1 HULETT HARPER STEWART LLP KIRK B. HULETT, SBN: 110726 2 BRIDGET FOGARTY GRAMME, SBN: 231953 525 B Street, Suite 760 3 San Diego, CA 92101 Telephone: (619) 338-1133 4 Facsimile: (619) 338-1139 e-mail: [email protected] 5 [email protected]

6 LAW OFFICES BERNARD M.GROSS PC BERNARD M. GROSS 7 DEBORAH R. GROSS Wanamaker Building, Suite 450 8 100 Penn Square East Philadelphia, PA 19107 9 Telephone: (215) 561-3600 Facsimile: (215) 561-3000 10 e-mail: [email protected] 11 Attorneys for Lead Plaintiff THE WHITE TRUST GROUP 12 IN THE UNITED STATES DISTRICT COURT 13 SOUTHERN DISTRICT OF CALIFORNIA 14 SANDRA LIFSCHITZ, on behalf of herself CASE NO. 3:08-CV-01697 LAB (WMc) 15 and all others similarly situated, (consol. w/ 3:08-CV-01934 LAB (WMc))

16 Plaintiff, CLASS ACTION 17 v. CONSOLIDATED AMENDED 18 NEXTWAVE WIRELESS INC., ALLEN COMPLAINT FOR VIOLATION OF THE SALMASI, GEORGE C. ALEX and FRANK FEDERAL SECURITIES LAWS 19 A. CASSOU, 20 Defendants. JUDGE: Honorable Larry Allen Burns 21 CTRM: 9 22 ALEX BENJAMIN, Individually and on behalf of all others similarly situated, 23 Plaintiff, 24 v. 25 NEXTWAVE WIRELESS INC., ALLEN 26 SALMASI, GEORGE C. ALEX and FRANK A. CASSOU, 27 Defendants. 28

1 1. This is a securities class action on behalf of all persons who purchased or 2 otherwise acquired the common stock of NextWave Wireless Inc. ("NextWave" or the 3 "Company") between November 14, 2006 and August 7, 2008 (the "Class Period"), against 4 NextWave and certain of its officers and/or directors for violations of the Securities Exchange Act 5 of 1934 ("1934 Act"). 6 SUMMARY OF THE ACTION 7 2. NextWave is a mobile broadband and multimedia technology company that 8 develops, produces and markets mobile multimedia and wireless broadband products, including 9 fourth generation ("40") wireless technology (WiMAX) tlu-ough production of broadband 10 semiconductors, device-embedded software for mobile handsets, mobile television systems and 11 mobile broadband network equipment. NextWave is headquartered in San Diego, California with 12 offices all over the world. 13 3. NextWave emerged as a Limited Liability Company from a Chapter 11 bankruptcy 14 as a new wireless technology company in 2005 with a business plan to engage in the development 15 of next-generation mobile broadband driving the wireless communications industry and having 16 received $3 billion in proceeds from the sales of NextWave Telecom Inc. CDMA-based personal 17 communications services network. NextWave focused its business activities on developing 18 WiMax certified products and other technologies to extend the broadband experience. When 19 NextWave emerged from bankruptcy, it emerged victorious after a long legal battle with the FCC, 20 being declared the winner for 154 spectrum licenses. As a result, NextWave owned licensed 21 spectrum rights and had a spectrum footprint across the U.S. covering a population of over 206 22 million people or POPs. It also acquired PacketVideo, a developer of embedded multimedia 23 software and products for mobile phones. 24 4. In 2006, NextWave's directors decided to convert NextWave from a Delaware 25 Limited Liability Company to a Delaware corporation. As such, NextWave would have its 26 common stock initially listed on the Over-the-Counter Bulletin Board and then on the NASDAQ 27 Global Market, as well as being a SEC reporting company. In connection with this corporate 28 1 3:08-CV-01697 LAB (WMC)

1 conversion merger, NextWave filed a registration statement on Form S-4 with the SEC. The 2 registration statement became effective on November 13, 2006 and every six membership units of 3 the Limited Liability Company were exchanged for one share of NextWave common stock. 4 5. NextWave came out of the box swinging with vim and vigor. It went on an 5 acquisition spree, having previously purchased PacketVideo in July 2005 and also Cygnus 6 Communications Inc. in February 2006. It was in the process of building a WiMAX compliant 7 trial network in Henderson, Nevada, to showcase NextWave products and technology. 8 6. As of July 1, 2006, NextWave had $340.4 million of cash, cash equivalents and 9 short-term investments. Additionally, it had just completed a private placement of senior secured 10 notes which provided net cash proceeds of $295.1 million available for the sole purpose of 11 financing spectrum acquisition and leases. The funds were used in part to pay for the 154 12 spectrum licenses awarded to NextWave by the FCC. 13 7. NextWave and Defendants had a plan and the means to accomplish this plan. 14 However, what Defendants didn't disclose was that this plan was doomed from the start. As 15 discussed in further detail infra, the acquisitions NextWave undertook were harmful to NextWave, 16 and either contrary to the due diligence recommendations by NextWave's own team, or were so 17 hastily put together that there could not have been proper due diligence. Thus, for example, in July 18 2007 NextWave announced that it was buying majority control of Japanese 40 cellular house 19 IPMobile through the purchase of the 69.23% stake held by Mori Trust. However, less than two 20 months later, it was announced that NextWave decided to sell back its stake in IPMobile to Mori 21 Trust after NextWave "made a comprehensive deliberation," said IPMobile spokeswoman Mari 22 Sendai. Similarly, NextWave purchased IPWireless, Inc., a privately held company that supplies 23 TD-CDMA network equipment and subscriber terminals, in May 2007 for $100 million in cash 24 and stock, only to subsequently learn that IPWireless did not have the proper design documents, 25 had a software code which was poorly written, termed in the industry as "spaghetti code," and had 26 products that had to be returned and replaced due to poor quality. NextWave also purchased GO 27 Networks in February 2007 for $16.9 million and additional purchase consideration subject to 28 2 3:08-CV-01697 LAB (WMC)

1 achievement of certain milestones, despite a NextWave team's recommendation not to because 2 there were serious technology issues. While GO Networks and IPWireless were also acquired to 3 enhance NextWave's revenue stream, which at that point was coming solely from its PacketVideo 4 subsidiary, the opposite happened instead. These companies needed substantial additional funding 5 to even stay alive. In fact, immediately after NextWave's announcement on August 7, 2008 that it 6 had a net loss for the first six months of 2008 of $194 million and was unable to meet its financial 7 obligations beginning in September 2008 if it did not obtain further financing, NextWave began 8 proceedings to place GO Networks and Cygnus subsidiaries in bankruptcy in Israel, Denmark and 9 Canada, and attempted to sell the remaining IPWireless, GO Networks and Cygnus subsidiaries. 10 8. Additionally, Defendants made numerous representations about the progress of 11 NextWave's WiMAX chipset platforms since Defendants knew of the many problems 12 encountered. Among these were problems with the development and production of the chip, 13 which was still in design development in July 2008 having encountered delays due to the chip's 14 complexity as well as certification delays, and would not be available for commercial sales in 15 2008. Similarly, with respect to the test network being developed, Defendants were aware that 16 NextWave was encountering problems in not only supplying their base station products, but also 17 in getting the base stations to work. The software codes created by IPWireless to get the base 18 stations to properly function were in disarray; there was no documentation, the codes were poorly 19 written and organized, and there were significant range and hand-off issues. The hand off 20 capability, which allows the wireless signal to transfer from one cell tower to another cell tower 21 was a significant aspect of the product and was not resolved during the Class Period. 22 9. Finally, with respect to specific projects such as the TD TV, an IP mobile TV 23 broadcasting application, or the Personal Media Player, PMP, NextWave encountered numerous 24 problems, delaying the project and eventually causing their death. In fact, Defendants knew they 25 weren't progressing as planned and had to present "canned" demonstrations of these projects at 26 various cellular telephone industry conferences, rather than actually running the live technology. 27 10. Defendants' broadbrush attempt to conquer and lead the WiMAX technology and 28 3 3:08-CV-01697 LAB (WMC)

1 product field was a serious cash drain to a company that only had one revenue producing 2 subsidiary. Although NextWave was burning tlu-ough cash at a minimum of Si million a day, it 3 was not disclosed to the market that NextWave was encountering any problems when Defendants 4 knew the contrary was true. Defendants had placed some of their cash in auction rate securities 5 which thus were illiquid and worthless. By the end of the Class Period, Defendants were in a 6 panic mode attempting to raise funds through the sales of its spectrum licenses and the lease of its 7 Global Operations Network Center in Nevada, and to conserve funds tlu-ough the refusal to 8 approve annual maintenance and repair required by various governmental regulations, as well as 9 delays in purchase order approvals of necessary products. Nevertheless, Defendants did not 10 disclose the truth to the market. 11 JURISDICTION AND VENUE 12 11. Jurisdiction is conferred by § 27 of the 1934 Act. The claims asserted herein arise 13 under §§ 10(b) and 20(a) of the 1934 Act and SEC Rule 10b-5 promulgated thereunder. 14 12. (a) Venue is proper in this District pursuant to § 27 of the 1934 Act. Many of 15 the false and misleading statements were made in or issued from this District. 16 (b) NextWave's principal executive offices are located at 12670 High Bluff 17 Drive, San Diego, California. 18 PARTIES 19 13. Lead Plaintiffs, The White Trust Group, purchased NextWave common stock as 20 set forth in the certifications previously filed with the Court at artificially inflated prices during the 21 Class Period and were damaged thereby. 22 14. Defendant NextWave engages in the development, production, and marketing of 23 mobile multimedia and wireless broadband products. NextWave operates in three segments: 24 Semiconductor, Multimedia, and Networks. On November 13, 2006, the corporate conversion of 25 NextWave Wireless LLC into NextWave became effective, in large part to facilitate the 26 Company's planned NASDAQ listing of its common stock. In connection with the corporate 27 conversion, the Company issued 82.2 million shares of common stock, which were registered 28 4 3:08-CV-01697 LAB (WMC)

1 under the Securities Act of 1933 pursuant to a Registration Statement, Form S-4, effective 2 November 13, 2006. The newly registered common stock was exchanged for all of the 3 outstanding membership units of NextWave Wireless LLC in a one-for-six exchange. On 4 November 16, 2006, the Company's stock was listed and began trading on the Over The Counter 5 ("OTC") US Market exchange. On November 27, 2006, the Company moved its stock's listing to 6 the OTC Bulletin Board exchange. On January 3, 2007, the Company listed its common stock on 7 the NASDAQ exchange under the symbol WAVE. 8 15. Defendant Allen Salmasi ("Salmasi") is the founder of NextWave. Defendant 9 Salmasi is, and at all relevant times was, Chairman of the Board, President and Chief Executive 10 Officer ("CEO") of NextWave. During the Class Period, Salmasi was responsible for the 11 Company's false financial and public statements. 12 16. Defendant George C. Alex ("Alex") is, and at all relevant times was, Chief 13 Financial Officer ("CFO") of NextWave. During the Class Period, Alex was responsible for the 14 Company's false financial and public statements. Alex submitted his resignation effective May 4, 15 2009. 16 17. Defendant Frank A. Cassou ("Cassou") is, and at all relevant times was, Executive 17 Vice President and Chief Legal Counsel of NextWave. During the Class Period, Cassou was 18 responsible for the Company's false financial and public statements. On August 22, 2007, Cassou 19 sold 50,000 shares of NextWave stock for proceeds of $2.92 million. He also sold 250,000 shares 20 of NextWave stock on June 6, 2006 for proceeds of $2.69 million. 21 18. Defendants Salmasi, Alex and Cassou (the "Individual Defendants"), because of 22 their positions with the Company, possessed the power and authority to control the contents of 23 NextWave's quarterly reports, press releases and presentations to securities analysts, money and 24 portfolio managers and institutional investors, Le., the market. They were provided with copies of 25 the Company's reports and press releases alleged herein to be misleading prior to or shortly after 26 their issuance, and had the ability and opportunity to prevent their issuance, or cause them to be 27 corrected. Because of their positions with the Company, and their access to material non-public 28 5 3:08-CV-01697 LAB (WMC)

