity securities of Target and
(b)&nbsp;an accredited investor (as defined in Rule&nbsp;501(a)
under the Securities Act).
</DIV>

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3.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Material Contracts.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Section&nbsp;3.15(a) of the Target Disclosure Schedule
lists all of the Material Contracts of Target as of the date of
this Agreement and identifies the relevant clause(s) of
Section&nbsp;3.15(c) triggering disclosure on the Target
Disclosure Schedule. Target has delivered or made available to
Acquiror a complete and accurate copy of each written Material
Contract and all amendments or modifications thereto. Each
Material Contract that was oral when entered into by Target has
been reduced to writing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;With respect to each Material Contract, other than as
described in Section&nbsp;3.15(b) of the Target Disclosure
Schedule (i)&nbsp;the Material Contract is legal, valid, binding
and enforceable and in full force and effect with respect to
Target (assuming such Material Contract constitutes the valid
and binding obligation of the other parties thereto), and to
Target&#146;s Knowledge is legal, valid, binding, enforceable
and in full force and effect with respect to each other party
thereto, in either case subject to the effect of bankruptcy,
insolvency, moratorium or other similar laws affecting the
enforcement of creditors&#146; rights generally and except as
the availability of equitable remedies may be limited by general
principles of equity; (ii)&nbsp;the Material Contract will
continue to be legal, valid, binding and enforceable and in full
force and effect immediately following the Effective Time of
Merger I in accordance with its terms as in effect prior to the
Effective Time of Merger&nbsp;I, subject to the effect of
bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors&#146; rights generally
and except as the availability of equitable remedies may be
limited by general principles of equity; and (iii)&nbsp;neither
Target, nor to Target&#146;s Knowledge, any other party, is in
breach or default, and no event has occurred (or by entering
into this Agreement will occur) that with notice or lapse of
time would constitute a breach or default by Target or, to
Target&#146;s Knowledge, by any such other party, or permit
termination, modification or acceleration, under such Material
Contract, and no notice of any such alleged breach or default
has been served on or received by Target. Except for the
consents set forth in Section&nbsp;3.15(b) of the Target
Disclosure Schedule (the &#147;Required Contract
Consents&#148;), no prior consent of any party to a Material
Contract is required for the consummation by Target of the
transactions contemplated hereby to be in compliance with the
provisions of such Material Contract.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;<I>&#147;Material Contract&#148;</I> means any
contract, agreement or commitment (other than agreements which
are expired, terminated or fully-performed, or any agreements
for the license of Public Software) to which Target is a party
(i)&nbsp;with expected receipts or expenditures in excess of
$100,000; (ii)&nbsp;under which Target (A)&nbsp;acquires any
Inbound License Rights (other than Standardized Licenses) in,
under or to any IP Rights (each an &#147;In-Bound Material
License&#148;), (B)&nbsp;with respect to any In-Bound Material
License, grants any Inbound License Rights to the licensor under
any current or future Patent Rights owned by or claimed to be
owned by, or licensed to Target, (C)&nbsp;grants any third
Person any option, right of first refusal, right of first
negotiation or any Outbound License Rights under or to any IP
Rights owned by Target, in which Target
</DIV>

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<DIV align="left" style="font-size: 10pt;">
claims an ownership interest that are licensed to Target,
(D)&nbsp;has granted any party a right to grant to others any
sublicense under Target&#146;s Patent Rights or Copyrights
constituting software or mask works, (E)&nbsp;has committed to
sell or deploy any technology owned by Target, in which Target
claims an ownership interest or that is licensed to Target;
(iii)&nbsp;providing for indemnification by Target with respect
to infringements of any Patent Rights (other than Standardized
Licenses or indemnities implied under applicable law);
(iv)&nbsp;granting any exclusive rights to any party or any
rights of first offer or first refusal with respect to the sale
of Target Capital Stock, the sale or merger of Target with or
into another entity, or the sale, lease, license, transfer or
other disposition of all or substantially all of Target&#146;s
assets; (v)&nbsp;evidencing indebtedness for borrowed or loaned
money, including guarantees of such indebtedness;
(vi)&nbsp;creating or relating to any partnership or joint
venture involving any sharing of revenues, profits, losses,
costs or liabilities; (vii)&nbsp;pursuant to which supplies are
provided to Target where such contract, agreement or commitment
is not terminable by Target without penalty; (viii)&nbsp;under
which any Governmental Entity has any rights or obligations, or
involving or benefiting any Governmental Entity;
(ix)&nbsp;leasing or obtaining the right to use real property or
any improvements thereon; or (x)&nbsp;imposing any restriction
on the right or ability of Target (a)&nbsp;to compete with, or
solicit any customer of, any other Person, (b)&nbsp;to acquire
any product or other asset or any services from any other
Person, (c)&nbsp;to solicit, hire, or retain any Person as an
employee, consultant or independent contractor, (d)&nbsp;to
develop, sell, supply, distribute, offer, support or service any
product or any technology or other asset to or for any other
Person, (e)&nbsp;to perform services for any other Person,
(f)&nbsp;to transact business or deal in any other manner with
any other Person, or (g)&nbsp;conduct business in any geographic
region or territory; or (xi)&nbsp;that could reasonably be
expected to have a Target Material Adverse Effect if breached by
Target in such a manner as would (A)&nbsp;permit any other party
to unilaterally cancel or terminate the same (with or without
notice of passage of time); (B)&nbsp;provide a basis for any
other party to claim money damages (either individually or in
the aggregate with all other such claims under that contract)
from Target; or (C)&nbsp;give rise to a right of acceleration of
any material obligation or loss of any material benefit under
such Material Contract.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Accounts Receivable.</I>
Except as would not reasonably be expected to have a Target
Material Adverse Effect, the accounts receivable shown on the
Target Financial Statements are valid and genuine, have arisen
solely out of bona fide sales and deliveries of goods,
performance of services, and other business transactions in the
ordinary course of business, and are not subject to any prior
assignment, lien or security interest.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Customers and
Suppliers.</I> As of the date hereof, no customer and no
supplier of Target for goods with a value in excess of
$100,000&nbsp;per annum has canceled or otherwise terminated, or
made any written threat to Target to cancel or otherwise
terminate its relationship with Target or has at any time on or
after the Target Balance Sheet Date, decreased materially its
services or supplies to Target in the case of any such supplier,
or its usage of the services or products of Target in the case
of such customer, and to Target&#146;s Knowledge no such
supplier or customer has notified Target either orally or in
writing that it intends to cancel or otherwise terminate its
relationship with Target or to decrease materially its services
or supplies to Target or its usage of the services or products
of Target, as the case may be, in each case other than in
connection with the expiration of the term of a written
agreement in accordance with its terms.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employees and
Consultants.</I> Section&nbsp;3.18 of the Target Disclosure
Schedule contains a list, as of July&nbsp;19, 2005, of the names
of all current employees (including without limitation part-time
employees and temporary employees), leased employees,
independent contractors and consultants employed or engaged by
Target and who have received payment by way of compensation from
Target in excess of $10,000 during the current fiscal year,
together with their respective salaries or wages, other
compensation, dates of employment or service with Target and
current positions and identifies all agreements between Target
and such individuals (other than any of the following agreement
in Target&#146;s standard form: (i)&nbsp;offer letters for
employment, (ii)&nbsp;proprietary rights assignment agreements,
(iii)&nbsp;stock option agreements or (iv)&nbsp;restricted stock
purchase agreements) concerning their employment, consulting or
independent contractor relationship with Target.
</DIV>

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3.19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Title to Property.</I>
Target owns all of its properties, interests in properties and
assets, real and personal, reflected in the Target Balance Sheet
or acquired after the Target Balance Sheet Date (except
properties, interests in properties and assets sold or otherwise
disposed of since the Target Balance Sheet Date in the ordinary
course of business), or with respect to leased properties and
assets, valid leasehold interests
</DIV>

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<DIV align="left" style="font-size: 10pt;">
therein, in each case as necessary for the conduct of the
business of Target in all material respects as currently
conducted, in each case free and clear of all mortgages, liens,
pledges, charges or encumbrances of any kind or character
(&#147;Encumbrances&#148;), except (a)&nbsp;Encumbrances of
current Taxes not yet due and payable or which are being
contested in good faith and are set forth in Section&nbsp;3.19
of the Target Disclosure Schedule; (b)&nbsp;such imperfections
of title, liens and easements and other Encumbrances as do not
and will not materially detract from or interfere with the use
of the properties subject thereto or affected thereby, or
otherwise materially impair business operations involving such
properties; and (c)&nbsp;Encumbrances securing debt that is
reflected on the Target Financial Statements. The plants,
tangible personal property and equipment owned by Target that
are used in the operations of the business of Target have been
maintained in accordance with normal industry practice and are
in good operating condition and repair in all material respects,
subject to normal wear and tear. All properties used in the
operations of Target are reflected in the Target Balance Sheet
to the extent required by GAAP as in effect on the Target
Balance Sheet Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Real Estate.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;All material leases for real property (each a
&#147;Lease&#148; and collectively, &#147;Leases&#148;) to which
Target is a party are in full force and effect and are valid,
binding and enforceable in accordance with their respective
terms (assuming such Lease constitutes the valid and binding
obligation of the other parties thereto), except as such
enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to
creditors&#146; rights generally; and general principles of
equity, regardless of whether asserted in a proceeding in equity
or at law. True and correct copies of all such Leases have been
provided or made available to Acquiror. Target does not own any
real property. Section&nbsp;3.20 of the Target Disclosure
Schedule also identifies as to each Lease: (i)&nbsp;name of the
landlord; (ii)&nbsp;the date and effective date; (iii)&nbsp;the
expiration date, if any; (iv)&nbsp;the monthly minimum charge,
if any; (v)&nbsp;arrearages, if any, and whether the latest
payment due has been paid; (vi)&nbsp;any amount prepaid;
(vii)&nbsp;any options to renew, extend or purchase,
(viii)&nbsp;any outstanding written notices of defaults of any
kind or nature whatsoever or claims of default and (ix)&nbsp;any
letters of credit or other third party credit enhancements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Except as set forth on Section&nbsp;3.20 of the Target
Disclosure Schedule, Target is entitled to and has exclusive
possession of the real estate to the extent subject to the
Leases (the &#147;Real Estate&#148;). With respect to the Real
Estate: (i)&nbsp;the Real Estate is not subject to any other
lease, tenancy or license or any agreement to grant such lease,
tenancy or license; (ii)&nbsp;there is no Person in possession
or occupation of or to the Knowledge of Target who has or claims
any right to possession or occupation of, the Real Estate;
(iii)&nbsp;to Target&#146;s Knowledge, there are no easements on
the Real Estate adversely affecting the rights of Target therein
to use the Real Estate for the conduct of Target&#146;s business
as presently conducted and as proposed to be conducted;
(iv)&nbsp;Target has paid all rents and service charges to the
extent such rents and charges are due and payable under the
Leases; (v)&nbsp;to Target&#146;s Knowledge, there is no
litigation pending or threatened in any way relating to the Real
Estate; (vi)&nbsp;to Target&#146;s Knowledge, there is no
condemnation, zoning or other land use regulation proceeding,
either instituted or planned to be instituted that would have a
Target Material Adverse Effect on the use and operation of the
Real Estate as currently being used and operated by Target, nor
does Target have Knowledge of any special assessment proceedings
affecting the Real Estate; and (vii)&nbsp;the current use and
operation of the Real Estate is, to Target&#146;s Knowledge, in
compliance in all material respects with the applicable building
codes, zoning laws, and other local, stated and federal laws and
regulations.
</DIV>

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3.21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Environmental Matters.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;The following terms shall be defined as follows:
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;<I>&#147;Environmental Laws&#148;</I> 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&nbsp;U.S.C. Section&nbsp;9601, et seq., as amended
    (&#147;CERCLA&#148;), and the</TD>
</TR>

</TABLE>

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    <TD>&nbsp;</TD>
    <TD align="left">
    federal Resource Conservation and Recovery Act, 42&nbsp;U.S.C.
    Section&nbsp;6901, et seq., as amended (&#147;RCRA&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;<I>&#147;Hazardous Materials&#148;</I> 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
    &#147;hazardous constituent,&#148; &#147;hazardous
    substance,&#148; &#147;hazardous material,&#148; &#147;acutely
    hazardous material,&#148; &#147;extremely hazardous
    material,&#148; &#147;hazardous waste,&#148; &#147;hazardous
    waste constituent,&#148; &#147;acutely hazardous waste,&#148;
    &#147;extremely hazardous waste,&#148; &#147;infectious
    waste,&#148; &#147;medical waste,&#148; &#147;biomedical
    waste,&#148; &#147;pollutant,&#148; &#147;toxic pollutant,&#148;
    &#147;contaminant&#148; 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 &#147;Hazardous
    Materials&#148; shall include without limitation any
    &#147;hazardous substances&#148; as defined, listed, designated
    or regulated under CERCLA, any &#147;hazardous wastes&#148; or
    &#147;solid wastes&#148; 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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Target is and has been in compliance in all material
respects with all Environmental Laws relating to the properties
or facilities used, leased or occupied by Target at any time
(collectively, &#147;Target&#146;s Facilities;&#148; such
properties or facilities currently used, leased or occupied by
Target are defined herein as &#147;Target&#146;s Current
Facilities&#148;), and no discharge, emission, release, leak or
spill of Hazardous Materials has occurred at any of
Target&#146;s Facilities that would reasonably be expected to or
will give rise to liability of Target under Environmental Laws.
To Target&#146;s Knowledge, there are no Hazardous Materials
(including without limitation asbestos) present in the surface
waters, structures, groundwaters or soils of or beneath any of
Target&#146;s Current Facilities, except where the presence of
such Hazardous Materials would not reasonably be expected to
give rise to a material liability of Target under Environmental
Laws. To Target&#146;s Knowledge, there neither are nor have
been any aboveground or underground storage tanks for Hazardous
Materials at Target&#146;s Current Facilities, except where the
presence of such aboveground or underground storage tanks would
not reasonably be expected to give rise to a material liability
of Target under Environmental Laws. To Target&#146;s Knowledge,
no employee of Target or other Person has claimed that Target is
liable for alleged injury or illness resulting from an alleged
exposure to a Hazardous Material. No civil, criminal or
administrative action, proceeding or investigation is pending
against Target, or, to Target&#146;s Knowledge, threatened
against Target, with respect to Hazardous Materials or
Environmental Laws; and Target has no Knowledge of any facts or
circumstances that would reasonably be expected to form the
basis for assertion of a claim against Target or that would
reasonably be expected to form the basis for liability of
Target, regarding Hazardous Materials or regarding actual or
potential noncompliance with Environmental Laws.
</DIV>

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3.22&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxes.</I>
</DIV>

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(a)&nbsp;As used in this Agreement, the terms &#147;Tax&#148;
and, collectively, &#147;Taxes&#148; mean any and all federal,
state and local taxes of any country, assessments and other
governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad
valorem, stamp transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with
all interest, penalties and additions imposed with respect to
such amounts and any obligations under any agreements or
arrangements with any other Person with respect to such amounts
and including any liability for taxes of a predecessor entity;
</DIV>

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(b)&nbsp;Target has prepared and timely filed all returns,
estimates, information statements and reports required to be
filed with any taxing authority (&#147;Returns&#148;) relating
to any and all Taxes concerning or attributable to Target or its
operations with respect to Taxes for any period ending on or
before the Closing Date and such Returns are true and correct in
all material respects. All Taxes shown on such Returns as due
and owing have been paid when due;
</DIV>

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(c)&nbsp;As of the date hereof Target has, and as of the Closing
Date Target will have, (i)&nbsp;timely withheld from its
employees, independent contractors, customers, Stockholders, and
other Persons from whom it is
</DIV>

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required to withhold Taxes in compliance with all applicable
law, and (ii)&nbsp;timely paid all amounts so withheld to the
appropriate Governmental Entity or taxing authority;
</DIV>

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(d)&nbsp;During the period of all unexpired applicable statutes
of limitations, Target has not been delinquent in the payment of
any Tax. There is no Tax deficiency outstanding or assessed or
proposed against Target that is not reflected as a liability on
the Target&#146;s Financial Statements, nor has Target executed
any agreements or waivers extending any statute of limitations
on or extending the period for the assessment or collection of
any Tax;
</DIV>

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(e)&nbsp;Target does not have any liabilities for unpaid Taxes
that have not been accrued for or reserved on the Target Balance
Sheet;
</DIV>

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(f)&nbsp;Target is not a party to any tax-sharing agreement or
similar arrangement with any other party, and Target has not
assumed any obligation to pay any Tax obligations of, or with
respect to any transaction relating to, any other Person or
agreed to indemnify any other Person with respect to any Tax;
</DIV>

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(g)&nbsp;Target&#146;s Returns have never been audited by a
government or taxing authority, nor is any such audit in process
or pending, and Target has not been notified of any request for
such an audit or other examination;
</DIV>

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(h)&nbsp;Target has never been a member of an affiliated group
of corporations filing a consolidated federal income tax return;
</DIV>

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(i)&nbsp;Target has disclosed to Acquiror (i)&nbsp;any Tax
exemption, Tax holiday or other Tax-sparing arrangement that
Target has in any jurisdiction, including the nature, amount and
lengths of such Tax exemption, Tax holiday or other Tax-sparing
arrangement; and (ii)&nbsp;any expatriate tax programs or
policies affecting Target. Target is in compliance with all
terms and conditions required to maintain such Tax exemption,
Tax holiday or other Tax-sparing arrangement or order of any
governmental entity and the consummation of the transactions
contemplated hereby will not have any adverse effect on the
continuing validity and effectiveness of any such Tax exemption,
Tax holiday or other Tax-sparing arrangement or order;
</DIV>

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(j)&nbsp;Target has made available to Acquiror copies of all
Returns filed for fiscal years 2001, 2002 and 2003;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;Target has not filed any consent agreement under
Section&nbsp;341(f) of the Code or agreed to have
Section&nbsp;341(f)(4) apply to any disposition of assets owned
by Target;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;Target has never been a United States Real Property
Holding Corporation within the meaning of Section&nbsp;897(c)(2)
of the Code;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(m)&nbsp;Target is not a party to any contract, agreement, plan
or arrangement, including but not limited to the provisions of
this Agreement, covering any employee or former employee of
Target that, individually or collectively, could give rise to
the payment of any amount that would not be deductible by reason
of Sections&nbsp;280G, 404 or 162(m) of the Code as an expense
under applicable law, or that would give rise to a penalty under
Section&nbsp;409A of the Code;
</DIV>

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(n)&nbsp;Target has not constituted either a &#147;distributing
corporation&#148; or a &#147;controlled corporation&#148; in a
distribution of stock qualifying for tax-free treatment under
Section&nbsp;355 of the Code (i)&nbsp;in the two years prior to
the date of this Agreement or (ii)&nbsp;in a distribution which
could otherwise constitute part of a &#147;plan&#148; or
&#147;series of related transactions&#148; (within the meaning
of Section&nbsp;355(e) of the Code) in conjunction with the
Closing;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(o)&nbsp;Target has not agreed to make, nor is required to make,
any adjustment under Section&nbsp;481 of the Code or
corresponding provision of state, local or foreign law by reason
of any change in accounting method;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(p)&nbsp;Target has complied with applicable information
reporting and record maintenance requirements of
Sections&nbsp;6038, 6038A and 6038B of the Code and the
regulations thereunder;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(q)&nbsp;Target has never been a party to any joint venture,
partnership or other agreement that could be treated as a
partnership for Tax purposes;
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(r)&nbsp;There are (and immediately following the Closing there
will be) no liens or encumbrances on the assets of Target
relating to or attributable to Taxes, other than liens for Taxes
not yet due and payable;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(s)&nbsp;Target has neither requested nor received any private
letter ruling from the Internal Revenue Service or comparable
rulings from any other government or taxing agency (domestic or
foreign);
</DIV>

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(t)&nbsp;No power of attorney with respect to Taxes has been
granted with respect to Target;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(u)&nbsp;Target has not distributed any cash to any Stockholder
prior to the Closing Date for any reason, including as a
dividend, repurchase, or redemption;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp;Target&#146;s Tax Returns have never been subject to a
Code Section&nbsp;482 adjustment or corresponding provision of
state, local or foreign law;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(w)&nbsp;No claim has been made by a taxing authority (domestic
or foreign) in a jurisdiction where Target does not file Returns
to the effect that Target may be subject to Tax by that
jurisdiction;&nbsp;and
</DIV>

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(x)&nbsp;Target will not be required to include any item of
income in, or exclude any item of deduction from, taxable income
for any taxable period (or portion thereof) ending after the
Closing Date as a result of any: (A)&nbsp;&#147;closing
agreement&#148; as described in Section&nbsp;7121 of the Code
(or any corresponding or similar provision of state, local or
foreign income Tax law) executed on or prior to the Closing
Date; (B)&nbsp;intercompany transactions or any excess loss
account described in Treasury Regulations under
Section&nbsp;1502 of the Code (or any corresponding or similar
provision of state, local or foreign income Tax law);
(C)&nbsp;installment sale or open transaction disposition made
on or prior to the Closing Date; or (D)&nbsp;prepaid amount
received on or prior to the Closing Date.
</DIV>

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3.23&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employee Benefit Plans and
Employment Matters.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Section&nbsp;3.23 of the Disclosure Schedule contains
an accurate and complete list, with respect to Target and any
other Person under common control with Target or any of its
subsidiaries within the meaning of Section&nbsp;414(b), (c),
(m)&nbsp;or (o)&nbsp;of the Code, and the regulations issued
thereunder (each, an &#147;ERISA Affiliate&#148;), of each plan,
program, contract, agreement or other arrangement providing for
severance benefits, deferred compensation, performance awards,
stock or stock-related awards, welfare benefits, fringe benefits
or other employee benefits of any kind, whether written or
unwritten, funded or unfunded, including each &#147;employee
benefit plan,&#148; within the meaning of Section&nbsp;3(3) of
ERISA, which is or has been maintained, contributed to, or
required to be contributed to, by Target, any of its
subsidiaries or any ERISA Affiliate for the benefit of any
current or former employee or director (collectively, the
&#147;Target Employee Plans&#148;). Neither Target nor any of
its subsidiaries has any obligation to establish any new Target
Employee Plan, or to modify any Target Employee Plan, except to
the extent required by applicable law or this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;<I>Documents.</I> Target or one of its Subsidiaries has
provided or made available to Acquiror with respect to each
Target Employee Plan: (i)&nbsp;correct and complete copies of
any documents embodying such Target Employee Plan, including all
amendments thereto, and any related trust documents,
(ii)&nbsp;the three (3)&nbsp;most recent annual reports
(Form&nbsp;Series&nbsp;5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or
the Code in connection with such Target Employee Plan,
(iii)&nbsp;if the Target Employee Plan is funded, the most
recent annual accounting, if any, of the assets of such Target
Employee Plan, (iv)&nbsp;the most recent summary plan
description, together with any summary of material modification
thereto, if any, required under ERISA with respect to such
Target Employee Plan, (v)&nbsp;any material administrative
service agreements and group insurance contracts relating to
such Target Employee Plan, (vi)&nbsp;any correspondence between
Target or any of its Subsidiaries and any governmental agency
relating to such Target Employee Plan, (vii)&nbsp;any model
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (&#147;COBRA&#148;) forms and related notices,
(viii)&nbsp;any fiduciary liability insurance policies covering
the fiduciaries for such Target Employee Plan, (ix)&nbsp;if such
Target Employee Plan is intended to be qualified under
Section&nbsp;401(a) of the Code, any discrimination tests for
such Target Employee Plan for the three (3)&nbsp;most recent
plan years for such Target Employee Plan, and (x)&nbsp;the most
recent IRS determination or opinion letter issued with respect
to each Target Employee Plan.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;<I>Target Employee Plan Compliance.</I> Each Target
Employee Plan has been established and maintained, in all
material respects, in accordance with its terms and all
applicable laws, including ERISA or the Code. The Internal
Revenue Service has issued with respect to each Target Employee
Plan intended to be qualified under Section&nbsp;401(a) of the
Code, and each trust intended to qualify under
Section&nbsp;501(a) of the Code, a favorable determination or
opinion letter, as applicable. Neither Target nor any of its
Subsidiaries has engaged in a material non-exempt
&#147;prohibited transaction,&#148; within the meaning of
Section&nbsp;4975 of the Code, or a material transaction
prohibited under Sections&nbsp;406 and 407 of ERISA, with
respect to any Target Employee Plan. There are no material
actions, suits or claims pending or, to the Knowledge of Target,
threatened, other than routine claims for benefits, against any
Target Employee Plan or against the assets of any Target
Employee Plan. Each Target Employee Plan can be amended,
terminated or otherwise discontinued after the Effective Time of
Merger I in accordance with its terms, without additional
liability to Acquiror, Target or any ERISA Affiliate (other than
any benefit liabilities under such Target Employee Plan,
ordinary administration expenses and termination expenses).
There are no audits, or proceedings pending or, to the Knowledge
of Target, threatened by the Internal Revenue Service,
U.S.&nbsp;Department of Labor, or any other governmental entity
with respect to any Target Employee Plan. Neither Target nor any
ERISA Affiliate is subject to any material penalty or Tax with
respect to any Target Employee Plan under Section&nbsp;502(i) of
ERISA or Sections&nbsp;4975 through 4980 of the Code. Target has
timely made all material contributions and other payments
required by and due under the terms of each Target Employee Plan.
</DIV>

