SC TO-T/A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE TO

Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
Amendment No. 1

NEXT LEVEL COMMUNICATIONS, INC.
(Name of Subject Company (issuer))

MOTOROLA, INC.
(Names of Filing Persons (identifying status as offeror, issuer or other person))

Common Stock, par value $0.01 per Share
(Title of Class of Securities)

65333U 10 4
(CUISIP Number of Class of Securities)

Michelle M. Warner
Motorola, Inc.
1303 East Algonquin Road, Schaumburg, IL 60196
(847) 576-5000
(Name, address, and telephone numbers of persons authorized
to receive notices and communications on behalf of filing persons))

Calculation of Filing Fee

Transaction valuation (1)	Amount of filing fee (2)
$30,432,934	$2,800

(1)

The transaction valuation is estimated solely for purposes of calculating the filing fee pursuant to Rule 0-11(d). The calculation assumes the purchase of all outstanding common shares of Next Level Communications, par value .01 (the "Shares"), not beneficially owned by Motorola, Inc. or its subsidiaries ("Motorola"), at a purchase price of $1.04 Share, net to the seller in cash. As of September 30, 2002, there were 29,262,437 Shares on a fully diluted basis (treating as outstanding, options or share purchase rights subject to issuance at approximately $1.04 or less) not beneficially owned by Motorola or its subsidiaries.



(2)

The amount of the filing fee is calculated in accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934, as amended, and Fee Rate Advisory No. 8 issued by the Securities and Exchange Commission on January 10, 2003. Such fee is equals .0092 percent of the value of the transaction.

ý

Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid:	$2,800
Form or Registration No.:	Not applicable
Filing Party:	Motorola, Inc.
Date Filed:	January 27, 2003

o

Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

ý	third party tender offer subject to Rule 14d-1.
o	issuer tender offer subject to Rule 13e-4.
ý	going-private transaction subject to Rule 13e-3.
o	amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer: o

        Amendment No. 1 amends and supplements the Tender Offer Statement, Rule 13e-3 Transaction Statement and Schedule 13D/A filed under cover of Schedule TO initially filed with the Securities and Exchange Commission on January 27, 2003 by Motorola, Inc., a Delaware corporation ("Motorola") to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Next Level Communications, Inc., a Delaware corporation ("Next Level"), not owned by Motorola or its subsidiaries, at a purchase price of $1.04 per Share net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 27, 2003 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with the Offer to Purchase, constitute the "Offer"). Capitalized terms used herein and not otherwise defined have the respecting meanings ascribed to them in the Offer to Purchase.

Item 1-10

        N/A

Item 11.    Additional Information

        (a)(5)(v)    On February 4, 2003, Next Level, et al., filed a complaint in the Delaware Court of Chancery against Motorola. The complaint alleges the tender offer commenced by Motorola is substantively and structurally coercive and unfair to minority shareholders. Motorola believes this lawsuit to be entirely without merit and intends to defend against it vigorously.

Item 12.    Exhibits

(a)(1)(x)	Text of Press Release issued by Motorola on February 4, 2003.
(a)(5)(v)	Complaint of Next Level, et al., Civil Action No.                         filed in the Court of Chancery of the State of Delaware on February 4, 2003.

Item 13.    Information Required by Schedule 13E-3

        N/A

2

SIGNATURE

        After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

	MOTOROLA, INC.
	By:	/s/  DONALD F. MCLELLAN
	Name:	Donald F. McLellan
	Title:	Corporate Vice President & Director, Corporate Development
Date: February 4, 2003

3

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Item 1-10
Item 11. Additional Information
Item 12. Exhibits
Item 13. Information Required by Schedule 13E-3

SIGNATURE

EX-99.(A)(1)(X)

                                                           EXHIBIT 99(a)(1)(X)

MOTOROLA COMMITTED TO PURSUING TENDER OFFER FOR REMAINING SHARES OF NEXT LEVEL
STOCK

Schaumburg, Ill. -- February 04, 2003 -- Motorola, Inc. (NYSE:MOT) today
expressed its disappointment that the Independent Committee of the Board of
Directors of Next Level Communications, Inc. (NASDAQ:NXTV) chose to recommend
against its offer to purchase the remaining shares of stock Motorola does not
own. As stated in Motorola's Offer to Purchase, approval of the Next Level board
of directors is not required for Motorola to continue its tender offer, which it
intends to do. Motorola believes its offer of $1.04 per share is fair given Next
Level's prospects. Claims made by Next Level and several of its shareholders are
not supported by fact nor established precedent and Motorola will vigorously
defend against those unmeritorious claims.

Motorola believes Next Level's value prospects are uncertain given its cost and
capital structure and urges shareholders to carefully evaluate its offering
materials prior to making a decision.

ABOUT THE TENDER OFFER

In order to protect the integrity and fairness of the process, the offer is
conditioned upon, among other things (1) the tender of a majority of Next Level
shares not held by Motorola and its affiliates, and (2) unless waived, Motorola
owning at least 90% of the outstanding Next Level common stock as a result of
the tender offer or otherwise. The tender is not conditioned on Motorola
obtaining any financing. Any shares not acquired in the tender offer will be
acquired in a subsequent "short form" merger transaction at the same $1.04 per
share cash price.

Motorola commenced the tender offer on January 27, 2003 and the offer will
expire at 5:00 p.m., New York City Time, on Tuesday, February 25, 2003
(unless extended).

NOTICE FOR NEXT LEVEL SECURITYHOLDERS

Next Level securityholders and other interested parties are urged to read
Motorola's tender offer statement and other relevant documents filed with the
SEC because they contain important information. Next Level securityholders will
be able to receive such documents free of charge at the SEC's web site,
www.sec.gov, or from Motorola, Inc. at 1303 E. Algonquin Road, Schaumburg,
Illinois 60196, ATTN: Investor Relations.


ABOUT MOTOROLA
Motorola, Inc. (NYSE:MOT) is a global leader in providing integrated
communications and embedded electronic solutions. Sales in 2002 were $26.7
billion. Motorola is a global corporate citizen dedicated to ethical business
practices and pioneering important technologies that make things smarter and
life better for people, honored traditions that began when the company was
founded 75 years ago this year. For more information, please visit:
WWW.MOTOROLA.COM.

BUSINESS RISKS

Statements in this news release that relate to consummation of the tender offer
and any subsequent merger and the impact of the reintegration of Next Level into
Motorola described herein are "forward-looking statements". These statements are
based on management's current expectations and involve risks and uncertainties
which include whether the conditions to the tender offer will be satisfied and,
following the consummation of the tender offer and the merger, Motorola's
ability to successfully reintegrate Next Level operations, retain key employees,
reduce costs, general economic factors and capital market conditions, and
general industry trends. Motorola wishes to caution the reader that these
factors, as well as other factors described in Motorola's SEC filings, are among
the factors that could cause actual results to differ materially from the
expectations described in the forward-looking statements.

# # #

MEDIA CONTACT:
Jennifer Weyrauch
847-435-5320
Jennifer.weyrauch@motorola.com

EX-99.(A)(5)(V)

                                                               EXHIBIT (a)(5)(v)

                IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

                          IN AND FOR NEW CASTLE COUNTY

NEXT LEVEL COMMUNICATIONS,                   )
INC., a Delaware corporation,                )
NEXT LEVEL PARTNERS, LLC,                    )
a Delaware limited liability company,        )
SPENCER SEGURA, and JACQUELYN                )
SEGURA,                                      )
                                             )        C.A. N0. ___________
                Plaintiffs,                  )
                                             )
    v.                                       )
                                             )
MOTOROLA, INC.,                              )
a Delaware corporation,                      )
                                             )
                    Defendant.               )

                               VERIFIED COMPLAINT

     Plaintiffs Next Level Communications, Inc. ("Next Level" or the "Company"),
Next Level Partners, LLC ("NLP"), Spencer Segura, and Jacquelyn Segura, for
their verified complaint against defendant Motorola, Inc. ("Motorola"), allege,
upon knowledge as to themselves and their own acts and upon information and
belief as to all other matters, as follows:

                              NATURE OF THE ACTION

     1.    This action is brought to stop a coercive, unfair tender offer (the
"Tender Offer") commenced by Motorola, the controlling stockholder of Next
Level. In preparing for and making the Tender Offer, Motorola obtained highly
confidential, non-public, proprietary information about Next Level. Motorola
then used this information to plan, formulate and launch the Tender Offer in
violation of a Non-Disclosure Agreement (the "NDA") dated April 20, 2001 between
Motorola and Next Level. Moreover, Motorola has not disclosed the highly
confidential, non-public, proprietary information about Next Level on which it
relied in making the Tender Offer. Indeed, the NDA



prohibits Motorola from disclosing this information, and Motorola cannot
disclose the information without causing irreparable harm to the Company in
breach of Motorola's fiduciary duties. Motorola's use of undisclosed and
undisclosable information for its own benefit in launching the Tender Offer
constitutes impermissible insider trading in breach of Motorola's fiduciary
duties to Next Level and its minority stockholders. Equally important, in
preparing for and making the Tender Offer, Motorola violated its fiduciary
duties by, INTER ALIA, (i) timing the Tender Offer in an attempt to
substantively coerce Next Level's minority stockholders into tendering; (ii)
structuring the Tender Offer to provide inadequate protections in an attempt to
coerce Next Level's minority stockholders into tendering; (iii) threatening Next
Level's stockholders with retribution by stating that Motorola will withhold
financial, product and customer support if the Tender Offer does not succeed,
then refusing to provide reassurances requested by Next Level; (iv) taking
advantage of highly restrictive blocking provisions in preferred stock that
Motorola previously caused Next Level to issue to Motorola to prevent Next
Level's directors from resisting the Tender Offer and carrying out their
fiduciary duties to safeguard the interests of the Company and all of its
stockholders; and (v) disseminating disclosure documents containing materially
false and misleading statements and omissions to Next Level's minority
stockholders in connection with the Tender Offer.