1 information available to them, but not to the public, the Individual Defendants knew that the 2 adverse facts specified herein had not been disclosed to, and were being concealed from, the 3 public and that the positive representations being made were then materially false and misleading. 4 The Individual Defendants are liable for the false statements pleaded herein. 5 CONFIDENTIAL WITNESSES 6 19. Lead Plaintiffs' allegations concerning the falsity of Defendants' statements and 7 their scienter, particularized herein, are based upon, in part, information obtained from numerous 8 former NextWave employees. Each of the Confidential Witnesses ("CWs") held a position with 9 NextWave that permitted him or her direct access to the information he or she provided. 10 20. CW1 was a Director of Product Certification from January 2007 until mid 2008 11 responsible for obtaining certifications for NextWave's products from the appropriate regulatory 12 authorities. However, during CW1's tenure at NextWave, there were no certifications obtained for 13 any of NextWave's products. Instead, CW1 prepared for and planned for the WiMAX 14 certification to ensure that CW1 and CW1's team understood the regulatory requirements for 15 WiMAX. At the time of CW1's departure, NextWave had not obtained WiMAX certification. 16 21. CW2 was a Director and Product Manager for Application Layer Services based in 17 NextWave's Henderson, Nevada location from March 2005 through October 2008. CW2 reported 18 to VP of Operations Alan Cameron, who reported to David Needham, President of NextWave 19 Broadband, who in turn reported to Defendant Salmasi. 20 (a) CW2 explained that since the WiMAX technology was not yet available in 21 2006 and 2007, NextWave tried to persuade various companies to adopt its "preWiMAX" or TD 22 CDMA technology being developed by IPWireless, so that once WiMAX was available, 23 implementation would go smoothly. This TD CMA technology was an IP mobile TV 24 broadcasting application ("TD TV"). There were four project teams working on the project, 25 comprised altogether of 45-50 personnel, including personnel from IPWireless, PacketVideo, a 26 team in Nevada and a team in Denmark. Legacy IPWireless Business Strategy Manager John 27 Eskins had overall program management responsibility for the project; the U.K. and Denmark 28 6 3:08-CV-01697 LAB (WMC) 1 project teams (approximately 20 people) were managed by Project Lead Michael Larson; and the 2 PacketVideo team (approximately eight people) was headed by Mark Barman. 3 (b) CW2 led the Nevada team (approximately 20 people) that was involved in 4 the TD TV project and spent one week every month — from March until June of 2008 — in the 5 United Kingdom visiting the U.K. facility of IPWireless in order to attend monthly planning 6 meetings regarding the TD TV project. The meetings were hosted by Eskins, but Larson "ran the 7 meeting agenda." CW2 said that there were also weekly status review conference calls held by 8 Eskins and Larson. 9 (c) CW2 explained that there were executive summary reports on the TD TV 10 project submitted to Defendant Salmasi on a weekly basis. Each of the project teams (i.e., the 11 U.K., Denmark, PacketVideo and Nevada teams) submitted their status updates to President of 12 NextWave Broadband Needham and, after Needham resigned in May 2008, to CW2's supervisor 13 Cameron. Needham and Cameron were responsible for consolidating the updates into an 14 executive summary report, which was a Word document containing a summary of the week's 15 events, and overall project risks (such as delays), as well as requests for additional financing, and 16 submitted it to Salmasi. 17 (d) CW2 said that the TD TV product was being developed for Orange and T- 18 Mobile, and there was a lot of pressure to deliver the pilot product to these carriers for their 19 evaluation, which typically takes three to four months, by October 2008 and no later than 20 November 2008. According to CW2, the project team believed that when the October 2008 21 delivery date was first established in March 2008 that it was a very "aggressive" deadline, 22 although they thought November 2008 was a reasonable timeframe for the Company to be able to 23 deliver a functional product to the customers. CW2 said that NextWave was hoping that upon a 24 successful evaluation by Orange and T-Mobile, NextWave would sign "commercial-term" 25 contacts with these carriers sometime in the first quarter of 2009, which would result in some 26 revenue flow. However, CW2 said that "none of that came to fruition" because IPWireless was 27 not able to complete development of the product due to the Company's layoffs and financial 28 7 3:08-CV-01697 LAB (WMC) 1 deterioration. 2 (e) CW2 said that CW2's Nevada team's responsibility on the TD TV project 3 was to obtain an "off-the-shelf' hardware platform, called CDS (Content Delivery System), and 4 perform certification testing according to the customer's documented specifications and 5 technology standards. The CDS platform was supposed to be shipped to Orange and T-Mobile 6 once the certification testing was completed and should have been shipped prior to the planned 7 pilot product deadline of October 2008. The CDS platform was an indispensible element of the 8 overall TD TV project (and was on the "critical path" of the project management schedule), but 9 procuring it required approval by NextWave's senior management. According to the project 10 schedule, the CDS platform was supposed to be purchased in June 2008 in order to meet the 11 product delivery deadline of October/November 2008. CW2 submitted a purchase order for the 12 CDS platform to the Finance Department in early June 2008. The cost of the CDS was $254,000 13 and the component was supposed to be purchased from IBM's value-added reseller Datatrend. 14 According to CW2, it took approximately one month to get the purchase 15 order approved from when it was first submitted for approval in June 2008. CW2 found the delay 16 strange, because the TD TV was such a high-profile project and the CDS platform was an essential 17 element for "driving the critical path" of the project. In early July 2008, the purchase order was 18 finally approved by President of IPWireless Jones, CFO Alex and CEO Salmasi, at which point 19 the CDS platform was purchased from Datatrend. CW2 said that Datatrend shipped the CDS 20 platform to NextWave's facility in Henderson, Nevada in an "expedited" manner, and the platform 21 was installed in the Nevada facility on July 7, 2008. Given the one-month delay in approving the 22 purchase order, by July 2008 it was clear to CW2 that the plan to deliver the TD TV product to 23 Orange and T-Mobile in October/November 2008 was no longer feasible. 24 (g) According to CW2, another event that impacted IPWireless' ability to 25 complete the TD TV project was a Company-wide layoff that began in July 2008 and continued 26 until the end of 2008. For instance, CW2 said that in July 2008 the entire Denmark team was "cut 27 loose" and "we never heard of them again." NextWave also began reducing its IPWireless and 28 8 3:08-CV-01697 LAB (WMC) 1 U.S.-based workforce in July 2008, which significantly impacted the TD TV project. However, 2 CW2 said that in July 2008, Gordon (the COO of IPWireless) told the remaining TD TV project 3 teams that the plan was still to go forward at full-speed with the development and delivery of the 4 product to Orange and T-Mobile, as planned, in October/November 2008. But there was no way 5 such a delivery date could be accomplished given the delay in procuring the CDS and the 6 terminations of so many critical personnel. 7 22. CW3 was a Senior Engineer at NextWave from mid-2004 until September 2008 8 and was based at the Company's facility in Nevada CW3 was responsible for testing NextWave's 9 products on the NextWave test network based in Las Vegas to determine how these products 10 would function in a simulated real-world network condition. 11 (a) CW3 said that NextWave had spent a lot of money to build its test network 12 in Las Vegas. The network had 30 "cell sites," which CW3 explained were cell towers mounted 13 on top of small structures that contained wireless equipment. According to CW3, NextWave spent 14 approximately $500,000 per "cell site," including equipment and the cost to install them. Most of 15 the equipment utilized at the "cell sites" was developed by Cisco and, therefore, had to be handled 16 by Cisco-certified personnel. For this reason, CW3 was encouraged to obtain Cisco certification, 17 which CW3 accomplished in November of 2007. 18 (b) CW3 said that it was widely known tlu-oughout the company that 19 NextWave's "burn rate" was Si million a day. CW3 said that such a high "burn rate" was not 20 surprising; because NextWave had 18 operations in nine countries, and only one of them — 21 PacketVideo — "was making money." Some of the company's burn rate was attributable to high 22 labor costs and rapid growth. 23 (c) CW3 recalled that approximately two months before he was laid off, (Le., 24 sometime in May/June 2008), CW3 began hearing that "we need to close at least one deal or we 25 are going to be in big trouble." That was when CW3 realized that "money was getting tight." 26 CW3 said that "everybody" in the Company was acting as "a salesperson" trying to do everything 27 possible to sell the Company's products. In a desperate search for revenue sources, NextWave 28 9 3:08-CV-01697 LAB (WMC) 1 even attempted to sell leases on its test network based in Las Vegas. CW3 said that the idea was 2 to lease out NextWave's test network, which was referred to as a Global Network Operation 3 Center, to various customers and NextWave would operate and manage the customers' global 4 networks from its Las Vegas facility. However, CW3 said that, as of September 2008, no such 5 leases were signed. 6 (d) CW3 said that another sign of the Company's financial difficulties 7 occurred when CW3 could not get budget approval for the annual maintenance of the Las Vegas 8 test network. According to CW3, various "environmental" regulations required the Company to 9 perform annual maintenance and repairs which typically took place in the summer of each year. 10 The witness was not certain, but said that the maintenance and repairs would cost anywhere 11 between $10,000 and $400,000 per "cell site," and NextWave had 30 "cell sites" in Las Vegas. 12 CW3 did not know the exact date when CW3's supervisor Fuentez submitted the "paperwork" for 13 the maintenance work which required management's approval, but CW3 believed it was sometime 14 in May/June 2008. Sometime in late July 2008, Fuentez told CW3 that the maintenance budget 15 had not been approved and that the management "wouldn't let us spend pennies." In fact, the 16 operation in Las Vegas was shut down in September 2008. 17 23. CW4 worked at NextWave Broadband in San Diego as Director of Field Test 18 Operations from July 2006 until May 2008. CW4 managed a team of 10 field test engineers and 19 was responsible for testing the functionality of NextWave's products in simulated field 20 environments. 21 (a) Prior to its acquisition of IPWireless in April 2007, NextWave had been a 22 customer of IPWireless for several years. CW4 explained that NextWave had purchased five of 23 IPWireless' second generation base-stations and installed them in its Las Vegas facility in Nevada 24 The base-stations were part of a network that was intended to test future WiMAX products that 25 NextWave was developing. 26 (b) CW4 said that a base-station is a piece of wireless equipment installed in 27 the "small building" at the base of a cell-tower. A base-station looks like a "box," which is 19 28 10 3:08-CV-01697 LAB (WMC) 1 inches wide, one foot high and three feet deep and is bolted onto a rack inside the small building at 2 the base of the tower. According to CW4, there is usually one base-station for one radio frequency 3 and there are often a few base-stations underneath one cell-tower. 4 (c) CW4 said that at the time of the acquisition of IPWireless, IPWireless was 5 working on developing its fifth generation wireless base-station referred to as "V5" (version five) 6 base-station. In January 2008, NextWave's San Diego-based operation was "split" into two 7 divisions — the "ASICs division," which designed and developed ASICs for the future Wi-MAX 8 system to accommodate hand-held devices, and the "Base-Station division," which was to design 9 and develop equipment for WiMAX capable base-stations and networks. CW4's group became 10 part of the Base-Station Division after the acquisition of IPWireless. 11 (d) CW4's involvement with IPWireless was to field-test its fifth generation 12 base-station (i.e., the V5). According to CW4, after NextWave's acquisition of IPWireless, 13 NextWave was supposed to develop software for the IPWireless base-station. CW4 explained that 14 prior to the acquisition of IPWireless, NextWave had developed its own base-station that was 15 intended to test NextWave's ASICs. NextWave's base-station was built on an off-the-shelf 16 product with some customization. Therefore, NextWave intended to modify its software for 17 possible use on the IPWireless base-stations. 18 (e) CW4 said that it was very difficult for the NextWave Software Engineers 19 to figure out how the IPWireless base-station worked in order to modify NextWave's previously 20 developed software to work with the IPWireless base-station. On numerous occasions, the 21 NextWave team involved in the project requested the IPWireless team to provide design 22 documents for the base-station, but received only a couple of minor documents that were in 23 disarray. According to CW4, NextWave's team did not believe that the IPWireless design 24 documents for their base-station even existed. However, such design documents were critical for 25 the NextWave team to be able to develop software that could be used on the IPWireless base- 26 stations. 27 NextWave's team also needed to see the IPWireless software code in order 28 11 3:08-CV-01697 LAB (WMC) 1 to modify the NextWave software for use on the IPWireless base station. However, when 2 NextWave's Software Engineers "saw" the IPWireless software code "they were horrified," 3 because it was "a mess." CW4 added that there is a term in the industry for the kind of poorly 4 written and organized software code that IPWireless had turned over — "spaghetti code." The 5 software code that the IPWireless team turned over to NextWave's Software Engineers was 6 without any documentation or test results that would show if the code was actually functional. 7 CW4 said that the IPWireless team told the NextWave team that the code "works and that was it." 8 (g) The witness' impression of the IPWireless operation was that it was a 9 small, start-up type of a company with employees working "off of their notes." There were no 10 processes in place and not much of the IPWireless software or base station development work 11 seemed to be documented. 12 (h) With respect to the TD TV product development, CW4 participated in its 13 demonstration at the annual Mobile World Congress held in Barcelona in February 2008. 14 According to CW4, NextWave had a large booth at the show that was shared by two teams. One 15 team, including CW4, demonstrated NextWave's WiMAX base-station using a hand-held device 16 that looked like Apple's iPhone. CW4 said that CW4's team's demonstration was able to transmit 17 real video over the air, enabling visitors to browse web pages, as well as make and receive calls. 18 (i) However, according to CW4, IPWireless' demonstration of TD TV was 19 "faked." CW4 said that IPWireless team had a "big pile of fancy equipment" on their side of the 20 booth, but they did not have a device that would enable IPWireless equipment to actually receive a 21 signal over the air. That was because such a device — which was the core technology supposedly 22 being demonstrated at the Congress — was simply not functional at that time. Instead, the 23 IPWireless team had to "wire" their TD TV equipment to a laptop, and the video transmission ran 24 through only a part of the IPWireless equipment, but not all of it. CW4 stated that the IPWireless 25 team "faked" the demonstration of its TD TV solution tlu-ough a wired connection, although the 26 team represented the demonstration to visitors as if the video was transmitted over the air. 27 While at the annual Mobile World congress, CW4 spoke with some 28 12 3:08-CV-01697 LAB (WMC) 1 IPWireless Engineers who expressed their frustration over the problems with the IPWireless base- 2 stations which were delivered to Northrup Gruninan Corporation for its contract with New York 3 City's Department of Information Technology and Telecommunications. As CW4 understood, the 4 main problem with this project was related to the high rate of returned systems due to initial 5 quality and performance problems. For instance, CW4 said that IPWireless shipped approximately 6 1,000 base-stations to Northrop Grumman for deployment in New York City. However, CW4 7 heard that 80% of the shipped base-stations were returned (although he could not say exactly 8 when). CW4 said that because IPWireless was not able to repair the returned units, it had to 9 replace them with the new ones. However, most of the replacement base-stations were also 10 returned, because they did not work in the field either. CW4 said these issues were unresolved as 11 of August 2008. 12 (k) With respect to the Company's acquisition of GO Networks, there were 13 several people at NextWave who "adamantly" told Salmasi not to acquire GO Networks. 14 Approximately six months prior to the February 2007 acquisition of GO Networks (i.e., in 15 August/September 2006), a team of NextWave employees headed by Senior VP of Engineering 16 Rob Gilmore visited GO Networks in Israel and evaluated the company and its products. Upon 17 returning from Israel, the team provided their feedback regarding GO Networks to Salmasi, 18 advising him not to acquire the company, and pointing out serious issues with GO Networks' 19 technology. One particular issue was related to "beam-forming," which CW4s said is used in 20 wireless technology for signal transmission. According to CW4, GO Network's "beam-forming" 21 worked in a lab environment but, as soon as the product was taken out in the field and exposed to 22 sunlight, it became very unstable. CW4 said that there was no way to adequately calibrate GO 23 Network's "beam-forming" in actual field conditions and, therefore, GO Network's technology 24 worked only inside a test lab. The consensus of Gilmore's team was that this problem was 25 unlikely to be easily resolved. 26 (1) With respect to NextWave's WiMAX chip development, CW4 said that 27 CW4's team had evaluated test versions, Le., so called "early emulators," of the WiMAX chip in 28 13 3:08-CV-01697 LAB (WMC) 1 the field and they did not work for many reasons. When CW4 was testing the emulators of the 2 NextWave's WiMAX chip on the NextWave test network in Las Vegas, CW4 said that there was a 3 significant "range issue." CW4 said that CW4 could not go two blocks from the base-station 4 without losing the signal due to a negative signal interference ratio. When CW4 was testing the 5 WiMAX connectivity in a building, which was located just one block from the nearest base- 6 station, CW4's hand-held device did not get any signal without holding the device out of the 7 window and pointing it in the direction of the base-station. CW4's conclusion was that the signal 8 could not penetrate the building, and even the window glass was a thermal barrier that would 9 absorb the signal and prevent it from penetrating the building. 10 (m) CW4 said that CW4' s team began testing the emulators in the late summer 11 or fall of 2007 and, at that time, there were indications of the "range issue." The issue was 12 confirmed or proved by further tests, which were conducted over a period of several months, both 13 with the emulators and the first generation WiMAX chip, beginning at the end of 2007 and up 14 until CW4's termination in August 2008. CW4 personally discussed this "range issue" with 15 Salmasi on several occasions. CW4 said the "range issue" was unresolved as of the time he 16 departed the Company in May 2008. 17 (n) There was another significant issue with NextWave's WiMAX 18 development, relating to the "hand-off' process from one base-station to another. CW4 said that 19 this functionality had not been thought out well and therefore did not work. CW4 explained that 20 when a person using a mobile phone is driving in a car, the call will be dropped unless the mobile 21 signal is properly "handed-off' from one cell-tower to the next. CW4 said that when CW4's team 22 tested a prototype of NextWave's WiMAX chip in a test lab environment, the "hand-off' never 23 worked. CW4 emphasized that this problem had not been resolved as of May 2008. 24 24. CW5 was employed from mid 2006 until June 2008 as a Systems Engineer 25 involved in the WiMAX infra-structure development project. According to CW5, there were 26 significant issues that the development team had to deal with. For instance, the "hand-over" 27 capability, which would allow the wireless signal to transfer from one cell tower to another did not 28 14 3:08-CV-01697 LAB (WMC)