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(d)&nbsp;<I>No Pension Plan.</I> Neither Target nor any ERISA
Affiliate has ever maintained, established, sponsored,
participated in, or contributed to, any Target Employee Plan
that is an &#147;employee pension benefit plan,&#148; within the
meaning of Section&nbsp;3(2) of ERISA (a &#147;Pension
Plan&#148;) subject to Part&nbsp;3 of Subtitle B of Title&nbsp;I
of ERISA, Title&nbsp;IV of ERISA or Section&nbsp;412 of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;<I>No Self-Insured Target Employee Plan.</I> Neither
Target nor any ERISA Affiliate has ever maintained, established,
sponsored, participated in or contributed to any self-insured
&#147;group health plan&#148; (within the meaning of
Section&nbsp;5000(b)(1) of the Code) that provides benefits to
employees (other than a medical flexible spending account,
health reimbursement arrangement or other similar program,
including any such plan pursuant to which a stop-loss policy or
contract applies).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;<I>Collectively Bargained, Multiemployer and
Multiple-Employer Plan.</I> Neither Target nor any ERISA
Affiliate has contributed to or been obligated to contribute to
any multiemployer plan (as defined in Section&nbsp;3(37) of
ERISA). Neither Target nor any ERISA Affiliate has at any time
ever maintained, established, sponsored, participated in or
contributed to any plan subject to Sections&nbsp;4063 and 4064
of ERISA or to any plan described in Section&nbsp;413 of the
Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;<I>Effect of Transaction.</I> Neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby or any termination of
employment or service in connection therewith will
(i)&nbsp;result in any payment (including severance, golden
parachute, bonus or otherwise), becoming due to any employee of
Target, (ii)&nbsp;result in any forgiveness of indebtedness of
any employee of Target, (iii)&nbsp;materially increase any
benefits otherwise payable by Target or any of its Subsidiaries
or (iv)&nbsp;result in the acceleration of the time of payment
or vesting (other than with respect to Target Options in the
standard forms used by Target) of any benefits to any Target
employee except as required under Section&nbsp;411(d)(3) of the
Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;<I>Deferred Compensation.</I> No compensation shall be
includable in the gross income of any current or former
employee, director or consultant of Target as a result of the
operation of Section&nbsp;409A of the Code with respect to any
applicable arrangements or agreements in effect prior to the
Effective Time of Merger I.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;<I>No Post-Employment Obligations.</I> No Target
Employee Plan provides post-termination of employment or retiree
life insurance, health or other employee welfare benefits to any
current or former employee or director, except as may be
required by COBRA or other applicable law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;<I>Employment Matters.</I> Target is in compliance in
all material respects with all applicable foreign, federal,
state and local laws, rules and regulations respecting
employment, employment practices, terms and conditions of
employment, employee safety and health and wages and hours, and
in each case, with respect to
</DIV>

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<DIV align="left" style="font-size: 10pt;">
employees: (i)&nbsp;has withheld and reported all amounts
required by law or by agreement to be withheld and reported with
respect to wages, salaries and other payments to employees,
(ii)&nbsp;is not liable for any arrears of wages, severance pay
or any Taxes or any penalty for failure to comply with any of
the foregoing, and (iii)&nbsp;is not liable for any payment to
any trust or other fund governed by or maintained by or on
behalf of any governmental authority, with respect to
unemployment compensation benefits, social security or other
benefits or obligations for employees (other than routine
payments to be made in the normal course of business and
consistent with past practice). There are no pending or, to
Target&#146;s Knowledge, threatened, or reasonably anticipated,
claims or actions against Target or any Target trustee under any
worker&#146;s compensation policy. The services provided by each
of Target&#146;s and their ERISA Affiliates&#146; employees is
terminable at the will of Target and its ERISA Affiliates and
any such termination would result in no liability to Target or
any ERISA Affiliate. To the Knowledge of Target, neither Target
nor any of its Subsidiaries has direct or indirect liability
with respect to any misclassification of any Person as an
independent contractor rather than as an employee, or with
respect to any employee leased from another employer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;<I>Labor.</I> No work stoppage or labor strike against
Target is pending, or, to the Knowledge of Target, threatened,
or reasonably anticipated. Target has no Knowledge of any
activities or proceedings of any labor union to organize any
employees. There are no actions, suits, claims, labor disputes
or grievances pending or, to Target&#146;s Knowledge,
threatened, or reasonably anticipated relating to any labor
matters involving any employee, including charges of unfair
labor practices. Target has not engaged in any unfair labor
practices within the meaning of the National Labor Relations
Act. Target is not presently, nor has it been in the past, a
party to, or bound by, any collective bargaining agreement or
union contract with respect to employees and no collective
bargaining agreement is being negotiated by Target. Within the
past year, Target has not incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act
(&#147;WARN&#148;) or any similar state or local law that
remains unsatisfied, nor shall any terminations prior to the
Closing Date result in unsatisfied liability or obligation under
WARN or any similar state or local law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;<I>No Interference or Conflict.</I> To the Knowledge of
Target, no stockholder, director, officer, employee or
consultant of Target is obligated under any contract or
agreement, subject to any judgment, decree, or order of any
court or administrative agency that would interfere with
Target&#146;s business. Neither the execution nor delivery of
this Agreement, nor the carrying on of Target&#146;s business as
presently conducted nor any activity of such officers,
directors, employees or consultants in connection with the
carrying on of Target&#146;s business as presently conducted
will, to the Knowledge of Target, conflict with or result in a
breach of the terms, conditions, or provisions of, or constitute
a default under, any contract or agreement under which any of
such officers, directors, employees, or consultants is now bound.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(m)&nbsp;<I>International Employee Plan.</I> Neither Target nor
any ERISA Affiliate maintains, establishes, sponsors,
participates in, or contributes to, or is required to contribute
to, any Target Employee Plan under which Target, any of its
Subsidiaries or any ERISA Affiliate has any liability with
respect to employees who perform services outside the United
States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.24&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Insurance.</I> Target has
policies of insurance and bonds of the type and in amounts
customarily carried by Persons conducting businesses or owning
assets similar to those of Target. There is no claim pending
under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums due and payable under all such
policies and bonds have been paid and Target is otherwise in
compliance in all material respects with the terms of such
policies and bonds. Target has no Knowledge of any threatened
termination of, or material premium increase (other than in the
ordinary course of business) with respect to, any of such
policies.
</DIV>

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3.25&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compliance With Laws.</I>
Target has complied with, is not in violation of and has not
received any notices of violation with respect to, any federal
state, local or foreign statute, law or regulation with respect
to the conduct of its business, or the ownership or operation of
its business, except as would not reasonably be likely to have a
Target Material Adverse Effect.
</DIV>

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3.26&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Brokers&#146; and
Finders&#146; Fee.</I> Except for Evercore Financial Advisors
LLC, no broker, finder or investment banker has been engaged by
or on behalf of Target who is entitled to brokerage or
finders&#146; fees or
</DIV>

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<DIV align="left" style="font-size: 10pt;">
agents&#146; commissions or investment bankers&#146; fees or any
similar charges in connection with this Agreement or any
transaction contemplated hereby.
</DIV>

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3.27&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Bank Accounts.</I>
Section&nbsp;3.27 of the Target Disclosure Schedule sets forth
with respect to each account maintained by or for the benefit of
Target at any bank or other financial institution: the name of
the bank or financial institution, the account number and the
names of all individuals authorized to draw on or make
withdrawals from such accounts.
</DIV>

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3.28&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employee Agreements.</I>
Prior to or concurrently with the execution and delivery of this
Agreement, each of the individuals set forth in
Schedule&nbsp;3.28 has executed and delivered (a)&nbsp;a Waiver
of Accelerated Option Vesting and Amendment of Stock Option
Agreement with Acquiror in substantially the form attached
hereto as Exhibit&nbsp;E-1 and Exhibit&nbsp;E-2, respectively,
(b)&nbsp;a Non-Competition and Non-Solicitation Agreement with
Acquiror in substantially the form attached hereto as
Exhibit&nbsp;F-1 and Exhibit&nbsp;F-2, respectively, and
(c)&nbsp;a Stock Restriction Agreement with Acquiror in
substantially the form attached hereto as Exhibit&nbsp;G-1 and
Exhibit&nbsp;G-2, respectively.
</DIV>

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3.29&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reserved.</I>
</DIV>

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3.30&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>International Trade
Matters.</I> Target is, and at all times has been, in compliance
in all material respects with and has not been and is not in
material violation of any International Trade Law (defined
below), including but not limited to, all laws and regulations
related to the import and export of commodities, software, and
technology from and into the United States, and the payment of
required duties and tariffs in connection with same. Target has
no Knowledge of any actual or threatened order, notice, or other
communication from any governmental body of any actual or
potential violation or failure to comply with any International
Trade Law. &#147;International Trade Law&#148; shall mean
U.S.&nbsp;statutes, laws and regulations applicable to
international transactions, including, but not limited to, the
Export Administration Act, the Export Administration
Regulations, the Foreign Corrupt Practices Act, the Arms Export
Control Act, the International Traffic in Arms Regulations, the
International Emergency Economic Powers Act, the Trading with
the Enemy Act, the U.S.&nbsp;Customs laws and regulations, the
Foreign Asset Control Regulations, and any regulations or orders
issued thereunder.
</DIV>

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3.31&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certain Payments.</I> Since
inception, neither Target, nor to Target&#146;s Knowledge, any
director, officer, agent or employee of Target, nor any other
Person acting for or on behalf of Target, has directly or
indirectly, on behalf of Target (a)&nbsp;made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback or
other payment to any entity or Person, private or public,
regardless of form, whether in money, property or services
(i)&nbsp;to obtain favorable treatment in securing business,
(ii)&nbsp;to pay for favorable treatment for business secured,
(iii)&nbsp;to obtain special concessions or for special
concessions already obtained or (iv)&nbsp;in violation of any
federal, state, local or foreign statute, law, ordinance, rule
or regulation or (b)&nbsp;established or maintained any fund or
asset for such purposes that has not been recorded in the books
and records of Target.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.32&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Registration Statement;
Information Statement/ Prospectus.</I> The information supplied
by Target in writing for inclusion in the registration statement
on Form&nbsp;S-4 of Acquiror relating to the offer and sale of
shares of Acquiror Common Stock in connection with the
transactions contemplated by this Agreement (the
&#147;Registration Statement&#148;) shall not at the time the
Registration Statement is declared effective by the SEC contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
information supplied by Target in writing for inclusion in the
information statement/ prospectus to be sent to the Stockholders
in connection with the Mergers (such information statement/
prospectus as amended or supplemented is referred to herein as
the &#147;Information Statement/ Prospectus&#148;) shall not, on
the date the Information Statement/ Prospectus is first mailed
to the Stockholders and at the Effective Time of Merger&nbsp;I,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Notwithstanding the foregoing, Target makes no representation,
warranty or covenant with respect to any information supplied by
Acquiror, Merger Sub I or Merger Sub&nbsp;II which is contained
in any of the foregoing documents.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.33&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Vote Required.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;The affirmative votes of the holders of (i)&nbsp;a
majority of the shares of Target Capital Stock outstanding on
the Record Date voting together on an as-if converted to common
stock basis as a single class, (ii)&nbsp;a majority of the
shares of Target Preferred Stock outstanding on the Record Date
voting together on an as-converted to common stock basis as a
single class, (iii)&nbsp;a majority of the shares of
Series&nbsp;A Preferred Stock outstanding on the Record Date
voting as a separate class and (iv)&nbsp;a majority of the
shares of Series&nbsp;B Preferred Stock outstanding on the
Record Date voting as a separate class (the votes referred to in
clauses &#147;(i)&#148; and &#147;(ii)&#148; of this sentence
being referred to together as the &#147;Required Merger
Stockholder Vote&#148; and the votes referred to in clauses
&#147;(i)&#148;, &#147;(ii)&#148;, &#147;(iii)&#148; and
&#147;(iv)&#148; of this sentence being referred to together as
the &#147;Required Certificate Amendment Vote&#148;), are the
only votes of the holders of any class or series of Target
Capital Stock necessary to approve and adopt this Agreement and
the Certificate Amendment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;The shares of Target Capital Stock that are subject to
the Executed Written Consents are (and will continue through the
Closing to be) sufficient to obtain the Required Merger
Stockholder Vote and the Required Certificate Amendment Vote.
The holders of a majority of the outstanding Target Preferred
Stock, voting together as a single class, will have, upon the
execution of the Executed Written Consents, validly elected,
pursuant to paragraph&nbsp;4(c) of Section&nbsp;A of
Article&nbsp;FOURTH of the Certificate of Incorporation, that
the Merger not be deemed to be a liquidation, dissolution or
winding up of Target for purposes of paragraph&nbsp;4 of
Section&nbsp;A of Article&nbsp;FOURTH of the Certificate of
Incorporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.34&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Subsidiaries.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;None of Target&#146;s Subsidiaries has any material
assets or liabilities or is engaged in any business or
operations. Neither Target nor any of Target&#146;s Subsidiaries
has agreed or is obligated to make, or is bound by any Material
Contract under which it may become obligated to make, any future
investment in or capital contribution to any other entity. None
of Target or Target&#146;s Subsidiaries is a general partner of,
or is otherwise liable for any of the debts or other obligations
of, any general partnership, limited partnership or other entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation (which jurisdiction is
identified opposite the name of such Subsidiary in
Section&nbsp;3.34 of the Target Disclosure Schedule) and has the
corporate power to own its properties and to carry on its
business as it is now being conducted and as proposed to be
conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so
qualified and in good standing would reasonably be expected to
have a Target Material Adverse Effect. Target has delivered or
made available to Acquiror a true and correct copy of the
charter or organizational documents of each Subsidiary, each as
amended to date. None of the Subsidiaries is in violation of any
of the provisions of its charter or organizational documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;None of the Subsidiaries is or has been required to be
qualified, authorized, registered or licensed to do business as
a foreign corporation in any jurisdiction. The Subsidiaries are
in good standing as foreign corporations in each of the
jurisdictions identified in Section&nbsp;3.34 of the Target
Disclosure Schedule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;None of the Subsidiaries has conducted any business
under any fictitious name, assumed name, trade name or other
name in any jurisdiction, other than its current corporate name
or the corporate or trade names of Target.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.&nbsp;Representations and Warranties of Acquiror, Merger Sub I
and Merger Sub&nbsp;II. Acquiror, Merger Sub I and Merger
Sub&nbsp;II represent and warrant to Target as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization, Standing and
Power.</I> Each of Acquiror, Merger Sub I and Merger Sub&nbsp;II
is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. There is no
pending or, to the Knowledge of Acquiror, Merger Sub I or Merger
Sub&nbsp;II, threatened, action for the dissolution, liquidation
or insolvency of any of Acquiror, Merger Sub I or Merger
Sub&nbsp;II.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority.</I> Acquiror,
Merger Sub I and Merger Sub&nbsp;II have all requisite corporate
power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Acquiror, Merger Sub I and
Merger Sub&nbsp;II and the
</DIV>

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<DIV align="left" style="font-size: 10pt;">
consummation of the transactions contemplated hereby have been,
or will have been by the Closing, duly authorized by all
necessary corporate action on the part of Acquiror, Merger Sub I
and Merger Sub&nbsp;II (subject to the adoption of this
Agreement by Acquiror as sole stockholder of Merger Sub I and
Merger Sub&nbsp;II, which will occur promptly following the
execution and delivery hereof). This Agreement has been duly
executed and delivered by Acquiror, Merger Sub I and Merger
Sub&nbsp;II and, assuming this Agreement constitutes the valid
and binding obligation of the other parties thereto, this
Agreement constitutes a valid and binding obligation of
Acquiror, Merger Sub I and Merger Sub&nbsp;II enforceable
against Acquiror in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to creditors&#146;
rights generally, and subject to general principles of equity.
The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any
material obligation or loss of a material benefit under
(a)&nbsp;any provision of the Certificate of Incorporation or
Bylaws of Acquiror, Merger Sub I and Merger Sub&nbsp;II; or
(b)&nbsp;any material mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Acquiror, Merger Sub I or Merger
Sub&nbsp;II or their properties or assets except in the case of
clause&nbsp;(b), for such conflicts, violations, defaults,
rights of termination, cancellation or acceleration as could not
reasonably be expected to have a material adverse effect on the
business, property, financial condition or results of operations
of Acquiror (&#147;Acquiror Material Adverse Effect&#148;). No
consent, approval, order or authorization of or registration,
declaration or filing with any Governmental Entity is required
by or with respect to Acquiror or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by
Acquiror, Merger Sub I or Merger Sub&nbsp;II or the consummation
by Acquiror, Merger Sub I and Merger Sub&nbsp;II of the
transactions contemplated hereby, except for (a)&nbsp;the filing
of the Certificate of Merger and the Second Certificate of
Merger, together with the required officers&#146; certificates,
as provided in Section&nbsp;2.2; (b)&nbsp;the filing of Current
Reports on Form&nbsp;8-K with the Securities and Exchange
Commission (&#147;SEC&#148;) and National Association of
Securities Dealers (&#147;NASD&#148;) to the extent required by
the Exchange Act; (c)&nbsp;such filings as may be required under
applicable state securities laws and the securities laws of any
foreign country; (d)&nbsp;such filings as may be required under
HSR and foreign antitrust laws; (e)&nbsp;the filing with the
Nasdaq Stock Market of a Notification Form for Listing of
Additional Shares with respect to the shares of Acquiror Common
Stock issuable upon conversion of the Target Capital Stock
pursuant to Merger I and upon exercise of options under the
Target Option Plan assumed by Acquiror; and (f)&nbsp;such other
consents, orders, declarations, authorizations, filings,
approvals and registrations which, if not obtained or made,
could not reasonably be expected to have an Acquiror Material
Adverse Effect and could not prevent, materially alter or delay
any of the transactions contemplated by this Agreement. No vote
of the stockholders of Acquiror is required under the DGCL,
Acquiror&#146;s Ce rtificate of Incorporation, the rules of the
Nasdaq Stock Market or applicable rules under the Exchange Act
to adopt this Agreement and to consummate the transactions
contemplated hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>SEC Documents; Financial
Statements.</I>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;Acquiror has filed on a timely basis all forms, reports
    and documents required to be filed with the SEC since
    October&nbsp;1, 2002 (all forms, reports and documents filed by
    Acquiror and its predecessors with the SEC since October&nbsp;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&nbsp;8-K, are
    referred to herein as the &#147;Acquiror SEC Documents&#148;).
    The Acquiror SEC Documents: (i)&nbsp;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)&nbsp;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.</TD>
</TR>