     2.    First, purportedly to assess Next Level's business model and
determine whether its technology was viable, Motorola conducted due diligence on
Next Level beginning in August 2002 and extending through January 2003. Motorola
reviewed highly confidential, non-public and proprietary Next Level documents
and information and received multiple presentations from Next Level senior
management containing customer information and revenue projections. Under the
NDA, Motorola was permitted to use this information only "in conjunction with
entering into a

                                       -2-


business relationship for the sale of Next Level Products." In violation of the
NDA, Motorola used and continues to use this information to prepare, launch and
carry out the Tender Offer.

     3.    Second, Motorola's use of inside information that it has not and
cannot disclose to prepare, launch and carry out its Tender Offer constitutes
illegal insider trading in breach of Motorola's fiduciary duties to Next Level
and its minority stockholders. Motorola has and cannot disclose the internal
Next Level documents and information on which it relied. The NDA prohibits
Motorola from disclosing this information. Any disclosure by Motorola of Next
Level's highly confidential, non-public and proprietary information likewise
would inflict irreparable injury on Next Level and constitute a breach of
Motorola's fiduciary duties. Motorola therefore cannot continue with its Tender
Offer.

     4.    Third, Motorola has breached its fiduciary duties by deliberately
timing the Tender Offer so it is substantively coercive and takes advantage of
Next Level's depressed stock price. Next Level possesses material information
about its future prospects, including customer information and potential
revenues, that has not been and cannot be disclosed to the market because of
confidentiality agreements with the customers and because disclosure would harm
the very customer relationships that would be described. As a result, as
Motorola's financial adviser agrees in the Schedule TO, the market price of Next
Level is not an accurate indicator of value, and Next Level's stockholders are
being substantively coerced into tendering their shares. Motorola, by contrast,
possesses this inside information and is using it to its own benefit and to the
detriment of Next Level and its stockholders.

     5.    Fourth, Motorola has breached it fiduciary duties by launching a
structurally coercive Tender Offer that precludes the public stockholders of
Next Level from making a free and unfettered investment decision. Although
Motorola has referred to a present intention to effect a subsequent back-end
merger promptly after closing the Tender Offer, Motorola has not provide the

                                       -3-


clear, uncontradicted commitment that is require under Delaware law to mitigate
the structural coercion inherent in a tender offer by a controlling stockholder.

     6.    Fifth, Motorola has breached it fiduciary duties by forcing Next
Level into an intolerable position and threatening Next Level with retribution
so that its stockholders have no apparent choice but to tender. Over the past
two years, Motorola took steps to establish itself as the Company's exclusive
source of financing. Motorola then took advantage of its position as Next
Level's controlling stockholder and exclusive source of financing to obtain
blocking rights over basic Next Level corporate actions through debt covenants
and highly protective preferred stock provisions. Motorola used these rights and
its status as the Company's controlling stockholder to prevent the Company from
raising capital from alternative sources. Motorola also entered into a
Relationship Agreement with the Company dated April 21, 2001 (the "Relationship
Agreement") under which Motorola committed to provide customer support and other
logistical services to the Company. The Schedule TO filed publicly by Motorola
on January 27, 2003, in connection with the Tender Offer (the "Schedule TO")
repeatedly states that Motorola finds it "no longer desirable" to support Next
Level if the Tender Offer does not succeed. These statements threaten
retribution against Next Level and seek to create an environment in which the
Company's stockholders are coerced into tendering regardless of the adequacy of
the price. Although Next Level has sought assurances from Motorola that it will
continue to support the Company even if the Tender Offer did not succeed,
Motorola has refused to provide the requested assurances.

     7.    Sixth, Motorola is breaching its fiduciary duties by using blocking
rights it possesses under a credit agreement and three series of preferred stock
to prevent Next Level from adopting a stockholder rights plan or taking other
defensive measures that could enhance Next Level's negotiating position and
protect the interest of the Company's public stockholders. Next Level

                                       -4-


asked Motorola to permit Next Level to adopt a stockholder rights plan to
provide Next Level with leverage to negotiate with Motorola. Motorola refused,
reserved its rights as a preferred stockholder or lender to block the rights
plan and asserted that Motorola would vigorously oppose the adoption of any
rights plan.

     8.    Finally, the disclosures made by Motorola made by Motorola in
connection with the Tender Offer contain materially false and misleading
statements and omissions of material fact that will prevent Next Level's public
minority stockholders from making an informed judgment regarding whether to
accept or reject the Tender Offer.

     9.    Motorola's actions threaten irreparable harm to Next Level and its
minority stockholders. Without the intervention of the Court, Motorola will
continue with its Tender Offer in violation of the NDA and in breach of its
fiduciary duties. The Company's minority stockholders will be forced to make an
uninformed decision concerning a coercive Tender Offer at an unfair price and
will have lost irretrievably their opportunity to share in the intrinsic value
and business prospects of Next Level. Meanwhile, Motorola will have used inside
information to benefit itself to the detriment of Next Level's minority
stockholders. Only injunctive relief can prevent this irreparable harm from
occurring.

                           PARTIES AND KEY INDIVIDUALS

     10.   Next Level is a Delaware corporation headquartered in Rohnert Park,
California. Next Level is a world leader in integrated broadband access
platforms for delivering a combination of voice, high-speed data and
multi-stream digital video services in homes or offices using existing copper
telephone lines. For example, by using Next Level's products, telephone
companies that traditionally provide only voice services can compete with cable
companies by offering television service over traditional phone lines. Next
Level's common stock trades publicly on Nasdaq.

                                       -5-


     11.   Plaintiff NLP is a Delaware limited liability company formed to hold
shares of Next Level common stock. NLP beneficially owns more than 1,800,000
shares of Next Level common stock. NLP is the largest stockholder of Next Level
other than Motorola.

     12.   Plaintiffs Spencer Segura and Jacquelyn Segura respectively own
approximately 400,000 and 200,000 shares of Next Level Common Stock.

     13.   Defendant Motorola is a Delaware corporation headquartered in
Schaumburg, Illinois. Motorola describes itself as a provider of "communications
solutions and embedded electronic solutions." Motorola currently own 74% of the
outstanding common stock and all of the issued and outstanding preferred stock
of Next Level. By virtue of its ownership of common and preferred stock,
Motorola controls approximately 89% of the total voting power of Next Level.
Since 2001, Motorola has established itself as the Company's exclusive source of
financing.

     14.   Christopher B. Galvin is Motorola's Chairman of the Board and Chief
Executive Officer. In the months leading up to the Tender Offer, in concert with
other Motorola executives, Galvin directly and indirectly solicited and received
extensive amounts of highly confidential and proprietary information about Next
Level. Galvin met personally with, received presentations from, and received
email from Next Level senior management containing material, non-public
information about Next Level. Galvin directly and indirectly oversaw Motorola's
efforts to prepare, launch and carry out the Tender Offer using Next Level's
highly confidential, non-public and proprietary information.

     15.   Mike S. Zafirovski is Motorola's President and Chief Operating
Officer. In the months leading up to the Tender Offer, in concert with other
Motorola executives, Zafirovski directly and indirectly solicited and received
extensive amounts of highly confidential, non-public and proprietary information
about Next Level. Zafirovski met personally with, received

                                       -6-


presentations from, and received email from Next Level senior management
containing material, non-public information about Next Level. In concert with
other Motorola executives, Zafirovski directly and indirectly oversaw Motorola's
efforts to prepare, launch and carry out the Tender Offer using Next Level's
highly confidential, non-public and proprietary information.