1 work. The development team still could not get this hand-over capability to work as of June 2008. 2 25. CW6 worked at NextWave from July 2007 until February 2008 as a Senior Test 3 Engineer. CW6's specialty was RF (radio frequency) testing. When CW6 joined NextWave in 4 July 2007, CW6 was assigned to a "PMP" (Personal Media Player) development project. CW6 5 said that PMP was a handheld device that was being developed by NextWave for "video 6 streaming," meaning that the PMP device would receive and play live video. The witness heard 7 that NextWave was supposed to have LC} produce 20,000 of the PMP devices but, at the end of 8 2007, the Company cancelled its plans for the order. CW6 did not know why the plan was 9 cancelled but speculated that, first of all, the PMP device was still under development in February 10 2008 and was not nearly ready for mass production. CW6 said that there were some technical 11 issues with the device, which had not been resolved as of February 2008. CW6 said that the 12 Company was also developing a wireless WiMAX card to be utilized in laptops. The card was 13 supposed to enable laptop users have wireless WiMAX connectivity. However this development 14 project was also cancelled at the end of 2007. 15 26. CW7 worked at NextWave from May 2006 until the end of July 2008 beginning as 16 a Prop-am Manager reporting to the Program Management Office, then transferring to the 17 Engineering organization. From May until September 2006, CW7 reported to VP of Device 18 Development Vincent Dorrian, from September until December 2006, to VP of Strategy and 19 Project Execution Raju Thomas and then to Executive VP of Mobile Products Division and 20 General Manager of the Semiconductor Business Unit Ed Redmond from December 2006 until 21 November 2007. From November 2007 and until July 2008, CW7 reported to Mark Kelley, 22 Senior VP and General Manager of the San Diego operations, who directly reported to CEO 23 Salmasi. After the last of the re-organizations, which took place in January 2008, Kelley assumed 24 a role of the Chief Technology Officer for the Network Products unit and began reporting to CEO 25 of the Network Products unit Bill Jones, the former CEO of NextWave's subsidiary IPWireless. 26 (a) During the first year of CW7' s employment with NextWave, between May 27 2006 and sometime in the third quarter of 2007, CW7 attended monthly Operations and Prop-am 28 15 3:08-CV-01697 LAB (WMC) 1 Review meetings. Individual Defendants CEO Salmasi and CFO George Alex along with other 2 senior executives, attended the quarterly Operations and Program Review meetings in person 3 whenever they were visiting the San Diego facility. In addition to the Defendants, the meetings 4 were attended by all senior-level managers based in the San Diego office. The attendees of the 5 monthly meetings often discussed the Company's financial state. For instance, they discussed the 6 amount of money NextWave had in the bank, as well as the Company's current burn-rate. CW7 7 said that during the meetings, the attendees calculated and determined when NextWave would 8 "run out of money." 9 (b) Sometime in the third quarter of 2007, the monthly Operations and 10 Program Review meetings were split into two meetings — a Finance meeting and a Program 11 Management meeting. From that point forward, CW7 attended only the Program Management 12 meetings and, therefore, stopped participating in discussions related to NextWave's financial 13 health. CW7 also said that whenever Salmasi was visiting the San Diego facility, there was 14 always a program status review meeting held to provide Salmasi with high-level updates on all on- 15 going projects. 16 (c) Beginning in the third quarter of 2007 and onward, CW7 also participated 17 in several meetings held between the members of the senior-level managers of the Network 18 Products unit and Salmasi. The objective of these meetings was to discuss business strategies for 19 the Network Products unit. According to CW7, on numerous occasions, Salmasi's senior staff 20 expressed concerns regarding the Company's strategies for its Network Products unit. CW7 said 21 that, Chief Strategy Officer Rick Kornfeld and Salmasi constantly debated about strategies, which 22 CW7 suspected was one of the reasons for Kornfeld's resignation at the end of 2007. VP of 23 Marketing Adam Gould also expressed concerns to Salmasi on numerous occasions. 24 (d) With respect to NextWave's acquisition of GO Networks, CW7 explained 25 that senior management had recommended against proceeding with the acquisition. Prior to 26 NextWave's acquisition of GO Networks in February 2007, a team from NextWave made 27 numerous trips to the GO Networks facility in Israel, during which the team performed due 28 16 3:08-CV-01697 LAB (WMC) 1 diligence reviews of the Company's technology and financial condition. CW7 said that there were 2 numerous long and "heated" discussions among the executive- and senior-level managers of 3 NextWave regarding the acquisition of GO Networks. CW7 knew that there were documents, 4 such as emails, reports and presentations — containing the senior management's recommendation 5 to not acquire GO Networks. 6 (e) With respect to NextWave's acquisition of IPWireless, CW7 said the 7 Company did not perform the same type of due diligence reviews as it had during the acquisition 8 of GO Networks. In acquiring IPWireless, NextWave was hoping to take advantage of 9 IPWireless' supposedly commercialized hardware and software products and obtain needed 10 revenues. However, following the acquisition of IPWireless, CW7's observations were that 11 IPWireless was not a "self-sustaining" company but rather heavily reliant on venture capital 12 financing. IPWireless had expectations for large contracts in the near future but, to CW7's 13 knowledge, was never even able to "break even." 14 CW7 said that one of the main problems with the IPWireless product — 15 the TDCMA base-station — was its poor quality. In the second half of 2007, CW7's former 16 supervisor Raju Thomas became VP of Quality and Processes. At the end of 2007 or beginning of 17 2008, Thomas conducted internal audits at IPWireless and told CW7 that the audit results 18 indicated that the failure rate for IPWireless base-stations was very high. As CW7 understood, 19 there were numerous problems with the hardware components of the base-station caused by the 20 manufacturing reliability issues. For instance, in some cases, the capacitors were put on 21 "backwards" resulting in product returns. 22 (g) Thomas told CW7 that IPWireless was supplying its base-stations to 23 Northrop Gruman to be installed in a public safety network in New York City. According to 24 Thomas, under IPWireless' contract with Northrop Gruman, the allowed return rate was 3%. In 25 actuality, the return rate for the IPWireless base-station was 10%. Thomas also told CW7 that 26 IPWireless had a contract with T-Mobile to supply the base-stations for installations in the Czech 27 Republic. In this case, the return rate was 30%-35%, as opposed to the 3% return rate stipulated 28 17 3:08-CV-01697 LAB (WMC) 1 under the contract. 2 (h) With respect to the company's development of its MXtv broadcast 3 solution, this project was not staffed in any serious way until March 2007 even though Salmasi 4 wanted to have trials in the middle of 2007. However, this trial did not take place. During the 5 second half of 2007, NextWave demonstrated its preliminary MXtv broadcast solution to potential 6 customers at the Company's Las Vegas facility. However, CW7 said that the "demo" solution was 7 a "dead-end" application. CW7 explained that the software code that was developed for the 8 "demo" solution was not branched out from the main software branch but was a sort of a stand- 9 alone or a "side-branch" software code, which, according to CW7, could never be commercialized. 10 CW7 added that the use of this dead-end code meant that the development team was nowhere 11 close to completing the development of the final software code for the MXtv broadcast solution. 12 CW7 said that the MXtv solution was nowhere near to commercialization by July 2008. 13 (i) With respect to the development of the company's WiMAX infra-structure 14 project, the objective of which was to integrate NextWave's FPGA into the IPWireless hardware 15 and software system of the TDCMA base-station, it was thought that NextWave's IPWireless 16 base-station then could be WiMAX ready when the WiMAX chip became available. Meetings 17 between the NextWave and IPWireless teams started in May 2007, shortly following the 18 acquisition of IPWireless. In August 2007, there was a large meeting with the IPWireless team in 19 the U.K. to discuss the project scope. Some of the NextWave team members, including CW7, 20 attended the meeting in the U.K. in person. However, CW7 said that Jones (Le., the former CEO 21 of IPWireless and current CEO of the Network Products unit) put clear "barriers and walls" 22 between different project activities. For instance, CW7 and the rest of the NextWave project team 23 who were responsible for integrating NextWave's FPGA into the IPWireless base-station, did not 24 have visibility into the TDCMA development being undertaken by the IPWireless project team. 25 (j) During this planning phase in May 2007 there were no expectations for the 26 infra-structure equipment to be commercially available in the first half of 2008, but to be 27 completed sometime in the middle of 2009. In the middle of 2007, CW7 presented the project 28 18 3:08-CV-01697 LAB (WMC) 1 schedule to CW7's supervisor and other members of the senior management team, including 2 Salmasi. CW7 learned during the review meeting that the middle of 2009 completion timeframe 3 was not deemed acceptable, because NextWave's executive managers — and Salmasi specifically — 4 were planning to have the WiMAX infra-structure product commercially available in the fourth 5 quarter of 2008. As CW7 understood, there was some sort of urgency for NextWave to get the 6 WiMAX infra-structure equipment commercially deployed in the fourth quarter of 2008 in order 7 to preserve its spectrum ownership. Even if the equipment was not fully functional, at a minimum, 8 the goal was to get it to transmit signals in the field. CW7 understood that the owners of the 9 wireless spectrums were obligated to gradually utilize their spectrums in order to maintain their 10 spectrum licenses. 11 (k) Given the reaction of Salmasi to the original project schedule, CW7 was 12 asked to accelerate the completion date or put together a plan for what could be accomplished by 13 the fourth quarter of 2008. In order to "pull" the completion date into the fourth quarter of 2008, 14 the project team "began taking shortcuts." For instance, the engineers simplified network 15 topology and deployment. Additionally, delays were caused, first of all, by the IPWireless team's 16 inability to timely supply base-stations to the NextWave team, which were required for integrating 17 and testing the FPGA. CW7 said that IPWireless failed to manufacture its base-stations fast 18 enough for both commercial deliveries and internal utilization. To CW7's knowledge, IPWireless 19 had a contract with a low-volume equipment manufacturer. According to the contract, the 20 manufacturer was supposed to produce eight units (Le., base-stations) per day but, in actuality, 21 only produced four units a day. CW7 also said that the NextWave project team did not receive 22 much support from the IPWireless team in relation to the integration matters. 23 (1) At the time of CW7's departure in July 2008, the project team had only 24 attained the basic functionality of the integrated WiMAX infra-structure product. At that time, 25 CW7 opined, NextWave still needed at least nine months before it would be able to commercialize 26 its first WiMAX infra-structure product, which CW7 noted, was well into 2009 as opposed to the 27 objective of getting the first WiMAX product deployed in the fourth quarter of 2008. 28 19 3:08-CV-01697 LAB (WMC) 1 (m) With respect to NextWave's development of the WiMAX semiconductor 2 chip, CW7 said there were several iterations of the MSS chip. MSS 1 and MSS 1.5 were not 3 intended for commercialization, because they were early versions of the chip that were "too big 4 and power hungry." MSS 2 was supposed to be completed in February 2008. However, the 5 anticipated completion of the MSS 2 chip gradually was postponed until June 2008. CW7 opined 6 that, even if NextWave kept up with the original February 2008 completion date for the chip's 7 development, the chip would not have been ready for commercial deployment earlier than the 8 middle, if not the end, of 2008 due to the technical complexity of the chip. When CW7 was 9 leaving NextWave, at the end of July 2008, the development team had just finalized the physical 10 design of the MSS 2 chip. After CW7 had already stopped working at NextWave, sometime in 11 August/September 2008, CW7 heard that the MSS 2 chip came back from the fabricator and, after 12 the initial test cycle, showed "pretty good" power consumption numbers. CW7 could not recall 13 the name of the fabricator but remembered that it was a small company located in the Bay Area of 14 California. 15 27. CW8 began working for NextWave in February 2006 when NextWave acquired 16 CW8's then employer, Cygnus, a privately-held fabless semiconductor company headquartered in 17 Carlsbad, California. CW8 continued at NextWave until CW8's departure in March 2009. In 18 December 2007, CW8 was promoted to the position of VP of Digital ASIC Development in the 19 Company's semiconductor division and was in charge of a team employing 35 engineers at the 20 beginning of 2008. Tlu-oughout CW8's employment with Cygnus and NextWave, CW8 and his 21 team were involved in developing three different digital ASICs. CW8 defined a digital ASIC as a 22 chip or chipset that is supposed to be integrated in various mobile WiMAX devices, such as 23 mobile handsets and personal media players. 24 (a) The development of the first ASIC began while CW8 was still working at 25 Cygnus and was completed in May 2007, shortly after Cygnus was acquired by NextWave. 26 According to CW8 the development of the first ASIC was considered to be successful, because the 27 chip had been fabricated and passed basic functionality testing, such as powering on and off. 28 20 3:08-CV-01697 LAB (WMC) 1 (b) The second digital ASIC was similar to the first one, but focused on low 2 power consumption. According to CW8, the team successfully completed the development of the 3 second digital ASIC in late January 2008. The third digital ASIC was developed in parallel with 4 the second one. It was supposed to be the final digital ASIC and was planned to be marketed and 5 taken to mass production. According to CW8, there were numerous issues in developing the third 6 digital ASIC, largely caused by very "aggressive" design methodologies. CW8 explained that the 7 third digital ASIC had to provide low power consumption, which CW8 said was much more 8 difficult to design than originally anticipated. The design issues led to a delay in completing its 9 development, and by the middle of 2008, the development was approximately one and a half or 10 two months behind the original schedule. 11 (c) CW8 also attributed schedule delays to certification requirements "at the 12 system level," which were not available when CW8's team began designing the third digital ASIC. 13 CW8 commented that this is a common problem with any new technology since standards and 14 requirements are introduced as the industry learns more information about the new technologies in 15 this case, WiMAX. CW8 said that some of such certification requirements for a WiMAX digital 16 ASIC were introduced by the WiMAX Forum when the ASIC development was already 17 underway. Thus, the new standards had to be incorporated in the ASIC design late in the 18 development cycle, causing further delays. 19 (d) At the very end of August 2008, CW8's team finally received the ASIC 20 from the fabricator. Upon CW8's departure in March 2009, however, certification testing of the 21 ASIC had yet to be completed. As CW8 understood, the ASIC development was simply 22 "abandoned" when the Company's senior management made a decision to "divest" its 23 Semiconductor division. 24 28. CW9 joined Cygnus in April 2005, continued working at NextWave upon its 25 acquisition of Cygnus in February 2006, and remained at NextWave until CW9's departure in 26 September 2008. CW9 was a Senior Staff Engineer in the Digital ASIC group, part of the 27 Semiconductor division. CW9 confirmed the story of CW8 concerning the development of the 28 21 3:08-CV-01697 LAB (WMC) 1 digital ASIC chip. CW9 explained that MSS1 had basic WiMAX functionality but did not offer 2 any advanced functionality and features desired by customers due to the lack of WiMAX standards 3 at that time. 4 (a) Once CW9 completed work on MSS1, CW9 was assigned to a project 5 developing "enhancements" for the second generation digital ASIC chip referred to internally as 6 MSS 2. The project began, according to CW9, in the spring 2007 and was completed in the 7 summer 2007. CW9 was responsible for developing the "PHY modules" utilizing 65 nanometer 8 (nm) technology and testing the MSS 2 chip for low power consumption. The development of the 9 MSS 2, began in the fall of 2007 and was completed in July 2008, at which time the MSS 2 design 10 was sent to a fabrication house. The development team received the fabricated MSS 2 in 11 September 2008. 12 (b) According to CW9, the main problem with the MSS 2 development was 13 the complexity of its design. For instance, because of the low power consumption requirements, 14 there had to be a feature that would shut off power to different parts of the chip, which was very 15 difficult to design and develop. Another issue was the team's inability to utilize available 16 Electronic Design Automation (EDA) tools to design MSS 2. According to CW9, NextWave 17 purchased and utilized Cadence Encounter design tools, which CW9 said were efficient for simple 18 designs, but virtually incapable of handling complex designs, such as the MSS 2. CW9 explained 19 that MSS 2 was a very small chipset and was "full" and did not have much "room to move 20 around." Since the EDA tools could not be used, CW9 said that the design had to be executed 21 manually, which added to the development time. 22 (c) CW9 said that, according to the original project schedule, the development 23 of MSS 2 was supposed to be completed in February 2008. So, according to CW9, by the time the 24 MSS 2 was completed in July 2008, it was already five months behind the original schedule. 25 According to CW9, there was a lot of pressure to complete development and implement more 26 features in the second generation chipset, because MSS 2 was being planned to be released to 27 market. 28 22 3:08-CV-01697 LAB (WMC) 1 29. CW10 worked at NextWave from September 2006 until March 2009 as Director of 2 Product Marketing for the semiconductor group, and later as VP of Product Management and 3 Marketing for the semiconductor group. During CW10's employment, CW10 met with all of the 4 Individual Defendants and attended status review meetings addressing product development and 5 customer matters, which the Individual Defendants also attended. When CW10 joined NextWave 6 in September 2006, the development of the first generation of the WiMAX Semiconductor chipset 7 was already underway. The chipset had already been defined and designed, and was in the process 8 of being built. According to CW10, within six months of CW10's employment with NextWave, 9 NextWave's development and marketing teams determined that this first generation chipset was 10 not suitable for the market. It lacked features that were desired and required by wireless carriers 11 and was unlikely to be certified by the standards of the WiMAX industry. CW10 explained that a 12 WiMAX chipset had to pass a "WAVE 2" certification standard set by the so-called WiMAX 13 Forum. 14 (a) When it became clear in early 2007 that it would not be possible for 15 NextWave to obtain such certification for its first generation WiMAX chipset, resulting in low 16 demand among potential customers, NextWave moved forward in developing its second 17 generation WiMAX chipset [referred to as NW20001. There were delays in the WiMAX 18 development — Le., the availability of the engineering samples of the chipset was delayed by a 19 couple of months. Software development was also delayed. Such delays were extensively 20 discussed during the status review meetings, which Defendant Salmasi personally attended. 21 (b) CW10 believed that the NW2000 engineering samples had been delivered 22 to a few customers once they became available in September 2008. Engineering samples represent 23 a limited number of chipsets that are provided to potential customers for their testing prior to 24 acceptance as satisfactory to the customer's requirements. Although CW10 declined to name 25 these customers due to CW10's non-disclosure agreement with NextWave, CW10 said that the 26 engineering samples were delivered to a couple customers in Taiwan, one customer in South 27 Korea and one customer in the U.S. Although, these customers received the chipset samples, 28 23 3:08-CV-01697 LAB (WMC) 1 CW10 said that some of the software for the chipset was not quite ready. The witness did not 2 know whether the customers had begun testing NextWave's chipset samples, because even before 3 then (i.e., in August 2008), NextWave had announced that it was running out of money and needed 4 to secure additional financing in order to continue its operations. CW10 said that after the 5 announcement, "everything" started falling apart very quickly. For instance, NextWave began 6 shutting down some of its functions (i.e., its Network Broadband group) and subsidiaries (i.e., GO 7 Networks and Cygnus). In light of the Company's disclosures, CW10 assumed that the customers 8 that received NextWave's chipset samples were not "eager" to invest their money and resources 9 into testing NextWave's WiMAX chipset, because they likely doubted that NextWave would 10 survive its financial problems and continue its WiMAX development. 11 30. CW11 worked at NextWave from March 2006 until March 2009 in the 12 semiconductor unit. Initially, CW11, in conjunction with four program managers, managed the 13 development of NextWave's WiMAX chipsets. CW11 transferred to a new position, VP of 14 Device Development in the semiconductor unit and managed a team of six to seven device 15 managers responsible for managing projects in partnership with various ODMs (Original Device 16 Manufacturers) and external software developers. According to CW11, CW11's team was 17 working on the following development projects — a PMP (Personal Media Player) device in 18 collaboration with LG, a smart phone in partnership with a company in Finland, and a "bridging" 19 device that was supposed to "bridge" WiFi with WiMAX. For instance, the "bridging" device 20 would allow a WiFi device, such as an iPhone, to receive WiMAX signals. The development of 21 the PMP device was planned to be completed in June 2009, and the rest of the projects were 22 supposed to be completed in the 2009-2010 time frame. 23 (a) CW11 said that completion of the device development projects depended 24 on the availability of the second generation WiMAX chipset. According to CW11, the device 25 development team utilized the first generation WiMAX chipset in the initial design phases of their 26 projects. However, because of the limited functionality of the first generation WiMAX chipset, 27 CW11 knew that at some point the team would need the second generation chipset in order to 28 24 3:08-CV-01697 LAB (WMC) 1 proceed with their projects. Although the availability of the second generation chipset was 2 scheduled for the first half of 2008, CW11 never "believed the schedule." CW11 believed the 3 schedule for the second generation chipset was too aggressive and did not take into consideration 4 all of the potential risks associated with the development of a brand new technology. CW11 5 personally believed that the second generation chipset was not going to be available until the end 6 of 2008. 7 31. CW12 worked at NextWave from January 2007 until March 2009 as VP of Sales 8 for the semiconductor division. This team consisted of three people. CW12 attended various trade 9 shows and confirmed the statements by CW4 about the Mobile World Congress Show in 10 Barcelona in February 2008 and that the demonstration was a "canned demo", Le., not a live 11 transmission of the mobile TV application but a playback. Subsequently, in April 2008, CW12 12 attended the CTIA Conference in Las Vegas where NextWave demonstrated its mobile TV 13 feature, MXtv. Although the MXtv demonstrated at the show was not yet fully functional, CW12 14 said NextWave was able to demonstrate its mobile TV feature "over air," meaning through a real 15 WiMAX transmission. The personal media player device utilized for the demonstration had been 16 developed by NextWave with a consumer electronics company. CW12 could not disclose the 17 name of this company because NextWave had never received permission from this company to 18 publicly use its name in relation to NextWave's products. 19 (a) As CW12 understood, the personal media device was developed strictly for 20 the demonstration at the CTIA Conference. As far as CW12 knew, there were no plans for mass 21 producing this device, although CW12 recalled that there were a few discussions in 2008 to 22 possibly commercialize it, given that there was consumer demand for the device. However, to 23 actually commercialize the product, NextWave would have had to find a third-party consumer 24 electronics company to re-design the personal media player and, possibly, make some stylistic 25 changes to make the device more appealing to consumers. However, as far as CW12 knew, none 26 of this ever materialized. 27 (b) At varying times throughout CW12's employment, there were as many as 28 25 3:08-CV-01697 LAB (WMC)

1 18 customers who were interested in the WiMAX chipset. However, according to CW12, 2 NextWave issued three press releases in 2008 regarding its partnership with tlu-ee customers that 3 committed to NextWave's WiMAX chipset, even though these customers had never seen the 4 chipset. The tlu-ee customers mentioned in NextWave's press releases were a South Korean 5 company DigiFriends i and two Taiwanese companies — dmedia 2 and Global Mobile. 3 CW12 6 identified these companies, because they were publicly named in the press releases as NextWave's 7 customers for its WiMAX products. CW12 said that these press releases were based solely on the 8 "potentiality" of NextWave's WiMAX products, which indicated that NextWave had customers 9 that were seriously interested in NextWave's WiMAX products. However, according to the 10 witness, no customer ever made any investments in NextWave's WiMAX products and NextWave 11 did not actually have the WiMAX chipset available to sell to these customers at the time of the 12 press releases. Moreover, as described in more detail below, NextWave was already late in 13 meeting its own internal goals for developing the chipset. There were only some vague plans that 14 the customers made for the time when NextWave's WiMAX chipset was supposed to be available 15 to them (i.e., September 2008). 16 (c) CW12 explained the process for development of the WiMAX chipset and 17