</TABLE>

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;Each of the audited and unaudited consolidated
    financial statements (including, in each case, any related notes
    thereto) contained in the Acquiror SEC Documents (the
    &#147;Acquiror Financial Statements&#148;) 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&#146;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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Issuance of Shares.</I> The
issuance and delivery of the Acquiror Common Stock as Merger
Consideration in accordance with this Agreement shall be, at or
prior to the Effective Time of Merger&nbsp;I, duly authorized by
all necessary corporate action on the part of Acquiror, and,
when issued at the Effective Time of Merger I as contemplated
hereby, such shares of Acquiror Common Stock will be duly and
validly issued, fully paid and nonassessable. Such Acquiror
Common Stock, when so issued and delivered in accordance with
the provisions of this Agreement, shall be free and clear of all
liens and encumbrances and adverse claims, other than
restrictions on transfer created by applicable securities laws
and will not have been issued in violation of their respective
properties or any preemptive rights or rights of first refusal
or similar rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Merger Sub I and Merger
Sub&nbsp;II.</I> Merger Sub I and Merger Sub&nbsp;II were formed
solely for the purpose of engaging in the transactions
contemplated by this Agreement, have engaged in no other
business activities and have conducted their operations only as
contemplated by this Agreement. All of the issued and
outstanding capital stock of Merger Sub I and Merger Sub&nbsp;II
is owned beneficially and of record by Acquiror, free and clear
of all Encumbrances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investigation.</I> Each of
Acquiror, Merger Sub I and Merger Sub&nbsp;II acknowledges that,
except for the matters that are expressly covered by the
provisions of this Agreement, Acquiror, Merger Sub I and Merger
Sub&nbsp;II are relying on their own investigation and analysis
in entering into the transactions contemplated hereby. Each of
Acquiror, Merger Sub I and Merger Sub&nbsp;II is knowledgeable
about the industries in which Target and its Subsidiaries
operate and is capable of evaluating the merits and risks of the
transactions contemplated by this Agreement and is able to bear
the substantial economic risk of such investment for an
indefinite period of time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Brokers&#146; and
Finders&#146; Fee.</I> Except for Morgan Stanley&nbsp;&#38; Co.
Incorporated, no broker, finder or investment banker has been
engaged by or on behalf of Acquiror who is entitled to brokerage
or finders&#146; fees or agents&#146; commissions or investment
bankers&#146; fees or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Litigation.</I> As of the
date of this Agreement, there is no private or governmental
action, suit, proceeding, claim, arbitration or investigation
pending before any Governmental Entity, foreign or domestic, or,
to the Knowledge of Acquiror, threatened in writing against
Acquiror, Merger Sub I or Merger Sub&nbsp;II, or any outstanding
judgment, decree or order against Acquiror, Merger Sub I or
Merger Sub&nbsp;II, in each case that could prevent, enjoin, or
materially alter or delay any of the transactions contemplated
by this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Information Supplied.</I>
None of the information supplied or to be supplied in writing by
Acquiror, Merger Sub I or Merger Sub&nbsp;II for inclusion in
(i)&nbsp;the Registration Statement will, at the time the
Registration Statement is declared effective under the
Securities Act, or (ii)&nbsp;the Information Statement/
Prospectus will, at the date it is first mailed to the
Stockholders and at the Effective Time of Merger&nbsp;I, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The
Registration Statement will comply as to form in all material
respects with the requirements of the Securities Act and the
rules and regulations promulgated thereunder, except that no
representation is made by Acquiror, Merger Sub I or Merger
Sub&nbsp;II with respect to statements made or incorporated by
reference therein based on information supplied in writing by
Target specifically for inclusion or incorporation by reference
therein.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conduct Prior to the
Effective Time of Merger I.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conduct of Business of
Target and Subsidiaries.</I> During the period from the date of
this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time of
Merger&nbsp;I, Target agrees (except to the extent expressly
contemplated by this Agreement or as consented to in writing by
Acquiror), to (a)&nbsp;carry on its business and its
Subsidiaries&#146; businesses in the ordinary course in
substantially the same manner as heretofore conducted;
(b)&nbsp;continue the prosecution and registration process with
respect to any IP Rights consistent with past practice;
(c)&nbsp;pay, or cause the payment by its Subsidiaries of, its
and its Subsidiaries&#146; material debts and Taxes when due
subject (i)&nbsp;to good faith disputes over such debts or
Taxes; and (ii)&nbsp;in the case of Taxes of Target or its
Subsidiaries, to Acquiror&#146;s consent to the filing of
material Tax Returns if applicable; (d)&nbsp;pay or perform, or
cause the payment or performance by its Subsidiaries of, other
material obligations (including those of its Subsidiaries) when
due, subject to good faith disputes over such obligations; and
(e)&nbsp;use all reasonable efforts to preserve intact its and
its Subsidiaries&#146; present business organizations, keep
available the services of its and its Subsidiaries&#146; present
officers and key employees and preserve its and its
Subsidiaries&#146; relationships with customers, suppliers,
distributors, licensors, licensees, potential customers and
others having business dealings with it. Target agrees to
promptly notify Acquiror of (a)&nbsp;any material event or
occurrence not in the ordinary course of Target&#146;s and its
Subsidiaries&#146; businesses, and of any event which could
reasonably be expected to have a Target Material Adverse Effect;
and (b)&nbsp;any change in its capitalization as set forth in
Section&nbsp;3.5 (other than with respect to the grant of Target
Options in accordance with Section&nbsp;5.1(d) or the exercise
of Target Options and Target Warrants) or the capitalization of
the Subsidiaries. Without limiting the foregoing, except as
expressly contemplated by this Agreement or the Target
Disclosure Schedule, Target shall not do, cause or permit any of
the following (including with respect to any of the Subsidiaries
as applicable) without the prior written consent of Acquiror
prior to the Effective Time of Merger I:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;<I>Charter Documents.</I> 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&nbsp;I (the &#147;Certificate Amendment&#148;);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;<I>Dividends; Changes in Target Capital Stock.</I>
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;<I>Stock Option Plans, Etc.</I> 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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;<I>Issuance of Securities.</I> 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)&nbsp;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&nbsp;shares; and (ii)&nbsp;Target shall,
    subject to the consummation of Merger&nbsp;I, prior to the
    Effective Time of Merger I and as specified in writing by
    Acquiror on or before the later to</TD>
</TR>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    occur of (A)&nbsp;the date that is 45&nbsp;days following the
    date of this Agreement and (B)&nbsp;the date that is
    21&nbsp;days following the date upon which Acquiror has
    completed its interviews of Target&#146;s employees (unless
    Acquiror fails to complete such interviews in a timely manner
    notwithstanding Target&#146;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 &#147;Directed
    Options&#148;) (provided that (I)&nbsp;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)&nbsp;Target shall cooperate with Acquiror in determining
    such securities laws compliance, (III)&nbsp;the actions to be
    taken by Target shall include (x)&nbsp;seeking the approval of
    the Directed Options by the Stockholders in connection with
    Target&#146;s obligations under Section&nbsp;6.28, (y)&nbsp;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)&nbsp;seeking the approval of the Stockholders of
    any such amendment, (IV)&nbsp;the grant of the Directed Options
    shall be effective immediately prior to, and shall be
    conditioned upon, the Closing, and (V)&nbsp;the Directed Options
    shall include grants to the Named Individuals in accordance with
    the parameters set forth on Schedule&nbsp;5.1(d)).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;<I>Intellectual Property Rights.</I> 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&#146;s or the Subsidiary&#146;s proposed
    products (other than such licenses and rights implied by the
    sale of products to customers) or Target&#146;s IP Rights;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (f)&nbsp;<I>Dispositions.</I> Sell, lease, license (other than
    the license of IP Rights, which shall be subject to
    Section&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (g)&nbsp;<I>Indebtedness.</I> 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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (h)&nbsp;<I>Agreements.</I> Enter into, terminate or amend,
    (i)&nbsp;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)&nbsp;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)&nbsp;any other agreement material to the business or
    prospects of Target or Subsidiary or that is or would be a
    Material Contract;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;<I>Payment of Obligations.</I> 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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (j)&nbsp;<I>Capital Expenditures.</I> Make any capital
    expenditures, capital additions or capital improvements, in
    excess of $75,000 individually or $500,000 in the aggregate;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (k)&nbsp;<I>Insurance.</I> Materially reduce the amount of any
    material insurance coverage provided by existing insurance
    policies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (l)&nbsp;<I>Termination or Waiver.</I> Take action to terminate
    or waive any right of substantial value of which Target has
    Knowledge, other than in the ordinary course of business;</TD>
</TR>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (m)&nbsp;<I>Employee Benefit Plans; New Hires; Pay
    Increases.</I> 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&nbsp;6.29 and Section&nbsp;5.1(d) and as
    contemplated under Section&nbsp;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&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (n)&nbsp;<I>Severance Arrangements.</I> 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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (o)&nbsp;<I>Lawsuits.</I> Commence a lawsuit other than
    (i)&nbsp;for the routine collection of bills, (ii)&nbsp;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&#146;s or the Subsidiaries&#146;
    businesses, provided that it consults with Acquiror prior to the
    filing of such a suit or (iii)&nbsp;for a breach of this
    Agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (p)&nbsp;<I>Acquisitions.</I> 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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (q)&nbsp;<I>Taxes.</I> 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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (r)&nbsp;<I>Revaluation.</I> 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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (s)&nbsp;<I>Customer Proposals.</I> Present, deliver or
    otherwise communicate to any customers (or potential customers)
    any proposals in any way related to Target&#146;s or the
    Subsidiaries&#146; business or prospects, including, but not
    limited to, Target&#146;s or the Subsidiaries&#146; current or
    future IP Rights, technology, products or potential business or
    other strategic relationships;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (t)&nbsp;<I>Public Software.</I> Target shall not use or
    incorporate, in any manner, any Public Software with or into any
    of Acquiror&#146;s IP Rights or products.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (u)&nbsp;<I>Other.</I> Take or agree in writing, or otherwise
    agree to take, any of the actions described in
    Sections&nbsp;5.1(a) through (t)&nbsp;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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding the foregoing provisions of this
Section&nbsp;5.1 or any other provision of this Agreement:
</DIV>

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    <TD width="97%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (v)&nbsp;<I>Parachute Payments.</I> 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 &#147;parachute payment&#148; under
    Section&nbsp;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)&nbsp;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)&nbsp;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;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (w)&nbsp;<I>Transaction Expenses.</I> Target may incur and pay
    any Transaction Expenses at any time and from time to
    time;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (x)&nbsp;<I>Deployment.</I> Target shall be permitted to
    (i)&nbsp;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)&nbsp;support deployments in the countries listed on
    Schedule&nbsp;5.1(x) to the extent provided on
    Schedule&nbsp;5.1(x), (iii)&nbsp;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)&nbsp;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&nbsp;5.1(x) shall include provisions to
    (A)&nbsp;limit liability under or arising out of such agreement
    to (I)&nbsp;the amounts actually received by either party from
    the other party thereunder or (II)&nbsp;no greater than
    $3,000,000, and (B)&nbsp;disclaim and exclude all liability any
    loss of profits or incidental, consequential, indirect, special,
    punitive, exemplary or other similar damages.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No Solicitation.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;From and after the date of this Agreement until the
Effective Time of Merger&nbsp;I, Target shall not, directly or
indirectly through any officer, director, employee,
representative or agent of Target or otherwise:
(i)&nbsp;solicit, initiate, or knowingly encourage any inquiries
or proposals that constitute, or would reasonably be expected to
lead to, a proposal or offer for a merger, consolidation, share
exchange, business combination, sale of all or a substantial
portion of the assets, sale of shares of capital stock or
similar transactions involving Target other than the
transactions contemplated by this Agreement (any of the
foregoing inquiries or proposals an &#147;Acquisition
Proposal&#148;); (ii)&nbsp;engage or participate in negotiations
or discussions concerning, or provide any non-public information
to any Person or entity relating to, any Acquisition Proposal;
or (iii)&nbsp;agree to, enter into, accept, approve or recommend
any Acquisition Proposal; provided, however, that nothing in
this Agreement shall prevent Target&#146;s Board of Directors
from complying with its duty of disclosure to the Stockholders
in the Information Statement/ Prospectus. Target has terminated
any pending discussions or negotiations relating to any
Acquisition Proposal prior to the date of this Agreement and
represents and warrants that it had the legal right to terminate
such discussions without payment of any fee or other penalty.
</DIV>

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(b)&nbsp;Target shall notify Acquiror promptly (and no later
than 24&nbsp;hours) after receipt by Target (or, to
Target&#146;s Knowledge, its advisors) of any Acquisition
Proposal or any request for nonpublic information in connection
with an Acquisition Proposal or for access to the properties,
books or records of Target by any Person or entity that informs
Target that it intends to make, or has made, an Acquisition
Proposal. Such notice shall be made orally and in writing and
shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or
contact.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;Nothing in this Section&nbsp;5.2 shall be construed as
requiring Target to not comply with the Rights Agreement or
otherwise limiting Target&#146;s rights and authority under
Sections&nbsp;6.23 and 8.1(e) hereof.
</DIV>

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5.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Deployments.</I> Upon
Acquiror&#146;s request, Target shall purchase additional
inventory reasonably necessary to meet Target&#146;s commitments
set forth on Schedule&nbsp;5.1(x) (&#147;Directed
Inventory&#148;).
</DIV>

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6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Additional Agreements.</I>
</DIV>

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6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Information Statement/
Prospectus.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;As soon as reasonably practicable following the date of
this Agreement, Acquiror and Target shall prepare the
Information Statement/ Prospectus and the Registration
Statement, and Acquiror shall file the Registration Statement
with the SEC following the expiration of the period of ten
(10)&nbsp;business days following the delivery of the Ten Day
Notice. Each of Acquiror and Target agrees to provide promptly
to the other such information concerning its business and
financial statements and affairs as, in the reasonable judgment
of the other party or its counsel, may be required or
appropriate for inclusion in the Information Statement/
Prospectus or the Registration Statement, or in any amendments
or supplements thereto, and to
</DIV>

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<DIV align="left" style="font-size: 10pt;">
cause its counsel and auditors to cooperate with the
other&#146;s counsel and auditors in the preparation of the
same. Target will promptly advise Acquiror, and Acquiror will
promptly advise Target, in writing if at any time prior to the
Effective Time of Merger I either Target or Acquiror shall
obtain knowledge of any facts that might make it necessary or
appropriate to amend or supplement the Registration Statement in
order to make the statements contained or incorporated by
reference therein not misleading or to comply with applicable
law. Target will use commercially reasonable efforts to cause
the Information Statement/ Prospectus to be mailed to the
Stockholders as promptly as practicable after the Registration
Statement is declared effective under the Securities Act.
Acquiror and Target shall each use its commercially reasonable
efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such
filing. Acquiror shall also take any commercially reasonable
action (other than qualifying to do business in any state in
which it is not now so qualified or filing a general consent to
service of process) required to be taken under any applicable
state securities laws in connection with the registration and
qualification of the Acquiror Common Stock to be issued pursuant
to Merger&nbsp;I, and Target shall furnish all information
relating to Target and its Stockholders as may be reasonably
requested in connection with any such action.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Notwithstanding the foregoing, in the event Acquiror is
directed by the SEC that any portion of the Acquiror Common
Stock being issued as part of the Merger Consideration may not
be registered pursuant to the Registration Statement, Acquiror
shall use its commercially reasonable efforts to cause such
shares of Acquiror Common Stock (the &#147;Registrable
Securities&#148;) 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&nbsp;S-3 (the &#147;S-3&#148;) with the SEC with respect to
the Registrable Securities as soon as reasonably practicable
after the date hereof, but no later than the Effective Time of
Merger&nbsp;I, and shall use its reasonable commercial efforts
to cause the&nbsp;S-3 to become effective as soon as possible
after the Effective Time of Merger I; provided, however, that
each holder of Registrable Securities (&#147;Holder&#148;) shall
provide all such information and materials to Acquiror and take
all such action as may be reasonably required in order to permit
Acquiror to comply with all applicable requirements of the SEC
and to obtain any desired acceleration of the effective date of
the&nbsp;S-3. Such provision of information and materials is a
condition precedent to the obligations of Acquiror pursuant to
this Section&nbsp;6.1(b). Acquiror shall not be required to
effect more than one (1)&nbsp;registration under this
Section&nbsp;6.1(b). The offering made pursuant to such
registration shall not be underwritten.
</DIV>

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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;Acquiror shall: (A)&nbsp;prepare and file with the SEC
    the&nbsp;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&nbsp;S-3 to remain effective for
    a period ending on the date which is one (1)&nbsp;year after the
    Effective Time of Merger I; (B)&nbsp;prepare and file with the
    SEC such amendments and supplements to the&nbsp;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&nbsp;S-3 until the termination of
    effectiveness of the&nbsp;S-3; and (C)&nbsp;for so long as
    Acquiror is required to cause the&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;Notwithstanding any other provision of this
    Section&nbsp;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
    &#147;Suspension Right&#148;). 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&#146; Agent notice, in a writing signed by an
    executive officer of Acquiror, of any such suspension (the
    &#147;Suspension Notice&#148;). Acquiror agrees to notify the
    Stockholders&#146; Agent promptly upon termination of the
    suspension (the &#147;Resumption Notice&#148;). Upon receipt of
    either a Suspension Notice or</TD>
</TR>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">
    Resumption Notice, the Stockholders&#146; Agent shall
    immediately notify each Holder concerning the status of
    the&nbsp;S-3. The period during which Acquiror is required to
    cause the&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;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&nbsp;6.1(b), including without
    limitation all registration and filing fees, printing expenses,
    transfer agents&#146; and registrars&#146; fees, the fees and
    disbursements of Acquiror&#146;s outside counsel and independent
    accountants, and the reasonable fees and disbursements of a
    single counsel for the Holders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;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&nbsp;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 &#147;Holder Indemnitee&#148;), 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&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (v)&nbsp;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
    &#147;Acquiror Indemnitee&#148;) 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&nbsp;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&#146;s Registrable
    Securities under the&nbsp;S-3.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (vi)&nbsp;Each person entitled to indemnification under this
    Section&nbsp;6.1(b) (an &#147;Indemnified Person&#148;) shall
    give notice to the party required to provide indemnification
    (the &#147;Indemnifying Person&#148;) promptly</TD>
</TR>

</TABLE>

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    <TD>&nbsp;</TD>
    <TD align="left">
    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&#146;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&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (vii)&nbsp;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&nbsp;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&nbsp;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&#146;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)&nbsp;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&nbsp;S-3; and (ii)&nbsp;no person or entity
    guilty of fraudulent misrepresentation within the meaning of
    Section&nbsp;11(f) of the Securities Act will be entitled to
    contribution from any person or entity who was not guilty of
    such fraudulent misrepresentation.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;Target shall furnish to Acquiror all information
concerning Target and the Holders and shall take such other
action as Acquiror may reasonably request in connection with the
filing of the&nbsp;S-3 and the issuance of shares of Acquiror
Common Stock. If at any time prior to the Effective Time of
Merger I any event or circumstance relating to Acquiror, Target,
any stockholder or their respective officers, directors,
employees, consultants or contractors should be discovered by
such party which should be set forth in an amendment or a
supplement to the Registration Statement or the&nbsp;S-3, such
party shall promptly inform the other thereof and take
appropriate action in respect thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Access to Information.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Target shall afford Acquiror and its accountants,
counsel and other representatives, reasonable access during the
period from the date hereof until the Effective Time of Merger I
to (i)&nbsp;all of Target&#146;s properties, personnel, books,
contracts, commitments and records and (ii)&nbsp;all other
information concerning the business, properties and personnel of
Target as Acquiror may reasonably request; provided, however,
that
</DIV>

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<DIV align="left" style="font-size: 10pt;">
access to information relating to Target&#146;s Patent Rights or
Trade Secret Information shall be subject to the mutual
agreement of Target and Acquiror.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Subject to compliance with applicable law, from the
date hereof until the Effective Time of Merger&nbsp;I, Target
shall confer on a regular and frequent basis with one or more
representatives of Acquiror to report material operational
matters and the general status of ongoing operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;No information or knowledge obtained in any
investigation pursuant to this Section&nbsp;6.2 or otherwise
shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations
of the parties to consummate the Mergers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Confidentiality.</I> The
parties acknowledge that Acquiror and Target have previously
entered into a Mutual Non-Disclosure Agreement dated
February&nbsp;10, 2003 (the &#147;Confidentiality
Agreement&#148;), which Confidentiality Agreement is hereby
incorporated herein by reference and shall continue in full
force and effect in accordance with its terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Public Disclosure.</I>
Unless otherwise permitted by this Agreement, Acquiror and
Target shall consult with each other before issuing any press
release or otherwise making any public statement or making any
other public (or non-confidential) disclosure (whether or not in
response to an inquiry) regarding the terms of this Agreement
and the transactions contemplated hereby, and neither shall
issue any such press release or make any such public statement
or disclosure without the prior approval of the other (which
approval shall not be unreasonably withheld or delayed), except
as may be required by law or by obligations pursuant to any
listing agreement with the Nasdaq Stock Market or any applicable
national securities exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Regulatory Approval; Further
Assurances.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Each party shall use all reasonable efforts to file, as
promptly as practicable after the date of this Agreement, all
notices, reports and other documents required to be filed by
such party with any Governmental Entity with respect to the
Mergers and the other transactions contemplated by this
Agreement, and to submit promptly any additional information
requested by any such Governmental Entity. Without limiting the
generality of the foregoing, if required by law, Target and
Acquiror shall, promptly after the date of this Agreement,
prepare and file the notifications required under HSR in
connection with the Mergers. Target and Acquiror shall respond
as promptly as practicable to (i)&nbsp;any inquiries or requests
received from the Federal Trade Commission or the Department of
Justice for additional information or documentations and
(ii)&nbsp;any inquiries or requests received from any state
attorney general or other Governmental Entity in connection with
antitrust or related matters. Each of Target and Acquiror shall
(i)&nbsp;give the other party prompt notice of the commencement
of any legal proceeding by or before any Governmental Entity
with respect to the Mergers or any of the other transactions
contemplated by this Agreement, (ii)&nbsp;keep the other party
informed as to the status of any such legal proceeding and
(iii)&nbsp;promptly inform the other party of any communication
to or from the Federal Trade Commission, the Department of
Justice or any other Governmental Entity regarding the Mergers.
Target and Acquiror will consult and cooperate with one another,
and will consider in good faith the views of one another, in
connection with any analysis, appearance, presentation,
memorandum, brief, argument, opinion or proposal made or
submitted in connection with any legal proceeding under or
relating to HSR or any other federal or state antitrust or fair
trade law. In addition, except as may be prohibited by any
Governmental Entity or by any legal requirement, in connection
with any legal proceeding under or relating to HSR or any other
federal or state antitrust or fair trade law or any other
similar legal proceeding, each of Target and Acquiror will
permit authorized representatives of the other party to be
present at each meeting or conference relating to any such legal
proceeding and to have access to and be consulted in connection
with any document, opinion or proposal made or submitted to any
Governmental Entity in connection with any such legal proceeding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Subject to Section&nbsp;6.5(c), Acquiror and Target
shall use all reasonable efforts to take, or cause to be taken,
all actions necessary to effectuate the Mergers and make
effective the other transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, but subject to
Section&nbsp;6.5(c), each party to this Agreement shall:
(i)&nbsp;make any filings and give any notices required to be
made and given by such party
</DIV>

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<DIV align="left" style="font-size: 10pt;">
in connection with the Mergers and the other transactions
contemplated by this Agreement; (ii)&nbsp;use all reasonable
efforts to obtain any consent required to be obtained (pursuant
to any applicable legal requirement or contract, or otherwise)
by such party in connection with the Mergers or any of the other
transactions contemplated by this Agreement (provided that no
party shall be required to make payments (other than filing or
application fees customary in transactions of the nature
contemplated herein), or commence litigation in order to procure
such consents); and (iii)&nbsp;use all reasonable efforts to
lift any restraint, injunction or other legal bar to the
Mergers. Each party shall promptly deliver to the other a copy
of each such filing made, each such notice given and each such
consent obtained by such party during the period prior to the
Effective Time of Merger I. Each party, at the reasonable
request of the other party, shall execute and deliver such other
instruments and do and perform such other acts and things as may
be necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated
hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;Notwithstanding anything to the contrary contained in
this Agreement, Acquiror shall not have any obligation under
this Agreement to: (i)&nbsp;dispose or transfer any assets, or
to commit to cause Target to dispose of any assets;
(ii)&nbsp;license or otherwise make available to any Person, any
technology or other IP Rights, or commit to cause Target to
license or otherwise make available to any Person any technology
or other IP&nbsp;Rights; (iii)&nbsp;hold separate any assets or
operations (either before or after the Closing Date), or commit
to cause Target to hold separate any assets or operations; or
(v)&nbsp;make any commitment (to any Governmental Entity or
otherwise) regarding its future operations or the future
operations of Target. If any action or proceeding is instituted
(or threatened to be instituted) challenging the transactions
contemplated by this Agreement or the Mergers as violative of
any antitrust or competition law, or if any decree, judgment,
injunction or other order is entered, enforced or attempted to
be entered or enforced by a court or other Governmental Entity,
which decree, judgment, injunction or other order would make the
transactions contemplated by this Agreement or the Mergers
illegal or would otherwise prohibit, prevent, restrict, impair
or delay consummation of the transactions contemplated hereby,
Acquiror shall use commercially reasonable efforts to contest
and resist any such action or proceeding and to have vacated,
lifted, reversed or overturned any such decree, judgment,
injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this
Agreement or the Mergers and to have such decree, judgment,
injunction or other order repealed, rescinded or made
inapplicable so as to permit consummation of the transactions
contemplated by this Agreement or the Mergers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cancellation of
Warrants.</I> Target agrees to use its commercially reasonable
efforts to obtain, prior to the Closing Date, a binding written
agreement, acceptable to Acquiror, from each holder of Target
Warrants, other than the Target Warrants set forth on
Schedule&nbsp;2.6(g), whereby such holder agrees that if the
Target Warrants held by such holder have not been exercised
prior to the Closing Date, then such Target Warrants shall
terminate upon and may not be exercised on or after the Closing
Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Form&nbsp;S-8.</I> Acquiror
shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Acquiror Common Stock
issuable pursuant to outstanding options under the Target Option
Plan assumed by Acquiror. No later than ten (10)&nbsp;business
days after the Effective Time of Merger&nbsp;I, Acquiror shall
file a registration statement on Form&nbsp;S-8 with respect to
the shares of Acquiror Common Stock subject to such options and
shall use commercially reasonable efforts to maintain the
effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options
remain outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Blue Sky Laws.</I> Acquiror
shall take such steps as may be necessary to comply with the
securities and blue sky laws of all jurisdictions applicable to
the issuance of the Acquiror Common Stock in connection with
Merger&nbsp;I, the assumption by Acquiror of the outstanding
Target Options under the Target Option Plan and the grant of the
Acquiror Warrants. Target shall use its commercially reasonable
efforts to assist Acquiror to comply with the securities and
blue sky laws of all jurisdictions applicable to the issuance of
Acquiror Common Stock in connection with Merger&nbsp;I, the
assumption by Acquiror of the outstanding Target Options under
the Target Option Plan and the grant of the Acquiror Warrants.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reserved.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Listing of Additional
Shares.</I> Prior to the Effective Time of Merger&nbsp;I,
Acquiror shall file with the Nasdaq Stock Market a Notification
Form for Listing of Additional Shares with respect to the shares
of Acquiror Capital Stock issuable upon conversion of the Target
Capital Stock pursuant to Merger I or upon exercise of Assumed
Options or Acquiror Warrants.
</DIV>

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6.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employees.</I> Target will
use commercially reasonable efforts in consultation with
Acquiror to retain existing employees of Target through the
Effective Time of Merger I and following Merger I. Target shall
use its commercially reasonable efforts to cause the employees
of Target designated in writing by Acquiror to execute an offer
letter in the form provided by Acquiror and, to the extent an
employee of Target has not previously executed a similar
agreement with Target, a Proprietary Rights and Non-Disclosure
Agreement in the form provided by Acquiror.
</DIV>