     16.   David W. Devonshire is Motorola's Executive Vice President and Chief
Financial Officer. In the months leading up to the Tender Offer, in concert with
other Motorola executives, Devonshire directly and indirectly solicited and
received extensive amounts of highly confidential, non-public and proprietary
information about Next Level. Devonshire met personally with, received
presentations from, and received email from Next level senior management
containing material, non-public information about Next Level. Devonshire was
involved in Motorola's efforts to prepare, launch and carry out the Tender Offer
using Next Level's highly confidential, non-public and proprietary information.

     17.   Leif G. Soderberg is Motorola's Senior Vice President and Director,
Global Strategy and Corporate Development. In the months leading up to the
Tender Offer, in concert with other Motorola executives, Soderberg directly and
indirectly solicited and received extensive amounts of highly confidential,
non-public and proprietary information about Next Level. Soderberg met
personally with, received presentations from, and received email from Next Level
senior management containing material, non-public information about Next Level.
Soderberg was involved in Motorola's efforts to prepare, launch and carry out
the Tender Offer using Next Level's highly confidential, non-public and
proprietary information.

     18.   Donald F. McLellan is Motorola's Corporate Vice President and
Director of Corporate Development. In the months leading up to the Tender Offer,
in concert with other Motorola executives, McLellan directly and indirectly
solicited and received extensive of

                                       -7-


highly confidential, non-public and proprietary information about Next Level.
McLellan met personally with, received presentations from, and received email
from Next level senior management containing material, non-public information
about Next Level. McLellan was the Motorola executive with primary
responsibility for preparing, launching and carrying out the Tender Offer using
Next Level's highly confidential, non-public and proprietary information.

     19.   GeoffRoman is Motorola's Corporate Vice President and Chief
Technology Officer, Broadband Communications Sector. In the Months leading up to
the Tender Offer, in concert with other Motorola executives, Roman directly and
indirectly solicited and received extensive amounts of highly confidential,
non-public and proprietary information about Next Level. Roman met personally
with, received presentations from, and received email from Next Level senior
management containing material, non-public information about Next Level. Roman
was involved in Motorola's efforts to prepare, launch and carry out the Tender
Offer using Next Level's highly confidential, non-public and proprietary
information.

     20.   Eugene Delaney has served as a director of Next Level since November
2000. Delaney is Senior Vice President and General Manager of Global Relations
and Resources Organization, an affiliate of Motorola. Delaney has been employed
by Motorola for 25 years. In the months leading up to the Tender Offer, Delaney
directly and indirectly solicited and received extensive amounts of highly
confidential, non-public and proprietary information about Next Level. Delaney's
knowledge is attributable to Motorola as a matter of law.

     21.   Gray Benoist has served as a director of Next Level since September
10, 2002. Benoist is an employee of Motorola. In the months leading up to the
Tender Offer, Benoist directly and indirectly solicited and received extensive
amounts of highly confidential, non-public and

                                       -8-


proprietary information about Next Level. Benoist's knowledge is attributable to
Motorola as a matter of law. Mr. Delaney and Benoist jointly are referred to as
the "Current Motorola Directors."

     22.   Richard Severns was a director of Next Level from January 2000 to
August 8, 2002. Severns worked for Motorola for over 30 years. He has held
various positions at Motorola and currently serves as Senior Vice President and
Director of Finance for the Networks Sector of Motorola. Severns was a director
of Next Level when Motorola and the Company entered into a credit facility in
May 2001 and when Motorola was issued Next Level preferred stock in February and
June 2002.

     23.   Ferdinand C. Kuznik was a director of Next Level from January 2000 to
August 8, 2002. Kuznik worked for Motorola for over a decade and recently
retired as an Executive Vice President of Motorola and President of Motorola's
operations in Europe, the Middle East and Africa. Kuznik was a director of Next
Level when Motorola and the Company entered into a credit facility in May 2001
and when Motorola was issued Next Level preferred stock in February and June
2002.

     24.   James G. Roseland was a director of Next Level from November 2000 to
August 8, 2002. Roseland worked for Motorola for over 40 years, primarily in its
finance organization, and retired recently as Senior Vice President and Director
of Finance for Motorola. Roseland was a director of Next Level when Motorola and
the Company entered into a credit facility in May 2001 and when Motorola was
issued Next Level preferred stock in February and June 2002. Severns, Kuznik and
Roseland collectively are referred to as the "Former Motorola Directors."

     25.   Each of the Former Motorola Directors and Current Motorola Directors
was appointed to the Next Level board of directors (the "Board") at the behest
of Motorola, by virtue of its status as controlling stockholder of Next Level.
As described above, each of the Former Motorola Directors and Current Motorola
Directors was employed by Motorola at the time of his service on

                                       -9-


the Board, placing each of them under Motorola's domination and control and
preventing each of them from acting independently or with disinterest concerning
decisions that could affect Motorola and transactions with Motorola. As
directors of Next Level, however, each of the Former Motorola Directors and the
Current Motorola Directors owe both the Company and its minority stockholders
fiduciary duties of care, loyalty and good faith.

     26.   J. Michael Norris is Next Level's Chairman of the Board, President
and Chief Executive Officer. Norris previously spent 29 years as an executive
with Motorola. Before joining Next Level in April 2001, Norris was Senior Vice
President and General Manager for Motorola's Network Management Group. Norris
owns 28,720 shares of Next Level common stock and options to acquire an
additional 597,197 shares.

     27.   James F. Ide is Next Level's Senior Vice President and Chief
Financial Officer. Prior to joining Next Level, he was Director of Finance for
Motorola's international telecom carrier joint ventures. Earlier in his career,
he worked at Motorola as a corporate audit manager and a senior
divisional/operations controller. Ide owns 20,000 shares of Next Level common
stock and options to acquire an additional 153,263 shares.

     28.   Keith A. Zar is Next Level's Senior Vice President, General Counsel,
Secretary and Chief Administrative Officer. He owns 9,813 shares of Next Level
common stock and options to acquire an additional 466,178 shares.

                                      -10-


                                   BACKGROUND

                     MOTOROLA ACQUIRES CONTROL OF NEXT LEVEL

     29.   Next Level commenced operations in July 1994. In September 1995, Next
Level was acquired by and became a wholly-owned subsidiary of General Instrument
Corporation ("General Instrument"). Next Level recorded its first sale in
September 1997. In January 1998, Spencer Trask invested in Next Level. As part
of the recapitalization, Next Level was recognized as Next Level Communications,
L.P., a limited partnership in which General Instrument held an 89% interest and
Spencer Trask held an 11% interest.

     30.   In November 1999, in preparation for an initial public offering
("IPO"), the business and assets of the limited partnership were merged into the
Company. On November 9, 1999, the Company raised net proceeds of $177 million
through an IPO of 9,775,000 shares of common stock. Following the IPO, General
Instrument controlled 80.4% of Next Level's outstanding common stock.

     31.   Also in November 1999, Next Level and General Instrument entered into
a Corporate and Intercompany Agreement (the "Intercompany Agreement") which
remains in effect. Under the Intercompany Agreement, if Next Level issues any
additional equity securities, General Instrument may purchase shares of Next
Level's common stock at fair market value to the extent necessary for General
Instrument to maintain its then-existing percentage of the total voting power.
The Intercompany Agreement also provides that, for as long as General Instrument
beneficially owns a majority of the outstanding common stock, Next Level may not
take any action which may be reasonably anticipated to result in a violation by
them of (i) any law or regulation; (ii) General Instrument's certificate of
incorporation, bylaws, or any credit agreement or other material instrument
binding upon General Instrument or any of their assets; or (iii) any judgment,
order or

                                      -11-


decree of any governmental authority having jurisdiction over General Instrument
or any of its assets.

     32.   On January 5, 2000, General Instrument merged with and into a
wholly-owned subsidiary of Motorola. As a result of the merger, Next Level
became an indirect subsidiary of Motorola, and Motorola became Next Level's
controlling stockholder.

        NEXT LEVEL SUFFERS AS A RESULT OF THE TELECOMMUNICATIONS DOWNTURN

     33.   From the time of the IPO until December 2000, Next Level funded its
operations using the IPO proceeds. Next Level achieved some early business
success, and during late 2000, under the direction of a Motorola-controlled
board of directors, Next Level's then-existing management team ramped up
production in anticipation of increased demand. At the same time, however,
telecommunication companies began scaling back their capital expenditures. The
increased demand never materialized, and by the first quarter of 2001, the
Company faced a significant inventory surplus.