18 1 On October 15, 2008, NextWave issued a press release announcing its partnership with 19 DIGIFRIENDS Co. Ltd, "one of Korea's leading mobile WiMAX and portable multimedia device makers" to develop a "sophisticated, WiMAX-enabled Mobile Internet Device (MID) — 20 the M3 — powered by NextWave's NW2000 WiMAX chipset." The press release stated that the MID was "[e]xpected to debut in 2H 2009." [Source: "Digifriends, NextWave Wireless 21 Announce WiMAX Device Collaboration," October 15, 2008, available at http://media.nextwave.com/ phoenix.zhtml?c=215860&p=irol- 22 newsArticle&ID=1209904&highlight= ]. 2 its June 5, 2008 press release, NextWave announced that it "teamed up" with dmedia System 23 Co. Ltd, "a leading Taiwanese manufacturer of navigation and wireless devices," to begin development on "an advanced mobile WiMAX device that will debut in 1H 2009." [Source: 24 "dmedia, NextWave Wireless Team to Develop Sophisticated Mobile WiMAX Device," June 5, 2008, available at http ://media.nextwave. com/phoenix.zhtml ?c=215860&p=irol- 25 newsArticle&ID=1162669&highlight= ]. 3 26 On June 4, 2008, Global Mobile Corporation, "Taiwan's leading WiMAX operator," and NextWave announced "a joint technology collaboration to make end-to-end mobile WiMAX 27 solutions a reality for the global market." [Source: "Global Mobile Corporation, NextWave Wireless Collaborate To Deliver On End-to-End Mobile WiMAX Vision," June 4, 2008, 28 available at http ://media.nextwave. com/phoenix . zhtml ?c=215860&p=irol- newsArticle&ID=1162111&highlight= ]. 26 3:08-CV-01697 LAB (WMC) 1 the delays in reaching certain milestones encountered by the NextWave team. The WiMAX 2 chipset development team began missing the milestones as early as in April 2008. In May 2008, 3 the development was one month behind the original schedule and by mid-July 2008, it was over 4 two months behind. CW12 said that in April 2008, CW12 had serious doubts that the entire 5 development of the chipset was going to be completed by September 2008, as originally planned. 6 In the middle of July 2008, it was very clear to CW12 that the September 2008 milestone, upon 7 which the chipset samples were to be delivered to customers, would definitely be missed. 8 (d) The witness explained that the development team, (I.e., NextWave's 9 Engineers), were first supposed to receive fabricated chipsets to internally test the chipset and 10 software. Normally, this type of testing takes a few months, because there are a lot of unknowns 11 whether all the parts and features of the chipset are going to work. Sometimes, it is necessary to 12 make changes to the chipset's hardware, which means that the chipset has to be "re-spun." "Re- 13 spinning" of the chipset includes implementing the hardware design changes and re-fabricating the 14 chipset. The chip also has to pass the required qualification testing for functionality, as well as 15 obtain certification by the WiMAX Forum. 16 (e) Only after the chipset and the software have been thoroughly and 17 successfully tested and determined to be fully functional according to NextWave's standards, are 18 the final chipset samples fabricated and delivered to customers. Once customers receive the 19 samples, they begin their own testing, which, according to CW12, would usually take 20 approximately one month. When the customers are satisfied with the performance of the chipset, 21 they begin designing their products, such as mobile handsets and personal media players, 22 integrating the chipset into their future products. CW12 said that the customer design and 23 development process takes anywhere from six to 12 months. Only when the customers complete 24 designing and developing their own products, will the chipset be taken to mass production and the 25 chipset vendor (Le., NextWave) actually begin generating sales. 26 CW12 said that NextWave took into consideration the required customer 27 testing, design and development efforts when it put together a plan for its NW2000 chipset 28 27 3:08-CV-01697 LAB (WMC) 1 development and launch. According to the plan, the chipset samples were supposed to be 2 delivered to customers sometime in September 2008, followed by approximately 12 months of 3 customer testing and development. Therefore, the mass production and sales of NextWave's 4 second generation WiMAX chipset — NW2000 — was planned to begin in September 2009. CW12 5 commented that under the ideal circumstances, this would have been a great plan. In actuality, not 6 everything went according to plan. 7 (g) For instance, CW12 said that NextWave's development team received the 8 fabricated Engineering samples either at the very end of August or the very beginning of 9 September 2008, which was almost the time when the customers were expecting their final 10 samples of the chipset. Because of these delays, a new plan was put into place to complete all of 11 the internal testing in as little as four weeks just to prove that the chipset was working. The final 12 samples of the chipset were, then, still supposed to be delivered to customers at the end of 13 September 2008, which CW12 said was a very aggressive, and not necessarily attainable, plan. 14 CW12 communicated the new delivery date to customers. According to CW12, all of NextWave's 15 customers were very disappointed upon hearing that the chipset would not be delivered to them as 16 promised in September 2008. Moreover, some of them were "outright angry." But the problems 17 only grew worse once the internal testing began and numerous problems began emerging. 18 (h) As soon as the NextWave development team began testing the chipset, the 19 team ran into a number of problems. CW12 generally said that the development team was never 20 able to get the software to work. Even the software for the basic functionality of the chipset, such 21 as network entry authentication and encryption, was not working. Approximately seven to 10 days 22 into the testing cycle, it was clear to CW12 that the testing was not going well and NextWave was 23 not going to deliver the chipset samples to customers, as promised, at the end of September 2008. 24 (i) Sometime in September 2008, CW12 received instructions from CW12's 25 supervisor to communicate to the customers that the chipset samples were not going to be 26 delivered to them until Thanksgiving 2008. CW12 was also instructed to communicate to the 27 customers that NextWave had obtained additional funding of $100 million, which "would fund 28 28 3:08-CV-01697 LAB (WMC)

1 [NextWave's] development tlu-ough the end of 2010." CW12 emphasized that CW12 was 2 instructed to communicate to the customers that the funding would sustain NextWave's operations 3 through the end of 2010 (and not just 2009). CW12 communicated these matters to the customers 4 at the end of September 2008 at the WiMAX World Conference held in Chicago, Illinois. 5 FRAUDULENT SCHEME AND COURSE OF BUSINESS 6 32. Defendants are liable for: (i) making false statements; or (ii) failing to disclose 7 adverse facts known to them about NextWave. Defendants' fraudulent scheme and course of 8 business that operated as a fraud or deceit on purchasers of NextWave common stock was a 9 success, as it: (i) deceived the investing public regarding NextWave's prospects and business; (ii) 10 artificially inflated the price of NextWave common stock; and (iii) caused Plaintiff and other 11 members of the Class to purchase NextWave common stock at inflated prices. 12 BACKGROUND 13 33. NextWave engages in the development, production, and marketing of mobile 14 multimedia and wireless broadband products. NextWave operates in tlu-ee segments: 15 Semiconductor, Multimedia, and Networks. The Semiconductor segment offers WiMAX and long 16 term evolution baseband chipsets, and multi-band radio frequency integrated circuits. The 17 Multimedia segment provides device-embedded multimedia software, media content management 18 platforms, and content delivery services. The Networks segment develops 3GPP UMTS and 19 WiMAX based wireless broadband and mobile broadcast products and services, as well as carrier- 20 grade mobile Wi-Fi products and services. The Company also markets various TD-CDMA end- 21 user devices to network operators, including desktop modems and PCMCIA cards. It has strategic 22 partnerships with Huawei and Elektrobit. NextWave primarily operates in the United States, Asia- 23 Pacific and Europe. 24 34. WiMAX technology is the next generation of wireless technology whose goal is to 25 be used by consumers on the go because its antennas can hand off coverage. WiMAX is a 26 wireless digital communications system intended for "metropolitan area networks," providing 27 broadband wireless access up to 30 miles for fixed stations and 3-10 miles for mobile stations. In 28 29 3:08-CV-01697 LAB (WMC)

1 contrast, WiFi is limited in most cases to only 100-300 feet. WiMAX is intended to allow higher 2 date rates over longer distances through the use of large umbrella cells interconnected with 3 numerous pico cells. WiMAX, meaning Worldwide Interoperabzlzty for Microwave Access, is a 4 telecommunications technology that provides wireless transmission of data using a variety of 5 transmission modes, from point-to-multipoint links to portable and fully mobile internet access. 6 The technology provides up to 3 Mbit/ broadband speed without the need for cables. The 7 technology is based on the IEEE 802.16 standard (also called Broadband Wireless Access). The 8 name "WiMAX" was created by the WiMAX Forum, which was formed in June 2001 to promote 9 conformity and interoperability of the standard. The forum describes WiMAX as "a standards- 10 based technology enabling the delivery of last mile wireless broadband access as an alternative to 11 cable and DSL." 12 35. NextWave's business strategy was to develop the key elements of an end-to-end 13 mobile WiMAX/Wi-Fi network solution that includes a family of WiMAX chipsets and network 14 components, thus ultimately providing a complete WiMAX solution to partners around the world. 15 To that end, NextWave engaged in an aggressive acquisition program of growth, characterized by 16 acquisition, new network deployments and new product launches. 17 36. In 2006, Defendants, as stated in the April 2, 2007 press release, completed several 18 "strategic acquisitions to enhance NextWave's product portfolio and global development 19 capabilities." NextWave 1) acquired Cygnus Communications, Inc., a developer of WiMAX 20 semiconductor solutions for $9.8 million, 2) successfully completed tlu-ee strategic acquisitions, 21 one in United States and two in Europe to greatly increase the technology breadth and product 22 portfolio of the company's PacketVideo subsidiary which provides device-embedded multimedia 23 software solutions to many of the largest wireless handset manufacturers and wireless carriers in 24 the world, 3) acquired additional licensed spectrum in the AWS and WCS bands to expand the 25 company's wireless spectrum footprint in the U.S. to over 248 million POPs, and 4) acquired 26 nationwide WiMAX spectrum in Germany, covering 82.5 million POPs, tlu-ough a majority owned 27 joint venture. 28 30 3:08-CV-01697 LAB (WMC)

1 37. Additionally, pursuant to that strategy, in the first quarter of 2007, Defendants 2 completed the acquisitions of Switzerland-based SDC Secure Digital Container AG and GO 3 Networks, Inc. SDC AG was acquired by PacketVideo, NextWave's principal subsidiary 4 responsible for substantially all of NextWave's revenues. Defendants touted the benefits of the 5 SDC AG acquisition in NextWave's May 14, 2007 earnings release for the first quarter of 2007, 6 stating that it "strengthen[ed] its position in the global music market." The GO Networks, Inc. 7 acquisition was also touted in the same press release as offering "carrier-class mobile Wi-Fi 8 network systems to commercial and municipal service providers worldwide." In its May 14, 2007 9 press release, Defendants announced the acquisition of IPWireless, Inc., a California company 10 with research facilities in the United Kingdom, which was touted as a "leading supplier of TD- 11 CDMA network equipment and subscriber terminals." 12 38. Unbeknownst to the market, however, because of Defendants' false and 13 misleading statements concerning NextWave's true financial and operating condition, NextWave 14 did not have adequate sources of liquidity to continue operations as it executed its growth strategy 15 and continued making aggressive worldwide acquisitions. Nor did it have the wherewithal to 16 launch its new WiMAX semiconductor products in the first six months of 2008. As a result, the 17 Company's very ability to continue as a going concern was put at substantial risk, particularly as 18 NextWave's increase was unable to revenues tlu-ough its acquisition spree which in fact drained 19 additional liquidity, coupled with the costs of new product development. Consequently, at the 20 same time Defendants were touting NextWave's successful execution of its growth strategy 21 throughout the Class Period, they not only misrepresented the financial benefits of that strategy but 22 also failed to disclose NextWave's fragile liquidity position and its ability to continue as a going 23 concern. 24 DEFENDANTS' FALSE AND MISLEADING 25 STATEMENTS ISSUED DURING THE CLASS PERIOD 26 39. On November 14, 2006, NextWave filed its Form 10-Q for the third quarter of 27 2006 ("Q3 2006 10-Q"), signed by Defendant Alex. The Company reported revenue for the third 28 31 3:08-CV-01697 LAB (WMC)

1 quarter of 2006 of $8.1 million compared to revenue of $1.2 million for the third quarter of 2005. 2 The net loss reported for the third quarter of 2006 was $31.3 million compared to a net loss of 3 $16.7 million in the third quarter of 2005. The Company further reported revenue for the nine 4 months ending September 30, 2006 of $22.1 million compared to revenue of $1.4 million for the 5 period from April 13, 2005 to September 30, 2005. The net loss reported for the first nine months 6 of 2006 was $65.5 million compared to a net loss of $19.6 million for the same time period in 7 2005. In the Q3 2006 10-Q, the Company stated that nearly all of NextWave's revenues are 8 derived from the sale of device embedded multimedia software solutions by its PacketVideo 9 subsidiary, which was acquired in July 2005. "While we expect to continue to grow and expand 10 our multimedia software business, we expect that, following the development of our WiMAX 11 products and technologies, the majority of our revenues will ultimately be derived from the sale 12 and licensing of our WiMAX compliant chipsets, network components and device technologies to 13 network infrastructure and mobile terminal manufacturers on a global basis." 14 40. The Q3 2006 further stated. 15 We are currently unable to project when our wireless broadband products and 16 technologies will be commercially deployed and generate revenue. However, we believe that our current revenues, cash and short-term investments and financing 17 activities will be sufficient to fund our operating activities at least through 2007, even if the estimated $40 million expenditure relating to the current WCS 18 substantial service date is required over the next 12 months.

19 • We plan to fund our WiMAX technology development activities with our $222.2 million of unrestricted cash and investments until 20 such point that we begin sales of our chipsets and network component products and enter into licensing arrangements for our 21 wireless broadband technologies. Our wireless broadband products and technologies are in the early stages of development and will 22 require a substantial investment before they may become commercially viable. Our research and development expenses for 23 our wireless broadband products and technologies, including our chipsets were $9.0 million in the third quarter of 2006. Largely due 24 to our planned increase in engineering personnel, we expect our WiMAX development expenses to increase by approximately 50% 25 over the next twelve months. Because we are adopting a strategy of licensing our technology and selling chipsets to third party 26 equipment manufacturers, we do not anticipate that the license and sale of our products and technologies will require significant 27 additional capital.

28 • Our mobile WiMAX network solutions offerings will involve a 32 3:08-CV-01697 LAB (WMC)

1 service business and are not expected to require significant additional capital expenditures beyond what is necessary to 2 complete our Henderson, Nevada office building and our trial network. With the exception of our trial network in Henderson, 3 Nevada, we will not build-out wireless networks, but will provide our technologies, services and spectrum to our network partners 4 who are engaged in these activities. In 2006, we expect to expend $5.0 million on the deployment of our trial network in Henderson, 5 Nevada If that trial network is successful, we anticipate that we will seek a network partner to expand the trial network to cover 6 most of the Las Vegas metropolitan region.

7 41. On January 3, 2007, NextWave announced that it had signed a definitive 8 agreement to acquire GO Networks, Inc., for approximately $13.3 million in cash and additional 9 consideration of up to $25.7 million based on the achievement of certain milestones. GO 10 Networks, based in Mountain View, California, with a major technology development center 11 located in Tel Aviv, Israel, and approximately 67 employees, provided commercial and municipal 12 service providers with high-performance mobile Wi-Fi systems. Defendant Salmasi commented 13 on the agreement stating: 14 "After extensive field testing of several metro-scale WI-Fi network systems, we 15 selected GO's Metr Broadband Wireless system as the most competitive and cost- effective Wi-Fi network solution for NextWave. . . . GO Network's' pioneering 16 Wi-Fi technology is a natural complement to NextWave's WiMAX product line and will enhance our ability to deliver high-performance, wide-area and local-area 17 wireless broadband services using stand-alone or integrated WiFi/WiMAX solutions ...." 18 42. On March 30, 2007, Defendants filed NextWave's Form 10-K for year-end 2006, 19 signed by Defendants Salmasi and Alex ("2006 10-K"). In the 2006 10-K, Defendants stated. 20 Competitive Strengths 21 A highly accomplished team of wireless technology professionals. Our 22 technology development efforts are led by a team of highly accomplished engineering veterans with broad experience in the development of wireless 23 communications technologies and solutions. Team members have led major development initiatives at leading technology companies, such as Intel, Motorola, 24 Nokia, QUALCOMM and Texas Instruments. Together they have been instrumental in developing some of today's dominant wireless technologies. 25 Several members of our team, including our Chief Executive Officer, Allen Salmasi, played key roles at QUALCOMM in the development and successful 26 commercialization of the CDMA wireless technology standard used worldwide today. Additional support for our technology development efforts if provided by 27 the NextWave Technical Development Steering Committee which is comprised of some of the most accomplished individuals in the wireless industry, including Dr. 28 Andrew Viterbi who co-founded QUALCOMM. In addition, our senior team has 33 3:08-CV-01697 LAB (WMC)

1 extensive experience in building and operating wireless networks for companies such as Airtouch, AT&T Wireless, McCaw Cellular, Nextel and SprintPCS. 2 Attractive wireless spectrum portfolio, well-suited to support mobile 3 broadband To date, we have acquired licensed spectrum and entered into long- term leases that provide us with exclusive leasehold access to licensed spectrum 4 throughout the U.S. Our spectrum portfolio covers approximately 248.9 million persons, or POPs, across the U.S., of which licenses covering 136.4 million POPs 5 are covered by 20 MHz or more of spectrum, and licenses covering an additional 98.7 million POPs are covered by at least 10 MHz of spectrum. In addition, a 6 number of markets, including much of the New York metropolitan region, are covered by 30 MHz or more of spectrum. We believe that this spectrum footprint, 7 which includes eight of the top ten Cellular Market Areas ("CMAs") and 15 of the top 20 CMAs in the U.S., will be attractive to service providers who wish to offer 8 40 wireless broadband services. Our spectrum resides in the 2.3GHz WCS, 2.5GHz BRS/EBS, and 1.7/2.1 GHz AWS bands and offers propagation and other 9 characteristics suitable to support high-capacity, mobile broadband services.