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6.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Duty to Supplement.</I>
Promptly upon Target&#146;s discovery of the occurrence of any
development, event, circumstance or condition occurring after
the date hereof that, individually or in the aggregate, could
reasonably be expected to have a Target Material Adverse Effect
or that has resulted or is reasonably likely to result in any
condition set forth in Section&nbsp;7 not being satisfied,
Target shall notify Acquiror of such development, event or
circumstance or condition. Not more than five (5), but not less
than two (2), business days prior to the Closing, Target shall
deliver to Acquiror an updated version of the Target Disclosure
Schedule (the &#147;Updated Schedule&#148;) reflecting updates
or other facts, events, conditions, or circumstances since the
date of this Agreement. For purposes of the Updated Schedule,
notwithstanding anything to the contrary in such sections, all
matters set forth in the Updated Schedule relating to
Section&nbsp;3.10 and Section&nbsp;3.15 shall speak as of the
Closing Date. No supplement or amendment to the Target
Disclosure Schedule, including but not limited to the Updated
Schedule, shall be deemed to supplement or amend such disclosure
schedule for purposes of (a)&nbsp;determining the accuracy or
existence of a breach of any of the representations and
warranties made by Target in this Agreement or
(b)&nbsp;determining whether any condition to any party&#146;s
obligations to consummate the transaction contemplated hereby
has been satisfied.
</DIV>

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6.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tax Treatment.</I> During
the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the
Effective Time of Merger&nbsp;I, each party hereto will not
knowingly take any action, cause any action to be taken, fail to
take any action or cause any action to fail to be taken which
action or failure to act could prevent the Merger from
qualifying as a reorganization under the provisions of
Section&nbsp;368(a) of the Code.
</DIV>

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6.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination of
Agreements.</I> To the extent requested by Acquiror, Target
shall use commercially reasonable efforts to cause the Target
contracts identified on Schedule&nbsp;6.14 to be terminated
effective prior to or as of the Effective Time of Merger I.
</DIV>

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6.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tax Matters.</I> At or
prior to the filing of the Registration Statement, Target and
Acquiror will execute and deliver to Latham&nbsp;&#38; Watkins
LLP (&#147;LW&#148;) and to DLA Piper Rudnick Gray Cary US LLP
(&#147;DLA&#148;) tax representation letters in customary form
and as reasonably requested by LW and DLA. Acquiror, Merger
Sub&nbsp;I, Merger Sub&nbsp;II, and Target shall each confirm to
LW and to DLA the accuracy and completeness as of the Effective
Time of Merger I of the tax representation letters delivered
pursuant to the immediately preceding sentence. Following
delivery of the tax representation letters pursuant to this
Section&nbsp;6.15, Acquiror will use its reasonable efforts to
cause DLA to deliver to it, and Target will use its reasonable
efforts to cause LW to deliver to it, a tax opinion satisfying
the requirements of Item&nbsp;601 of Regulation&nbsp;S-K
promulgated under the Securities Act. In rendering such
opinions, each of such counsel shall be entitled to rely on the
tax representation letters referred to in this Section&nbsp;6.15.
</DIV>

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6.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Resignation of
Directors.</I> Target shall use commercially reasonable efforts
to obtain and deliver to Acquiror at the Closing the resignation
of each director of Target.
</DIV>

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6.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>FIRPTA Matters.</I> At the
Closing, Target shall deliver to Acquiror: (a)&nbsp;a statement
(in such form as may be reasonably requested by counsel to
Acquiror) conforming to the requirements of
Section&nbsp;1.897&nbsp;&#151; 2(h)(1)(i) of the United States
Treasury Regulations; and (b)&nbsp;the notification to the IRS
required under Section&nbsp;1.897&nbsp;&#151; 2(h)(2) of the
United States Treasury Regulations.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Closing Working
Capital.</I> On the date three (3)&nbsp;business days prior to
the estimated Closing Date, Target shall provide Acquiror with a
reasonable estimate of the Closing Working Capital (the
&#147;Estimated Closing Working Capital&#148;), together with
detailed supporting documentation reasonably satisfactory to
Acquiror, and such estimate shall be used at the Closing for
purposes of determining whether there is an Adjustment Amount
that reduces the Aggregate Purchase Price.
</DIV>

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6.19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Approval of
Stockholders.</I> Target shall promptly after the date hereof
take all action necessary in accordance with the DGCL and its
Certificate of Incorporation and Bylaws to obtain the written
consent of the Stockholders listed on Schedule&nbsp;B adopting
this Agreement and approving the Mergers and the Certificate
Amendment. Target shall use its commercially reasonable efforts
to obtain from the Stockholders listed on Schedule&nbsp;B an
Executed Written Consent.
</DIV>

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6.20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indemnification.</I>
Acquiror shall assume the written obligations of Target to
defend, indemnify and hold harmless Target&#146;s current and
former executive officers and directors, which obligations arise
pursuant to indemnity agreements between Target and such
individuals provided to Acquiror, including the notification
obligations thereunder, including, but not limited to, indemnity
obligations with respect to matters arising out of this
Agreement. In the event that Acquiror or the Surviving
Corporation amends, repeals or modifies the provisions of the
Certificate of Incorporation or Bylaws of the Surviving
Corporation or its successor that adversely affect any right of
indemnification, exculpation, advancement of expenses or similar
protection of any such executive officer of director as compared
to the Certificate of Incorporation or Bylaws of Target in
effect immediately prior to the Effective Time of Merger&nbsp;I,
then such amendment, repeal or modification shall not apply with
respect to any right or protection of such an executive officer
or director existing at the time of such amendment, repeal or
modification (it being understood that all such executive
officers and directors shall continue to be afforded the rights
and protections set forth in the Certificate of Incorporation
and Bylaws of Target in effect immediately prior to the
Effective Time of Merger I).
</DIV>

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6.21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Required Contract
Consents.</I> To the extent requested by Acquiror, Target shall
use its commercially reasonable efforts to obtain all Required
Contract Consents and to deliver such consents to Acquiror.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.22&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expenses.</I> Whether or
not the Mergers are consummated, all costs and Transaction
Expenses (other than with respect to HSR filings, which shall be
borne by Acquiror) incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the
party incurring such expense.
</DIV>

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6.23&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Notification of Certain
Parties.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The parties to this Agreement acknowledge that, pursuant to the
Rights Agreement, Target has granted rights to certain third
parties in connection with prior transactions. None of the
parties to this Agreement desire or intend to violate or
otherwise impede rights granted under the Rights Agreement, and
the parties desire that Target fulfill its commitments and
obligations under such agreement to ensure that such third
parties receive the treatment to which they are entitled to
receive pursuant to such agreement. Target represents and
warrants that NVP has validly waived the its rights under the
Rights Agreement referred to in this Section&nbsp;6.23.
Accordingly, the parties hereby agree that:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;Within twenty-four (24)&nbsp;hours following the
    execution of this Agreement, Acquiror and Target shall jointly
    prepare and Target shall immediately provide (i)&nbsp;written
    notice setting forth the information required to be provided as
    set forth in Section&nbsp;5.2(a) of the Rights Agreement (the
    &#147;Ten Day Notice&#148;), and (ii)&nbsp;written notice
    setting forth the information required to be provided as set
    forth in Section&nbsp;5.3(a) of the Rights Agreement (the
    &#147;Thirty Day Notice&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;If Target shall receive a bona fide written offer (an
    &#147;Offer&#148;) during the period of ten (10)&nbsp;business
    days following delivery of the Ten Day Notice (the &#147;Notice
    Period&#148;), from a party to whom Target was obligated to
    delivery such Ten Day Notice, other than NVP (the &#147;Notice
    Parties&#148;), Target shall immediately provide written notice
    to Acquiror of such Offer. Should Target&#146;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 &#147;Offer Notification&#148;) of
    such determination (together with a certified copy of the
    resolution duly adopted by Target&#146;s Board of Directors
    making such determination), but in any event within twenty-four</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">
    (24)&nbsp;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)&nbsp;five (5)&nbsp;business days
    following receipt of an Offer Notification and (ii)&nbsp;the
    date that is ten (10)&nbsp;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&#146;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&#146;s Offer (a &#147;Topping
    Offer&#148;); 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&#146;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;Notwithstanding the provisions of Section&nbsp;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&nbsp;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&nbsp;6.23(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;For purposes of this Agreement, &#147;Superior
    Proposal&#148; 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&#146;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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.24&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Release and Termination of
Security Interests.</I> Target shall use its commercially
reasonable efforts to seek and obtain the release of patent
numbers 6711120 and 6473418 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.25&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Delivery of Written
Notice.</I> Prior to the Closing Target shall deliver written
notification, pursuant of that certain Open Base Station
Architecture Initiative Supporter Agreement between the
Promoters (as defined in such agreement) and Target dated
September&nbsp;3, 2004, to withdraw from participation of all
Specifications (as defined in such agreement).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.26&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employee Benefits.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Acquiror agrees that, following the Effective Time of
Merger&nbsp;I, the employees of Target will be eligible to
receive benefits under employee compensation and benefits plans
which are no less favorable than those provided by Acquiror as
of immediately prior to the Effective Time of Merger I to
Acquiror&#146;s similarly-situated employees, unless the plans
of Target providing similar benefits did not terminate at the
Effective Time of Merger&nbsp;I, in which case Target&#146;s
employees will be eligible to receive benefits under
Acquiror&#146;s plans following the termination of the
continuing Target benefit plans. Schedule&nbsp;6.26(a) lists
each Target Employee Plan that could continue after the
Effective Time of Merger&nbsp;I, as well as an estimate of the
monthly cost to continue such plan after the Effective Time of
Merger I (to the extent such monthly cost can be reasonably
estimated by Target).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Acquiror will cause the employee benefit plans of
Acquiror in which employees of Target are eligible to
participate to take into account for purposes of eligibility,
waiting periods, pre-existing conditions, vesting (solely with
respect to employee benefit plans and not with respect to stock
options) and paid time off
</DIV>

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<DIV align="left" style="font-size: 10pt;">
entitlement thereunder the service of such employees with Target
as if such service were with Acquiror, to the same extent that
such service was credited under a comparable plan of Target,
provided, however, that such service recognized under
Acquiror&#146;s employee benefit plans shall not exceed ten
(10)&nbsp;years.
</DIV>

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(c)&nbsp;Acquiror agrees to (i)&nbsp;provide coverage for active
Target employees under Acquiror&#146;s health or other welfare
plan as of the Effective Time of Merger I unless the plans of
Target providing similar benefits did not terminate at the
Effective Time of Merger&nbsp;I, and (ii)&nbsp;waive any
preexisting conditions and actively at work requirements under
such plan, to the extent permitted by the applicable plan
documents or required by applicable law.
</DIV>

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6.27&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Warn; Cobra.</I>
</DIV>

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(a)&nbsp;Acquiror shall not, at any time prior to ninety
(90)&nbsp;days after the Effective Time of Merger&nbsp;I,
effectuate a &#147;plant closing&#148; or &#147;mass
layoff&#148;, as those terms are defined in WARN, affecting in
whole or in part any site of employment, facility, operating
unit or employee of the Surviving Corporation, without complying
with the notice requirements and other provisions of WARN.
Acquiror shall provide a full defense to, and indemnify the
Stockholders for any loss, liability, claim, damage or expense
(including attorney&#146;s fees and other costs of defense)
which the Stockholders may incur in connection with, any suit or
claim of violation brought against the Surviving Corporation
under WARN for any actions taken by Acquiror with regard to any
site of employment, facility, operating unit or employee
affected by this Agreement on or after the Effective Time of
Merger I.
</DIV>

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(b)&nbsp;Acquiror and the Surviving Corporation shall be liable
for all notices and benefits required to be provided to Target
employees under COBRA on or after the Effective Time of Merger I
and shall be responsible for all liabilities and obligations
with respect to the provision of any notice and benefits to any
Target employees that arise under COBRA on or after the
Effective Time of Merger I. Further, Acquiror shall, and shall
cause the Surviving Corporation to, provide any required notices
and benefits.
</DIV>

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6.28&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stockholder Approval
Regarding Section&nbsp;280G Payments.</I>
</DIV>

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(a)&nbsp;With respect to any payments by Target of cash, stock
or otherwise (or the portion thereof) that could reasonably be
determined to constitute a &#147;parachute payment&#148;
pursuant to Section&nbsp;280G of the Code, that are either
payable to one of the Named Individuals or relate to the grant
of the Directed Options, Target shall seek the vote of the
Stockholders to approve pursuant to a method provided for in the
regulations promulgated under Section&nbsp;280G of the Code with
respect to any such &#147;parachute payment&#148; (or the
portion thereof necessary to cause such payment not to be a
&#147;parachute payment&#148;), and if the Stockholders vote
upon and disapprove any such &#147;parachute payment&#148; (or
portion thereof), then such disapproved &#147;parachute
payment&#148; (or disapproved portion thereof) shall not be made
or provided for in any manner.
</DIV>

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(b)&nbsp;With respect to any payments by Target of cash, stock
or otherwise (or the portion thereof) that could reasonably be
determined to constitute a &#147;parachute payment&#148;
pursuant to Section&nbsp;280G of the Code (other than to the
extent payable to one of the Named Individuals or relating to
the grant of the Directed Options), to the extent that the
recipient of such &#147;parachute payment&#148; (or portion
thereof) agrees, Target shall seek the vote of the Stockholders
to approve pursuant to a method provided for in the regulations
promulgated under Section&nbsp;280G of the Code with respect to
any such &#147;parachute payment&#148; (or the portion thereof
necessary to cause such payment not to be a &#147;parachute
payment&#148;), and if the Stockholders vote upon and disapprove
any such &#147;parachute payment&#148; (or portion thereof),
then such disapproved &#147;parachute payment&#148; (or
disapproved portion thereof) shall not be made or provided for
in any manner. Target shall use commercially reasonable efforts
to obtain such agreement of such recipients.
</DIV>

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(c)&nbsp;Any such &#147;parachute payment&#148; (or portion
thereof) approved by the Stockholders in accordance with this
Section&nbsp;6.28 shall be made or provided in accordance with
their respective terms.
</DIV>

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6.29&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendment of Target Option
Plan.</I> Target shall amend the Target Option Plan prior to the
Closing to the extent necessary to permit the assumption of the
outstanding Target Options by Acquiror.
</DIV>

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7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conditions to the Merger.</I>
</DIV>

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7.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conditions to Obligations of
Each Party to Effect the Mergers.</I> The respective obligations
of each party to this Agreement to consummate and effect this
Agreement and the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Effective Time of
Merger I of each of the following conditions, any of which may
be waived, in writing, by agreement of all the parties hereto:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;<I>No Injunctions or Restraints; Illegality.</I> 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&nbsp;I, which makes the consummation
    of Merger I illegal.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;<I>Governmental Approval.</I> Acquiror, Target, Merger
    Sub I and Merger Sub&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;<I>Stockholder Approval.</I> 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&#146;s Certificate of Incorporation.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional Conditions to the
Obligations of Acquiror, Merger Sub I and Merger Sub&nbsp;II.
The obligations of Acquiror, Merger Sub I and Merger Sub&nbsp;II
to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of Merger I of each of the following
conditions, any of which may be waived, in writing, by Acquiror:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;<I>Representations, Warranties and Covenants.</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;<I>Performance of Obligations.</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;<I>Certificate of Officers.</I> Acquiror, Merger Sub I
    and Merger Sub&nbsp;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&nbsp;7.2(a) and 7.2(b) have been satisfied.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;<I>Secretary&#146;s Certificate.</I> Acquiror, Merger
    Sub I and Merger Sub&nbsp;II shall have received from
    Target&#146;s Secretary, a certificate having attached thereto
    (i)&nbsp;Target&#146;s Certificate of Incorporation as in effect
    immediately prior to the Effective Time of Merger&nbsp;I,
    (ii)&nbsp;Target&#146;s Bylaws as in effect immediately prior to
    the Effective Time of Merger&nbsp;I, (iii)&nbsp;resolutions
    approved by Target&#146;s Board of Directors authorizing the
    transactions contemplated hereby, and (iv)&nbsp;the Executed
    Written Consents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;<I>Delivery of Written Notice.</I> 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&nbsp;3, 2004, in order to withdraw
    from participation from all Specifications (as defined in such
    agreement).</TD>
</TR>

</TABLE>

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (f)&nbsp;<I>No Governmental Litigation.</I> 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)&nbsp;challenging or seeking to restrain or prohibit the
    consummation of the Mergers; (ii)&nbsp;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)&nbsp;seeking to prohibit or limit in any
    material respect Acquiror&#146;s ability to vote, receive
    dividends with respect to or otherwise exercise ownership rights
    with respect to the Target Capital Stock; or (iv)&nbsp;that
    would materially and adversely affect the right of Surviving
    Corporation or Target to own the assets or operate the business
    of Target.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (g)&nbsp;<I>Tax Opinion.</I> Acquiror shall have received a
    written opinion from Acquiror&#146;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&nbsp;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&nbsp;6.15 of this Agreement. The
    opinion in this Section&nbsp;7.2(g) shall not be waivable
    without the approval of Target.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (h)&nbsp;<I>No Other Order.</I> There shall not be issued any
    order of any Governmental Agency which (i)&nbsp;prohibits or
    limits in any material respect Acquiror&#146;s ability to vote,
    receive dividends with respect to or otherwise exercise
    ownership rights with respect to any of Target Capital Stock or
    (ii)&nbsp;which adversely affects the right of Acquiror or
    Target to own the assets or operate the business of Target.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;<I>Employees.</I> As of the Closing, all of the
    individuals set forth in Part&nbsp;I of Schedule&nbsp;7.2(i)
    (the &#147;Named Individuals&#148;) and at least sixty-five
    percent (65%) of Target&#146;s engineers, the names of which are
    set forth in Part&nbsp;II of Schedule&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (j)&nbsp;<I>Post-Signing Agreements.</I> Other than as permitted
    by Section&nbsp;5.1(x), Target shall not have entered into any
    agreements, arrangements or understandings in violation or
    breach of Section&nbsp;5.1(h) that (i)&nbsp;violate or breach
    clause&nbsp;(ii) of Section&nbsp;5.1(h) or (ii)&nbsp;result in
    commitments by Target or any Subsidiary of Target to sell or
    provide any products.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (k)&nbsp;<I>No Target Material Adverse Effect.</I> No Target
    Material Adverse Effect shall have occurred.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (l)&nbsp;<I>Opinion.</I> LW shall have delivered to Acquiror an
    opinion in substantially the form attached hereto as
    Exhibit&nbsp;H.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (m)&nbsp;<I>Termination Agreements.</I> Agreements, satisfactory
    in form and substance to Acquiror, providing for the termination
    of the Target contracts identified on Schedule&nbsp;6.14 shall
    have been executed and delivered to Acquiror.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (n)&nbsp;<I>Termination of 401(k) Plan.</I> 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&nbsp;401(k) (each, a &#147;Target 401(k) Plan&#148;)
    (unless Acquiror shall have provided written notice to Target no
    later than five (5)&nbsp;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</TD>
</TR>

</TABLE>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    provide such estimate in writing to Acquiror no later than
    fifteen (15)&nbsp;calendar days prior to the Closing Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (o)&nbsp;<I>FIRPTA Documents.</I> The statement and notice
    referred to in Section&nbsp;6.17, executed by Target, shall have
    been delivered to Acquiror.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (p)&nbsp;<I>Closing Payment Schedule.</I> Target shall have
    delivered to Acquiror the Closing Payment Schedule.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (q)&nbsp;<I>Closing Option Schedule.</I> Target shall have
    delivered to Acquiror the Closing Option Schedule.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (r)&nbsp;<I>Updated Schedule.</I> Target shall have delivered to
    Acquiror the Updated Schedule.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (s)&nbsp;<I>Release and Termination of Security Interests.</I>
    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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Additional Conditions to
Obligations of Target.</I> The obligations of Target to
consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of Merger I of each of the following
conditions, any of which may be waived, in writing, by Target:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;<I>Representations, Warranties and Covenants.</I> The
    representations and warranties of Acquiror, Merger Sub I and
    Merger Sub&nbsp;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).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;<I>Performance of Obligations.</I> Acquiror, Merger Sub
    I and Merger Sub&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;<I>Certificate of Officers.</I> Target shall have
    received a certificate executed on behalf of Acquiror, Merger
    Sub I and Merger Sub&nbsp;II by a duly authorized officer of
    each of Acquiror, Merger Sub I and Merger Sub&nbsp;II,
    respectively, certifying that the conditions set forth in
    Sections&nbsp;7.3(a) and 7.3(b) have been satisfied.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;<I>Tax Opinion.</I> Target shall have received a
    written opinion from Target&#146;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&nbsp;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&nbsp;6.15 of this Agreement. The
    opinion in this Section&nbsp;7.3(d) shall not be waivable
    without the approval of Acquiror.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;<I>Nasdaq Listing.</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (f)&nbsp;<I>Registration Statement.</I> 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 &#147;blue sky&#148; 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.</TD>
</TR>

</TABLE>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination, Extension and
Waiver.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination.</I> This
Agreement may be terminated at any time prior to the Effective
Time of Merger I (with respect to Section&nbsp;8.1(b) through
Section&nbsp;8.1(f), by written notice by the terminating party
to the other party):
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;by the mutual written consent of Acquiror and Target;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;by either Acquiror or Target if Merger I shall not have
    been consummated by the date that is one hundred eighty
    (180)&nbsp;days from the date hereof; provided, however, that
    the right to terminate this Agreement under this
    Section&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;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&nbsp;7.2(a), (b)&nbsp;or (j), or
    in Section&nbsp;7.3(a) or (b), respectively, shall not be
    satisfied which breach shall not have been cured within twenty
    (20)&nbsp;business days following receipt by the breaching party
    of written notice of such breach from the other party;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;by Target, in the event that (i)&nbsp;Target receives a
    Superior Proposal, (ii)&nbsp;Acquiror does not make a Topping
    Offer within the time period allotted for making a Topping Offer
    pursuant to Section&nbsp;6.23(b), (iii)&nbsp;Target has fully
    complied with the requirements set forth in Section&nbsp;6.23
    hereof, and (iv)&nbsp;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;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (f)&nbsp;by Acquiror, if Target has failed to deliver the
    Executed Written Consents to Acquiror prior to 12:00&nbsp;p.m.
    Pacific Time on July&nbsp;26, 2005.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effect of Termination.</I>
In the event of termination of this Agreement as provided in
Section&nbsp;8.1, there shall be no liability or obligation on
the part of Acquiror, Target, Merger Sub&nbsp;I, Merger
Sub&nbsp;II or their respective officers, directors, or
stockholders, except as set forth in Section&nbsp;8.2 or
Section&nbsp;9.2(g); provided, however, that the provisions of
Sections&nbsp;6.3, 6.4, 6.22, 9.2(c)(iii), 10 and this
Section&nbsp;8.2 shall remain in full force and effect and
survive any termination of this Agreement. In the event that
(a)&nbsp;prior to the Closing Date Acquiror makes a public
announcement with respect to a transaction or potential
transaction between Acquiror or any of its Subsidiaries and the
party set forth on Schedule&nbsp;8.2 hereto ( a &#147;Fee
Transaction&#148;), and (b)&nbsp;thereafter, this Agreement is
terminated by Target or Acquiror pursuant to
Section&nbsp;8.1(a), (b)&nbsp;or (c)&nbsp;above as a result of a
court order or the failure to achieve the required clearance
under HSR to consummate the transactions contemplated hereby due
to the Fee Transaction, then Acquiror shall pay Target a
termination fee of $50,000,000 in immediately available funds
within two business days of such termination. The parties hereto
agree that the foregoing sentence is an integral part of this
Agreement, and that without such provision, the parties would
not enter into this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Extension; Waiver.</I> At
any time prior to the Effective Time of Merger&nbsp;I, the
parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally
allowed: (i)&nbsp;extend the time for the performance of any of
the obligations or other acts of the other parties hereto;
(ii)&nbsp;waive any inaccuracies in the representations and
warranties contained herein or in any document delivered
pursuant hereto; and (iii)&nbsp;waive compliance with any of the
agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf
of such party.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indemnification.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reserved.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indemnification.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;<I>Survival of Warranties.</I> All representations and
warranties made by Target in this Agreement or any certificates
delivered pursuant hereto or as provided herein and therein
shall survive until the date that is eighteen (18)&nbsp;months
after the Closing Date (and thereafter until resolved if a claim
in respect thereof has been made prior to such date) (the
&#147;Survival Period&#148;). The covenants and agreements
contained in this Agreement, exhibits and the schedules hereto
shall survive the Closing unless otherwise expressly provided
for by their terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;<I>Indemnification of Acquiror Indemnified Persons.</I>
Subject to the limitations set forth in this Section&nbsp;9,
each of the Stockholders shall severally and not jointly
indemnify and hold harmless and satisfy and defend Acquiror, the
Surviving Corporation and their respective affiliates, officers,
directors, employees, representatives, attorneys, consultants
and agents (each an &#147;Acquiror Indemnified Person&#148; and
collectively, &#147;Acquiror Indemnified Persons&#148;) against
and in respect of any and all claims, obligations, liabilities,
losses, damages, deficiencies, penalties, fines, costs or
expenses (including, without limitation, reasonable legal,
expert and consultant fees and expenses and Taxes) (collectively
&#147;Damages&#148;) arising out of or resulting from:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;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);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;any nonfulfillment or breach of, or default in
    connection with, any covenant or agreement by Target under this
    Agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;the exercise by any Dissenting Stockholder of
    appraisal rights under the DGCL (provided that such Dissenting
    Stockholder&#146;s pro rata portion of the Initial Purchase
    Price and the Additional Payment Amount shall be deducted from
    such Damages);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;any post-Closing adjustment to the aggregate amount of
    the Merger Consideration payable to Target as a result of
    (A)&nbsp;Target having Closing Working Capital less than the
    Working Capital Threshold, or (B)&nbsp;Target&#146;s Transaction
    Expenses exceeding the Transactional Expense Threshold, but in
    each case excluding all liabilities included in the
    determination of Target&#146;s Closing Working Capital;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (v)&nbsp;any matter set forth on the Target Disclosure Schedule
    in a paragraph that includes a statement that &#147;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.&#148;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;<I>Indemnification of Stockholder Indemnified
Persons.</I> Acquiror shall indemnify and hold harmless and
satisfy and defend Target, the Stockholders and each of their
respective affiliates, officers, directors, employees,
representatives, attorneys, consultants and agents (each a
&#147;Stockholder Indemnified Person&#148; and collectively,
&#147;Stockholder Indemnified Persons,&#148; and together with
the Acquiror Indemnified Persons, the &#147;Indemnified
Persons&#148;) against and in respect of any and all Damages
arising out of or resulting from:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;any inaccuracy or breach of any representation or
    warranty made by Acquiror, Merger Sub I or Merger Sub&nbsp;II in
    this Agreement or in any of the certificates delivered to Target
    by Acquiror, Merger Sub I or Merger Sub&nbsp;II pursuant to this
    Agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;any nonfulfillment or breach of, or default in
    connection with, any covenant or agreement by Acquiror, Merger
    Sub I or Merger Sub&nbsp;II under this Agreement;</TD>
</TR>