     34.   In December 2000, Motorola proposed and Next Level agreed to enter
into a Tax Sharing and Allocation Agreement (the "Tax Sharing Agreement"). The
purpose of the Tax Sharing Agreement was to allow Motorola to benefit from the
inclusion of Next Level's net operating losses on Motorola's consolidated tax
return. Pursuant to the Tax Sharing Agreement, Motorola advanced Next Level $15
million in December 2000 and $17.3 million in January 2001, representing the
present value of the anticipated tax benefits for the period from January 6,
2000 through May 17, 2000. If Motorola does not achieve all of the anticipated
tax benefits from Next Level's operating losses by September 20, 2006, Next
Level is obligated to repay the amount of any difference.

     35.   In December 2000, the Board installed Norris as Next Level's Chairman
of the Board, President and Chief Executive Officer and, during 2001, replaced
significant members of the

                                      -12-


management team including bringing on James F. Ide as Next Level's Senior Vice
President and Chief Financial Officer. The team's first task was to deal with
the inventory problem. Norris' team also put in place the Relationship Agreement
and the NDA, both dated April 20, 2001. In the Relationship Agreement, Motorola
committed to provide customer support and other logistical services to the
Company. In the NDA, Motorola and Next Level agreed to strict procedures and
limitations that would allow them to exchange "Confidential Proprietary
Information."

     36.   The NDA defines Confidential Proprietary Information as any
information disclosed by a party or any of its agents to the other party "in
oral, visual, written and/or other tangible form" that relates to the Company's
"portfolio, products, proprietary product designs, product descriptions, sales
and marketing information, business plans (including Customer lists and related
information), and technical and planning information relating to applications
and deployment of the Nlevel3 system." In the NDA, Motorola and Next Level
agreed "to maintain the confidentiality of the disclosing party's Confidential
Proprietary Information ... and not disclose such Information to any third
party, except as authorized by the disclosing party in writing." The NDA does
not contain any exception to the requirement that the disclosing party must
consent before the receiving party can disclose the Confidential Proprietary
Information. The NDA does not contain any exception for non-consensual
disclosure which may be required by law.

     37.   Even more importantly, in the NDA, Motorola and Next Level agreed "to
use the disclosing party's Confidential Proprietary Information only in
conjunction with entering into a business relationship for the sale of Next
Level Products." This is the exclusive purpose for which Confidential
Proprietary Information can be used.

     38.   On May 16, 2001, Next Level and Motorola entered into a two-year
credit agreement under which Motorola agreed to loan Next Level up to $60
million (the "Credit Agreement").

                                      -13-


Motorola stood on both sides of this transaction by virtue of its status as Next
Level's controlling stockholder and its control at the time of the Next Level
Board. When Next Level negotiated the Credit Agreement, Next Level expected that
the facility would provide sufficient cash to meet Next Level's working capital
and capital expenditure requirements for the next twelve months.

     39.   Motorola extracted significant benefits for itself when negotiating
the credit facility. Motorola demanded and obtained a first priority lien on
substantially all of Next Level's personal property assets, including its
intellectual property. Motorola also demanded and obtained "claw back"
provisions under which a portion of any future financing in excess of $25
million would be used to reduce outstanding debt to Motorola. Up to one third of
any financing amounts between $25 and $50 million, up to one half of any
financing amounts between $50 and $75 million, and all amounts of any financing
greater than $75 million would be used to pay off debt to Motorola. Motorola
also used its influence as Next Level's controlling stockholder to insist upon
stringent protective provisions in the Credit Agreement that allowed Motorola to
veto fundamental corporate actions, including obtaining additions funding. In
addition, Motorola demanded and obtained from Next Level warrants with a fair
value of more than $25 million.

     40.   During the second quarter of 2001, telecommunication companies scaled
back their capital expenditures even more dramatically, and Next Level's
revenues fell. Next Level was forced to write down over $72 million in excess
inventory. Next Level suffered a net operating loss of over $102 million in the
second quarter of 2001 alone, compared with a net operating loss of
approximately $14 million during the same period in 2000. Because of the cash
crunch during the second quarter of 2001, Next Level was forced to draw down the
entire $60 million.

                                      -14-


              MOTOROLA BLOCKS THE COMPANY'S FUNDRAISING EFFORTS AND
           ESTABLISHED ITSELF AS NEXT LEVEL'S SOLE SOURCE OF FINANCING

     41.   Having exhausted the Credit Agreement to address inventory issues,
Next Level began to explore other sources of financing. Next Level asked
Motorola to help develop a long-term financial strategy for the Company, but
Motorola refused. Severns advised Next Level that Motorola would not provide any
more funding for the Company. Next Level then explored obtaining a $20 million
mortgage loan on its headquarters' building, but the financing required a
guarantee from Motorola. Severns vetoed the idea. Next Level also raised the
possibility of using an investment banker to explore a private placement of its
securities -- a "PIPE" transaction. Severns vetoed this idea also. Severns
instructed Next Level to seek a strategic investor, even if it resulted in
dilution to Motorola.

     42.   In July and August 2001, Next Level attempted to identify a strategic
investor and, as alternatives, continued to explore a mortgage financing or a
PIPE transaction. Next Level engaged Merrill Lynch to assist in locating a PIPE
investor. Next Level soon discovered that the onerous terms of the Credit
Agreement made third parties reluctant to invest in Next Level. Potential
investors were particularly concerned about the claw-back feature in the Credit
Agreement, which effectively meant that a significant portion of the funds
contributed by any new investor would go to Motorola rather than to Next Level.

     43.   In September 2001, Next Level faced a cash crisis and came close to
missing payroll. Next Level was forced to reapproach Motorola about guaranteeing
a $20 million mortgage loan to provide bridge financing for the Company. Without
Motorola's guarantee, Next Level only could obtain a $7 million loan. Motorola
again refused to provide a guarantee, but agreed to advance Next Level an
additional $4 million on the Credit Agreement. Motorola insisted that the $4
million be repaid out of the mortgage loan proceeds. Finally, in October 2001,
Motorola agreed to provide the

                                      -15-


mortgage guarantee, but demanded and used its influence as the Company's
controlling stockholder to extract from Next Level warrants for another 3
million shares of the Company's common stock at an exercise price of $3.82.

     44.   Also in October 2001, Motorola notified Next Level that the estimated
net present value of income tax benefits received by Motorola from Next Level's
operating losses was $3 million less than expected. Motorola demanded that Next
Level repay the S3 million difference. After discussion, Motorola agreed to
treat the S3 million as an additional loan under the Credit Agreement.

     45.   In November 200], Next Level continued to search for a potential
third party investor and attempted without success to negotiate with Motorola
the elimination or modification of the claw-back feature. Between August and
November 2001, Next Level and Merrill Lynch talked to over thirty investors.
Their efforts generated term sheets from four investors. The Company provided
each term sheet to Motorola for its review. The Company also gave Motorola
detailed briefings regarding the consequences of each proposal, including
potential adverse effects on Motorola's equity ownership in Next Level. Motorola
failed to provide meaningful feedback to the Company. In mid-November, without
any insight into Motorola's position and with only 90 days of cash remaining,
Next Level's management selected the most favorable of the term sheets and
proceeded to negotiate and document the potential transaction,

     46.   On December 5,2001, the Next Level Board met to consider the
potential third party investment. Motorola had been kept informed throughout the
fund-raising process and Next Level had asked Motorola if it wanted to provide
the requisite funds itself. Motorola never committed to providing financing
itself and appeared to support the Company's fund-raising efforts. However,

                                      -16-


on December 5, Sevens vetoed the proposal. As a result, the potential investor
pulled out and Next Level found itself unable to obtain reasonable financing
from any third party.

     47.   Having prevented the Company from bringing in a third party investor,
Motorola then took advantage of the Company's dire situation. On December 7,
2001, Motorola proposed to provide the Company with S20 million in bridge
financing in the form of convertible debt. The debt would pay a market rate of
return and be converted into equity in the Company's next financing. In
addition, Motorola demanded warrants with an estimated fair value of $13
million. Because Motorola had prevented Next Level from pursuing alternative
financing, Next Level desperately needed the funds. Later in December, the
transaction closed on Motorola's terms.

     48.   Over the next two months, the Company searched for but was unable to
locate financing from any entity other than Motorola. On February 21, 2002,
Motorola and Next Level entered into a securities purchase agreement whereby
Motorola purchased 6,912,442 shares of Next Level Series A Convertible
Preferred Stock (the "Series A Preferred") at $4.34 per share, for a total
purchase price of approximately $30 million. Each share of Series A Preferred is
convertible into two shares of Next Level common stock and is entitled to voting
rights on an as-converted basis. The terms of the certificate of designation for
the Series A Preferred contain extremely onerous provisions by which Motorola
sought to obtain control over a number of fundamental Next Level corporate
decisions. Most significantly, under Section 4(b) of the certificate of
designation, without the consent of a majority of the outstanding shares of the
Series A Preferred, Next Level purportedly may not "authorize the issuance of
any equity security (other than (i) the issuance of securities upon exercise or
conversion of outstanding options or other convertible securities, (ii) the
issuance of stock options to employees, directors or consultants of the Company,
and (iii) the issuance of additional shares of [preferred stock] pursuant to
[the certificate of designation])." Next Level

                                      -17-


management objected to this onerous provision, but Motorola insisted. Because of
the Company's dire financial situation and Motorola's dominant position as the
Company's controlling stockholder and exclusive source of financing, Motorola
was able to force the Company to accept its terms.