10 Unique combination of silicon, software, systems engineering and spectrum. We have assembled a unique combination of assets, including a world- 11 class semiconductor design and wireless technology development team, one of the world's leading providers of device-embedded multimedia software, a leading 12 provider of carrier-class, mobile Wi-Fi network systems, an experienced network design and operations team, and an attractive portfolio of licensed spectrum in the 13 U.S. and abroad. We believe that the combination of these assets offers us an advantageous position to develop and deliver our wireless broadband products and 14 technologies to customers.

15 Integrated business model. We believe that each of our operating subsidiaries represents an attractive standalone business. However, we believe that 16 our business units are highly complementary to each other and together provide us with the ability to adapt our business model and allocate resources to maximize 17 market share in a rapidly evolving industry.

18 Well established industry position. Our PacketVideo subsidiary has established strong commercial relationships with the wireless industry's leading 19 device manufacturers and network operators. Its customers include leading handset manufacturers such as LGE, Motorola, Nokia, Sony-Ericsson, and Samsung as 20 well as some of the world's largest network operators including NTT DoCoMo, Orange, T-Mobile and Verizon Wireless. While some of these customers have 21 developed software solutions that overlap or augment certain PacketVideo software products, we believe that these relationships will be highly valuable as we 22 pursue strategic partnerships and begin to market current and future products, technologies and network solutions. 23 Extensive experience in building and operating wireless networks. Our 24 senior team has extensive experience in building and operating wireless networks for companies such as Airtouch, AT&T Wireless, McCaw Cellular, Nextel and 25 SprintPCS. Members of our Network Solutions Group have extensive experience in conducting field trials of numerous wireless broadband technologies and have 26 led the development of a next-generation IP core network and back office system ("BOSS") designed specifically to enable the delivery of highly-differentiated 27 mobile broadband network services.

28 Integrated WiMAX/Wi-Fi solutions. Our GO Networks subsidiary offers 34 3:08-CV-01697 LAB (WMC)

1 carrier-class, mobile Wi-Fi systems specifically designed for wide-area deployments. We believe that Wi-Fi and WiMAX are complementary technologies 2 and that the most cost-effective solution to provide mobile broadband services on a wide-area basis is to often deploy hybrid networks that utilize both technologies 3 since WiFi-enabled devices, including laptops, have been widely adopted by the mass consumer market. In addition, because GO Networks utilizes a cellular-mesh 4 network architecture, we believe that GO Network customers represent opportunities for future Wi-Fi to WiMAX upgrades that utilize NextWave's 5 WiMAX products and technologies.

6 Business Strategy Our strategy is to deliver a broad suite of technologically advanced 7 wireless broadband products and solutions to mobile subscriber terminal and 8 wireless network equipment manufacturers, wireless broadband service providers and consumer electronic product companies. Our focus includes: 9 Develop the key elements of a mobile TFiMAX system. We intend to develop the key elements of an end-to-end mobile WiMAX/Wi-Fi network 10 solution that includes a family of WiMAX chipsets and network components. Our development activities are focused on both sides of the radio connection, which we 11 believe will enable us to deliver a superior system solution to our customers. To date, we have made significant progress in our WiMAX development efforts and 12 we expect to begin field testing elements of our chipset product line in 2007. These field testing activities will be part of a comprehensive technical field trial of our 13 technologies in Henderson, Nevada We expect to utilize this field trial to showcase the capabilities of our WiMAX/Wi-Fi technologies, and believe that the 14 trial will be an important step towards successful commercialization of our family of WiMAX/Wi-Fi products. 15 Market our products and technologies to third parties. We intend to market our products and technologies worldwide to network equipment and device 16 manufacturers and to wireless broadband service providers. We expect that our marketing efforts will benefit from growing worldwide demand for fully-mobile 17 access to the Internet and the delivery of rich-media content to mobile devices. Similar to other wireless technologies, we believe that the sale or licensing of our 18 chipsets, network components, software and device technologies will generate a long-term, recurring revenue stream for our company. 19 Form strategic relationships with service providers who want to offer 20 wireless broadband services. We intend to make our spectrum available to service providers looking to deploy next-generation wireless broadband networks that 21 utilize our advanced products and technologies. Potential service providers include wireless service providers, cable operators, multimedia content distributors, 22 applications service providers and Internet service providers. We believe that a model under which service providers can utilize our spectrum to offer advanced 23 wireless broadband services will help accelerate sales of our mobile broadband products and technologies. 24 Grow and extend PacketVideo's multimedia software business. We believe that the number of multimedia enabled smartphones as a percentage of 25 global handsets shipped annually will rise significantly over the next several years. We will seek to maintain PacketVideo's strong position in this growing market 26 through the growth and extension of its existing multimedia software business. At present, the primary competitors for PacketVideo's multimedia software products 27 are the internal multimedia design teams at the OEM handset manufacturers to whom PacketVideo markets its products and services. Furthermore, we believe 28 that the deployment of mobile broadband networks will spawn the development of 35 3:08-CV-01697 LAB (WMC)

1 entire new categories of software applications that can take full advantage of the distinctive mobility features inherent in mobile broadband systems. While we 2 expect the competition from the OEM internal multimedia design teams and other independent multimedia software providers to increase in the next few years, we 3 expect PacketVideo will be able to leverage its PacketVideo Experience platform and DRM capabilities to fortify its position in the mobile wireless and converged 4 broadband software business. 5 Grow our GO Networks mobile Tri-Fi business. We believe that the worldwide market for wide-area, mobile Wi-Fi networks will continue to grow and intend to pursue these opportunities by offering customers our advanced GO 6 Networks Wi-Fi system. Because the GO Networks system utilizes a cellular-type 7 architecture, we believe it can be upgraded to a hybrid Wi-Fi/WiMAX solution at a total cost of ownership below that of competing Wi-Fi network solutions and 8 intend to leverage this advantage in the marketplace. Identify and pursue acquisitions and investments to accelerate and 9 improve the development of our end-to-end wireless broadband solutions. We believe there are a number of companies participating in the WiMAX technology, 10 wireless broadband and wireless multimedia sectors that could be attractive acquisition or investment candidates. We continue to monitor these opportunities 11 and may pursue those which we believe will enhance our capabilities and product offerings. 12 Acquire additional wireless spectrum to complement our existing portfolio. We believe that expanding our spectrum footprint will make our 13 spectrum more attractive to service providers. As such, we are actively evaluating 14 spectrum acquisition and leasing opportunities and will pursue those which allow us to obtain complementary spectrum at prices that we believe to be attractive. We also believe that there may exist opportunities to obtain additional spectrum 15 internationally which we will continue to monitor. 16 Our Products and Teclmologies 17 WiMAX /Wi-Fi Semiconductors 18 Based in San Diego, California, our Advanced Technology Group (ATG), a division of our NextWave Broadband subsidiary, is creating a family of 19 semiconductor products, based on WiMAX and WiFi technology, to enhance the capabilities and economics of fixed and mobile WiMAX/Wi-Fi networks. These 20 low-power, high-performance semiconductor products are intended to enable fixed and mobile WiMAX/Wi-Fi networks to more efficiently handle bandwidth- 21 intensive and quality-of-service dependent applications such as mobile television, VoIP telephony, streaming audio and video, video conferencing and real-time 22 gaming. While these semiconductor products will include special features to allow them to fully utilize NextWave's licensed spectrum (BRS/EBS, WCS, AWS), they 23 are also being designed to operate on frequency bands most often allocated for mobile broadband use on a global basis. 24 The Advanced Technology Group is comprised of approximately 238 employees and full-time equivalent contractors and is led by a highly accomplished team of 25 veteran engineers with broad experience in the development of advanced wireless 26 communications technologies and products, such as digital baseband Application Specific Integrated Circuits ("ASICs"), radio frequency technologies including multi-band Radio-Frequency Integrated Circuits ("RFICs"), advanced antenna 27 systems, software defined radios (SDRs), and mobile terminal designs. Advanced Technology Group team members have led major technology development 28 initiatives at companies such as Intel, Motorola, Nokia, QUALCOMM and Texas 36 3:08-CV-01697 LAB (WMC)

1 Instruments and have been instrumental in developing some of today's dominant wireless technologies including CDMA. In addition, several key members of our 2 technical team were leading contributors to the 802.16 family of standards. 3 We believe that to fully optimize mobile WiMAX for the efficient delivery of bandwidth-intensive multimedia applications requires a system approach that encompasses all of the key elements of the WiMAX air interface. By adopting this 4 approach, we expect to offer network infrastructure and device manufacturers a 5 comprehensive suite of products including low-power WiMAX digital baseband ASICs and multi-band RFICs, software defined radio platforms and terminal device reference designs. 6 To develop its semiconductor products, ATG has organized its engineering 7 resources into several product development groups including: a) RFIC engineering and design team; b) digital baseband engineering team; c) systems engineering 8 team; and c) BTS radio product group. In addition, ATG has established a large team of system engineers to create an end-to-end system that integrates the 9 products and technologies developed by its various product teams. These development activities are designed to produce an integrated platform of paired RF 10 and baseband chipset families that will allow mobile device and network equipment manufacturers to design a variety of products using NextWave silicon 11 products. Digital Baseband ASICs: An ASIC is an integrated circuit or chip customized for a 12 specific purpose. Our family of WiMAX/Wi-Fi based digital baseband ASICs under development represent the core of our system architecture. Our first 13 baseband WiMAX ASIC, the NW1100, is currently in the final stages of 14 development and the final description of the circuit is expected to be sent to manufacture in Q3 2007. This ASIC includes many of the enhancements that have been developed by ATG engineers and is designed to showcase and validate these 15 innovations.. The family of baseband ASIC that ATG is developing include a wide array of interfaces to accommodate a wide range of device types including mobile 16 handsets, PDAs, mobile PC cards, USB devices, and CPE modems. For this 17 reason, ATG is also creating a family of device reference designs, including those for handsets and media players, that will highlight the features of its WiMAX AS IC products. 18 Radio Frequency Integrated Circuits (RFICs): An RFIC is part of the front-end of 19 a radio system that receives a radio frequency signal, converts it to a lower frequency and modifies it for further processing. Designed to utilize multiple 20 spectral bands to improve performance and flexibility, our RFICs are part of an advanced radio frequency subsystem that is matched to our family of baseband 21 ASICs and is expected to enable a mobile device to operate over a wide range of operational frequencies without sacrificing overall performance. We believe that 22 enabling WiMAX to operate over multiple frequency bands will significantly improve the economics of WiMAX network deployments for the following 23 reasons: WiMAX network operators will have the ability to assemble 24 a licensed spectrum footprint using multiple frequency bands as opposed to having to acquire scarce spectrum in a single frequency 25 band; 26 carriers will have the ability to address network coverage and capacity issues via the acquisition of low-cost spectrum as 27 opposed to costly cell splitting; the ability of frequency-agile WiMAX devices to roam 28 between multiple WiMAX networks will be facilitated; and 37 3:08-CV-01697 LAB (WMC)

1 a single chipset family capable of addressing markets worldwide will permit economies of scale and result in lower 2 device costs.

3 Our initial multi-band RFIC, the NW1200, was sent to manufacture in late 2006. Sample chips have undergone successful testing and evaluation. Additional testing 4 will take place in combination with our NW1100 baseband WiMAX ACIS when available. The NW1200 RFIC operates in the 2.3-2.8 GHz and 3.3-3.8 GHz 5 frequency bands and is designed for Time Division Duplexing ("TDD") operation. The NW 2200 RFIC, currently under development, is expected to operate in the 6 same frequency bands as the NW 1100, but will also support the AWS band (1.7- 2.1 GHz) and will operate in frequency division duplex ("FDD") mode. Both 7 RFICs are designed to support WiMAX and Wi-Fi and are optimized to operate with the NextWave family of baseband WiMAX ASICS. 8 Pico Base Transceiver Station (BTS): A BTS, also known as a wireless base 9 station, includes equipment needed to transmit and receive radio signals (transceiver) to and from subscriber devices, antennas, and the electronics required 10 to communicate with other network elements. Unlike a conventional BTS which can provide radio coverage over a radius of several miles, a pico BTS is much 11 smaller in size and is intended to provide low-cost capacity and coverage relief in very small geographic areas. NextWave is currently in the design phase of silicon 12 products to support a PicoBTS/Access point product family. This design is currently being implemented in field-programmable gate array ("FPGA") form and 13 will be field tested later this year. 14 43. In the 2006 10-K, Defendants stated that "we believe that our current revenues, 15 cash and short-term investments and financing activities will be sufficient to fund our operating

16 activities at least through 2008."

17 44. On April 2, 2007, NextWave issued a press release entitled "NextWave Wireless 18 Announces Full Year Financial Results — Revenues Exceed $24 Million in First Full Year of

19 Operation," in a release which stated in part:

20 NextWave Wireless Inc., a global provider of mobile broadband and wireless multimedia products and technologies to enable Wireless 2.0, the next 21 generation of mobile communications, today announced financial results for the full year ended December 30, 2006. Financial highlights for the year included 22 revenues of $24.3 million from the Company's PacketVideo subsidiary, which reflects the recently announced restatement, net loss per share of $(1.28) on a 23 diluted GAAP basis, the issuance of Senior Secured Notes resulting in gross proceeds of $297.5 million, the expansion of the company's licensed spectrum 24 footprint in the United States to approximately 248.9 million persons, or POPs, and the completion of several strategic acquisitions to enhance NextWave's 25 product portfolio and global development capabilities. 26 "The financial results achieved by the company are consistent with our expectations and reflect the successful growth strategy we implemented when we 27 formed NextWave Wireless in April 2005," said Allen Salmasi, chairman and chief executive officer of NextWave Wireless Inc. "Our business activities will 28 continue to be focused on providing our partners and customers with the leading- 38 3:08-CV-01697 LAB (WMC)

1 edge wireless broadband products and technologies they need to deliver next- generation mobile broadband solutions to businesses and consumers." 2

3 "In the twenty months since our inception in April 2005, we have 4 successfully built a solid foundation for corporate growth and we remain optimistic about what 2007 holds for our company. We expect to expand our 5 commercial product offerings, expand our domestic and international licensed spectrum footprint, augment our engineering team, and execute on strategic 6 acquisitions to allow us to take full advantage of what we see as exciting growth opportunities in the mobile broadband and wireless multimedia marketplace," Mr. 7 Salmasi added. 8

9 Revenue for the year ended December 31, 2006 was $24.3 million compared to $4.1 million for the period from inception to December 31, 2005, an 10 increase of $20.2 million. Since inception in April 2005, substantially all revenues have been generated by NextWave's PacketVideo subsidiary, which NextWave 11 acquired in July 2005. NextWave's PacketVideo subsidiary supplies device- embedded multimedia software to many of the largest wireless service providers 12 and manufacturers of high-end mobile phones in the world. PacketVideo's software enables a mobile handset to stream, download, and play video and music, 13 receive live TV, or engage in two-way video telephony. The revenue increase is resultant from unit sales growth and market penetration of mobile devices with 14 multimedia capabilities by PacketVideo's customer base, which includes wireless operators and device manufacturers, in addition to increased technology 15 development contracts, wherein an increasing number of wireless devices were designed to use PacketVideo customized software. 16 Loss from operations for 2006 was $98.5 million, compared to $55.7 17 million for the period from inception to December 31, 2005, an increase of $42.8 million. This increase was primarily resultant from increased cost of revenues of 18 $7.5 million due to revenue growth, increases in engineering, research and development costs of $35.5 million, general and administrative costs of $36.2 19 million and sales and marking costs of $7.0 million, offset by reductions in business realignments costs of $20.2 million and $3.1 million of purchased in- 20 process research and development costs. Included in the loss from operations for 2006 of $98.5 million were non-cash expenses items totaling $14.3 million, 21 consisting of $6.1 million for depreciation, $5.8 million for amortization of intangible assets, $5.2 million for stock-based compensation, $3.5 million for 22 purchased in-process research and development related to acquisitions, and $0.8 million of other expenses which were offset with a non-cash reduction in prior 23 year accrual of $7.1 million for business realignment costs.

24 Net loss for 2006 was $105.0 million, compared to $46.0 million for the prior year, an increase of $59.0 million. This increase primarily resulted from an 25 increased loss from operations of $42.8, and increase in net interest expense of $18.2 million. 26

27 45. On April 9, 2007, NextWave announced that it had signed a definitive agreement 28 to acquire IPWireless Inc, a privately-held company, headquartered in San Bruno, California, with 39 3:08-CV-01697 LAB (WMC) 1 research and development facilities in the United Kingdom. IPWireless was a supplier of TD- 2 CDMA network equipment and subscriber terminals. There lease touted the fact that IPWireless 3 was recently selected by New York City as part of the deployment of a citywide, public-safety 4 wireless network. Under the terms of the agreement, NextWave paid approximately $100 million 5 at closing, consisting of $25 million in cash and $75 million in NextWave common stock. 6 Additional consideration of up to $135 million was to be paid based on the achievement of certain 7 revenue milestones in the 2007 — 2009 timeframe as specified in the agreement, with potential 8 payments of up to $50 million in late 2007 or 2008, up to $7.5 million in 2008, up to $24.2 million 9 in 2009 and up to $53.3 million in 2010. If earned, up to $114 million of such additional 10 considerations was to be payable in cash or shares of common stock at the election of NextWave, 11 and up to $21 million of such amounts were to be payable in cash or shares of common stock at 12 the election of representatives of IPWireless shareholders. 13 46. In commenting on the acquisition, Defendant Salmasi stated. 14 The acquisition of IPWireless fits perfectly into our strategy of providing our 15 customers with the most cost-effective and high-performance mobile broadband products and solutions available today. IPWireless and NextWave will work 16 together to expand IPWireless' product portfolio to incorporate WiMAX and/or Wi-Fi technologies for those service providers and equipment vendors that require 17 such solutions," said Allen Salmasi, chairman and chief executive officer of NextWave Wireless. "IPWireless's excellent global track record, including their 18 successful introduction and commercialization of TD-CDMA technology, their development of several industry-first wireless broadband technologies, and their 19 recent introduction of TD TV clearly demonstrate their strong capacity for technical innovation and the clear value they will bring to NextWave. We are very 20 excited about the prospects of working together to develop and deliver advanced, next-generation wireless broadband solutions to the marketplace and welcome the 21 entire IPWireless team to NextWave's family of companies."