</TABLE>

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;any breach by Target of, or any claim against Target
    under, the Rights Agreement with respect (A)&nbsp;to
    Section&nbsp;5.2(a) or Section&nbsp;5.3(a) of the Rights
    Agreement (other than any claim from, or relating to, NVP or any
    of its affiliates), (B)&nbsp;the Ten Day Notice or the Thirty
    Day Notice arising out of or related to the execution and
    delivery of this Agreement, (C)&nbsp;the execution and delivery
    of the Exclusivity Agreement between Target and Acquiror dated
    June&nbsp;27, 2005, or (D)&nbsp;the performance by Target or any
    Stockholder of the transactions contemplated hereby;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;actions taken by Stockholder Indemnified Persons in
    connection with the grant or issuance of Directed Options (other
    than (A)&nbsp;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)&nbsp;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 &#147;Required Approvals&#148;)).</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    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)&nbsp;the Directed Options
    (other than with respect to the Required Approvals) and
    (B)&nbsp;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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;<I>Knowledge.</I> The representations, warranties,
covenants and obligations of each party hereto, and the rights
and remedies that may be exercised by any Indemnified Person,
shall not be limited or otherwise affected by or as a result of
any information furnished to, or any investigation made by or
knowledge of, any of the Indemnified Persons or any of their
Representatives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;<I>Threshold for Claims.</I> No claim for Damages shall
be made by an Acquiror Indemnified Person under Section&nbsp;9
unless the aggregate of Damages (other than De Minimis Damages)
for which claims are made hereunder by the Acquiror Indemnified
Persons exceeds $1,500,000 (the &#147;Deductible Amount&#148;),
after which the Acquiror Indemnified Persons shall be entitled
to seek compensation for all Damages in excess of the Deductible
Amount; provided, however, that any claim for Damages arising
out of or resulting from clauses&nbsp;(iv) or (v)&nbsp;of
Section&nbsp;9.2(b) above shall not be subject to such
Deductible Amount and Acquiror shall immediately be entitled to
be indemnified, and receive payment, for all Damages related
thereto; provided, further, that other than with respect to
Damages arising out of or resulting from clauses&nbsp;(iii),
(iv)&nbsp;or (v)&nbsp;of Section&nbsp;9.2(b) above, the
Stockholders shall have no obligation to indemnify any Acquiror
Indemnified Person pursuant to this Section&nbsp;9 with respect
to Damages from any single claim or series of claims that relate
to a single set of related facts or circumstances or a series of
such related facts or circumstances if such Damages resulting
therefrom are less than $50,000 in the aggregate (&#147;De
Minimis Damages&#148;). The aggregate liability pursuant to
Section&nbsp;9.2(b) shall in no event be in excess of
$75,000,000 of the Additional Patent Consideration to the extent
actually paid or accrued (the &#147;Holdback Indemnification
Funds&#148;), and no Stockholder individually shall be liable
for any amount in excess of such Stockholder&#146;s pro rata
portion of the Holdback Indemnification Funds in connection with
any offset by Acquiror against such funds in accordance with
Section&nbsp;9.3 and Section&nbsp;9.4.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;<I>Determination of Damages.</I> The amount of any
Damages with respect to any claim for indemnification hereunder
shall be determined net of any insurance proceeds and any
indemnity, contribution or other similar payment actually
received by the Indemnified Person or any of its affiliates with
respect to such claim (such proceeds or payment to be paid over
to the Indemnifying Person up to the amount paid by the
Indemnifying Person if received after payment of the
indemnification claim by the Indemnifying Person).
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;<I>No Limitations.</I> Notwithstanding anything to the
contrary in this Agreement, nothing set forth in this Agreement
shall limit the rights, remedies or claims of any party (or the
liability of any other party) for fraud or willful breach.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Offset of Claims Period;
Release of Holdback Indemnification Funds.</I> The period for
offsetting claims against the Holdback Indemnification Funds
shall terminate upon the expiration of the Survival Period (the
&#147;Indemnification Termination Date&#148;); provided,
however, that a portion of the Holdback Indemnification Funds
that, in the reasonable judgment of Acquiror, subject to the
objection of the Stockholders&#146; Agent and the subsequent
litigation of the matter in the manner provided in
Section&nbsp;9.6 hereto, is necessary to satisfy any unsatisfied
claims made in accordance with Section&nbsp;9.2 hereof and
specified in the Officer&#146;s Certificate (as defined in
Section&nbsp;9.4 below) delivered to the Stockholders&#146;
Agent prior to the Indemnification Termination Date, shall
remain subject to the right of Acquiror to offset such claims
against the Holdback Indemnification Funds pursuant to
Section&nbsp;9.4 below until such claims have been resolved or
until a portion of such amount is determined by Acquiror in good
faith or a court of competent jurisdiction to be no longer
necessary to satisfy such claims.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Offset of Claims; Sole
Remedy.</I> Upon receipt by the Stockholders&#146; Agent on or
before the Indemnification Termination Date of a certificate
signed by any officer of Acquiror (an &#147;Officer&#146;s
Certificate&#148;) stating that Damages exist with respect to
the indemnification obligations of the Stockholders set forth in
Section&nbsp;9.2 and that a claim for such Damages has been made
in accordance with Section&nbsp;9.2 hereof prior to the
Indemnification Termination Date, and specifying in reasonable
detail the individual items of such Damages included in the
amount so stated, the date each such item was paid, or properly
accrued or arose, and the nature of the misrepresentation,
breach of warranty, covenant or claim to which such item is
related, Acquiror shall be entitled, subject to the
Stockholders&#146; Agent&#146;s right to object in accordance
with this Section&nbsp;9, to withhold payment of a portion of
the Additional Payment Amount in the amount of such aggregate
amount of Damages from the Holdback Indemnification Funds. The
right of Acquiror to offset Damages against, and by withholding
payment of, the Holdback Indemnification Funds (to the extent
the Stockholders may otherwise be entitled to receipt of payment
thereof) shall be the sole remedy for, and sole source of,
indemnification with respect to Damages arising hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Objections to Claims.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;For a period of thirty (30)&nbsp;days after delivery by
Acquiror of an Officer&#146;s Certificate, the
Stockholders&#146; Agent shall be entitled to object in a
written statement to the claim made in such Officer&#146;s
Certificate, by delivering such statement to Acquiror prior to
the expiration of such thirty (30)&nbsp;day period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;In case the Stockholders&#146; Agent shall so object in
writing to any claim or claims by Acquiror made in any
Officer&#146;s Certificate, Acquiror shall have thirty
(30)&nbsp;days to respond in a written statement to the
objection of the Stockholders&#146; Agent. If after such thirty
(30)&nbsp;day period there remains a dispute as to any claims,
the Stockholders&#146; Agent and Acquiror shall attempt in good
faith for thirty (30)&nbsp;days to agree upon the rights of the
respective parties with respect to each of such claims. If the
Stockholders&#146; Agent and Acquiror should so agree, a
memorandum setting forth such agreement shall be prepared and
signed by both parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Resolution of Conflicts.</I>
If no agreement can be reached after good faith negotiation
between the Stockholders&#146; Agent and Acquiror pursuant to
Sections&nbsp;9.5, either Acquiror or the Stockholders&#146;
Agent may initiate formal legal action with the applicable court
in San&nbsp;Diego County, California to resolve such dispute.
The decision of the court as to the validity and amount of any
claim in such Officer&#146;s Certificate shall be binding and
conclusive upon the parties to this Agreement, and
notwithstanding anything in Section&nbsp;9 hereof, the parties
shall be entitled to act in accordance with such decision and
Acquiror shall be entitled to offset such claims in accordance
with Section&nbsp;9.4 hereof or, if resolution is in favor of
the Stockholders&#146; Agent there shall be no offset for such
claim.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stockholders&#146; Agent.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Appointment. QF REP, LLC shall be appointed as agent
and attorney-in-fact (&#147;Stockholders&#146; Agent&#148;) for
and on behalf of the Stockholders. The Stockholders&#146; Agent
shall have full power and authority to
</DIV>

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<DIV align="left" style="font-size: 10pt;">
represent all of the Stockholders and their successors with
respect to all matters arising under this Agreement and all
actions taken by the Stockholders&#146; Agent hereunder shall be
binding upon all such Stockholders and their successors as if
expressly confirmed and ratified in writing by each of them and
no Stockholder shall have the right to object, dissent, protest
or otherwise contest the same. The Stockholders&#146; Agent
shall take any and all actions which it believes are necessary
or appropriate under this Agreement for and on behalf of the
Stockholders, as fully as if the Stockholders were acting on
their own behalf, including executing this Agreement as
Stockholders&#146; Agent and overseeing the Expenses Fund,
giving and receiving notices, instructions and communications
permitted or required under this Agreement, interpreting this
Agreement, authorizing payments to be made with respect hereto
or thereto, obtaining reimbursement as provided for herein of
all out-of-pocket fees and expenses and other obligations of or
incurred by the Stockholders&#146; Agent in connection with this
Agreement, defending all indemnity claims against the
Stockholders, reviewing, negotiating and compromising the
Closing Working Capital Calculation, authorizing the offset of
claims by Acquiror against the Holdback Indemnification Funds,
objecting to such deliveries, agreeing to, negotiating and
entering into settlements and compromises of, demanding
arbitration or other legal proceedings and complying with orders
of courts and awards of arbitrators, with respect to such
claims, engaging counsel or accountants or other representatives
in connection with the foregoing matters, and taking all actions
necessary or appropriate in the judgment of the
Stockholders&#146; Agent for the accomplishment of the foregoing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;<I>Authorization.</I> By their approval and adoption of
this Agreement, the Stockholders hereby authorize the
Stockholders&#146; Agent, on the Stockholders&#146; behalf, to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;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&#146; Agent for
    such purpose;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;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&#146; Agent may in its sole discretion deem
    appropriate;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;take such action on behalf of any of the Stockholders
    as the Stockholders&#146; Agent may in its sole discretion deem
    appropriate in respect of:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (A)&nbsp;taking such other action as the Stockholders&#146;
    Agent or any of the Stockholders is authorized to take under
    this Agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (B)&nbsp;receiving all documents or certificates and making all
    determinations, on behalf of any of the Stockholders, required
    or permitted under this Agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (C)&nbsp;all such other matters as the Stockholders&#146; Agent
    may in its sole discretion deem necessary or appropriate to
    consummate this Agreement and the transactions contemplated
    hereby;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (D)&nbsp;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&nbsp;9 and any
    waiver of any obligation of Acquiror or the Surviving
    Corporation.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    All actions, decisions and instructions of the
    Stockholders&#146; 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&#146; Agent, and the
    Stockholders&#146; Agent shall have no liability to any
    Stockholder, for any action taken, decision made or instruction
    given by the Stockholders&#146; Agent in connection with this
    Agreement, except in the case of its own willful misconduct.</TD>
</TR>

</TABLE>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;<I>Indemnification.</I> The Stockholders&#146; Agent
shall incur no liability to the Stockholders with respect to any
action taken or suffered by it in reliance upon any note,
direction, instruction, consent, statement or other documents
reasonably believed by the Stockholders&#146; Agent to be
genuinely and duly authorized by at least a majority in interest
of the Stockholders (or the successors or assigns thereto), nor
for other action or inaction taken or omitted in good faith in
connection herewith, in any case except for liability to the
Stockholders for its own willful misconduct. The
Stockholders&#146; Agent shall be indemnified for and shall be
held harmless by the Stockholders against any loss, liability or
expense incurred by the Stockholders&#146; Agent or any of its
Affiliates and any of their respective partners, directors,
officers, employees, agents, stockholders, consultants,
attorneys, accountants, advisors, brokers, representatives or
controlling persons, in each case relating to the
Stockholders&#146; Agent&#146;s conduct as Stockholders&#146;
Agent, other than such losses, liabilities or expenses resulting
from the Stockholders&#146; Agent&#146;s willful misconduct in
connection with its performance under this Agreement. This
indemnification shall survive the termination of this Agreement.
The costs of such indemnification (including the costs and
expenses of enforcing this right of indemnification) shall be
paid from the Expenses Fund, and thereafter shall be the
responsibility of the Stockholders. For all purposes hereunder,
a majority in interest of the Stockholders shall be determined
on the basis of each Stockholder&#146;s pro-rata interest in the
Expenses Fund. The Stockholders&#146; Agent may, in all
questions arising under this Agreement, rely on the advice of
counsel and for anything done, omitted or suffered in good faith
by the Stockholders&#146; Agent in accordance with such advice,
the Stockholders&#146; Agent shall not be liable to the
Stockholders. In no event shall the Stockholders&#146; Agent be
liable under this Section&nbsp;9.7 or otherwise for any loss of
profits or incidental, consequential, indirect, special,
punitive, exemplary or other similar damages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;<I>Access.</I> Acquiror shall provide the
Stockholders&#146; Agent reasonable access to information of and
concerning any indemnity claim made by any Acquiror Indemnified
Person which is in the possession or control of Acquiror and the
reasonable assistance of the Surviving Corporation&#146;s
officers and employees for purposes of performing the
Stockholders&#146; Agent&#146;s duties under this Agreement and
exercising its rights under this Agreement, including for the
purpose of evaluating any indemnity claim made by any Acquiror
Indemnified Person; provided that the Stockholders&#146; Agent
shall treat confidentially and not, except as reasonably
necessary in connection with enforcing its rights or the rights
of the Stockholders hereunder, disclose any nonpublic
information from or concerning any indemnity claim made by any
Acquiror Indemnified Person to anyone (except to the
Stockholders&#146; Agent&#146;s attorneys, accountants or other
advisers, to Stockholders, to the arbitrators appointed to
resolve disputes pursuant to this Agreement, and on a
need-to-know basis to other individuals who agree to keep such
information confidential).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;<I>Reasonable Reliance.</I> In the performance of its
duties hereunder, the Stockholders&#146; Agent shall be entitled
to rely upon any document or instrument reasonably believed by
it to be genuine and accurate. The Stockholders&#146; Agent may
assume that any person purporting to give any notice in
accordance with the provisions hereof has been duly authorized
to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;<I>Attorney-in-Fact.</I>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;The Stockholders&#146; 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&#146;
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;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&#146;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)&nbsp;the termination or resolution of all pending
    indemnification claims pursuant to Section&nbsp;9.2 or disputes
    relating to the Additional Patent Consideration or the Per Share
    Additional Patent</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Consideration, (B)&nbsp;the eighth (8th) anniversary of the
    Closing Date, and (C)&nbsp;the complete distribution of the
    Expenses Fund.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;Each Stockholder hereby waives any and all defenses
    which may be available to contest, negate or disaffirm the
    action of the Stockholders&#146; Agent taken in good faith under
    this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;Notwithstanding the power of attorney granted in this
    Section&nbsp;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&#146; Agent.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;<I>Liability.</I> If the Stockholders&#146; Agent is
required by the terms of the this Agreement to determine the
occurrence of any event or contingency, the Stockholders&#146;
Agent shall, in making such determination, be liable to the
Stockholders only for its proven bad faith as determined in
light of all the circumstances, including the time and
facilities available to it in the ordinary conduct of business.
In determining the occurrence of any such event or contingency,
the Stockholders&#146; Agent may request from any of the
Stockholders such reasonable additional evidence as the
Stockholders&#146; Agent in its sole discretion may deem
necessary to determine any fact relating to the occurrence of
such event or contingency, and may at any time inquire of and
consult with others, including any of the Stockholders, and the
Stockholders&#146; Agent shall not be liable to any Stockholder
for any damages resulting from its delay in acting hereunder
pending its receipt and examination of additional evidence
requested by it.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;<I>Orders.</I> The Stockholders&#146; Agent is
authorized, in its sole discretion, to comply with final,
nonappealable orders or decisions issued or process entered by
any court of competent jurisdiction or arbitrator with respect
to the Expenses Fund or the Holdback Indemnification Funds. If
any portion of the Holdback Indemnification Funds or Expenses
Fund is disbursed to the Stockholders&#146; Agent and is at any
time attached, garnished or levied upon under any court order,
or in case the payment, assignment, transfer, conveyance or
delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgment or decree shall be
made or entered by any court affecting such property or any part
thereof, then and in any such event, the Stockholders&#146;
Agent is authorized, in its sole discretion, but in good faith,
to rely upon and comply with any such order, writ, judgment or
decree which it is advised by legal counsel selected by it is
binding upon it without the need for appeal or other action; and
if the Stockholders&#146; Agent complies with any such order,
writ, judgment or decree, it shall not be liable to any
Stockholder by reason of such compliance even though such order,
writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;<I>Successor Stockholders&#146; Agent.</I> The
Stockholders&#146; Agent shall have the right at any time to
appoint a successor Stockholders&#146; Agent; provided, however,
that such appointment of a successor Stockholders&#146; Agent
shall not be effective until the delivery to Acquiror of
executed counterparts of a writing signed by the
Stockholders&#146; Agent with respect to such appointment,
together with an acknowledgment signed by the successor
Stockholders&#146; Agent appointed in such writing that he or
she accepts the responsibility of successor Stockholders&#146;
Agent and agrees to perform and be bound by all of the
provisions of this Agreement applicable to the
Stockholders&#146; Agent. Each successor Stockholders&#146;
Agent shall have all of the power, authority, rights and
privileges conferred by this Agreement upon the original
Stockholders&#146; Agent, and the term &#147;Stockholders&#146;
Agent&#148; as used herein shall be deemed to include any
interim or successor Stockholders&#146; Agent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;<I>Expenses of the Stockholders&#146; Agent.</I>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;The Stockholders&#146; 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&#146; fees and expenses, if applicable) incurred
    by the Stockholders&#146; Agent in connection with this
    Agreement and the transaction contemplated hereby.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;At the Closing, the Expenses Fund&nbsp;Shares shall be
    registered in the name of, and, together with the Expenses
    Fund&nbsp;Cash, shall be deposited with, the Stockholders&#146;
    Agent, such deposit(s) and any Additional Expenses
    Fund&nbsp;Shares (as defined in Section&nbsp;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&nbsp;Shares, such shares will be issued in the name of the
    Stockholders&#146; Agent and</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    delivered to the Stockholders&#146; Agent in the same manner as
    the Expenses Fund&nbsp;Shares delivered at the Closing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;Except for dividends paid in stock declared with
    respect to the Expenses Fund&nbsp;Shares (&#147;Additional
    Expenses Fund&nbsp;Shares&#148;), which shall be treated as
    Expenses Fund&nbsp;Shares in the Expenses Fund pursuant to
    Section&nbsp;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&nbsp;Shares or
    the Expenses Fund&nbsp;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&nbsp;Shares and
    Additional Expenses Fund&nbsp;Shares deposited in the Expenses
    Fund with respect to such Stockholder so long as such Expenses
    Fund&nbsp;Shares and Additional Expenses Fund&nbsp;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&nbsp;Shares and Additional Expenses
    Fund&nbsp;Shares remain in the Stockholder Agent&#146;s
    possession, the Stockholders will retain and will be able to
    exercise all other incidents of ownership of said Expenses
    Fund&nbsp;Shares and Additional Expenses Fund&nbsp;Shares which
    are not inconsistent with the terms and conditions of this
    Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;The Stockholders&#146; Agent shall have the authority
    to sell all Expenses Fund&nbsp;Shares and Additional Expenses
    Fund&nbsp;Shares in its discretion.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (v)&nbsp;Within five (5)&nbsp;business days after the later of
    (A)&nbsp;the termination or resolution of all pending
    indemnification claims pursuant to Section&nbsp;9.2 or disputes
    relating to the Additional Patent Consideration and (B)&nbsp;the
    eighth (8th) anniversary of the Closing Date, the
    Stockholders&#146; Agent shall release from the Expenses Fund to
    the Stockholders their pro rata portion of the Expenses
    Fund&nbsp;Shares, Additional Expenses Fund&nbsp;Shares and
    Expenses Fund&nbsp;Cash therein. Expenses Fund&nbsp;Shares,
    Additional Expenses Fund&nbsp;Shares and Expenses Fund&nbsp;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&nbsp;Shares and
    Additional Expenses Fund&nbsp;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&nbsp;Share or Additional Expenses Fund&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (vi)&nbsp;No Expenses Fund&nbsp;Shares or Additional Expenses
    Fund&nbsp;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&#146;s pro rata portion of the
    Expenses Fund by the Stockholders&#146; Agent as provided herein.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;<I>Actions of Stockholders&#146; Agent.</I> Any action
taken by the Stockholders&#146; Agent pursuant to the authority
granted in this Section&nbsp;9.7 shall be effective and
absolutely binding on each Stockholder notwithstanding any
contrary action of, or direction from, any Stockholder, except
for actions taken by the Stockholders&#146; Agent which are in
bad faith. Acquiror may rely upon any decision, act, consent or
instruction of the Stockholders&#146; Agent as being the
decision, act, consent or instruction of each and every
Stockholder. Acquiror is hereby relieved from any liability to
any Person for any acts done by them in accordance with such
decision, act, consent or instruction of the Stockholders&#146;
Agent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;<I>Binding Appointment.</I> The provisions of this
Agreement, including without limitation Section&nbsp;9.7 hereof,
shall be binding upon each Stockholder and the executors, heirs,
legal representatives and successors of each Stockholder, and
any references in this Agreement to a Stockholder or the
Stockholders shall mean and include the successors to the
Stockholders&#146; rights hereunder, whether pursuant to
testamentary disposition, the laws of descent and distribution
or otherwise.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(m)&nbsp;<I>Bond and Compensation.</I> No bond shall be required
of the Stockholders&#146; Agent, and the Stockholders&#146;
Agent shall receive no compensation for his services. Notices or
communications to or from the Stockholders&#146; Agent shall
constitute notice to or from each of the Stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(n)&nbsp;<I>Excess Expenses Certificate.</I> In the event that
the Stockholders&#146; Agent shall expend amounts in excess of
the Expenses Fund in accordance with the terms and conditions of
Section&nbsp;9.7, the Stockholders&#146; Agent shall be entitled
deliver to Acquiror written notice certifying the amount of such
expenses in excess of the Expenses Fund payable by the
Stockholders (an &#147;Excess Expenses Certificate&#148;). Prior
to the distribution of any Additional Patent Consideration (if
any), Acquiror shall reimburse the amount certified in the
Excess Expenses Certificate to the Stockholders&#146; Agent (up
to the amount of Additional Patent Consideration otherwise to be
distributed) and shall deduct a corresponding amount from such
amount otherwise to be distributed. Acquiror shall be entitled
to rely on the amount set forth in any Excess Expenses
Certificate without investigation or liability whatsoever.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Third-Party Claims.</I> In
the event that a third party institutes a formal legal action or
proceeding against Acquiror specifically seeking at least
$5,000,000 and which could reasonably result in a demand for an
offset against all or any portion of the Holdback
Indemnification Funds, Acquiror shall notify the
Stockholders&#146; Agent of such claim. Notwithstanding the
foregoing, Acquiror shall notify the Stockholders&#146; Agent of
any outstanding claims at least ninety (90)&nbsp;days prior to
the end of the Indemnification Termination Date. Acquiror shall
not settle any third party claim without the prior written
consent of the Stockholders&#146; Agent; provided, however, if
the Stockholders&#146; Agent withholds such consent, Acquiror
may, in its sole discretion, settle such claim pursuant to terms
agreed upon by Acquiror in its sole discretion; provided,
further, that if Acquiror has previously notified
Stockholders&#146; Agent of a claim, Acquiror shall notify the
Stockholders&#146; Agent at least five (5)&nbsp;business days
prior to settling such claim, and if Acquiror has not previously
notified the Stockholders Agent of such claim, Acquiror shall
notify the Stockholders&#146; Agent at least ten
(10)&nbsp;business days prior to settling such claim. In the
event that such claim is settled without the consent of the
Stockholders&#146; Agent, Acquiror shall pay the amount of such
settlement and (subject to the provisions of this
Section&nbsp;9) shall be entitled to offset fifty percent (50%)
of such settlement amount against the Holdback Indemnification
Funds. In the event that the Stockholders&#146; Agent has
consented to any such settlement, the Stockholders&#146; Agent
shall have no power or authority to object under
Section&nbsp;9.5 or any other provision of this Section&nbsp;9
to the amount of any claim by Acquiror against the Holdback
Indemnification Funds for indemnity with respect to such
settlement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General Provisions.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Notices.</I> All notices
and other communications hereunder shall be in writing and shall
be deemed duly delivered: (i)&nbsp;upon receipt if delivered
personally; (ii)&nbsp;three (3)&nbsp;business days after being
mailed by registered or certified mail, postage prepaid, return
receipt requested; (iii)&nbsp;one (1)&nbsp;business day after it
is sent by commercial overnight courier service; or
(iv)&nbsp;upon transmission if sent via facsimile with
confirmation of receipt to the parties at the following address
(or at such other address for a party as shall be specified upon
like notice:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;if to Acquiror, Merger Sub I or Merger Sub&nbsp;II, to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    QUALCOMM Incorporated</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    5775 Morehouse Drive</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    San&nbsp;Diego, CA 92121</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Attention: President</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Fax: (858)&nbsp;658-2100</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Tel: (858)&nbsp;587-1121</TD>
</TR>