     49.   Motorola undoubtedly interprets the prohibition on the issuance of
"any equity security" to include rights to acquire shares under a stockholder
rights plan. Therefore, by issuing itself the Series A Preferred, Motorola
sought to guarantee its ability to later pursue a going private transaction
without the threat of independent directors of the Company adopting a
stockholder rights plan or other defensive measures. At the time, Motorola held
four of the eight seats on the Next Level Board and thus was in a position to
block any transaction that did not include these onerous terms. At the same
time, Motorola's dominant position as the Company's controlling stockholder and
exclusive source of financing allowed Motorola to force these terms on the
Company.

     50.   The issuance of the Series A Preferred was another stop-gap financing
measure. It did not address Next Level's need for a long-term financing
strategy. In March 2002, to avoid a "going-concern" opinion from Next Level's
auditors, Next Level was forced again to approach Motorola for financing.
Pursuant to a commitment letter dated March 29, 2002 between Motorola and the
Company (the "Commitment Letter"), Motorola agreed to provide an additional $35
million of funding (the "Financing Facility") to the Company. The Commitment
Letter provided that Motorola had the option at the time of any drawdown
thereunder by the Company of the Financing Facility to either treat such
drawdown as (a) an increase in the aggregate principle amount of debt owed by
the Company to Motorola under the Credit Agreement, or (b) as an additional
preferred stock investment. Also in March 2002, Nasdaq notified Next Level that
it appeared not to be in compliance with the exchange's then-applicable listing
requirement that a company have $4 million in net tangible assets. Next Level's
inability to meet this requirement was driven largely by

                                      -18-


Motorola's insistence on debt financing and the inclusion of a feature in the
Series A Preferred allowing Motorola to force Next Level to redeem the preferred
under certain circumstances.

     51.   In April 2002, Next Level senior management approached Motorola about
the need to agree on a long-term financing strategy for Next Level. Motorola
previously had indicated to Next Level that Motorola wanted Next Level to find a
third party investor to provide additional funding for the Company. In April
2002, Next Level management advised Motorola that would be difficult, if not
impossible, for the Company to raise third party financing unless Motorola and
the Company reached some accommodation on Motorola's debt, which was then
scheduled to become due in May 2003.

     52.   Three months later, in June 2002, Motorola agreed to an incremental
solution that would partially address Next Level's situation. Next Level drew
down $13 million in cash under the March 2002 financing commitment and Motorola
canceled the $20 million loan incurred in December 2001. Motorola exercised its
option under the Financing Facility to receive preferred stock. Next Level
issued to Motorola (a) 277,311 shares of Series A-1 Preferred Stock (reflecting
a per share purchase price of $119.00 per share, or $1.19 per share on a "per
common" basis based on the original conversion ratio of 100-for-1); (b) a
warrant to purchase 6,008,403 shares at $1.19 per share; and (c) a warrant to
purchase 330,000 shares at $2.00 per share. Motorola received the same
protective provisions in the Series A-1 preferred stock as in the Series A
preferred stock.

                       MOTOROLA OBTAINS INSIDE INFORMATION
                    IN PREPARATION FOR THE TENDER OFFER WHILE
               CONTINUING TO BLOCK THE COMPANY'S FINANCING EFFORTS

     53.   Beginning in August 2002, Motorola senior management sought from Next
Level, and Next Level provided, extensive amounts of highly confidential,
non-public, proprietary Next Level documents and information, including detailed
internal information on Next Level's customers

                                      -19-


and projected revenues, as well as Next Level's business plans and the
assumptions on which the plans were based. These documents and information
constituted Confidential Proprietary Information within the meaning of the NDA
which cannot be used by Motorola in furtherance of the Tender Offer.
Furthermore, because Motorola possesses material, non-public information
regarding Next Level, Motorola was and is obligated to refrain from dealing in
Next Level's securities because Motorola has no lawful means of disclosing such
information. Motorola has never disclosed the material inside information it
possesses about Next Level and cannot disclose such information without
violating the NDA. Motorola also cannot disclose the information without
violating its fiduciary duties because disclosure would cause significant harm
to Next Level.

     54.   At the same time Motorola was conducting due diligence on Next Level
and obtaining highly confidential, non-public, proprietary information, Motorola
continued to shut down any alternative sources of funds that Next Level pursued
to ensure that the only financing available to Next Level would be from
transactions with Motorola. In August 2002, Next Level management again
approached Motorola about a financing strategy for the Company, reiterating the
importance of developing alternatives for the Company's debt to Motorola, which
was still scheduled to come due in May 2003. Next Level management stressed that
a debt restructuring would be a prerequisite to any non-Motorola financing
alternative. Next Level management also identified potential auditor issues and
Nasdaq listing requirements that could create difficulties for the Company if a
financing strategy were not developed.

     55.   By email dated August 16, 2002, Ide sent a business update and a
financial restructuring proposal to Devonshire and McLellan. The materials
included confidential customer information and revenue projections. Ide also
submitted a financial restructuring proposal to Devonshire and McLellan included
extending the Credit Agreement until May 2006, converting

                                      -20-


additional Motorola debt into preferred stock, permitting additional draws on
the Credit Agreement, and obtaining a financing commitment from Motorola to
support Next Level in the first quarter of 2003. On Monday, August 19, 2002, Ide
met with Devonshire at Motorola's headquarters and discussed the Next Level
business update in detail, including a discussion of confidential customer
information and revenue projections.

     56.   The meeting was also attended by Geoff Roman, Motorola's Senior Vice
President and Chief Technology Officer. By email dated August 27, 2002, and in
anticipation of a meeting with Galvin on August 29, Norris provided Galvin and
Zafirovski with confidential customer information. Also in advance of the
meeting, Zafirovski instructed Norris and Ide to be prepared to answer a list of
questions about Next Level's customers and revenues. On August 29, 2002, Norris
and Ide met with Galvin, Zafirovski, Devonshire, and McLellan at Motorola's
headquarters. Norris and Ide provided Motorola executives with confidential
information about and responded to Motorola's questions regarding Next Level's
customers and revenue projections.

     57.   Throughout September 2002, Next Level management followed up with
McLellan and other Motorola executives about Next Level's financing proposal.
McLellan failed to respond to Next Level's inquiries until September 10, 2002,
when he advised Ide that the decision would require a "fresh consensus" from
Motorola's senior management team. Over the next two weeks; Ide pressed Motorola
for a decision at least on the debt to equity conversion so that Next Level
could remain in compliance with Nasdaq listing requirements after September 30.
Meanwhile, on September 13, Norris and Ide met with Soderberg and provided him
with confidential, non-public information regarding Next Level's customers,
competitors, and revenue projections.

     58.   On September 24, 2002, McLellan advised Ide that Motorola was still
"not quite done with [its] thinking on "Next Level's financing proposal. Two
days later, to meet its cash needs, Next

                                      -21-


Level drew down $10 million in cash under the March 2002 financing commitment,
and Motorola canceled $12 million of indebtedness under Next Level's May 2001
credit facility. Motorola exercised its option under the Financing Facility to
receive preferred stock, and Next Level issued to Motorola (a) 236,559 shares of
Series A-1 Preferred Stock (reflecting a per share purchased price of $93,00 or
$0.93 on a "per common" basis based on the original conversion ratio of
100-for-1); (b) a warrant to purchase 5,913,978 Shares at $0.93 per share; and
(c) a warrant to purchase 220,000 Shares at $2.00 per share.

     59.   In October 2002, Next Level management continued to contact Motorola
about a long-term financing strategy. Next Level management repeatedly raised
the need to restructure the Motorola debt in a way that would allow Next Level
to raise third party funding, but also protect Motorola. Next Level received no
response. Also during October 2002, Soderberg requested and Norris provided an
extensive list of Next Level's contacts at its key customers, and other Motorola
personnel requested and Next Level provided detailed financial information and
Net Level's highly confidential 2003 business plan. A Motorola employee also
requested and Next Level provided, detailed information about Next Level's
stockholder profile, including ownership by entities other than Motorola,
percentages of shares held by institutions, the names of top institutional
holders, percentages held by management, and the number of options outstanding.
The Motorola employee indicated the information was needed for a presentation to
Motorola senior management.