22 47. In an interview given to Investor's Business Daily, posted on May 4, 2007, 23 Defendant Salmasi emphasized that NextWave acquired IPWireless because "It developed one of 24 the first 40 technologies. They really have the most solid technology that has been developed to 25 date, with high-speed connection rates. Last year they won a public safety (network) contract in 26 New York City." 27 48. On May 14, 2007, the Company reported its first quarter fiscal year 2007 financial 28 40 3:08-CV-01697 LAB (WMC)

1 results, in a release which stated in part: 2 Revenues were $7.7 million for the first quarter of 2007 and were derived 3 primarily from our PacketVideo subsidiary, which supplies device-embedded multimedia software to many of the largest wireless carriers and handset 4 manufacturers in the world. Our first quarter revenues represent a 98% increase over revenues of $3.9 million for the first quarter of 2006 and are primarily the 5 result of unit sales growth and market penetration of mobile subscriber services by PacketVideo's customer base. 6 Loss from operations was $(41.1) million for the first quarter of 2007, 7 representing an increase of $22.0 million, when compared to the loss from operations of $(19.1) million for the first quarter of 2006. Loss from operations 8 increased primarily due to an increase in operating expenses related to the expansion of our research and development teams and related support 9 organizations, tlu-ough organic growth and acquisitions. At present, 653 full time employees and 238 contractor personnel are engaged in developing and marketing 10 our mobile broadband and wireless multimedia products and technologies. 11

12 "Our financial results are consistent with our expectations and reflect the important strategic and product development milestones we achieved during the 13 first quarter of the year," said Allen Salmasi, chairman and chief executive officer of NextWave Wireless Inc. "Our business activities will continue to be focused on 14 providing customers with the leading-edge, cost-effective wireless broadband products and technologies they need to deliver next-generation mobile broadband 15 solutions to businesses and consumers."

16 49. On May 15, 2007, the Company filed its Form 10-Q for the first quarter of 2007 17 ("Q1 2007 10-Q"), signed by Defendant Alex, which included the financial results previously 18 reported in the May 14, 2007 press release. Defendants stated in the Q1 2007 10-Q that INA/1e

19 believe that our current revenues, cash and short-term investments and financing activities will be

20 sufficient to fund our operating activities and contractual commitments at least through 2008." 21 Defendants stated that 95% of NextWave's unrestricted short-term investments were invested in

22 municipal securities.

23 50. On June 6, 2007, NextWave announced plans to introduce WiMAX chip sets 24 through its subsidiary NextWave Broadband, Inc. noting that samples of the Company's first

25 generation WiMAX baseband system-on-a-chip and matched multi-band RFIC would be

26 available that quarter. "Initial availability of the company's second generation chips, designed for 27 high-volume commercial production, is planned for the second half of 2008." NextWave

28 emphasized that its roadmap to support the needs of its customers included the NextWave's 41 3:08-CV-01697 LAB (WMC) 1 deployment of a state-of-the-arts WiMAX field test facility in Henderson, Nevada, with advanced 2 data collection tools to measure "real world" performance in typical deployment environments, 3 available to customers who wish to conduct field testing of their products based on NextWave's 4 reference designs and chipset products. Mark Kelly, Chief Division Officer of NextWave's 5 Advanced Technology Group, stated, "Our mission is to make mobile broadband faster, more 6 reliable, more accessible and more affordable Our 250 world-class engineers are among the most 7 accomplished in the industry. We have the talent, the financial resources and the commitment to 8 provide our customers with the technologies and support they need to deliver the widest range of 9 new and innovative products to the mobile broadband marketplace." 10 51. On August 14, 2007, the Company filed its Form 10-Q for the second quarter of 11 2007 ("Q2 2007 10-Q"), signed by Defendant Alex. Defendants again stated in the Q2 2007 10-Q 12 that "[w]e believe that our revenues, existing cash and short-term investments and financing 13 activities will be sufficient to fund our operating activities and contractual commitments at least 14 through 2008." Defendants further stated in the Q2 2007 10-Q that the Company's WiMAX 15 semiconductor products would initially be available for commercial sale in the first half of 2008 16 and that the revenue generated from the sale of the WiMAX products would alleviate some of 17 NextWave's working capital requirements. Defendants stated that 95% of NextWave's 18 unrestricted short-term investments were invested in municipal securities. 19 52. Defendants included in the Q2 2007 10-Q the certifications required by Section 20 906 of SOX, signed by Defendants Salmasi and Alex on August 14, 2007, each certifying that the 21 "information included in [the Q2 2007 10-Q] fairly present[s] in all material respects the financial 22 condition [and] results of operations" of the Company. 23 53. On August 15, 2007, NextWave reported its second quarter fiscal year 2007 24 financial results, in a release which stated in part: 25 Revenues were $12.8 million for the second quarter of 2007, a $6.5 million 26 increase over the second quarter in 2006 and a $5.1 million increase over the first quarter in 2007. These quarterly increases are primarily related to revenue derived 27 from IPWireless, Inc. that was acquired by NextWave Wireless in the second quarter of 2007. 28 42 3:08-CV-01697 LAB (WMC)

1 Loss from operations was $(59.5) million for the second quarter of 2007, representing an increase of $33.5 million, when compared to the loss from 2 operations for the first quarter of 2006 and an increase of $18.4 million over the first quarter of 2007. Loss from operations, sequentially and year-over-year 3 increased primarily due to an increase in operating expenses related to the expansion of our research and development teams and related support 4 organizations, tlu-ough organic growth and acquisitions. At present, 895 full time employees and 276 contractor personnel are engaged in developing and marketing 5 our mobile broadband and wireless multimedia products and technologies.

6

7 In the second quarter of 2007, to meet increased customer demand for its User Equipment (UE), IPWireless transferred its UE manufacturing to a high- 8 volume production facility in China and in June 2007 began shipping its V5 commercial base station which supports the latest generation of TD-CDMA and 9 can be upgraded to support mobile WiMAX or 3GPP LTE technologies.

10 In June 2007, NextWave Broadband announced the roadmap for its family of WiMAX baseband and multi-band RFIC chipsets designed to provide wireless 11 device and network equipment manufacturers with an advanced platform to develop next-generation WiMAX mobile terminal and infrastructure products. 12 Samples of the company's first-generation WiMAX baseband system-on-a-chip (SOC) and matched multi-band RFIC are currently available for reference design 13 development activities by device manufacturers. Initial availability of the company's second-generation chips, designed for high-volume commercial 14 production, is planned for the first half of 2008.

15 To further augment its global spectrum portfolio, on June 18, 2007, NextWave, tlu-ough its Inquam Broadband GmbH subsidiary, acquired a 65% 16 controlling interest in Zurich based WiMAX Telecom AG which has wireless broadband spectrum concessions in Austria, Slovakia, and Croatia. 17 "The acquisition of IPWireless and WiMAX Telecom, and the successful 18 fabrication of our first-generation WiMAX chipset, which is one of the first paired multi-band chipsets to enable global roaming for WiMAX users, were some of the 19 important milestones achieved during the second quarter of 2007," said Allen Salmasi, chairman and chief executive officer of NextWave Wireless Inc. "Our 20 team remains focused on accelerating revenue growth, on developing the advanced, end-to-end wireless technologies and solutions our customers require, 21 and on further strengthening NextWave's position in the global wireless marketplace." 22 54. The next day, August 16, 2007, NextWave announced that it had begun shipping 23 samples of its NW1000 Series WiMAX chip. 24 55. On November 13, 2007, the Company filed its Form 10-Q for the third quarter of 25 2007 ("Q3 2007 10-Q"), signed by Defendant Alex on November 13, 2007. Defendants stated in 26 the Q3 2007 10-Q that "[biased upon our current plans, we believe that our existing cash, cash 27 equivalents, working capital and strategic financing alternatives, together with the incremental 28 43 3:08-CV-01697 LAB (WMC) 1 gross margins forecasted from our newly acquired GO Networks and IPWireless wireless 2 broadband network businesses, along with incremental margins from revenue growth in our 3 PacketVideo multimedia software business, will be sufficient to cover our estimated liquidity 4 needs for at least the next twelve months." Defendants further stated in the Q3 2007 10-Q that the 5 Company's WiMAX semiconductor products would initially be available for commercial sale in 6 the first half of 2008 and that the revenue generated from the sale of the WiMAX products would 7 alleviate some of NextWave's working capital requirements. The financial statements included in 8 the Q3 2007 10-Q reported that NextWave had $179 million in municipal securities on its balance 9 sheet, which represented 85% of its total unrestricted marketable securities. Defendants included 10 in the Q3 2007 10-Q the certifications required by Section 906 of SOX, signed by Defendants 11 Salmasi and Alex on November 13, 2007, each certifying that the "information included in [the Q3 12 2007 10-Q] fairly present[s] in all material respects the financial condition [and] results of 13 operations" of the Company. 14 56. On November 14, 2007, NextWave reported its third quarter fiscal 2007 financial 15 results, in a release which stated in part: 16 NextWave reported that its third quarter revenues increased 166 percent 17 compared to third quarter 2006. Revenues were $17.8 million for the third quarter of 2007, an $11.1 million increase over the third quarter in 2006 and a $4.9 million 18 increase over the second quarter in 2007. The robust increase in quarterly revenue was driven by the continued growth in mobile device software royalties generated 19 by the company's PacketVideo subsidiary and by increased sales of wireless broadband network equipment and subscriber devices by the company's 20 IPWireless, Inc. subsidiary which was acquired in the second quarter of 2007.

21 "We are very pleased with the rapid revenue growth achieved by our PacketVideo and IPWireless subsidiaries this quarter and the transition from early- 22 stage development to pre-commercialization status of our WiMAX chipset business," said Allen Salmasi, chairman and chief executive officer of NextWave 23 Wireless Inc. "These achievements are the direct result of the investments we have made in our people, our business, and our technologies." 24 NextWave reported that its loss from operations was $91.7 million for the 25 third quarter of 2007, representing an increase of $65.3 million, when compared to the loss from operations for the third quarter of 2006 and an increase of $32.2 26 million over the second quarter of 2007. Approximately forty percent, or $36.9 million, of the loss was attributable to the accounting for the acquisition of the GO 27 Networks and IPWireless businesses during the first half of the year, and from the integration of the operations of those businesses. NextWave expects to realize 28 improved contributions from these businesses in the future resulting from the 44 3:08-CV-01697 LAB (WMC)

1 achievement of operating efficiencies, improved margin contributions and the one- time nature of approximately $11.2 million of these charges. 2 Loss from operations during the third quarter of 2007, as compared to the 3 third quarter of 2006, increased primarily due to increased operating expenses of $76.4 million, of which $18.3 million were non-cash expenses arising from the 4 accounting for purchased in-process R&D and the amortization of intangible assets as a result of the acquisition of GO Networks and IPWireless and new spectrum 5 properties. Approximately $31 million of the increase in operating loss was attributable to increases in R&D, of which $17.5 million was due to the growth of 6 the semiconductor engineering team at NextWave Broadband and activities related to the commercialization of the company's family of WiMAX chipsets and $10.9 7 million was attributable to the addition of the IPWireless and GO Networks operations earlier in the year. The addition of the IPWireless and GO Networks 8 operations in the first half of 2007 also accounted for additional increases in operating expenses of $16.2 million attributable to increases of $11.1 million in 9 cost of revenues and $5.1 million in sales, marketing, and G&A expenses.

10 Excluding cost of revenues for the quarter of $17.3 million, total operating expenses for the third quarter were $92.2 million, of which thirty-tlu-ee percent, or 11 $30.3 million, were attributable to non-cash expenses, including $8.7 million for the amortization of intangible assets related to acquisitions, $6.9 million for non- 12 cash share based and other compensation expense, $3.5 million for depreciation and $11.2 million for In-Process Research and Development (IPR&D) expense 13 related to the acquisition of IPWireless, Inc. 14

15 During the third quarter of 2007, NextWave Broadband announced the release of its NW1000 Series WiMAX chipset; the first generation in a family of 16 WiMAX baseband and multi-band RFIC chipsets designed to provide wireless device and network equipment manufacturers with an advanced platform to 17 develop next-generation WiMAX mobile terminal and infrastructure products. The company's second-generation chips, designed for high-volume, full- 18 commercial production is planned for the first half of 2008.

19 Consistent with its strategy to acquire and make available licensed spectrum to network operators who deploy the company's wireless broadband 20 products and technologies, NextWave, tlu-ough its Inquam Broadband GmbH subsidiary, completed its acquisition of a 65% controlling interest in Zurich-based 21 WiMAX Telecom AG which has wireless broadband spectrum concessions in Austria, Slovakia, and Croatia. 22 In July 2007, NextWave announced the launch of its Latin American 23 business operation, NextWave Wireless — Latin America. The new business unit was established to deliver NextWave's broad array of industry-leading mobile 24 broadband and wireless technology solutions to customers throughout the Latin American region. 25 Recently, on November 5, 2007, PacketVideo announced that it has joined 26 the Open Handset Alliance as a founding member, along with more than 30 other industry leaders including Google. PacketVideo is responsible for supplying the 27 multimedia sub-system, providing for essential media features for media device development, of the OpenCORETM software for the Alliance's Android platform. 28 PacketVideo expects to market a broad suite of innovative applications, features, 45 3:08-CV-01697 LAB (WMC)

1 and services designed to enhance its contributed OpenCORE TM software. 2 "Our third quarter results are consistent with our expectations and will further strengthen our position for future growth. We're looking forward to a 3 successful commercial launch of our low-power, 65 nanometer, WiMAX baseband and RFIC products in 2008 including a fully-integrated Wi-Fi and WiMAX chipset 4 with matched multi-band RFIC that supports global roaming and unique broadcast capabilities. To accelerate the commercial introduction of our WiMAX chipsets 5 and technologies, we have also undertaken joint development activities with world-class device vendors," Salmasi added. "We also remain very excited about 6 the prospects of our TDtv Tm mobile broadcast technology which has already been successfully tested by some of the largest carriers in Europe. IPWireless and 7 PacketVideo are currently working with major device manufacturers to incorporate our TDtv chipsets, embedded multimedia software and other technologies into a 8 wide range of exciting 30 devices." 9 57. After this announcement of NextWave's Third Quarter earnings, various officers 10 of NextWave sold stock as follows:

11 Name Date Amount Proceeds David B. Needham 11/16/07 150,000 $892,035.00 12 Pres — Network 11/19/07 2,500 $ 15,250.00 Solutions Group 11/28/07 74,500 13 11/29/07 25,000 $599,512.45 11/30/07 46,000 $277,550.20 14 12/05/07 59,500 $361,010.30

15 Roy Berger 11/20/07 40,000 $223,160.00 EVP-Marketing 16 Officer 17 Andrew Salony 11/29/07 40,000 $241,432.00 EVP-Chief 18 Admin. Officer

19 58. On November 29, 2007, Roy Berger, NextWave's EVP of Marketing and 20 Communications provided an interview webcast to The Wall Street Analyst Forum. In explaining

21 what NextWave as all about, Berger emphasized, "we are a mobile multimedia technology

22 company. What we do is develop semiconductor solutions, software solutions and wireless 23 network infrastructure solutions that enable next-generation mobile multimedia application, such

24 as like mobile TV. The important thing is that, this is a market that is on a verge of explosive

25 global growth and we'll talk about that a little more in a moment." 26 59. In talking about NextWave's recently announced third quarter financial results,

27 Berger stated,

28 "We are excited that the $17.8 million of revenue in the third quarter represents 46 3:08-CV-01697 LAB (WMC)

1 triple-digit growth from the same period last year, actually 166% revenue growth. We are excited about that top-line growth. Most of that growth came out of two of 2 our operating subsidiaries. One of them is PacketVideo which we'll talk about in a moment. . . .And IPWireless, which is a company that we acquired earlier this 3 year, which provides fourth generation mobile broadband and mobile multimedia network products for carriers worldwide. Our third quarter operating loss of $91.7 4 million needs to be put in to context and that 40% of that loss was attributed to acquisitions of IPWireless and PacketVideo and 33% of that loss was attributed to 5 non-cash items, amortizations, non-cash compensation expenses, in-process R&D again associated with some of those acquisition. We also in our earnings 6 announcement, touch down some key operation milestone that we reached in the third quarter. First of which was the release of our NW1100 WiMAX chipset. 7 That's our first WiMAX chipset, it's comprised of a baseband system-on-chip and a multi-band RFIC that matched our baseband chip. In the announcement, we 8 made clear that there is a second family of chips coming out which are the NW2000 chips in 2008." 9

10 60. On January 3, 2008, NextWave announced the formation of two new business 11 units, NextWave Mobile Products and NextWave Network Products to enhance the Company's 12 ability to meet growing market demand for its cutting-edge mobile media and wireless broadband

13 products and technologies. NextWave Mobile Products, comprised of the Company's

14 PacketVideo (PV) subsidiary and the company's semiconductor development group, was to 15 develop and deliver advanced multimedia software and content management solutions, baseband

16 and RF chipsets, and device reference designs to network operators and mobile device

17 manufacturers. NextWave Network Products, comprised of NextWave's IPWireless and GO 18 Networks subsidiaries, both companies acquired in 2007, were to begin an immediate transition to

19 the NextWave Wireless brand. The new business unit, which also included NextWave's network

20 services and systems development businesses, was to focus on providing network operators around 21 the world with wireless infrastructure equipment and end-to-end, wireless broadband and mobile

22 broadcast network systems.