</TABLE>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
with a copy to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    DLA Piper Rudnick Gray Cary US LLP</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    4365 Executive Drive, Suite&nbsp;1100</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    San&nbsp;Diego, CA 92121</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Attention: Cameron Jay Rains</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Fax: (858)&nbsp;677-1401</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Tel: (858)&nbsp;677-1476</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;if to Target, to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Flarion Technologies, Inc.</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    135 Route 202/206 South</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Bedminster, NJ 07921</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Attention: Chief Executive Officer</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Fax: (908)&nbsp;947-7000</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Tel: (908)&nbsp;947-7090</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
with a copy to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Latham&nbsp;&#38; Watkins LLP</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    600&nbsp;West Broadway, Suite&nbsp;1800</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    San&nbsp;Diego, California 92101</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Attention: Howard L. Armstrong</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Fax: (619)&nbsp;236-1234</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Tel: (619)&nbsp;696-7419</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;if to Stockholders&#146; Agent, to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    QF REP, LLC</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    c/o&nbsp;Charles River Ventures, Inc.</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    1000 Winter Street, Suite&nbsp;3300</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Waltham, MA 02451</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Attn: Sarah Reed,&nbsp;Esq.</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Fax: 781-768-6100</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Tel: 781-768-6064</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
with a copy to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Proskauer Rose LLP</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    1585 Broadway</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    New York, NY 10036-8299</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Attention: Adam J. Kansler</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Fax: (212)&nbsp;969-2900</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Tel: (212)&nbsp;969-3689</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Counterparts.</I> This
Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall
become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same
counterpart.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Entire Agreement;
Nonassignability; Parties in Interest.</I> This Agreement and
the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the
exhibits and schedules hereto, including the Target Disclosure
Schedule: (a)&nbsp;together constitute the entire agreement
among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter
hereof except for the Confidentiality Agreement, which shall
continue in full force and effect, and shall survive any
termination of this Agreement or the Closing, in accordance with
its terms; and (b)&nbsp;are not intended to confer upon any
</DIV>

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<DIV align="left" style="font-size: 10pt;">
other person any rights or remedies hereunder except as
otherwise expressly provided herein and shall not be assigned by
operation of law or otherwise without the written consent of the
other party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Severability.</I> In the
event that any provision of this Agreement or the application
thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder
of this Agreement will continue in full force and effect and the
application of such provision to other Persons or circumstances
will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or
unenforceable provision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Remedies Cumulative.</I>
Except as set forth in Section&nbsp;9.2(g), the parties agree
that, from and after the Effective Time of Merger&nbsp;I, the
remedies provided in Section&nbsp;9 and Section&nbsp;10.8 shall
be the exclusive remedies at law or in equity for any claims
relating to or arising out of this Agreement or the transactions
contemplated hereby. Except with respect to Damages related to
IP Rights, or contracts relating to or involving IP Rights, no
party shall be entitled to recover loss of profits or
incidental, consequential, indirect, special, punitive,
exemplary or other similar damages for any breach of any
representation, warranty, covenant, term or provision hereof or
any other claim directly or indirectly resulting from, arising
out of or relating to this Agreement or the transactions
contemplated hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Governing Law.</I> This
Agreement shall be governed by and construed in accordance with
the internal laws of California applicable to parties residing
in California, without regard applicable principles of conflicts
of law; provided, however, that matters of corporate law
relating to this Agreement, the Mergers or any of the parties
hereto shall be governed by and construed in accordance with the
DGCL. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of the Chancery Court located in the
State of Delaware in connection with any matters of corporate
law based upon or arising out of this Agreement or the matters
contemplated hereby and it agrees that process may be served
upon it in any manner authorized by the laws of the State of
Delaware for such Persons and waives and covenants not to assert
or plead any objection which it might otherwise have to such
jurisdiction and such process. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction of any court
located within San&nbsp;Diego County, California in connection
with any other matter based upon or arising out of this
Agreement or the matters contemplated hereby and it agrees that
process may be served upon it in any manner authorized by the
laws of the State of California for such Persons and waives and
covenants not to assert or plead any objection which it might
otherwise have to such jurisdiction and such process.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rules of Construction.</I>
The parties hereto agree that they have been represented by
counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Specific Enforcement.</I>
Each party acknowledges and agrees that the other party would be
irreparably harmed and would not have any adequate remedy at law
in the event that any of the provisions of this Agreement were
not performed by the first party in accordance with their
specific terms or were otherwise breached. Accordingly each
party agrees that the other party shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy to which
each party is entitled at law or in equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Guarantee.</I> Acquiror
agrees to take all action necessary to cause each of Merger
Sub&nbsp;I, Merger Sub&nbsp;II, and Surviving Corporation I or
the Surviving Corporation, as applicable, to perform all of its
respective agreements, covenants and obligations under this
Agreement. Acquiror unconditionally guarantees to Target and the
Stockholders the full and complete performance by each of Merger
Sub&nbsp;I, Merger Sub&nbsp;II, and Surviving Corporation I or
the Surviving Corporation, as applicable, of its respective
obligations under this Agreement and shall be liable for any
breach of any representation, warranty, covenant or obligation
of Merger Sub&nbsp;I, Merger Sub&nbsp;II, Surviving Corporation
I or the Surviving Corporation, as applicable, under this
Agreement.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendment; Waiver.</I> Any
amendment or waiver of any of the terms or conditions of this
Agreement must be in writing signed on behalf of each of the
parties or duly executed by or on behalf of the party to be
charged with such waiver. Notwithstanding the foregoing, this
Agreement may be amended at any time prior to the Effective Time
of Merger&nbsp;I, whether before or after Stockholder approval
hereof, provided that no amendment to this Agreement that
requires the further approval of the Stockholders under the DGCL
shall be made without having obtained such further approval. The
failure of a party to exercise any of its rights hereunder or to
insist upon strict adherence to any term or condition hereof on
any one occasion shall not be construed as a waiver or deprive
that party of the right thereafter to insist upon strict
adherence to the terms and conditions of this Agreement at a
later date. Further, no waiver of any of the terms and
conditions of this Agreement shall be deemed to or shall
constitute a waiver of any other term of condition hereof
(whether or not similar).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Incorporation of Exhibits
and Schedules.</I> The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference and made a part
hereof.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
IN WITNESS WHEREOF, Target, Acquiror, Merger Sub&nbsp;I, Merger
Sub&nbsp;II and Stockholders&#146; Agent have caused this
Agreement to be executed and delivered by each of them or their
respective officers thereunto duly authorized, all as of the
date first written above.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    FLARION TECHNOLOGIES, INC.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 40pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">Raymond P. Dolan
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;Raymond P. Dolan</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="22%"></TD>
    <TD width="38%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>Title:&nbsp;Chairman and CEO</TD>
    <TD align="left">
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    QUALCOMM INCORPORATED</TD>
</TR>

</TABLE>

<DIV style="margin-top: 40pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">William E. Keitel
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;William E. Keitel</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:&nbsp;Executive Vice President and CFO</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    FLUORITE ACQUISITION CORPORATION</TD>
</TR>

</TABLE>

<DIV style="margin-top: 40pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">William E. Keitel
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;William E. Keitel</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="21%"></TD>
    <TD width="39%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>Title:&nbsp;President and CFO</TD>
    <TD align="left">
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    QUARTZ ACQUISITION CORPORATION</TD>
</TR>

</TABLE>

<DIV style="margin-top: 40pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">William E. Keitel
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;William E. Keitel</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="21%"></TD>
    <TD width="39%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>Title:&nbsp;President and CFO</TD>
    <TD align="left">
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    STOCKHOLDERS&#146; AGENT:</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    QF REP, LLC</TD>
</TR>

</TABLE>

<DIV style="margin-top: 40pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">Bruce I. Sachs
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;Bruce I. Sachs</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="21%"></TD>
    <TD width="39%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>Title:&nbsp;Managing Member</TD>
    <TD align="left">
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-75

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<DIV align="left" style="font-size: 10pt;">
<A name='200'></A>
</DIV>

<!-- link1 "Annex B" -->

<DIV align="right" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Annex&nbsp;B</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OPINION OF FLARION&#146;S FINANCIAL ADVISOR</B>
</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
July&nbsp;25, 2005
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Board of Directors
</DIV>

<DIV align="left" style="font-size: 10pt;">
Flarion Technologies, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt;">
Bedminster One
</DIV>

<DIV align="left" style="font-size: 10pt;">
135 Route 202/206 South
</DIV>

<DIV align="left" style="font-size: 10pt;">
Bedminster, NJ 07921
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Members of the Board of Directors:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We understand that Flarion Technologies, Inc.
(&#147;Flarion&#148;) is considering a transaction (the
&#147;Proposed Transaction&#148;) pursuant to an Agreement and
Plan of Reorganization, dated as of July&nbsp;25, 2005 (the
&#147;Definitive Agreement&#148;) among Flarion, QUALCOMM, Inc.
(&#147;Acquiror&#148;), Merger Subsidiary&nbsp;I, a wholly-owned
subsidiary of Acquiror (&#147;Merger Sub I&#148;) and Merger
Subsidiary&nbsp;II, a wholly-owned subsidiary of Acquiror
(&#147;Merger Sub&nbsp;II&#148;), pursuant to which Merger Sub I
will be merged with and into Flarion with Flarion as the
surviving corporation (&#147;Merger I&#148;) and immediately
following the effectiveness of Merger&nbsp;I, Flarion will be
merged with and into Merger Sub&nbsp;II with Merger Sub&nbsp;II
as the surviving corporation (&#147;Merger&nbsp;II&#148; and,
together with Merger&nbsp;I, the &#147;Merger&#148;). All
capitalized terms used but not defined herein shall have the
meanings given to them in the Definitive Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We further understand that pursuant to Merger&nbsp;I, each
security holder of Flarion shall be entitled to receive
consideration as detailed below:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    I)&nbsp;(i)&nbsp;each outstanding share of common stock, par
    value $0.001&nbsp;per share, of Flarion (&#147;Flarion Common
    Stock&#148;) 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&nbsp;per share (&#147;Acquiror Common Stock&#148;), of
    Acquiror equal to the quotient of the Per Share Purchase Price
    divided by the Average Closing Price; (ii)&nbsp;each outstanding
    share of preferred stock, par value $0.001&nbsp;per share
    (&#147;Flarion Preferred Stock&#148;) 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)&nbsp;dividing two times the Per Share Purchase
    Price by the Average Closing Price and (B)&nbsp;multiplying the
    result of (A)&nbsp;by the Preferred Equity Percentage and the
    remainder of which shall be payable in cash; (iii)&nbsp;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
    &#147;Flarion Option&#148;) and (A)&nbsp;each Flarion Option
    shall thereby be converted into an option (an &#147;Assumed
    Option&#148;) 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)&nbsp;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)&nbsp;QUALCOMM will grant to the holders of warrants to
    purchase Flarion Preferred Stock (the &#147;Assumed Flarion
    Warrants&#148;), warrants (&#147;Acquiror Warrants&#148;) 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)&nbsp;the per
    share exercise price for the shares of Acquiror Common Stock</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">B-1

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    II)&nbsp;Upon the Patent Milestone Date, QUALCOMM shall
    (i)&nbsp;pay to each former holder of Flarion Common Stock an
    amount in cash equal to the Per Share Additional Patent
    Consideration; (ii)&nbsp;pay to each former holder of Flarion
    Preferred Stock an amount in cash equal to two times the Per
    Share Additional Patent Consideration; (iii)&nbsp;exchange each
    Assumed Option that is not a Directed Option (an &#147;Existing
    Option&#148;) 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)&nbsp;the Per Share Additional Patent
    Consideration actually being delivered by Acquiror to the
    Stockholders, multiplied by (b)&nbsp;the number of shares of
    Flarion Common Stock subject to the corresponding Existing
    Option immediately prior to its assumption; and
    (iv)&nbsp;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)&nbsp;above.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Collectively, the consideration to be paid to the holders of
Flarion Common Stock, Flarion Preferred Stock, Flarion Options,
and Flarion Warrants in paragraphs I and II above form the
Merger Consideration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You have asked us whether, in our opinion as of the date hereof,
the Merger Consideration to be received by the holders of
Flarion Common Stock, Flarion Preferred Stock, Flarion Options,
and Flarion Warrants, in the aggregate, is fair, from a
financial point of view, to the holders of Flarion Common Stock,
Flarion Preferred Stock, Flarion Options, and Flarion Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with rendering our opinion, we have:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;Analyzed certain financial projections concerning
    Flarion prepared by and furnished to us by the management of
    Flarion;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;Discussed the past and current operations and
    financial condition and the prospects of Flarion with the
    management of Flarion;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;Compared the financial performance of Flarion and
    QUALCOMM with certain publicly-traded companies and their
    securities that we deemed relevant;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (v)&nbsp;Reviewed the financial terms, to the extent publicly
    available, of certain business combinations and other
    transactions that we deemed relevant;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (vi)&nbsp;Participated in discussions and negotiations among
    representatives of Flarion and QUALCOMM and their financial and
    legal advisors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (vii)&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (viii)&nbsp;Analyzed certain publicly available projections and
    operating data for QUALCOMM prepared by Wall Street analysts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ix)&nbsp;Analyzed certain publicly available financial
    statements and other information relating to QUALCOMM;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (x)&nbsp;Reviewed with Flarion management the scope and results
    of the transaction process to date;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (xi)&nbsp;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.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">B-2

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For purposes of our analysis and opinion, we have assumed and
relied upon, without assuming any responsibility for
independently verifying, the accuracy and completeness of all
the financial and other information publicly available and the
information furnished to us by Flarion management or otherwise
discussed with or reviewed by or for us, and we have not assumed
any liability thereof. We have further relied on the assurances
of the management of Flarion that it is not aware of any facts
that would make such information inaccurate or misleading.
Management has informed us that they expect to receive the
Additional Patent Consideration, and consequently for the
purposes of this Opinion, we have assumed, with Flarion
management&#146;s permission, that the Additional Patent
Consideration will be paid to the former holders of Flarion
securities. For purposes of rendering this opinion, management
of Flarion has provided us and discussed with us certain
financial projections. With respect to these financial
projections, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available
estimates and good faith judgments of the future competitive,
operating and regulatory environments and related financial
performance of Flarion. We have further assumed that, in all
material respects, such financial projections will be realized
in the amounts and at the times indicated. We express no view as
to such financial projections, or the assumptions on which they
are based. We have also assumed, with your approval, that the
Merger will qualify as a tax-free reorganization for United
States federal income tax purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have not made nor assumed any responsibility for making any
independent valuation or appraisal of the assets or liabilities
of Flarion, nor have we been furnished with any such appraisals,
nor have we evaluated the solvency or fair value of Flarion
under any state or federal laws relating to bankruptcy,
insolvency or similar matters. Our opinion is necessarily based
on economic, market and other conditions as in effect on, and
the information made available to and discussed with us as of,
the date hereof. It should be understood that subsequent
developments may affect this opinion and that we do not have any
obligation to update, revise, or reaffirm this opinion. We have
not been asked to pass upon, and express no opinion with respect
to, any matter other than the fairness from a financial point of
view, as of the date hereof, of the Merger Consideration to the
holders of Flarion Common Stock, Flarion Preferred Stock,
Flarion Options, and Flarion Warrants. We express no opinion as
to the underlying decision by Flarion and QUALCOMM to engage in
the Merger. We are expressing no opinion herein as to the price
at which Flarion Common Stock, Flarion Preferred Stock or
QUALCOMM Common Stock will trade at any future time. We are not
rendering any accounting, legal or tax advice and understand
that Flarion is relying upon other advisors as to accounting,
legal and tax matters in connection with the Merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We requested from QUALCOMM management, but did not receive,
financial projections for QUALCOMM or QUALCOMM&#146;s estimates
of synergies expected to result from the Merger. Flarion
management has not independently prepared financial projections
for QUALCOMM or estimates of synergies expected to result from
the Merger. Consequently, with your permission we have relied
upon consensus Wall Street research estimates for financial and
operational projection information regarding QUALCOMM. With
respect to these Wall Street research estimates, we have assumed
that they have been reasonably prepared on bases reflecting the
best currently available estimated and good faith judgments of
the future competitive, operating and regulatory environments.
We have assumed no responsibility for independent verification
of these research estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For purposes of rendering our opinion, we have assumed, in all
respects material to our analysis, that the final form of the
Definitive Agreement will not vary in any material respect from
the draft reviewed by us, that the representations and
warranties of each party contained in the Definitive Agreement
are true and correct, that each party will perform all of its
respective covenants and agreements contained in the Definitive
Agreement, that all conditions to the consummation of the Merger
will be satisfied without waiver thereof and that no material
indemnification payments are made to QUALCOMM, and that no
Working Capital Adjustment is required that would reduce the
Merger Consideration. We have further assumed that all
governmental, regulatory or other consents and approvals
(contractual or otherwise) necessary for the consummation of the
Merger will be obtained without any adverse effect on Flarion or
QUALCOMM or on the contemplated benefits of the Merger. You have
also advised us, and we have assumed that any third party
contractual rights in connection with the Merger and the other
transactions contemplated by the Definitive
</DIV>

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<DIV align="left" style="font-size: 10pt;">
Agreement will not have any adverse effect on the Company or
QUALCOMM or on the contemplated benefits of the Merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have acted as financial advisor to Flarion in connection with
the Merger and will receive fees for our services, a portion of
which is payable upon delivery of this opinion and the balance
of which is contingent upon the consummation of the Merger. In
addition, Flarion has agreed to reimburse our expenses and to
indemnify us for certain liabilities arising out of our
engagement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This letter is provided solely for the benefit of the Board of
Directors of Flarion in connection with and for the purposes of
its evaluation of the Merger, and is not on behalf of, and shall
not confer rights or remedies upon, any shareholder, creditor or
any other person other than the Board of Directors of Flarion,
or be used or relied upon for any other purpose. This opinion
may not be disclosed, referred to, or communicated (in whole or
in part) to any third party for any purpose whatsoever except
with our prior written approval. It is further understood that
this letter and the opinion expressed herein do not constitute a
recommendation to any holder of Flarion Common Stock, Flarion
Preferred Stock, QUALCOMM Common Stock, or any other person, as
to how such person should vote or act on any matter relating to
the proposed Merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the Merger Consideration in aggregate is
fair, from a financial point of view, to the holders of Flarion
Common Stock, Flarion Preferred Stock, Flarion Options, and
Flarion Warrants.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Very truly yours,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    EVERCORE GROUP INC.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">Timothy G. LaLonde
    </FONT></TD>
</TR>

</TABLE>

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    <TD width="40%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="width: 47%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">

</DIV>

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    <TD width="40%"></TD>
    <TD width="60%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Timothy G. LaLonde</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Senior Managing Director</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">B-4

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<DIV align="left" style="font-size: 10pt;">
<A name='201'></A>
</DIV>

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<DIV align="right" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Annex&nbsp;C</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SECTION&nbsp;262</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>&#167;&nbsp;262. Appraisal rights.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection&nbsp;(d)&nbsp;of this section with
respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who
has otherwise complied with subsection&nbsp;(d)&nbsp;of this
section and who has neither voted in favor of the merger or
consolidation nor consented thereto in writing pursuant to
&#167;&nbsp;228 of this title shall be entitled to an appraisal
by the Court of Chancery of the fair value of the
stockholder&#146;s shares of stock under the circumstances
described in subsections (b)&nbsp;and (c)&nbsp;of this section.
As used in this section, the word &#147;stockholder&#148; means
a holder of record of stock in a stock corporation and also a
member of record of a nonstock corporation; the words
&#147;stock&#148; and &#147;share&#148; mean and include what is
ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and
the words &#147;depository receipt&#148; mean a receipt or other
instrument issued by a depository representing an interest in
one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to
&#167;&nbsp;251 (other than a merger effected pursuant to
&#167;&nbsp;251(g) of this title), &#167;&nbsp;252,
&#167;&nbsp;254, &#167;&nbsp;257, &#167;&nbsp;258,
&#167;&nbsp;263 or &#167;&nbsp;264 of this title:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="97%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;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)&nbsp;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)&nbsp;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&nbsp;(f)&nbsp;of
    &#167;&nbsp;251 of this title.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;Notwithstanding paragraph&nbsp;(1)&nbsp;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
    &#167;&#167;&nbsp;251, 252, 254, 257, 258, 263 and 264 of this
    title to accept for such stock anything except:</TD>
</TR>

</TABLE>

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    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    a.&nbsp;Shares of stock of the corporation surviving or
    resulting from such merger or consolidation, or depository
    receipts in respect thereof;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    b.&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    c.&nbsp;Cash in lieu of fractional shares or fractional
    depository receipts described in the foregoing subparagraphs a.
    and b. of this paragraph;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    d.&nbsp;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.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">C-1