     60.   By email dated October 16, 2002, Norris contacted Galvin and
Zafirovski about the urgent need to develop a financing strategy for Next Level.
Norris advised Galvin and Zafirovski that Next Level had been asking Motorola
for months to address the debt restructuring and reminded them that the Company
was unable to obtain new capital unless the debt situation was addressed. Norris
also advised Galvin and Zafirovski that although Motorola's last minute
agreement to convert

                                      -22-


debt to equity had allowed Next Level to comply with the Nasdaq minimum net
worth requirements, Next Level now had been notified by Nasdaq that it was in
breach of the listing requirement that a company's stock price not fall below
one dollar per share for more than 30 days. Motorola initially decided to delay
considering any deferral of Next Level's debt, but then, after another personal
appeal by Norris to Galvin, Motorola agreed on October 21, 2002 to defer the
debt until May 2006. In exchange for this action, Motorola extracted from Next
Level warrants to purchase 3,000,000 shares at $.76 per share. Also on October
21, Norris and Ide met with Soderberg again and provided him with additional
confidential information about Next Level.

     61.   Based on Motorola's agreement to restructure the debt and prior
indications that it wanted Next Level to obtain a third party investor, Next
Level contacted Raymond James Associates, Inc. in November 2002 about exploring
third party sources of capital. Ide kept McLellan fully informed about
discussions with Raymond James. Ide also kept McLellan and other Motorola
representatives informed about Next Level's efforts to achieve compliance with
Nasdaq listing requirements.

     62.   While Ide was working with Raymond James to pursue third party
fundraising opportunities, Motorola retained RHK, Inc., a consulting firm
specializing in telecommunications industry analysis, to examine the economics
and business model for Next Level's VDSL product. Next Level expressed concern
to Motorola about the engagement, the scope of the project and the time and
resources that RHK proposed to devote to the evaluation. O'Donohue noted Next
Level's concerns and advised that Motorola had selected RHK because of its low
price.

     63.   Motorola used RHK to obtain Next Level's most highly sensitive and
confidential customer information, projections and revenue models. RHK also
obtained from Next Level its proprietary views of technology trends that would
affect its business.

                                      -23-


     64.   At the same time RHK was conducting its due diligence, senior
Motorola executives continue to receive highly confidential, non-public,
proprietary information from Next Level. By email dated November 5, 2002, Next
Level provided confidential customer information to Galvin, Zafirovski and
McLellan. By email dated November 25, 2002, Norris provided Galvin with a
detailed customer update. By email dated November 26, 2002, Norris shared
confidential updated revenue projections with Galvin, Zafirovski, Soderberg,
Benoist and Delaney. During the last week of November, senior Next Level
management met with Motorola senior management and discussed Next Level's
short-term and long-term revenue prospects.

     65.   In December 2002, Norris continued to provide Motorola with
non-public customer information. On December 2, 2002, Norris provided Soderberg
and McLellan with a highly confidential presentation about Next Level's customer
accounts. Contemporaneously, Next Level senior management approached Motorola
senior management with a proposal to address Next Level's Nasdaq situation. Next
Level also asked Motorola to confirm that it would permit Next Level to raise
$30 million in third party funding for 2003. Motorola did not respond.

     66.   On December 4, 2002, all of the Next Level directors except Benoist
attended a meeting of the Next Level Board. Next Level management presented Next
Level's business plan, which included detailed, non-public, highly confidential
projections for the Company's business. The Next Level Board, including Delaney,
supported the business plan without reservation.

     67.   At the same meeting, in light of Motorola's failure to provide Next
Level management with any indication as to whether Motorola would continue to
support Next Level, company management formally proposed retaining Raymond James
to explore third party fundraising opportunities for the Company. Next Level
management believed that with the

                                      -24-


assistance of Raymond James, the Company could raise third party funding. The
Next Level Board, including Delaney, unanimously supported the fundraising plan.

     68.   On December 11, 2002, Ide met with McLellan at Motorola. Ide briefed
McLellan on Next Level's revenue situation and updated him in confidence on
developments regarding Next Level's major customers. McLellan advised Ide that
while Motorola would make changes in its preferred stock to help Next Level
address the Nasdaq listing requirements, Motorola had not yet made any decision
regarding funding for 2003. McLellan advised that he would be meeting with
Galvin and Zafirovski on December 16, 2002 to make a final decision on this
issue. On December 20, 2002, McLellan advised Ide that Motorola had not yet
decided on how to proceed.

     69.   Also on December 11, Next Level independent director Craig Komblau
sent a note to Motorola asking if Motorola intended to permit Next Level to
pursue third party financing, only to veto a transaction at the last minute as
Motorola had done before. Motorola did not respond until January 5, 2003, just
over a week before Motorola launched its Tender Offer when Benoist sent a
cryptic message to Komblau saying, in substance, that Motorola would provide an
"appropriate response from an appropriate executive at the appropriate time."

     70.   By email dated December 12, 2002, Norris advised Zafirovski and
Galvin that he and the senior management team were taking steps to get Next
Level to the break even point in the fourth quarter of 2003. In another email
dated December 12, 2002, Norris updated Galvin, Zafirovski, McLellan, Soderberg,
Delaney and Benoist on Next Level's customers.

     71.   On December 18, 2002, to address Nasdaq listing requirements, Next
Level drew down $12 million in cash under the March 2002 financing commitment
and Motorola canceled $10 million of indebtedness under the Credit Agreement. In
exchange, Motorola received (a) 26,506 shares of Series A-2 Preferred Stock at a
per share purchase price of $830.00 (reflecting $0.83 per

                                      -25-


share on a "per common" basis based on a 1,000-for-1 conversion ratio); (b) a
warrant to purchase 7,951,807 shares at $0.83 per share; and (c) a warrant to
purchase 220,000 shares at $2.00 per share. The Series A Preferred, Series A-1
Preferred, and Series A-2 Preferred are referred to collectively as the
"Blocking Preferred."

     72.   On January 6, 2003, less than a week before Motorola would launch its
Tender Offer, Motorola asked Next Level for an updated forecast for 2003. The
same day, Norris emailed Galvin and Zafirovski to update them about positive
developments regarding a major customer. On January 8, Ide advised McLellan that
the Company was finalizing the engagement of Raymond James. Ide noted that
finding third party financing would be challenging in light of the terms of the
Company's outstanding debt to Motorola. Ide pointed out that it would be
beneficial to know if Motorola would be willing to provide short-term bridge
financing until the completion of the third party financing. McLellan did not
respond. Later on January 8, 2003 Ide advised Benoist that Raymond James would
be retained on January 10, 2003 and would start the fundraising process. Benoist
did not respond.

                       MOTOROLA ANNOUNCES THE TENDER OFFER
           TO PREEMPT NEXT LEVEL'S FINANCING EFFORTS AND FUTURE GROWTH

     73.   On Sunday, January 12, 2003, two days after Raymond James was
retained, McLellan called Norris and advised him that Motorola intended to
announce the Tender Offer the next day. Norris asked McLellan to wait and first
discuss the matter with Next Level. McLellan refused. Norris had the Company's
outside counsel call McLellan and make the same request. McLellan again refused.

     74.   On January 13, 2003, Motorola issued a press release announcing that
it intended to commence the Tender Offer, in which Motorola would purchase any
and all outstanding shares of Next Level common stock that it did not already
own at a price of $1.04 per share in cash (the "Announcement").

                                      -26-


     75.   The Announcement was part of Motorola's efforts to prevent Next Level
from raising funds from a third party. Next Level first approached Motorola
about third party financing in April 2002. Motorola told Next Level to wait.
Over the next nine months, Next Level repeatedly asked Motorola to approve a
financing strategy that would allow Next Level to raise third party funding or
otherwise to commit to funding Next Level. Motorola withheld its consent to a
financing strategy and refused to commit to support Next Level. Upon information
and belief, Motorola delayed Next Level's third party fund-raising efforts
throughout 2002 so that Next Level would burn through its cash reserves and Next
Level's stockholders would face pressure to sell their Next Level shares to
Motorola. After the December 4, 2002 Board meeting, Motorola knew that Next
Level was hiring Raymond James to explore third party financing. Moreover,
Motorola knew that Next Level was confident that the third party financing could
be obtained. When Ide disclosed to McLellan on January 8, 2003 that Next Level
was moving forward to raise financing from a third party, Motorola moved quickly
to pre-empt Next Level from raising money from a third party.