23 61. In commenting on this reorganization, Defendant Salmasi stated,

24 In less than three years, NextWave has grown into a global provider of mobile multimedia and wireless broadband solutions to many of the largest network 25 operators and device manufacturers in the world. In recognition of our triple-digit revenue growth, and the fact that we now have more than 1,100 employees in 29 26 international offices, we are realigning our operations into two highly focused business units, NextWave Mobile Products and NextWave Network Products. This 27 will help us sustain our rate of growth and will make it much easier for us to provide our customers with solutions that seamlessly integrate our wide range of 28 innovative products and technologies." 47 3:08-CV-01697 LAB (WMC)

1 62. After this re-organization announcement, Roy Berger sold stock in NextWave as 2 follows: 3 Date Amount Proceeds 01/07/08 15,400 $84,858.62 4 01/08/08 2,500 $13,750.00 01/10/08 16,714 $91,942.04 5 02/12/08 40,000 $227,002.00

6 63. On March 13, 2008, the Company filed its Form 10-K for year end 2007 ("2007 10 7 K"), signed by Defendants Salmasi and Alex. The 2007 10-K stated that "[biased on the operating

8 plan for the year ended December 27, 2008 approved by our board of directors, management

9 believes our existing cash, cash equivalent and marketable securities, the release of the $75 million 10 of restricted cash . . . and cash forecasted to be generated by operations will be sufficient to meet

11 our estimated working capital." The 10-K further provided that the Company's WiMAX

12 semiconductor products would initially be available for commercial sale in the first half of 2008. 13 Revenue generated from the sale of the WiMAX products would alleviate some of NextWave's

14 working capital requirements. Defendants disclosed in the 2007 10-K that at December 29, 2007,

15 the close of fiscal 2007, $102.2 million, or 90%, of NextWave's marketable securities were 16 invested in auction rate securities. Such securities are highly risky and speculative bonds, the

17 liquidity of which are subject to the weekly auctions, artificially maintained by the investment

18 houses and banks that sponsored the issuance of the auction rate securities. Defendants included 19 in the 2007 10-K the certifications required by Section 906 of SOX, signed by Defendants Salmasi

20 and Alex on March 13, 2008, each certifying that the "information included in [the 2007 10-K]

21 fairly present[s] in all material respects the financial condition [and] results of operations" of the 22 Company.

23 64. On March 14, 2008, NextWave reported its fourth quarter and fiscal year 2007

24 financial results, in a release which stated in part:

25 Reported revenue for fiscal 2007 was $59.1 million, representing a 143 percent revenue growth over reported 2006 revenue of $24.3 million. 26 "Our accelerated 2007 revenue growth was driven by our success in developing 27 and delivering cutting-edge mobile broadband and multimedia products and technologies to our worldwide customers. We are very pleased that sales of all of 28 our major products, including our industry-leading embedded software and mobile 48 3:08-CV-01697 LAB (WMC)

1 broadband network systems, experienced excellent revenue growth and topped $106.6 million in shipped revenue in 2007," said Allen Salmasi, chairman and 2 chief executive officer of NextWave Wireless Inc. "2007 was an exceptional year for our company on many levels. We grew revenues and expanded our global 3 customer base; completed key strategic alliances and acquisitions; added to our world class technical and managerial team; and introduced multiple breakthrough 4 technologies and products, including the mobile TV, 40 semiconductor, mobile multimedia platforms, and WiMAX and LTE network products that we announced 5 in the first quarter of 2008."

6

7 "It is clear that our investments since formation have propelled the company into a leader in mobile TV and broadband multimedia technologies. We are now 8 delivering complete end-to-end technology platforms and products to our customers around the world, creating a new generation of personalized and 9 advertising supported mobile multimedia over broadband devices and services," added Mr. Salmasi. "As a result of the significant investments we made during 10 2007, we have charged into 2008 with a broad suite of new and innovative mobile multimedia and wireless broadband products. During the first quarter of 2008, we 11 have already made significant product, customer and partnership announcements - Orange and T-Mobile will launch a commercial pilot of our UMTS-based TDtv 12 broadcast solution in London this summer; our MXtv broadcast solution already implemented in our WiMAX chipsets and network products, and made available 13 through partnerships with leading network equipment suppliers Alcatel-Lucent and Huawei, offering up to 45 high quality broadcast channels on personal handsets or 14 other handheld multimedia capable devices in every 10 MHz of spectrum; over- the-air demonstrations of first commercial quality WiMAX smartphone and 15 Personal Media Player (PMP) reference designs delivering high quality VoIP and multimedia applications; the recently announced matchbox-sized mobile broadcast 16 receiver that enables viewing of most of the major mobile broadcast technologies on a wide range of existing mobile devices; and a new highly advanced base 17 station platform that provides for a migration path and/or simultaneous operations of WiMAX and LTE technologies in the same base station, thus future-proofing 18 our customers' technology decisions and significant investments into 40 network infrastructure today." 19 20 65. In selecting certain year 2007 events to highlight, NextWave emphasized that it:

21 • Listed on NASDAQ (WAVE);

22 • Raised $351.1 million of new capital; 23 • Launched business operations in Argentina, Brazil, China, Denmark, 24 Japan, and Korea, to expand our global sales and marketing capabilities;

25 • Acquired six companies, including IPWireless, the world leader in UMTS 26 TD-CDMA technology and a leading developer of LTE technology; GO Networks, a global leader 27 in carrier-grade Wi-Fi systems; and WiMAX Telecom AG, one of the pioneers of WiMAX

28 technology in Europe; 49 3:08-CV-01697 LAB (WMC) 1 • Increased the Company's global spectrum portfolio by 142 million POPs, 2 acquiring spectrum licenses in Austria, Argentina, Canada, Croatia, Germany, Norway, Slovakia 3 Switzerland and the US for a total of 390 million POPs; 4 • Announced a family of advanced second generation WiMAX chipsets, 5 designed for high volume commercial production in the second half of 2008 which will initially be 6 available through early reference design sample chips scheduled for delivery in the second quarter 7 of fiscal 2008; 8 • Surpassed the 600 unit milestone with deliveries of UMTS base stations to 9 T-Mobile's 4th generation wireless broadband network in the Czech Republic; 10 • Completed the phase one of deliveries of the state-of-the-art wireless 11 broadband network for public safety applications to the City of New York; 12 • Awarded product acceptance by the U.S. government's Rural Development 13 agency, which is promoting and funding broadband networks in rural communities tlu-oughout the 14 United States; 15 • Was chosen by the State of Rio de Janeiro in Brazil to provide carrier class 16 WiFi networks for its program to set benchmarks for wireless networks for cities tlu-oughout the 17 state; 18 • Was named as a founding member and was awarded the sole responsibility 19 for the multimedia subsystem of the Android platform being implemented by the Open Handset 20 Alliance led by Google; 21 • Was recognized as one of the year's best technology companies by winning 22 the prestigious American Electronics Association High Tech Award in the category of 23 communications products and services; 24 • Reported that its software now powers more than 170 million multimedia 25 mobile devices worldwide as of December 2007; 26 • Announced and demonstrated PVConnect(TM) product line which links 27 the home or private networks with mobile phones for content sharing, discovery and management; 28 50 3:08-CV-01697 LAB (WMC) 1 and 2 • Reorganized the Company into two highly integrated new business units - 3 NextWave Mobile Products and NextWave Network Products - to accelerate the development and 4 delivery of wireless broadband and multimedia products to customers around the world. 5 66. Shortly thereafter, on March 28, 2008, NextWave announced that is would 6 showcase its next-generation WiMAX semiconductors, WiMAX and UMYS mobile broadcast 7 technologies . . . at the upcoming CTIA WIRELESS 2008 show in Las Vegas. On April 1, 2008, 8 NextWave announced that it began demonstrations of their NW2000 family of mobile WiMAX 9 silicon solutions at the CTIA Wireless 2008 conference in Las Vegas. 10 67. On April 14, 2008, NextWave filed its Form10-K for the year-ended December 31, 11 2007, as well as its 2007 Annual Report. Defendant Salmasi penned a letter to shareholders in 12 which he wrote: 13 At NextWave, we provide the industry's leading mobile operators and mobile 14 device manufacturers with the enabling wireless semiconductors, mobile broadband and multimedia systems, and software technologies they need to 15 successfully navigate this exciting and challenging transition.

16 2007 was a year of noteworthy growth for our company. Driven by sales of our wireless broadband network equipment and subscriber devices and by the 17 continued growth in mobile device software royalties by our PacketVideo subsidiary, we grew our GAAP revenues to over $59 million, an annual growth 18 rate of 143 percent, and exceeded $106 million in shipped revenues. We also increased our worldwide team of engineering and business professionals to over 19 1,300 people to boost our sales and customer support capabilities, and to accelerate the pace of our product development activities. This revenue growth and 20 workforce increase was a direct result of the substantial investments we made in research and development in the expansion of our global operations. 21 In 2007, we invested $150 million in research and development, a nearly $100 22 million increase over 2006. We invested $191 million in the acquisition of complementary businesses, including IPWireless and GO Networks; and we 23 invested $86 million in the acquisition of domestic and foreign spectrum licenses. While these investments contributed to significantly larger losses in 2007, we 24 believe they were necessary to help us achieve the scale and technical capabilities needed to succeed in the highly competitive global wireless market. 25 As a technology company, one of our key goals is to commercialize our technical 26 innovations as quickly as possible. For NextWave, 2007 will be remembered as the year when we made the first customer deliveries of our mobile broadband 27 network equipment and when we began the process of transitioning some of our most promising wireless technologies out of the lab and into pre-production. 28 These include our first family of WiMAX semiconductors to power next- 51 3:08-CV-01697 LAB (WMC)

1 generation WiMAX handsets and our ground-breaking MXtv mobile broadcast system that will let customers watch live TV and movies using a WiMax-enabled 2 mobile device. We are optimistic that demand for these technologies, along with our other WiMax products, will increase as the global market for WiMAX-based 3 network equipment and devices continues to expand.

4 2007 was also a year of both rapid strategic growth and demanding change for NextWave. We acquired six companies, including IPWireless, a leader in UMTS 5 mobile broadband technology; GO Networks, a global leader in carrier-grade Wi- Fi systems; and WiMAX Telecom AG, one of the pioneers of WiMAX technology 6 in Europe. Equally important, to help us meet the challenges of integrating these companies while navigating another year of rapid industry change, we streamlined 7 our global operations into two business units, NextWave Mobile Products and NextWave Network Products. 8

9 Major 2007 Business Milestones 10 In 2007, we began to commercialize some of our most innovative technologies, expanded our valuable spectrum portfolio, and further enhanced the financial 11 strength of the company. Some of the year's major milestones were: 12

13 • We expanded our global spectrum portfolio to 390 million POPs (an increase of 142 million POPs) . 14 • We announced the roadmap for our WiMAX chipset platforms and began 15 shipping samples of our NW1100 baseband System-on-a-Chip (SoC) and its companion multi-band RFIC, the NW1200, and associated system 16 software; * * * 17 • We completed phase-one deliveries of our state-of-the-art wireless broadband network equipment in connection with the City of New York's 18 new wireless public safety network; and 19 • We delivered our 600th UMTS mobile base station to T-Mobile for deployment in their next-generation "internet 40" wireless broadband 20 network in the Czech Republic. 21

22 2008 is already shaping up to be a milestone-rich year for NextWave. In February, after a thorough evaluation of competing mobile broadcast technologies, Orange 23 and T-Mobile, two of the world's largest mobile operators, announced their selection of NextWave's TDTV mobile broadcast system for a joint mobile TV 24 commercial pilot in London. Also in February, we announced our TDTV device integration pack to provide mobile handset manufacturers the ability to easily 25 integrate our TDTV technology into their future mobile phone products. In March, we launched MXTV, an inventive WiMAX mobile TV technology for 26 mobile operators that requires no additional spectrum or network radio infrastructures. Global network infrastructure providers Alcatel-Lucent and 27 Huawei have already announced plans to integrate our MXTV technology into their next-generation WiMAX network solutions. 28 52 3:08-CV-01697 LAB (WMC)

1 68. Later in the Annual Report, with respect to a presentation on Semiconductors, it 2 was stated: 3 Our NW2000 WiMAX chipset family includes the 65 nanometer WiMAX 4 baseband SoC and a companion multi-band RFIC. Available in 2008, this chipset incorporates the latest in cutting-edge silicon technologies, including our 5 breakthrough MXTV mobile broadcast technology, integrated Wi-FI, and sophisticated power saving techniques. These advanced chips support worldwide 6 frequency deployment and roaming and are optimized for a wide range of WiMAX devices, including mobile handsets and personal media players. 7

8 69. On April 24, 2008, NextWave announced that it retained Deutsche Bank and UBS 9 Investment Bank to explore the sale of its extensive spectrum holdings in the United States

10 Defendant Salmasi explained:

11 Since the completion of the recent 700 MHz auction, we have received multiple offers for our U.S. spectrum assets. Given our continued success in 12 developing highly differentiated wireless broadband and multimedia-enabled products, we no longer view our spectrum holdings as critical to reaching our 13 product sales objectives, and believe that now is the perfect time for us to sell these valuable assets while network operators are trying to finalize their band plans 14 and spectrum holdings for their continuing 30 and planned 40 rollouts. Monetizing the value of our substantial spectrum assets would allow us to further 15 strengthen our balance sheet, retire debt, and continue the commercial introduction of a wide range of innovative wireless broadband and multimedia solutions such as 16 our high-performance WiMAX and RFIC chipsets, advanced multi-mode, multi- band TD-CDMA, WiMAX and LTE enabled base station platforms, breaktlu-ough 17 MXtv(TM) and TDtv(TM) mobile television systems, highly advanced mobile multimedia software solutions and platforms that we are now bringing into 18 commercial deployments globally with many of the largest mobile operators and device manufactures in the world. 19 20 70. On May 8, 2008, the Company reported its first quarter fiscal 2008 financial 21 results, in a release which stated in part:

22 NextWave reported GAAP revenues of $26 million for the first quarter of 2008, a $5.2 million or 25 percent increase over the fourth quarter of 2007. The 23 significant increase in quarterly revenue was driven by increased sales of NextWave's wireless broadband network equipment and subscriber devices and by 24 the continued growth in mobile device software royalties generated by the Company's PacketVideo subsidiary. Additionally, the Company reported $3.5 25 million quarter-over-quarter growth, or a 6 percent increase, in both short term and long term deferred revenue which generally represents billed product and royalties 26 for which payment is received but is not immediately eligible for US GAAP revenue recognition due to the accounting principles associated with multi-element 27 arrangements. Accordingly, billed revenues for the quarter were $29.5 million.

28 "We continue to see growing demand for PacketVideo's industry-leading 53 3:08-CV-01697 LAB (WMC)

1 multimedia software and our advanced mobile broadband network solutions," said Allen Salmasi, chairman and chief executive officer of NextWave Wireless Inc. 2 "In addition, we expect to begin generating revenues from our recently announced second-generation WiMAX chipsets and network products, our breaktlu-ough 3 MXtvTM and TDtv Tm mobile television systems, and PacketVideo's TellyTm pocket mobile broadcast receiver later this year." 4 NextWave reported that its loss from operations for the first quarter of 5 2008 was ($79.6) million, a decrease of $16.6 million or 17 percent over the fourth quarter of 2007. The first quarter of 2008 loss from operations includes $21.3 6 million of non-cash expenses. These non-cash expenses include $8.8 million of intangible asset amortization expenses, $8.5 million in employee compensation 7 expenses for share-based compensation and performance bonuses, and $4.0 million of depreciation and other non-cash operating expenses. Excluding these 8 non-cash operating expenses of $21.3 million, the cash-based loss from operations for the first quarter of 2008 was ($58.3) million, compared to ($66.5) million for 9 the fourth quarter of 2007, a decrease of $8.2 million. This decrease was primarily due to increased revenues of $5.2 million and decreased operating expenses of 10 $3.0 million. 11 "Driving revenues and developing cutting-edge mobile technologies while maintaining a tight focus on costs remains our top priority," Salmasi added. "Our 12 decision earlier this year to eliminate operational redundancies and streamline our global operation into two business units is just one example of our commitment to 13 aggressively manage costs." 14

15 NextWave's cash, cash equivalents, marketable securities, and restricted cash totaled $142.5 million at the end of the first quarter of 2008, compared to 16 $241.9 million at the end of the fourth quarter of 2007. 17

18 The Company utilized $99.4 million of cash in the first quarter of 2008 of which $58.3 million was used in operations; $13.4 million was used for spectrum 19 lease payments, spectrum purchases, and capital expenditures; $13.2 million in working capital and other operating expenses; $10.1 million was used to pay net 20 interest expense; and $4.4 million was paid to the selling shareholders of IPWireless (acquired in the second quarter of 2007) as a result of the achievement 21 of certain product shipment milestones in 2007.