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;In the event all of the stock of a subsidiary Delaware
    corporation party to a merger effected under &#167;&nbsp;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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of incorporation,
any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this
section, including those set forth in subsections (d)&nbsp;and
(e)&nbsp;of this section, shall apply as nearly as is
practicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;Appraisal rights shall be perfected as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;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&nbsp;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&nbsp;(b)&nbsp;or
    (c)&nbsp;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&#146;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&#146;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&#146;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&nbsp;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;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;If the merger or consolidation was approved pursuant to
    &#167;&nbsp;228 or &#167;&nbsp;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&nbsp;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&nbsp;days after the date of mailing of such notice,
    demand in writing from the surviving or resulting corporation
    the appraisal of such holder&#146;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&#146;s shares. If
    such notice did not notify stockholders of the effective date of
    the merger or consolidation, either (i)&nbsp;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)&nbsp;the
    surviving or resulting corporation shall send such a second
    notice to all such holders on or within 10&nbsp;days after such
    effective date; provided, however, that if such second notice is
    sent more than 20&nbsp;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&#146;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&nbsp;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</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;Within 120&nbsp;days after the effective date of the
merger or consolidation, the surviving or resulting corporation
or any stockholder who has complied with subsections
(a)&nbsp;and (d)&nbsp;hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within
60&nbsp;days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw
such stockholder&#146;s demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within
120&nbsp;days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections (a)&nbsp;and (d)&nbsp;hereof, upon
written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and
with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written
statement shall be mailed to the stockholder within 10&nbsp;days
after such stockholder&#146;s written request for such a
statement is received by the surviving or resulting corporation
or within 10&nbsp;days after expiration of the period for
delivery of demands for appraisal under
subsection&nbsp;(d)&nbsp;hereof, whichever is later.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20&nbsp;days after
such service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the
time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1
or more publications at least 1&nbsp;week before the day of the
hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining
their fair value exclusive of any element of value arising from
the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account
all relevant factors. In determining the fair rate of interest,
the Court may consider all relevant factors, including the rate
of interest which the surviving or resulting corporation would
have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to trial
upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting
corporation pursuant to subsection&nbsp;(f)&nbsp;of this section
and who has submitted such stockholder&#146;s certificates of
stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal
rights under this section.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or
</DIV>

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<DIV align="left" style="font-size: 10pt;">
compound, as the Court may direct. Payment shall be so made to
each such stockholder, in the case of holders of uncertificated
stock forthwith, and the case of holders of shares represented
by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court&#146;s decree
may be enforced as other decrees in the Court of Chancery may be
enforced, whether such surviving or resulting corporation be a
corporation of this State or of any state.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorney&#146;s fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an appraisal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights
as provided in subsection&nbsp;(d)&nbsp;of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection&nbsp;(e)&nbsp;of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholder&#146;s demand for an
appraisal and an acceptance of the merger or consolidation,
either within 60&nbsp;days after the effective date of the
merger or consolidation as provided in
subsection&nbsp;(e)&nbsp;of this section or thereafter with the
written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the
foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms
as the Court deems just.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
</DIV>

<P align="center" style="font-size: 10pt;">C-4

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<DIV align="left" style="font-size: 10pt;">
<A name='202'></A>
</DIV>

<!-- link1 "Annex D" -->

<DIV align="right" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Annex&nbsp;D</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FORM OF FLARION STOCKHOLDER WRITTEN CONSENT</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ACTION BY WRITTEN CONSENT</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>OF THE STOCKHOLDERS OF</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>FLARION TECHNOLOGIES, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>a Delaware corporation</B>
</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>July&nbsp;26, 2005</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the authority set forth in Section&nbsp;228 of the
Delaware General Corporation Law, the undersigned, being the
holders of at least (i)&nbsp;a majority of the outstanding
capital stock (voting together on an as-if converted to common
stock basis and as a single class), (ii)&nbsp;a majority of the
outstanding preferred stock (voting together on an as-if
converted to common stock basis and as a single class),
(iii)&nbsp;a majority of the outstanding shares of Series&nbsp;A
preferred stock and (iv)&nbsp;a majority of the outstanding
shares of Series&nbsp;B preferred stock of Flarion Technologies,
Inc., a Delaware corporation (the
<B><I>&#147;Corporation&#148;</I></B>), hereby consent to and
adopt the following resolutions by written consent, which shall
have the same force and effect as if adopted at a duly convened
meeting of the stockholders of the Corporation:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>APPROVAL OF THE MERGERS AND THE MERGER DOCUMENTS</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, pursuant to that certain Agreement and Plan of
Reorganization (the <B><I>&#147;Merger Agreement&#148;</I></B>),
entered into by and among QUALCOMM Incorporated, a Delaware
corporation <B><I>(&#147;Acquiror&#148;)</I></B>, Fluorite
Acquisition Corporation, a Delaware corporation and a wholly
owned subsidiary of Acquiror <B><I>(&#147;Merger Sub
I&#148;)</I></B>, Quartz Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Acquiror
<B><I>(&#147;Merger Sub&nbsp;II&#148;)</I></B>, QF REP, LLC (the
<B><I>&#147;Stockholders&#146; Agent&#148;</I></B>), and the
Corporation, and all of the exhibits and schedules thereto and
each other agreement and document contemplated by the Merger
Agreement (collectively, the <B><I>&#147;Merger
Documents&#148;</I></B>), Merger Sub I will be merged with and
into the Corporation <B><I>(&#147;Merger I&#148;)</I></B>, and
immediately thereafter the Corporation will be merged with and
into Merger Sub&nbsp;II
(<B><I>&#147;Merger&nbsp;II&#148;</I></B>, and together with
Merger&nbsp;I, the <B><I>&#147;Mergers&#148;</I></B>);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, pursuant to the Merger Documents, (i)&nbsp;each issued
and outstanding share of the Corporation&#146;s common stock
shall be cancelled and exchanged into the right to receive an
amount of Acquiror&#146;s common stock as set forth in
Section&nbsp;2.6 of the Merger Agreement, (ii)&nbsp;each issued
and outstanding share of the Corporation&#146;s preferred stock
shall be cancelled and exchanged into the right to receive an
amount of Acquiror&#146;s common stock and cash as set forth in
Section&nbsp;2.6 of the Merger Agreement, (iii)&nbsp;Acquiror
shall assume each option to purchase the Corporation&#146;s
common stock, and (iv)&nbsp;Acquiror shall grant warrants to
purchase an amount of Acquiror&#146;s common stock to certain
holders of warrants to purchase the Corporation&#146;s preferred
stock;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the Board of Directors of the Corporation has
determined that the Mergers are advisable and fair to, and in
the best interests of, the Corporation and its stockholders, has
approved the Merger Documents and the transactions contemplated
thereby and declared the Merger Documents and the transactions
contemplated thereby advisable and recommends that the
stockholders of the Corporation adopt the Merger Documents and
approve the Mergers and the other transactions contemplated
thereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOW, THEREFORE, BE IT RESOLVED, that the Merger Documents, and
the Mergers and the other transactions contemplated in the
Merger Documents, including, without limitation, the
indemnification and offset provisions of Section&nbsp;9 and the
indemnification provisions of Section&nbsp;6.1(b)(v) of the
Merger Agreement, are hereby adopted and approved in all
respects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>CERTIFICATE OF INCORPORATION</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, pursuant to the Corporation&#146;s Second Amended and
Restated Certificate of Incorporation, as amended (the
<B><I>&#147;Certificate of Incorporation&#148;</I></B>), the
Mergers would constitute a liquidation, dissolution or
</DIV>

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<DIV align="left" style="font-size: 10pt;">
winding up of the Corporation for purposes of Paragraph&nbsp;4
of Section&nbsp;A of Article&nbsp;FOURTH thereof, unless the
holders of at least a majority of the then outstanding shares of
the Corporation&#146;s preferred stock voting together as a
single class elect otherwise by giving notice to the Corporation
at least five (5)&nbsp;days before the effective date of Merger
I;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, pursuant to Paragraph&nbsp;5 of Section&nbsp;A of
Article&nbsp;FOURTH of the Certificate of Incorporation, the
holders of the Corporation&#146;s preferred stock are entitled
to elect to convert their shares of preferred stock into common
stock of the Corporation at any time and from time to time;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, pursuant to Paragraph&nbsp;5(g) of Section&nbsp;A of
Article&nbsp;FOURTH of the Certificate of Incorporation, the
Mergers would constitute a merger or consolidation of the
Corporation with or into another corporation thereby requiring
that provision be made so that the holders of the
Corporation&#146;s preferred stock shall be entitled to receive
upon consummation of such transaction, the number of shares of
stock or other securities of the successor corporation resulting
from such merger or consolidation to which a holder of the
Corporation&#146;s common stock would have been entitled upon
consummation of such merger had such holder&#146;s preferred
stock been converted into the Corporation&#146;s common stock
prior to such merger or consolidation;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the terms of the Merger Documents provide for the
holders of the Corporation&#146;s common stock to receive common
stock of Acquiror in exchange for their shares of the
Corporation&#146;s common stock and for the holders of the
Corporation&#146;s preferred stock to receive a combination of
the common stock of Acquiror and cash in exchange for their
shares of the Corporation&#146;s preferred stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOW, THEREFORE, BE IT RESOLVED, that the undersigned holders of
the Corporation&#146;s preferred stock hereby elect that the
Mergers shall not constitute a liquidation, dissolution or
winding up of the Corporation for purposes of Paragraph&nbsp;4
of Section&nbsp;A of Article&nbsp;FOURTH of the Certificate of
Incorporation;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
RESOLVED FURTHER, that the undersigned holders of the
Corporation&#146;s preferred stock hereby agree that from the
date hereof until the earlier of (i)&nbsp;the termination of the
Merger Agreement, and (ii)&nbsp;the effectiveness of
Merger&nbsp;I, the undersigned holders will not convert their
shares of the Corporation&#146;s preferred stock into common
stock;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
RESOLVED, FURTHER, that the undersigned holders of the
Corporation&#146;s common stock, the undersigned holders of the
Corporation&#146;s Series&nbsp;A preferred stock and the
undersigned holders of the Corporation&#146;s Series&nbsp;B
preferred stock, voting (i)&nbsp;as a single class, (ii)&nbsp;as
preferred stock, voting together as a single class,
(iii)&nbsp;as a single class of the Series&nbsp;A preferred
stock, and (iv)&nbsp;as a single class of Series&nbsp;B
preferred stock, hereby consent to an amendment to the
Certificate of Incorporation to amend and restate
Paragraph&nbsp;5(g) of Section&nbsp;A of Article&nbsp;FOURTH of
the Certificate of Incorporation, so that, as amended and
restated, paragraph&nbsp;5(g) of Section&nbsp;A of
Article&nbsp;FOURTH shall be and read as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;(g)&nbsp;<I><U>Merger or Sale of Assets.</U></I> 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&#146;s properties and assets to any other person
    (other than an event described in paragraph&nbsp;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&#146;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&nbsp;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 (&#147;Acquiror&#148;), Fluorite
    Acquisition Corporation, a Delaware corporation and a wholly
    owned subsidiary</TD>
</TR>

</TABLE>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    of Acquiror, Quartz Acquisition Corporation, a Delaware
    corporation and a wholly owned subsidiary of Acquiror, QF REP,
    LLC (as Stockholders&#146; Agent), and the Corporation, as such
    Agreement and Plan of Reorganization may be amended from time to
    time.&#148;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>WAIVERS AND RELEASES</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, pursuant to Section&nbsp;262 of the Delaware General
Corporation Law <B><I>(&#147;Section&nbsp;262&#148;)</I></B>,
the stockholders of the Corporation are entitled to appraisal
rights in connection with the consummation of Merger I;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the undersigned holders of the Corporation&#146;s
capital stock desire to waive and release certain claims that
they may have against the Corporation or its officers,
directors, employees, affiliates or agents, effective as of the
consummation of Merger I.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOW, THEREFORE, BE IT RESOLVED, that the undersigned holders of
the Corporation&#146;s capital stock hereby irrevocably waive
their appraisal rights under Section&nbsp;262 in connection with
Merger I;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
RESOLVED FURTHER, that, effective as of the consummation of
Merger&nbsp;I, the undersigned holders of the Corporation&#146;s
capital stock do hereby release and forever discharge the
Corporation and its officers, directors, employees, affiliates
and agents from any and all manner of action or actions, cause
or causes of action, in law or in equity, suits, contracts,
agreements, promises, liability, claims, demands, damages,
attorneys&#146; fees or expense, of any nature whatsoever, known
or unknown, fixed or contingent, arising out of or related to
the ownership of securities of the Corporation by the
undersigned holders or by reason of the undersigned
holders&#146; status as holders of the capital stock of the
Corporation (other than actions, causes of action, in law or in
equity, suits, contracts, agreements, promises, liability,
claims, demands, damages, attorneys&#146; fees or expenses to
the extent they arise pursuant to or in connection with the
Merger Documents and the Mergers). This release and discharge in
no way limits the rights of the holders of the
Corporation&#146;s capital stock to indemnification under the
Corporation&#146;s Certificate of Incorporation, By-laws,
indemnification agreements and the Merger Documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>STOCKHOLDERS&#146; AND INVESTORS&#146; RIGHTS
AGREEMENTS</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the undersigned holders of the Corporation&#146;s
capital stock, the Corporation and certain other persons are
party to an Amended and Restated Stockholders&#146; Agreement
dated as of March&nbsp;30, 2001, as amended on May&nbsp;15,
2003, February&nbsp;12, 2004, April&nbsp;14, 2004 and
November&nbsp;30, 2004 (as amended, the
<B><I>&#147;Stockholders&#146; Agreement&#148;</I></B>);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, Section&nbsp;12 of the Stockholders&#146; Agreement
permits: (a)&nbsp;certain sections of the Stockholders&#146;
Agreement to be waived, amended, modified or terminated by the
Corporation with the written consent of Investors (as defined
therein) who hold in the aggregate at least a majority of the
Stock (as defined therein) issued and outstanding or issuable
upon conversion of the Preferred Stock (as defined therein), and
(b)&nbsp;the remainder of the Stockholders&#146; Agreement to be
waived, amended, modified or terminated by the Corporation and
the holders of a majority of the outstanding Stock then held by
all parties to the Stockholders&#146; Agreement (treating
Preferred Stock as then converted Common Stock);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, Section&nbsp;8 of the Amendment to Amended and Restated
Stockholders&#146; Agreement dated as of May&nbsp;15, 2003 (the
<B><I>&#147;May 13 Amendment&#148;</I></B>) provides that the
May 13 Amendment may not be altered, amended or modified in any
way except in accordance with Section&nbsp;7.3 of the Rights
Agreement (as defined below);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the undersigned holders of the Corporation&#146;s
capital stock, the Corporation and certain other persons are
party to an Amended and Restated Investors&#146; Rights
Agreement dated as of March&nbsp;30, 2001, as amended on
May&nbsp;15, 2003 (as amended, the <B><I>&#147;Rights
Agreement&#148;</I></B>);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, Section&nbsp;7.3 of the Rights Agreement provides that
such Agreement may be amended by a writing executed by the
Corporation and Investors (as defined therein) holding at least
a majority of the then
</DIV>

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<DIV align="left" style="font-size: 10pt;">
outstanding Preferred Stock (as defined therein) and the
securities convertible into, exchangeable for or exercisable for
Preferred Stock (calculated on an as converted, exchanged or
exercised basis);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the undersigned holders of the Corporation&#146;s
capital stock desire to amend the Stockholders&#146; Agreement
in the form attached hereto as Attachment A;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the undersigned holders of the Corporation&#146;s
capital stock desire to amend the Rights Agreement in the form
attached hereto as Attachment B.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOW, THEREFORE, BE IT RESOLVED, that the undersigned holders of
the Corporation&#146;s capital stock hereby agree to amend the
Stockholders&#146; Agreement in the form attached hereto as
Attachment A;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
RESOLVED FURTHER, that the undersigned holders of the
Corporation&#146;s capital stock hereby agree to amend the
Rights Agreement in the form attached hereto as Attachment B.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>STOCKHOLDERS&#146; AGENT</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, pursuant to Section&nbsp;9.7 of the Merger Agreement,
the Stockholders&#146; Agent has been appointed as agent and
attorney-in-fact for and on behalf of the holders of the
Corporation&#146;s capital stock with respect to the matters set
forth in the Merger Agreement and the other Merger Documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOW, THEREFORE, BE IT RESOLVED, that the undersigned holders of
the Corporation&#146;s capital stock hereby agree to the terms
of Section&nbsp;9 of the Merger Agreement, including, without
limitation, Section&nbsp;9.7 of the Merger Agreement, and hereby
ratify the rights, powers and authority granted to the
Stockholders&#146; Agent to act on behalf of the holders of the
Corporation&#146;s capital stock with respect to the matters set
forth in the Merger Agreement and the other Merger
Documents;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
RESOLVED FURTHER, that the undersigned holders of the
Corporation&#146;s capital stock hereby agree, pursuant to
Section&nbsp;9.7(f) of the Merger Agreement, that the
Stockholders&#146; Agent is the true and lawful attorney-in-fact
of the undersigned holders of the Corporation&#146;s capital
stock, to act according to the terms of the Merger Agreement and
the other Merger Documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>GENERAL AUTHORITY AND RATIFICATION</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
RESOLVED, that the executive officers of the Corporation be, and
each of them hereby is, authorized and directed, on behalf and
in the name of the Corporation, to prepare or cause to be
prepared and to execute, deliver, verify, acknowledge, file or
record any documents, instruments, certificates, statements,
papers, or any amendments thereto, as may be deemed necessary or
advisable in order to effectuate the transactions contemplated
by the Merger Documents, and to take such further steps and do
all such further acts or things as shall be necessary or
desirable to carry out the transactions contemplated by the
foregoing resolutions;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
RESOLVED FURTHER, that any actions taken by any of the executive
officers of the Corporation or any of them taken prior to the
adoption of these resolutions, which would have been within the
authority conferred hereby if done after the date these
resolutions are adopted, are hereby ratified and approved.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>[Signature pages follow]</I>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT style="font-variant:SMALL-CAPS">This Action by Written
Consent </FONT></B>may be executed in counterparts, each of
which shall constitute an original and all of which, when taken
together, shall constitute one instrument as of the date first
written above. This Action by Written Consent shall apply to all
shares of the Corporation&#146;s capital stock held by the
undersigned.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

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    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B>STOCKHOLDER:</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
     </TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:&nbsp;&nbsp;&nbsp;</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 27pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<FONT style="font-variant:SMALL-CAPS">Signature Page To Action
By Written Consent
</FONT>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<FONT style="font-variant:SMALL-CAPS">Of The Stockholders Of
Flarion TEchnologies, Inc.
</FONT>
</DIV>

<P align="center" style="font-size: 10pt;">D-5

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ATTACHMENT A</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FLARION TECHNOLOGIES, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AMENDMENT&nbsp;#5 TO AMENDED AND RESTATED</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>STOCKHOLDERS&#146; AGREEMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Amendment&nbsp;#5 (this &#147;Amendment&#148;), dated as of
July&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2005, to the Amended
and Restated Stockholders&#146; Agreement, dated as of
March&nbsp;30, 2001 (as subsequently amended, the
&#147;Stockholders&#146; Agreement&#148;), by and between
Flarion Technologies, Inc., a Delaware corporation (the
&#147;Company&#148;) and the Investors and the Common
Stockholders (as defined under the Agreement) (the Investors and
the Common Stockholders, together with the Company, the
&#147;Parties&#148;), is entered into by and among the Company
and the signatories hereto.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>RECITALS</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the Company and the signatories hereto have determined
that it is in the best interests of the Company and its
stockholders that the Stockholders&#146; Agreement be amended as
of the date hereof;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, this Amendment is entered into in accordance with
Section&nbsp;12 of the Stockholders&#146; Agreement, and
Section&nbsp;8 of the Amendment to Amended and Restated
Stockholders&#146; Agreement dated as of May&nbsp;15, 2003, by
and among the Company and the signatories hereto, such
signatories representing the requisite number of Investors and
holders of outstanding Stock of the Company thereunder necessary
to amend the Stockholders&#146; Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>AGREEMENT</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOW, THEREFORE, the Parties hereby agree as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    1.&nbsp;<I><U>Defined Terms</U>.</I> Capitalized terms not
    defined herein shall have the meaning assigned to such terms in
    the Stockholders&#146; Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    2.&nbsp;<I><U>Amendment to the Stockholders&#146;
    Agreement</U>.</I> A new Section&nbsp;21 shall be added to the
    Stockholders&#146; Agreement as follows:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;21.&nbsp;<I><U>Termination Upon a Change of
    Control</U>.</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;For the purposes of this Section&nbsp;21, &#147;Change
    of Control&#148; 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.&#148;</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    3.&nbsp;<I><U>Modification</U>.</I> Except as and to the extent
    specifically modified or amended hereby, the Stockholders&#146;
    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&nbsp;12 of the Stockholders&#146;
    Agreement. Any such alteration, amendment or modification shall
    be binding on the Parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    4.&nbsp;<I><U>Governing Law</U>.</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    5.&nbsp;<I><U>Counterparts</U>.</I> 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.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>[Signature pages follow]</I>
</DIV>

<P align="center" style="font-size: 10pt;">D-6

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AMENDMENT&nbsp;#5 TO AMENDED AND RESTATED</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>STOCKHOLDERS&#146; AGREEMENT</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>*<U>COUNTERPART SIGNATURE PAGE</U>*</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B>Flarion Technologies, Inc.</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
     </TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B>Investor</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
     </TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B>Common Stockholder</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
     </TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">D-7

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ATTACHMENT B</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FLARION TECHNOLOGIES, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AMENDMENT&nbsp;#2 TO AMENDED AND RESTATED</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>INVESTORS&#146; RIGHTS AGREEMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Amendment&nbsp;#2 (this &#147;Amendment&#148;), dated as of
July&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2005, to the Amended
and Restated Investors&#146; Rights Agreement, dated as of
March&nbsp;30, 2001 (as subsequently amended, the &#147;Rights
Agreement&#148;), by and between Flarion Technologies, Inc., a
Delaware corporation (the &#147;Company&#148;) and the Investors
and the Founders listed on <U>Schedule&nbsp;I</U>,
<U>Schedule&nbsp;II</U> and <U>Schedule&nbsp;III</U> thereto
(together with the Company, the &#147;Parties&#148;), is entered
into by and among the Company and the signatories hereto.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>RECITALS</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the Company and the signatories hereto have determined
that it is in the best interests of the Company and its
stockholders that the Rights Agreement be amended as of the date
hereof;&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, this Amendment is entered into in accordance with
Section&nbsp;7.3 of the Rights Agreement, by and among the
Company and the signatories hereto, such signatories
representing the requisite number of Investors thereunder
necessary to amend the Rights Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>AGREEMENT</U></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOW, THEREFORE, the Parties hereby agree as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    1.&nbsp;<I><U>Defined Terms</U>.</I> Capitalized terms not
    defined herein shall have the meaning assigned to such terms in
    the Rights Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    2.&nbsp;<I><U>Amendment to Section&nbsp;7 of the Rights
    Agreement</U>.</I> A new Section&nbsp;7.10 shall be added to the
    Rights Agreement as follows:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;7.10&nbsp;<I><U>Termination Upon a Change of
    Control</U>.</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;For the purposes of this Section&nbsp;7.10,
    &#147;Change of Control&#148; 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.&#148;</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    3.&nbsp;<I><U>Modification</U>.</I> 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&nbsp;7.3 of the Rights Agreement. Any such
    alteration, amendment or modification shall be binding on the
    Company, all Investors and all Founders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    4.&nbsp;<I><U>Governing Law</U>.</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    5.&nbsp;<I><U>Counterparts</U>.</I> 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.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>[Signature pages follow]</I>
</DIV>

<P align="center" style="font-size: 10pt;">D-8

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AMENDMENT&nbsp;#2 TO AMENDED AND RESTATED</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>INVESTORS&#146; RIGHTS AGREEMENT</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>*<U>COUNTERPART SIGNATURE PAGE</U>*</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B>Flarion Technologies, Inc.</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
     </TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B>Investor</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
     </TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">D-9