     76.   Motorola clearly has acted in its self-interest and in a effort to
create an environment that would coerce Next Level's stockholders into
tendering. The Schedule TO, asserts that without additional funding. Next Level
cannot reach profitability. By preventing Next Level from obtaining funding,
therefore, Motorola is pressuring Next Level's stockholders to choose between
tendering into Motorola's inadequate offer or potentially being left with
worthless shares in a bankrupt entity. In addition, Motorola knew based on
non-public information it received from Next Level that if Next Level does not
obtain additional funding or a commitment for additional funding for additional
funding by March 31, 2003, there was a strong likelihood that Next Level's
auditors will question Next Level's ability to continue as a going concern. This
in turn would have disastrous consequences for the Company's stock price, its
customer and supplier relationships, and its business as a whole. By announcing
the

                                      -27-


Tender Offer and further delaying Next Level's ability to start raising funds,
Motorola is attempting to convince Next Level's stockholders that Next Level
cannot raise money quickly enough to avoid a going concern opinion. In each
case, Motorola is trying to coerce Next Level's stockholders into tendering
their shares to Motorola at an extremely low price.

     77.   Next Level also intentionally timed the Announcement to purchase Next
Level shares to be made just before imminent and significant customer orders for
Next Level's products. By virtue of the confidential information it possesses,
Motorola knows when orders and revenues are expected. By acting quickly,
Motorola is preventing the stockholders from revising their assessment of Next
Level's value and creating uncertainty regarding the Company's prospects. In
short, Motorola acted quickly to usurp for itself all the benefits of Next
Level's business, Next Level's value and the expected future appreciation in
Next Level's stock price.

     78.   Shortly after the Announcement, Roman spoke by telephone with Bill
Weeks, the Chief Technical Officer for Next Level. Roman advised Weeks that the
main reason Motorola launched the Tender Offer was because Motorola did not want
Next Level to raise money from a third party that would dilute Motorola's
controlling position.

                           MOTOROLA REFUSES TO PROTECT
                NEXT LEVEL'S CONFIDENTIAL PROPRIETARY INFORMATION

     79.   Following the Announcement, the Next Level Board formed a special
committee comprised exclusively of non-management directors with no present or
past affiliation with Motorola (the "Independent Committee") to evaluate and
respond to the Tender Offer. The Independent Committee realized that Motorola
possessed Confidential Proprietary Information as a result of its so-called "due
diligence" investigation. The Independent Committee became concerned that in
connection with the Tender Offer, Motorola would choose to disclose Confidential
Proprietary Information in its public tender offer filings, including its
Schedule TO. The Independent

                                      -28-


Committee also realized that disclosure of Next Level's Confidential Proprietary
Information would inflict serious harm on the Company, leaving the Company in a
damaged competitive position even if Next Level's stockholders rejected the
grossly underpriced Motorola offer. This in turn would pressure Next Level's
stockholders to tender into an under-priced offer to avoid being left holding
shares in a damaged and uncompetitive entity.

     80.   By letter dated January 25, 2003, the Independent Committee reminded
Motorola of the existence of the NDA and its restrictions. The Independent
Committee offered to meet with Motorola promptly to review Motorola's
disclosures and determine if there was any Confidential Proprietary Information
that would be disclosed and how the issues could be addressed. Motorola never
responded.

                  MOTOROLA FORMALLY LAUNCHES THE TENDER OFFER

     81.   On January 27, 2003, Motorola formally launched the Tender Offer to
acquire all shares of Next Level common stock that Motorola already did not own
for $1.04 per share in cash (the "Tender Offer Price"). The Tender Offer is
scheduled to expire at midnight on February 25, 2003.

     82.   The Schedule TO contains extensive language that can only be read as
threatening Next Level's stockholders with dire consequences if they do not
tender their shares into the Tender Offer. The Schedule TO contains disclosures
designed to create the impression that (i) Next Level needs additional funds
immediately and cannot obtain them from any source other than Motorola, (ii)
Next Level's customers are not purchasing and/or will not purchase Next Level's
products without Motorola's backing, and (iii) Next Level's customers will not
purchase enough of Next Level's products and will not make any purchases
promptly enough for Next Level to survive as an independent entity. The Schedule
TO combines these disclosures with statements that Motorola

                                      -29-


finds it "no longer desirable" to provide financial, product, or customer
support to Next Level unless the Tender Offer succeeds and Next Level becomes
part of Motorola. Motorola's clear message from this combination of disclosures
is that Motorola will cut off its support for Next Level (indirect and
intentional violation of the Relationship Agreement) and that, if Next Level's
stockholders do not tender their shares into the Tender Offer, they supposedly
will be left holding worthless shares in a Company destined for bankruptcy.

     83.   Motorola's statements about finding it "no longer desirable" to
provide financial, product, or customer support to Next Level were clearly
concocted for purposes of attempting to coerce Next Level's stockholders to
tender. As recently as October 22, 2002, Motorola's Chairman and CEO reiterated
Motorola's "continued support to Next Level, its customers, management and
employees." At the Next Level Board meeting on December 4, 2002, Delaney, the
only Current Motorola Director in attendance, supported Next Level's business
plan and fund-raising efforts. Moreover, Motorola apparently has no difficulties
continuing to support Next Level if the Tender Offer succeeds. Motorola's
statements in the Schedule TO are thus designed solely to attempt to coerce Next
Level's stockholders into tendering their shares.

     84.   The Schedule TO also attempts to coerce Next Level's stockholders
into tendering their shares by indicating that Next Level will lose its key
employees as a result of the Tender Offer. The Schedule TO describes the
"disruption to the Next Level team" resulting from the Tender Offer and
recognizes that "Next Level's key employees are important to the success of Next
Level's business and operations." Yet at the same time Motorola offers no
guarantees or plans for retaining Next Level's employees during this difficult
time. To the contrary, Motorola discloses that it "has not finalized any
particular incentive plans." Again, Motorola's message to Next Level's

                                      -30-


stockholders is that if they do not tender quickly into the Tender Offer, Next
Level will lose the human capital on which its business depends.

     85.   The Schedule TO further attempts to coerce Next Level's stockholders
by focusing prominently on letters that Next Level has received from Nasdaq
regarding the Company's ability to meet Nasdaq listing requirements. Motorola's
clear message in the Schedule TO is that if stockholders do not lender their
shares into the Tender Offer, Next Level will be delisted from Nasdaq, with a
concomitant loss of liquidity and value for holders of Next level shares.

     86.   The Schedule TO also contains false and misleading disclosures.
First, it misleadingly states that "Next Level has required significant funding
and other support from Motorola to remain solvent and qualify for continued
inclusion on the Nasdaq National Market." The Schedule TO fails to disclose
Motorola's successful efforts to block Next Level's ability to raise third party
funding. Motorola's delay in assisting Next Level with its Nasdaq issues, or the
consideration that Motorola extracted for itself from Next Level in each
transaction designed to address Next Level's financial difficulties.

     87.   Second, the Schedule TO misleadingly describes the financing that
Motorola has provided to Next Level. The Schedule TO states that "Since December
2000, Motorola has provided approximately $177.3 million in debt and equity
financing, guarantees of Next Level indebtedness ..., and other accommodations
to Next Level." The Schedule TO misleadingly omits the warrants to buy millions
of shares of Next Level stock that Motorola extracted from Next Level as part of
the financing. The Schedule TO also does not describe the extremely onerous and
restrictive terms that Motorola imposed on Next Level through the Credit
Agreement and the Blocking Preferred. Additionally, the Schedule TO does not
discuss Motorola's successful efforts to block the Company's ability to raise
third party funding.

                                      -31-


     88.   Third, in describing the financing that Motorola has provided to Next
level, the Schedule TO falsely and misleadingly states that "Each time [Next
Level] approached Motorola, Next Level provided a financial plan and projections
of customer adoptions that assumed that the next big win in revenue growth was
imminent and that Motorola's support was needed only on a transitional basis."
In reality, Next Level has kept Motorola fully apprised of the status of its
customer orders and projected revenues by providing Motorola with detailed,
non-public, highly-confidential and proprietary information. Next Level also
consistently sought a long-term solution to its fund-raising needs. It was
Motorola, not Next Level, that dragged its feet and insisted on addressing Next
Level's financial situation using incremental, stop-gap measures. The only party
that benefitted from this approach was Motorola, who thereby repeatedly was able
to use Next Level's financial difficulties to extract benefits for itself.

     89.   Fourth, the Schedule TO falsely and misleadingly describes Next
Level's search for third party financing in the fourth quarter of 2001. The
Schedule TO falsely states that "Given the lack of success Next Level had in
securing third-party financing on acceptable terms and in sufficient amounts,
Motorola agreed to lend Next Level an additional $20 million as interim
financing under the terms of the May 2001 Credit Agreement." In reality, after
forcing Next Level to pursue the capital raising process by refusing to commit
to a long-term financing solution for Next Level, then standing by while Next
Level spent months developing negotiating, and documenting a third party
investment, on December 5 Motorola vetoed the investment at the last minute. Two
months later, Motorola used the Company's financing needs and its status as the
Company's controlling stockholder to force the Company to issue the first
tranche of the Blocking Preferred.