22 71. On May 8, 2008, the Company filed its Form 10-Q for the first quarter of 2008 23 ("Q1 2008 10-Q"), signed by Defendant Alex on May 7, 2008, which included the same financial 24 results previously reported. Defendants stated in the Q1 2008 10-Q that "[management believes

25 our existing cash and cash equivalents, along with the release of $50.0 million of restricted cash

26 based on our payment of consent fees in March and April 2008 in accordance with amended 27 purchase agreement for the Notes . . . and the cash forecasted to be generated by operations, as

28 well as a combination of the following potential sources of cash will be sufficient to meet our 54 3:08-CV-01697 LAB (WMC) 1 estimated working capital and capital expenditures requirements tlu-ough at least March 2009." 2 The 10-Q further provided that the Company's WiMAX semiconductor products would initially be 3 available for commercial sale in the first half of 2008. Revenue generated from the sale of the 4 WiMAX products would alleviate some of NextWave's working capital requirements. Defendants 5 included in the Q1 2008 10-Q the certifications required by Section 906 of SOX, signed by 6 Defendants Salmasi and Alex on May 7, 2008, each certifying that the "information included in 7 [the Q1 2008 10-Q] fairly present[s] in all material respects the financial condition [and] results of 8 operations" of the Company. 9 72. On July 24, 2008, NextWave announced that it signed agreements with four 10 parties to sell a portion of its AWS license portfolio, representing 63% of its total AWS MHz- 11 pops, for a total of $150.1 million. "The sale of our AWS spectrum is just the first step in 12 maximizing the value of our spectrum portfolio," said Allen Salmasi, chief executive officer and 13 president of NextWave Wireless. "We will continue to monetize our remaining spectrum assets in 14 the U.S. and are working with Deutsche Bank and UBS Investment Bank to achieve our spectrum 15 sale objectives." 16 THE TRUTH IS REVEALED 17 73. Then, on August 7, 2008, after the market closed, NextWave issued a press release 18 entitled "NextWave Wireless Announces Second Quarter 2008 Financial Results," which stated in 19 part: 20 NextWave reported revenues of $31.8 million for the second quarter of 2008, a $5.8 million or 22 percent increase over the first quarter of 2008. The 21 significant increase in quarterly revenue was driven by increased sales of NextWave's wireless broadband network equipment and subscriber devices and by 22 the continued growth in mobile device software revenues generated by the Company's PacketVideo subsidiary. 23 For the first six months of 2008, revenues were $57.8 million compared to 24 $20.6 million for the first six months of 2007, an increase of $37.2 million or 181 percent. The increase in revenues year-over-year is primarily related to the 25 acquisition of IPWireless, Inc. in May 2007 and continued sales growth and market penetration in mobile subscriber services by PacketVideo. 26 "The 22 percent revenue growth we achieved this quarter reflects the 27 investments we have made in developing industry-leading mobile multimedia and wireless broadband technologies," said Allen Salmasi, chairman and chief 28 executive officer of NextWave Wireless Inc. "However, we are feeling the effects 55 3:08-CV-01697 LAB (WMC)

1 of a slowing global economy on our business. This has resulted in lower than anticipated sales of our 3GPP and 114-Fi based network products and a delay in 2 WiMAX network deployments that will continue to impact projected sales of our WiMAX semiconductor products." 3 NextWave reported a loss from operations of $65.7 million for the second 4 quarter of 2008, a decrease of $13.9 million or 17 percent over the first quarter of 2008. The second quarter 2008 loss from operations includes $14.3 million of non- 5 cash expenses. These non-cash expenses include $8.4 million of wireless spectrum and intangible asset amortization expenses and $5.9 million of depreciation and 6 other non-cash operating expenses. Excluding these non-cash operating expenses of $14.3 million, the cash-based loss from operations for the second quarter of 7 2008 was $51.4 million, compared to $58.3 million for the first quarter of 2008, a decrease of $6.9 million primarily due to an increase in revenues and a reduction 8 in operating expenses.

9 Total reported net interest expense in the second quarter of 2008 was $18.4 million compared to $13.1 million in the first quarter of 2008, an increase of $5.3 10 million. This increase was primarily due to $7.0 million in financing consent fees related to the withdrawal of $50.0 million from the cash reserve account related to 11 the Senior Notes compared to $3.5 million being paid in the first quarter.

12 Net loss available to common shares for the second quarter 2008 was $91.8 million, or $0.89 per share, compared to a net loss available to common shares of 13 $102.2 million, or $1.09 per share for the first quarter of 2008. The decrease in net loss available to common shares is due to increased revenues and a reduction in 14 operating expenses, offset by an increase in interest expense.

15 For the first six months of 2008, net loss available to common shares was $194.0 million, or $1.97 per share, compared to $121.7 million, or $1.41 per share 16 for the first six months of 2007. The increase in net loss year over year is primarily related to acquisitions that were not present in the first half of 2007 as well as an 17 increase in development spending.

18 Since the filing of the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 29, 2008, several factors have negatively impacted 19 the Company's current and future operations and potential sources of funding. These factors include adverse worldwide economic conditions, which the 20 Company believes have adversely affected manufacturers of telecommunications equipment and technology and caused the NextWave Network Products group to 21 experience lower than projected contract bookings and sales. The Company believes these conditions have also led to a delay in global WiMAX network 22 deployments that will continue to impact the timing and volume of projected commercial sales of its WiMAX semiconductor products. In addition, the 23 Company's efforts to sell certain of its U.S. spectrum assets on favorable terms has been delayed by current market conditions, as well as regulatory and other market 24 activities involving potential buyers.

25 Nextirave's cash, cash equivalents, marketable securities, and restricted cash totaled $71. 1 million at the end of the second quarter of 2008, compared to 26 $142.5 million at the end of the first quarter of 2008. The Company utilized $71.4 million of cash in the second quarter of 2008 of which $51.4 million was 27 used in operations; $7.8 million was used for spectrum lease payments, spectrum purchases, and capital expenditures; $7.0 million was paid in financing consent 28 fees; and $5.2 million was used in working capital and other activities. 56 3:08-CV-01697 LAB (WMC)

1 The Company currently believes its existing cash and cash equivalents, 2 along with the $4.9 million received in July 2008 from the settlement of its escrow claim related to the acquisition of IPTiVireless, Inc., and the $21.5 million 3 received in August 2008 from a collateralized borrowing against the Company's auction rate securities will be sufficient to meet its estimated working capital 4 requirements into September 2008. If the Company does not obtain further financing in September 2008, it would not be able to meet its financial 5 obligations at the beginning of the fourth quarter of 2008, will not be able to continue its operations in the normal course of business and may be forced to 6 restructure its obligations. If the Company successfully obtains financing, it will continue to seek buyers for its U.S. spectrum assets as previously disclosed, and 7 will explore additional options for further cost reductions. 8 "In order to meet our estimated working capital requirements through June 2009, we are in the process of negotiating the terms for $100 to $200 million of 9 additional financing," added Salmasi. "We are working on a $100 million private placement of junior preferred stock to be completed in September 2008, subject to 10 the execution of definitive agreements and board approvals. In addition, we are also exploring the possibility of obtaining up to $100 million in second lien debt 11 financing."

12 In July 2008, as part of a global cost reduction initiative, the Company announced plans to consolidate its network product engineering and development 13 activities at its facility in the United Kingdom. This consolidation is expected to reduce the Company's worldwide workforce by approximately 132 employees. 14 The Company is reviewing other cost reduction measures, including additional operational consolidations, in response to current and anticipated marketplace 15 conditions.

16 On July 23, 2008, the Company announced that it had signed agreements with four parties to sell a portion of its AWS license portfolio, representing 63% of 17 its total AWS MHz-pops, for a total of $150.1 million. Pursuant to the terms of NextWave's Senior Notes, $75 million of the proceeds from the sale will be 18 deposited into a restricted cash collateral account and $75 million will be used to redeem a portion of the Notes. NextWave's remaining U.S. spectrum assets 19 include 2.8 billion MHz-pops of 2.3 GHz WCS spectrum, 972 million MHz-pops of 2.5 GHz BRS/EBS spectrum, and 348 million MHz pops of AWS spectrum. In 20 addition, the Company has 5.9 billion MHz-pops of spectrum in Europe, Canada, and South America. In April 2008, NextWave announced that it had retained 21 Deutsche Bank and UBS Investment Bank to explore the sale of its U.S. spectrum assets. The Company has also retained Canaccord Adams to explore the sale of its 22 Canadian spectrum assets. The Company's efforts towards monetization of its remaining domestic and international spectrum tlu-ough the investment banks and 23 direct discussions with interested parties will remain on-going.

24 74. On this news, NextWave's stock plummeted $1.90 per share to close at $0.95 per 25 share, a one-day decline of 67% on volume of 12.5 million shares; over 50 times the average 26 three-month volume. 27 75. Defendants' statements in NextWave's SEC Forms 10-K and 10-Q and in its press 28 57 3:08-CV-01697 LAB (WMC) 1 releases quoted above in tf3 9-56, 58-61, and 63-72 were false and misleading when made and 2 failed to disclose material facts as follows, supported by information provided by the Confidential 3 Witnesses as alleged in tf 7-10, 20-31: 4 (a) NextWave did not have adequate sources of liquidity to continue 5 operations as it executed its growth strategy and continued making aggressive worldwide 6 acquisitions; 7 (b) NextWave did not have the wherewithal to launch its new WiMAX 8 semiconductor products in the first six months of 2008; 9 (c) NextWave's growth and acquisition strategy was not financially successful, 10 was undertaken without proper due diligence or in the face of due diligence that said not to 11 undertake the acquisition and did not provide the basis for continued growth or financial success 12 because it was straining NextWave's fragile liquidity position and NextWave did not have the 13 financial resources to continue to operate its world-wide operations through the end of 2008; 14 (d) NextWave failed to timely disclose that it had invested all of its marketable 15 securities in extremely high-risk and illiquid auction rate securities and had misrepresented these 16 investments as marketable securities on its balance sheet included in its financial statements 17 disseminated in its Forms 10-K and 10-Q and press releases, referenced above; 18 (e) Defendants had no reasonable basis to make favorable statements that the 19 Company's WiMAX semiconductor products would be available for commercial sale in the first 20 half of 2008 when the facts available to Defendants concerning the development and marketing of 21 the Company's WiMAX semiconductor products indicated that they would not be available for 22 commercial sale until at least the first half of 2009 and that the delay in sale of the WiMAX 23 products would put further pressure on the Company's liquidity position; and 24 NextWave's ability to continue as a going concern was seriously in 25 question by reason of the facts alleged in subparagraphs (a)-(e) above. 26 76. As a result of Defendants' false statements, NextWave's stock traded at inflated 27 levels during the Class Period. However, after the above revelations seeped into the market, the 28 58 3:08-CV-01697 LAB (WMC)

1 Company's shares were hammered by massive sales, sending them down 92% from their Class 2 Period high. 3 SUBSEQEUNT EVENTS 4 Loss Causation/Economic Loss 5 77. By misrepresenting demand for NextWave's products, the Defendants presented a 6 misleading picture of NextWave's business and prospects. Thus, instead of truthfully disclosing 7 during the Class Period that NextWave's business was not as healthy as represented, Defendants 8 misrepresented the demand for NextWave's products and its actual business prospects going 9 forward. 10 78. These claims of profitability caused and maintained the artificial inflation in 11 NextWave's stock price tlu-oughout the Class Period and until the truth was revealed to the market. 12 79. Defendants' false and misleading statements had the intended effect, and caused 13 NextWave stock to trade at artificially inflated levels throughout the Class Period, reaching as high 14 as $12.75 per share in January 2007. 15 80. As a direct result of Defendants' admissions and the public revelations regarding 16 the truth about demand for NextWave's products and its actual business prospects going forward, 17 NextWave's stock price plummeted $1.90 per share to close at $0.95 per share, a one-day decline 18 of 67% on volume of 12.5 million shares, over 50 times the average three-month volume. 19 81. The drops in NextWave's stock price removed the inflation from NextWave' 20 stock, causing real economic loss to investors who had purchased the stock during the Class 21 Period. 22 CLASS ACTION ALLEGATIONS 23 82. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal 24 Rules of Civil Procedure on behalf of all persons who purchased or otherwise acquired NextWave 25 common stock during the Class Period (the "Class"). Excluded from the Class are Defendants. 26 83. The members of the Class are so numerous that joinder of all members is 27 impracticable. The disposition of their claims in a class action will provide substantial benefits to 28 59 3:08-CV-01697 LAB (WMC)

1 the parties and the Court. NextWave has over 103 million shares of stock outstanding, owned by 2 hundreds if not thousands of persons. 3 84. There is a well-defined community of interest in the questions of law and fact 4 involved in this case. Questions of law and fact common to the members of the Class which 5 predominate over questions which may affect individual Class members include: 6 (a) whether Defendants violated the 1934 Act; 7 (b) whether Defendants omitted and/or misrepresented material facts; 8 (c) whether Defendants' statements omitted material facts necessary to make 9 the statements made, in light of the circumstances under which they were made, not misleading; 10 (d) whether Defendants knew or deliberately disregarded that their statements 11 were false and misleading; 12 (e) whether the price of NextWave's common stock was artificially inflated; 13 and 14 the extent of damage sustained by Class members and the appropriate 15 measure of damages. 16 85. Plaintiff's claims are typical of those of the Class because Plaintiff and the Class 17 sustained damages from Defendants' wrongful conduct. 18 86. Plaintiff will adequately protect the interests of the Class and has retained counsel 19 who are experienced in class action securities litigation. Plaintiff has no interests which conflict 20 with those of the Class. 21 87. A class action is superior to other available methods for the fair and efficient 22 adjudication of this controversy. 23 COUNT I 24 For Violation of Section 10(b) of the 1934 Act and Rule 10b-5 Against All Defendants 25 88. Plaintiff incorporates tf 1-87 by reference. 26 89. During the Class Period, Defendants disseminated or approved the false statements 27 specified above, which they knew or deliberately disregarded were misleading in that they 28 60 3:08-CV-01697 LAB (WMC) 1 contained misrepresentations and failed to disclose material facts necessary in order to make the 2 statements made, in light of the circumstances under which they were made, not misleading. 3 90. Defendants violated § 10(b) of the 1934 Act and Rule 10b-5 in that they: 4 (a) employed devices, schemes and artifices to defraud; 5 (b) made untrue statements of material facts or omitted to state material facts 6 necessary in order to make the statements made, in light of the circumstances under which they 7 were made, not misleading; or 8 (c) engaged in acts, practices and a course of business that operated as a fraud 9 or deceit upon Plaintiff and others similarly situated in connection with their purchases of 10 NextWave common stock during the Class Period. 11 91. Plaintiff and the Class have suffered damages in that, in reliance on the integrity of 12 the market, they paid artificially inflated prices for NextWave common stock. Plaintiff and the 13 Class would not have purchased NextWave common stock at the prices they paid, or at all, if they 14 had been aware that the market prices had been artificially and falsely inflated by Defendants' 15 misleading statements. 16 COUNT II 17 For Violation of Section 20(a) of the 1934 Act Against All Defendants 18 92. Plaintiff incorporates tf 1-91 by reference. 19 93. The Individual Defendants acted as controlling persons of NextWave within the 20 meaning of § 20(a) of the 1934 Act. By reason of their positions with the Company, and their 21 ownership of NextWave stock, the Individual Defendants had the power and authority to cause 22 NextWave to engage in the wrongful conduct complained of herein. NextWave controlled the 23 Individual Defendants and all of its employees. By reason of such conduct, Defendants are liable 24 pursuant to § 20(a) of the 1934 Act. 25 PRAYER FOR RELIEF 26 WHEREFORE, Plaintiff prays for judgment as follows: 27 A. Declaring this action to be a proper class action pursuant to Fed. R. Civ. P. 23; 28 61 3:08-CV-01697 LAB (WMC)

1 B. Awarding Plaintiff and the members of the Class damages, including interest; 2 C. Awarding Plaintiff reasonable costs and attorneys' fees; and 3 D. Awarding such equitable/injunctive or other relief as the Court may deem just and 4 proper. 5 JURY DEMAND 6 Plaintiff demands a trial by jury. 7 DATED: May 15, 2009 HULETT HARPER STEWART LLP 8 KIRK B. HULETT BRIDGET FOGARTY GRAMME 9 10

11 s/KIrk B. Hulett KIRK B. HULETT 12 525 B Street, Suite 760 13 San Diego, CA 92101 14 Telephone: (619) 338-1133 Facsimile: (619) 338-1139 15

16 LAW OFFICES BERNARD M.GROSS PC 17 BERNARD M. GROSS DEBORAH R. GROSS 18 Wanamaker Building, Suite 450 100 Penn Square East 19 Philadelphia, PA 19107 Telephone: (215) 561-3600 20 Facsimile: (215) 561-3000 21 Attorneys for Lead Plaintiff 22 THE WHITE TRUST GROUP 23

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28 62 3:08-CV-01697 LAB (WMC)

1 PROOF OF SERVICE Sandra Lifschitz v. Nextwave Wireless Inc., et al. 2 CASE NO: 3:08-CV-01697 LAB (WMC) Alex Benjamin v. Nextwave Wireless Inc., et al. 3 CASE NO. 3:08-CV-01934 LAB (CAB) 4 I, the undersigned, declare under penalty of perjury that I am over the age of eighteen 5 years and not a party to this action. I am employed in the County of San Diego, State of California. My business address is: 525 B Street, Suite 760, San Diego, CA 92101. 6 That on May 15, 2009, I served the following document(s) entitled: CONSOLIDATED 7 AMENDED COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS 8 on ALL INTERESTED PARTIES in this action.

9• BY MAIL . By placing a true copy thereof in a sealed envelope addressed as listed below, and placing it for collection and mailing following ordinary business practices. I am 10 readily familiar with the firm's practice of collection and processing correspondence, pleadings, and other matters for mailing with the United States Postal Service. The 11 correspondence, pleadings and other matters are deposited with the United States Postal Service with postage thereon fully prepaid in San Diego, California, on the same day in 12 the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if the postal cancellation date or postage meter date is more than one day 13 after date of deposit for mailing in affidavit. 14 Wayne W Smith GIBSON DUNN AND CRUTCHER 15 3161 Michelson Drive Irvine, CA 92612 16 • BY CM/ECF Electronic Service: I caused such document to be served via the Court's 17 (NEF) electronic filling system on all registered parties. 18 fl BY FAX: I transmitted a copy of the foregoing document this date via telecopier to the above referenced counsel, I caused the machine to print a transmission record of the 19 transmission.

20 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on May 15, 2009, at San Diego, California. 21

22 23 /s/ Kirk B. Hulett KIRK B. HULETT 24

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