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<A name='203'></A>
</DIV>

<!-- link1 "PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PART&nbsp;II</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INFORMATION NOT REQUIRED IN THE PROSPECTUS</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM 20.</B></TD>
    <TD>
    <B><I>INDEMNIFICATION OF DIRECTORS AND OFFICERS.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The registrant&#146;s bylaws provide for indemnification (to the
fullest extent permitted by law) of directors, officers and
other agents of the registrant against expenses, judgments,
fines and amounts paid in settlements actually and reasonably
incurred in connection with any proceeding arising by reason of
the fact that such person is, or was, an officer, director, or
agent of the registrant. The registrant also has entered into
indemnification agreements with its directors and officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;145 of the General Corporation Law of the State of
Delaware provides generally that a corporation shall have the
power, and in some cases with respect to present or former
directors of officers is required, to indemnify directors,
officers, employees or agents of the corporation, who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact
that he or she is or was a director, officer, employee or agent
of the corporation, against certain expenses, judgments, fines,
settlements, and other amounts under certain circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
These indemnification provisions may be sufficiently broad to
permit indemnification of the registrant&#146;s officers and
directors for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;21.</B></TD>
    <TD>
    <B><I>EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(a)&nbsp;</TD>
    <TD align="left">
    <I>Exhibits</I></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description of Document</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Agreement and Plan of Reorganization made and entered into as of
    July&nbsp;25, 2005, by and among the Registrant, Fluorite
    Acquisition Corporation, Quartz Acquisition Corporation, Flarion
    Technologies, Inc. and QF REP, LLC (included as Annex&nbsp;A to
    the prospectus/ information statement included in this
    registration statement)*</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certificate of Incorporation of Registrant(1)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Bylaws of Registrant(2)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Opinion of DLA Piper Rudnick Gray Cary US LLP regarding legality
    of securities being registered(3)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>8</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Opinion of Latham&nbsp;&#38; Watkins LLP regarding certain tax
    matters</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>8</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Opinion of DLA Piper Rudnick Gray Cary US LLP regarding certain
    tax matters</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>21</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Subsidiaries of the Registrant(4)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of DLA Piper Rudnick Gray Cary US LLP (included in
    Exhibit&nbsp;5.1)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of PricewaterhouseCoopers LLP, independent registered
    public accounting firm for the Registrant</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Latham&nbsp;&#38; Watkins LLP (included in
    Exhibit&nbsp;8.1)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Ernst &#38; Young LLP, independent auditors for
    Flarion Technologies, Inc.</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>24</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Power of Attorney(3)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*</TD>
    <TD align="left">
    All exhibits and schedules will be provided supplementally to
    the Securities and Exchange Commission upon request of the
    Commission.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Incorporated by reference to Exhibit&nbsp;99.5 to our Current
    Report on Form&nbsp;8-K filed March&nbsp;11, 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Incorporated by reference to Exhibit&nbsp;99.6 to our Current
    Report on Form&nbsp;8-K filed March&nbsp;11, 2005.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Previously filed.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Incorporated by reference to Exhibit&nbsp;21 to our Annual
    Report on Form&nbsp;10-K for the year ended September&nbsp;26,
    2004.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

</TABLE>

<P align="center" style="font-size: 10pt;">II-1
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;<I>Financial Statements Schedule</I>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    None.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;22.</B></TD>
    <TD>
    <B><I>UNDERTAKINGS.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The undersigned Registrant hereby undertakes:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    to file, during any period in which offers or sales are being
    made, a post-effective amendment or prospectus supplement to
    this registration statement:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;to include any prospectus required by
    Section&nbsp;10(a)(3) of the Securities Act;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;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&nbsp;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 &#147;Calculation of
    Registration Fee&#148; table in the effective registration
    statement;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;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;</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    that, for purposes of determining any liability under the
    Securities Act, each filing of the Registrant&#146;s annual
    report pursuant to Section&nbsp;13(a) or 15(d) of the Securities
    Exchange Act (and, where applicable, each filing of an employee
    benefit plan&#146;s annual report pursuant to Section&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    to respond to requests for information that is incorporated by
    reference into the prospectus pursuant to Items&nbsp;4,
    10(b),&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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&nbsp;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;&nbsp;and</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">II-2

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    that every prospectus (i)&nbsp;that is filed pursuant to the
    immediately preceding paragraph, or (ii)&nbsp;that purports to
    meet the requirements of Section&nbsp;10(a)(3) of the Securities
    Act and is used in connection with an offering of securities
    subject to Rule&nbsp;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.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
</DIV>

<P align="center" style="font-size: 10pt;">II-3

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SIGNATURES</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of the Securities Act, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing this
Registration Statement on Form&nbsp;S-4 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of
San&nbsp;Diego, State of California, on the 19th day of
September, 2005.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    QUALCOMM INCORPORATED</TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="center">
    /s/ <FONT style="font-variant:SMALL-CAPS">Paul E. Jacobs
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    Paul E. Jacobs</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    Chief Executive Officer</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    (Principal Executive Officer) and Director</TD>
</TR>

</TABLE>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="center">
    /s/ <FONT style="font-variant:SMALL-CAPS">William E. Keitel
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    William E. Keitel</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    Executive Vice President and</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    Chief Financial Officer (Principal Financial</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    Officer and Principal Accounting Officer)</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Signature</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Title(s)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Date</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Paul E. Jacobs<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Paul
    E. Jacobs</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Chief Executive Officer (Principal Executive Officer) and
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">William E. Keitel<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>William
    E. Keitel</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Executive Vice President and Chief Financial Officer (Principal
    Financial Officer and Principal Accounting Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Irwin Mark Jacobs*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Irwin
    Mark Jacobs</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Chairman of the Board</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Richard C.
    Atkinson*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Richard
    C. Atkinson</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Adelia A. Coffman*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Adelia
    A. Coffman</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Donald G.
    Cruickshank*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Donald
    G. Cruickshank</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Raymond V.
    Dittamore*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Raymond
    V. Dittamore</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">II-4
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Signature</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Title(s)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Date</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Diana Lady Dougan*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Diana
    Lady Dougan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Robert E. Kahn*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Robert
    E. Kahn</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Duane A. Nelles*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Duane
    A. Nelles</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Peter M. Sacerdote*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Peter
    M. Sacerdote</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Brent Scowcroft*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Brent
    Scowcroft</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Marc I. Stern*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Marc
    I. Stern</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">Richard Sulpizio*<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Richard
    Sulpizio</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    *By:</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">William E. Keitel<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>William
    E. Keitel<BR>
    Attorney-in-fact</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    September&nbsp;19, 2005</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">II-5
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXHIBIT INDEX</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description of Document</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Agreement and Plan of Reorganization made and entered into as of
    July&nbsp;25, 2005, by and among the Registrant, Fluorite
    Acquisition Corporation, Quartz Acquisition Corporation, Flarion
    Technologies, Inc. and QF REP, LLC (included as Annex&nbsp;A to
    the prospectus/ information statement included in this
    registration statement)*</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certificate of Incorporation of Registrant(1)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Bylaws of Registrant(2)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Opinion of DLA Piper Rudnick Gray Cary US LLP regarding legality
    of securities being registered(3)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>8</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Opinion of Latham&nbsp;&#38; Watkins LLP regarding certain tax
    matters</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>8</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Opinion of DLA Piper Rudnick Gray Cary US LLP regarding certain
    tax matters</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>21</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Subsidiaries of the Registrant(4)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of DLA Piper Rudnick Gray Cary US LLP (included in
    Exhibit&nbsp;5.1)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of PricewaterhouseCoopers LLP, independent registered
    public accounting firm for the Registrant</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Latham&nbsp;&#38; Watkins LLP (included in
    Exhibit&nbsp;8.1)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Ernst &#38; Young LLP, independent auditors for
    Flarion Technologies, Inc.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>24</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Power of Attorney(3)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*</TD>
    <TD align="left">
    All exhibits and schedules will be provided supplementally to
    the Securities and Exchange Commission upon request of the
    Commission.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Incorporated by reference to Exhibit&nbsp;99.5 to our Current
    Report on Form&nbsp;8-K filed March&nbsp;11, 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Incorporated by reference to Exhibit&nbsp;99.6 to our Current
    Report on Form&nbsp;8-K filed March&nbsp;11, 2005.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Previously filed.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Incorporated by reference to Exhibit&nbsp;21 to our Annual
    Report on Form&nbsp;10-K for the year ended September&nbsp;26,
    2004.</TD>
</TR>

<TR><TD><FONT size="1">

</FONT></TD></TR>

</TABLE>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-8.1
<SEQUENCE>2
<FILENAME>a11421a1exv8w1.htm
<DESCRIPTION>EXHIBIT 8.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv8w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;8.1
</DIV>


<P><DIV style="position: relative; float: left; width: 48%">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><IMG src="a11421a1a1142103.gif" alt="(LATHAM &#038; WATKINS LLP LOGO)">

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">September&nbsp;19, 2005
<DIV align="left"><FONT size="1">

</FONT></DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Flarion Technologies, Inc.<BR>
135 Route 202 / 206 South<BR>
Bedminster, NJ 07921

</DIV>
</DIV>
<DIV style="position: relative; float: right; width: 48%">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><IMG src="a11421a1a1142104.gif" alt="(OFFICE LOCATIONS TEXT GRAPHIC)">
</DIV>

</DIV>
<BR clear="all"><BR>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Re: Agreement and Plan of Reorganization dated as of July&nbsp;25, 2005 by and among QUALCOMM
Incorporated, Fluorite Acquisition Corporation, Quartz Acquisition Corporation, Flarion
Technologies, Inc., and QF REP, LLC, as Stockholders&#146; Agent</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Ladies and Gentlemen:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have acted as counsel to Flarion Technologies, Inc., a Delaware corporation (&#147;<B>Target</B>&#148;), in
connection with the proposed merger (&#147;<B>Merger I</B>&#148;) of Fluorite Acquisition Corp., a Delaware
corporation (&#147;<B>Merger Sub I</B>&#148;) and wholly-owned subsidiary of QUALCOMM Incorporated, a Delaware
corporation (&#147;<B>Acquiror</B>&#148;), with and into Target, and following Merger I, the merger of Target with
and into Quartz Acquisition Corp., a Delaware corporation (&#147;<B>Merger Sub II</B>&#148;) and wholly-owned
subsidiary of Acquiror (&#147;<B>Merger II</B>&#148;) (together with Merger I, the &#147;<B>Mergers</B>&#148;), pursuant to an
Agreement and Plan of Reorganization by and among Acquiror, Merger Sub I, Merger Sub II, Target,
and QF REP, LLC, as Stockholders&#146; Agent, dated as of July&nbsp;25, 2005 (the &#147;<B>Merger Agreement</B>&#148;). This
opinion is being delivered in connection with the Acquiror&#146;s Prospectus/Information Statement on
Form S-4 relating to the proposed Mergers pursuant to the Merger Agreement (the
&#147;<B>Prospectus/Information Statement</B>&#148;) to which this opinion appears as an exhibit. Capitalized terms
not defined herein have the meanings specified in the Merger Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In rendering our opinion, we have examined and, with your consent, are expressly relying upon
(without any independent investigation or review thereof) the truth and accuracy of the statements,
covenants, representations and warranties contained in (i)&nbsp;the Merger Agreement (including any
Exhibits and Schedules thereto), (ii)&nbsp;the Prospectus/Information Statement, (iii)&nbsp;representations
by Acquiror, Merger Sub I and Merger Sub II and by Target in their respective letters provided to
us, each dated the date thereof (the &#147;<B>Representation Letters</B>&#148;), and (iv)&nbsp;such other documents and
corporate records as we have deemed necessary or appropriate for purposes of our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we have assumed, with your consent, that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">1. Original documents (including signatures) are authentic and documents submitted
to us as copies conform to the original documents;
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><IMG src="a11421a1a1142103.gif" alt="(LATHAM &#038; WATKINS LLP LOGO)">

</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">2. Merger II will be effected immediately following Merger I as part of a single
integrated plan and the Mergers will be effected in accordance with the laws of the
State of Delaware;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">3. All statements, descriptions and representations contained in any of the
documents referred to herein or otherwise made to us are true, complete and correct,
and no actions have been taken or will be taken which are inconsistent with such
statements, descriptions or representations or which make any such statements,
descriptions or representations untrue, incomplete or incorrect at the Effective
Time;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">4. Any statements made in any of the documents referred to herein &#147;to the knowledge
of&#148; or similarly qualified are true, complete and correct and will continue to be
true, complete and correct at all times up to and including the Effective Time, in
each case without such qualification; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">5. The parties have complied with and, if applicable, will continue to comply with,
the covenants contained in the Merger Agreement and the Prospectus/Information
Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based upon and subject to the foregoing, and subject to the qualifications and limitations
stated in the Prospectus/Information Statement, the statements under the caption &#147;Material United
States Federal Income Tax Consequences of the Mergers,&#148; insofar as they purport to summarize
certain provisions of the statutes or regulations referred to therein, are accurate summaries in
all material respects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the matters set forth above, this opinion is subject to the exceptions,
limitations and qualifications set forth below.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">1. This opinion represents our best judgment regarding the application of United
States federal income tax laws arising under the Internal Revenue Code of 1986, as
amended, existing judicial decisions, administrative regulations and published
rulings and procedures. Our opinion is not binding upon the Internal Revenue
Service or the courts, and there is no assurance that the Internal Revenue Service
will not assert a contrary position. Furthermore, no assurance can be given that
future legislative, judicial or administrative changes, on either a prospective or
retroactive basis, would not adversely affect the accuracy of the conclusions stated
herein. Nevertheless, we undertake no responsibility to advise you of any new
developments in the application or interpretation of the United States federal
income tax laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">2. No opinion is expressed as to any transaction other than the Mergers as described
in the Merger Agreement, or to any transaction whatsoever, including
the Mergers, if, to the extent relevant to our opinion, either all the transactions
described in the Merger Agreement are not consummated in accordance with the terms
of the Merger Agreement and without waiver or breach of any provisions thereof or
all of the representations, warranties, statements and assumptions upon which we
have relied are not true and accurate at all relevant times.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><IMG src="a11421a1a1142103.gif" alt="(LATHAM &#038; WATKINS LLP LOGO)">

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This opinion is rendered only to you, and is solely for your use in connection with the
Acquiror&#146;s filing of the Prospectus/Information Statement upon the understanding that we are not
hereby assuming professional responsibility to any other person whatsoever. This opinion may not
be relied upon by you for any other purpose, or furnished to, quoted to, or relied upon by any
other person, firm or corporation for any purpose, without our prior written consent, except that
this opinion may be furnished or quoted to your legal counsel and to judicial regulatory
authorities having jurisdiction over you, and <I>provided, however, </I>that this opinion may be relied
upon by persons entitled to rely on it pursuant to applicable provisions of federal securities law.
We consent to the filing of this opinion as an exhibit to the Prospectus/Information Statement and
to the reference to our firm name therein under the captions
&#147;THE MERGER &#151; Background of the
Merger&#148;, &#147;Material United States Federal Income Tax Consequences of the Mergers&#148; and &#147;LEGAL
MATTERS.&#148; In giving this consent, we do not admit that we are within the category of persons whose
consent is required under Section&nbsp;7 of the Securities Act of 1933, as amended, or the rules or
regulations of the Securities and Exchange Commission promulgated thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">Very truly yours,<BR><BR>
/s/ Latham &#38; Watkins LLP<BR>
<BR>
LATHAM &#38; WATKINS LLP

</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-8.2
<SEQUENCE>3
<FILENAME>a11421a1exv8w2.htm
<DESCRIPTION>EXHIBIT 8.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv8w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;8.2
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%"><B>DLA Piper Rudnick Gray Cary US LLP</B><BR>
4365 Executive Drive, Suite&nbsp;1100<BR>
San Diego, California 92121-2133<BR>
<B>T&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>858.677.1400<BR>
<B>F&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>858.677.1401<BR>
<B>W&nbsp;&nbsp;&nbsp;</B>www.dlapiper.com

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">September&nbsp;19, 2005
<DIV align="left"><FONT size="1">

</FONT></DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">QUALCOMM Incorporated<BR>
5775 Morehouse Drive<BR>
San Diego, CA 92121

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Ladies and Gentlemen:

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have
acted as counsel to QUALCOMM Incorporated, a Delaware corporation (&#147;Acquiror&#148;), in
connection with the transactions described in the Agreement and Plan of Reorganization made and
entered into as of July&nbsp;25, 2005 (the &#147;Agreement&#148;), by and among Acquiror, Fluorite Acquisition
Corporation, a Delaware corporation and wholly owned subsidiary of Acquiror (&#147;Merger Sub I&#148;),
Quartz Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of Acquiror
(&#147;Merger Sub II&#148;), and Flarion Technologies, Inc., a Delaware corporation (&#147;Target&#148;). Capitalized
terms not otherwise defined herein shall have the same meanings as set forth in the Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Acquiror is filing with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the &#147;Securities Act&#148;), a registration statement on Form S-4 (the &#147;Registration Statement&#148;)
with respect to the common stock of Acquiror to be issued to Target stockholders in exchange for
their stock of Target (the &#147;Target Capital Stock&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If the Mergers are consummated on the terms and subject to the conditions set forth in the
Agreement, then Merger Sub I will merge with and into Target, the separate corporate existence of
Merger Sub I will cease and Target will continue as the surviving corporation (&#147;Merger I&#148;) and
concurrently with or as soon as practicable following the Effective Time of Merger I, Target will
be merged with and into Merger Sub II, the separate corporate existence of Target will cease and
Merger Sub II will continue as the surviving corporation (&#147;Merger II,&#148; and together with Merger I,
collectively, the &#147;Mergers&#148;). We have assumed for purposes of the opinion set forth below that
Merger II will be effected immediately following Merger I as part of a single integrated plan and
that the Mergers will be effected in accordance with the General Corporation Law of the State of
Delaware. The holders of shares of Target Capital Stock will be entitled to receive for each share
of Target Capital Stock held by them, other than cash in lieu of a fractional share, the number of
shares of Acquiror Common Stock and cash as determined pursuant to the Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This opinion is being rendered pursuant to the requirements of Item 21(a) of Form S-4 under the
Securities Act and Section&nbsp;6.15 of the Agreement. In connection with this opinion, we have
examined, and are familiar with: (i)&nbsp;the Agreement (including all exhibits and schedules attached
thereto), (ii)&nbsp;the Registration Statement and the Prospectus/Information Statement which is
contained in and made part of the Registration Statement (the &#147;Prospectus/Information Statement&#148;),
and (iii)&nbsp;such other presently existing documents, records and matters of law as we have deemed
appropriate in order to enable us to render this opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SERVING CLIENTS GLOBALLY</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">QUALCOMM Incorporated<BR>
September 19, 2005<BR>
Page Two
</DIV>
<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In rendering this opinion, we have assumed the following (without any independent investigation or
review thereof):
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;The legal capacity of all natural persons, the authenticity of original documents submitted
to us, the conformity to original documents of all documents submitted to us as copies and the
authenticity of the originals of such copies, the genuineness of all signatures and the due
execution and delivery of all documents;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;The due execution and delivery of the tax representation letters delivered to us by
Acquiror, Merger Sub I, Merger Sub II and Target on or before the date hereof (the &#147;Tax
Representation Letters&#148;);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;The truth and accuracy at all relevant times of the representations, warranties and
statements of fact made or to be made by Acquiror, Merger Sub I, Merger Sub II, Target and their
respective management, employees, officers, directors and stockholders in connection with the
Mergers, including, but not limited to, those set forth in the Agreement and in the Tax
Representation Letters;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;Any representation or statement made &#147;to the knowledge of&#148; or similarly qualified is
correct without such qualification;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;The Mergers will be consummated in accordance with the Agreement without any waiver or
breach of any material provision thereof, and the Mergers will be effective under applicable state
law;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;The Mergers will be reported by Acquiror, Merger Sub I, Merger Sub II and Target on their
respective federal income tax returns in a manner consistent with treatment of the Mergers as a
&#147;reorganization&#148; within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;The opinion of Latham &#038; Watkins LLP, counsel to the Target, rendered pursuant to Section
6.15 of the Agreement, substantially identical in substance to this opinion, has been delivered and
has not been withdrawn.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Based upon and subject to (i)&nbsp;the Mergers being consummated in the manner described in the
Agreement, (ii)&nbsp;the accuracy of the Registration Statement and the Prospectus/Information Statement
and the facts concerning the Mergers that have come to our attention during our engagement, and
(iii)&nbsp;certain representations made by Acquiror, Merger Sub I, Merger Sub II and Target pursuant to
the Agreement or in connection with the issuance of our opinion, we are of the opinion that the
discussion in the Prospectus/Information Statement included as part of the Registration Statement
under the caption &#147;Material United States Federal Income Tax Consequences of the Mergers&#148; (the &#147;Tax
Section&#148;), insofar as it relates to statements of law or legal conclusions, sets forth the material
United States federal income tax considerations generally
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SERVING CLIENTS GLOBALLY</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">QUALCOMM Incorporated<BR>
September 19, 2005<BR>
Page Three
</DIV>
<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">applicable to the Mergers based upon
current law and the facts and assumptions stated or referred to therein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We express no opinion as to whether such description in the Tax Section addresses all of the United
States federal income tax consequences of the Mergers that may be applicable to Acquiror,
Merger Sub I, Merger Sub II, Target, or to any particular Acquiror stockholder or Target
stockholder. In addition, we express no opinion as to United States federal, state, local, foreign
or other tax consequences, other than as set forth in the Tax Section. Because this opinion is
being delivered prior to the Effective Time of the Mergers, it must be considered prospective and
dependent upon future events. There can be no assurance that changes in the law will not take
place which could affect the United States federal income tax consequences of the Mergers or that
contrary positions may not be taken by the Internal Revenue Service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. We
also consent to the references to our firm name in the Tax Section. By giving this consent, we do
not admit that we come within the category of persons whose consent is required under Section&nbsp;7 of
the Securities Act or the rules and regulations of the Securities and Exchange Commission
promulgated thereunder (the &#147;Rules&#148;), nor do we hereby admit that we are experts with respect to
any part of the Registration Statement within the Securities Act or the Rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">No opinion is expressed as to any federal income tax consequence of the Mergers or the other
transactions contemplated by the Agreement except as specifically set forth herein. This opinion
may not be relied upon except with respect to the consequences specifically discussed herein. By
rendering this opinion, we undertake no responsibility to update this opinion after the date hereof
for any reason, including but not limited to, any new or changed facts or law which come to our
attention after the date hereof. This opinion is being delivered to you solely in connection with
the filing of the Registration Statement and is intended only for the benefit of Acquiror and its
stockholders. This opinion may not be relied upon or utilized for any other purpose or by any
other person or entity without our prior written consent.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Very truly yours,

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">/s/ DLA Piper Rudnick Gray Cary US LLP
<BR><BR>DLA PIPER RUDNICK GRAY CARY US LLP
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SERVING CLIENTS GLOBALLY</DIV>


<P align="center" style="font-size: 10pt">&nbsp;



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>4
<FILENAME>a11421a1exv23w2.txt
<DESCRIPTION>EXHIBIT 23.2
<TEXT>
<PAGE>

                                                                    Exhibit 23.2

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of QUALCOMM Incorporated of our report dated November 2,
2004, except for Note 10 which is as of August 19, 2005, relating to the
financial statements, financial statement schedule, management's assessment of
the effectiveness of internal control over financial reporting and the
effectiveness of internal control over financial reporting, which appears in
QUALCOMM Incorporated's Current Report on Form 8-K dated August 19, 2005. We
also consent to the reference to us under the heading "Experts" in such
Registration Statement.

PricewaterhouseCoopers LLP

San Diego, California
September 15, 2005
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.4
<SEQUENCE>5
<FILENAME>a11421a1exv23w4.txt
<DESCRIPTION>EXHIBIT 23.4
<TEXT>
<PAGE>
                                                                    Exhibit 23.4

                        Consent of Independent Auditors


We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 6, 2005, with respect to the consolidated
financial statements of Flarion Technologies, Inc. as of December 31, 2004 and
2003 and the two years then ended and for the period January 21, 2000 (date of
inception) through December 31, 2004 included in Amendment No. 1 to the
Registration Statement (Form S-4 No. 333-127725) and related
Prospectus/Information Statement of QUALCOMM Incorporated dated September 19,
2005.


                                         /s/ Ernst & Young LLP

September 14, 2005
MetroPark, New Jersey
</TEXT>
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<SEQUENCE>6
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<DESCRIPTION>GRAPHIC
<TEXT>
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`
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