     90.   Fifth, the Schedule TO contains disclosure designed to create the
false and misleading impression that Next Level's "burn rate" is high and has
not and/or cannot be reduced.

                                      -32-


In reality, as Motorola knows from the non-public, highly confidential
information it received, Next Level has reduced its burn rate dramatically to
less than $4 million per quarter. Next Level has approximately $33 million in
cash on hand.

     91.   Notably, Motorola concedes in the Schedule TO that it obtained from
Next Level, used in connection with the Tender Offer and provided to its
consultants "information available from Next Level (including product
documentation, market strategy and technology documents, a presentation on
historical market acceptances of Next Level's product offerings, current
financial productions, a financial model used to assess decision economics for a
potential carrier customer and interviews with Next Level marketing personnel)."
Motorola also concedes that it provided its financial advisor with internal
financial forecasts prepared by Motorola based on confidential information
provided by Next Level. The use of Next Level's Confidential Proprietary
information for this purpose violates the NDA, as does the disclosure of Next
Level's Confidential Proprietary Information to Motorola's consultants and
financial advisor.

                      MOTOROLA'S REFUSAL TO GIVE ASSURANCES

     92.   After the commencement of the Tender Offer, the Independent Committee
met. The Independent Committee recognized that Motorola's status as Next Level's
controlling stockholder and exclusive source of financing, combined with the
threats in the Schedule TO, could create a coercive environment in which the
Company's stockholders are pressured unfairly to tender into the Tender Offer
regardless of their views or the Independent Committee's views on the adequacy
of the Tender Offer Price. The Independent Committee believes that if Next
Level's public stockholders reject the Tender Offer, Motorola easily could
retaliate and cripple the Company. The Independent Committee therefore
determined to seek assurances from Motorola that would assist

                                      -33-


the Independent Committee in evaluating the Tender Offer, including the
potential threat of coercion and/or retribution by Motorola in connection with
the Tender Offer.

     93.   By letter dated January 29, 2003, the Independent Committee asked
Motorola for assurances, particularly requesting that Motorola agree:

                    (i)    to offer unqualified support to Next Level
                           with respect to its attempts to secure
                           third party financing, in line with
                           previous indications Motorola gave Next
                           Level regarding its support of such
                           financing, and despite Motorola's sabotage
                           of any prior attempt by Next Level to
                           acquire such financing;

                    (ii)   not to change its course and to continue to
                           support and finance the implementation of
                           the business plan reviewed at the December
                           4, 2002, Board Meeting at least through
                           December 31, 2003, as Motorola did not
                           object to the proposed business plan at the
                           time it was presented to Motorola;

                    (iii)  not to use its unfairly extracted blocking
                           and veto power to prevent the Independent
                           Committee or the Board from exercising its
                           fiduciary duty and protecting Next Level's
                           minority stockholders by implementing a
                           stockholder rights plan;

                    (iv)   to vote all of its Next Level shares in
                           favor of any stock split that the Board may
                           deem advisable in order to maintain the
                           Company's Nasdaq listing; and

                    (v)    to perform its duties, obligations and
                           responsibilities to Next Level under any
                           and all existing agreements between the
                           Company and Motorola.

Because of the time pressures imposed by the Tender Offer, the Independent
Committee asked Motorola to respond to its request for assurances within 48
hours.

     94.   The very next day, by letter dated January 30, 2003, Motorola
responded and either implicitly or explicitly rejected each of the Independent
Committee's request for assurances.

                                      -34-


Motorola's response was carefully designed to heighten, rather than diminish,
the coercive environment that Motorola intentionally had created surrounding
Next Level.

     95.   Before rejecting the Independent Committee's requests, Motorola did
not contact the Independent Committee or offer to enter into discussions. In
its letter, Motorola stressed its desire to deal directly with Next Level's
stockholders, thereby indicating that it did not want the Independent Committee
to attempt to protect the minority stockholders' interests or otherwise to
involve itself in the process. Motorola explicitly took the position that the
Independent Committee's only role in the process was to participate in the
preparation of the Schedule 14D-9 to be filed by the Company in response to
Motorola's Schedule TO.

     96.   Each of Motorola's responses to the Independent Committee heightens
the unfair and coercive pressure on Next level's stockholders. First, in
response to the Independent Committee's request that Motorola support Next
Level's fundraising efforts, Motorola failed to offer any support or commitment,
and failed to waive any of its veto rights. To the contrary, Motorola reaffirmed
and defended its ability to use its rights to reject a proposed financing.
Motorola thus reinforced a coercive environment in which Next Level cannot raise
funds and therefore stockholders have no choice but to tender.

     97.   Second, Motorola explicitly rejected the Independent Committee's
request that Motorola continue to finance Next Level's business plan in light of
the effects of the Tender Offer on Motorola's fundraising efforts. Motorola
likewise refused to provided any interim financing commitment or bridge
financing to the Company. Motorola thus reinforced the possibility that even if
the Tender Offer were defeated, the Company would not have time to raise funds
and would not be able to obtain interim funding. This again forces stockholders
to tender.

                                      -35-


     98.   Third, Motorola explicitly rejected the Independent Committee's
inquiry about a stockholder rights plan. Motorola asserted that an attempt by
the Independent Committee to take defensive action would be inappropriate and
would violate the directors' fiduciary duties. Motorola threatened that it
"would vigorously oppose, and expressly reserves its rights with respect to" the
adoption of any stockholder rights plan. Motorola thus refused to give the
Independent Committee any negotiating leverage or ability to slow down the
Tender Offer.

     99.   Fourth, Motorola failed to respond to the Independent Committee's
request for support for the Company's efforts to maintain its Nasdaq listing,
such as a reverse stock split. Motorola claimed that it could not provide any
assurance with respect such matters. Motorola thus reinforced the fear that the
Company will be delisted, creating additional pressure to tender.

     100.  Finally, Motorola offered no reassurances whatsoever and failed to
address in any way the Independent Committee's request for reassurance that
Motorola would continue to abide by the NDA and the Relationship Agreement.
Motorola thus confirmed the impression that it will not support the Company
unless the Tender Offer succeeds.

               THE INDEPENDENT COMMITTEE ISSUES ITS SCHEDULE I4D-9
               AND DIRECTS THE COMPANY TO COMMENCE THIS LITIGATION

     101.  On January 31 and again on February 3, 2003, the Independent
Committee met and considered Motorola's Tender Offer. On each occasion, the
Independent Committee consulted at length with its advisors and discussed the
Tender Offer in detail. On February 3, 2003, Morgan Stanley rendered its opinion
to the Independent Committee to the effect that the Tender Offer was inadequate
from a financial point of view to holders of Next Level's common stock other
than Motorola. After considering Morgan Stanley's opinion, the coercive nature
of the Tender Offer, Motorola's breach of the NDA, the false and misleading
disclosures in the Schedule TO, and Motorola's response to the Independent
Committee's request for reassurances, the independent

                                      -36-


Committee determined to recommend that Next Level's stockholders not tender
their shares to Motorola. The Independent Committee authorized and directed the
Company to pursue this litigations.

                                IRREPARABLE HARM

     102.  Motorola's Tender Offer is inflicting irreparable harm on Next Level
and its stockholders in numerous ways. First, Motorola has breached and is
continuing to breach the NDA by using Next Level's Confidential Proprietary
Information for an improper purpose, Misuse of Next Level's Confidential
Proprietary Information constitute irreparable harm as a matter of law.

     103.  Second, because Motorola currently possesses material, non-public
information about Next Level that it has not and cannot disclose, Motorola is
breaching its fiduciary duties and threatens to engage in "insider trading."
Unless enjoined by this Court, Motorola will close the Tender Offer and
eliminate Next Level's minority stockholders at an inadequate price. Motorola
will have used inside information to its own benefit and to Next Level's
detriment. This constitutes irreparable harm as a matter of law.

     104.  Third, the Motorola Tender Offer is substantively and structurally
coercive. Motorola has manufactured a highly coercive environment by currently
preventing Next Level from pursuing any other alternatives that would enable the
Company to prosper if the Tender Offer does not succeed. Motorola is attempting
to coerce Next Level's minority stockholders into tendering regardless of their
views on the adequacy of the Tender Offer Price. Motorola's coercive tender
offer threatens Next Level's stockholders with irreparable harm as a matter of
law.

     105.  Fourth, plaintiffs in this action seek a determination that shares
held by Next Level officers should be counted in the "minority" for purposes of
determining whether the "majority of the minority" condition for the Tender
Offer has been met. Absent a prompt determination from this

                                      -37-


Court or an injunction pending a final determination on this issue, Next Level's
minority stockholders will be irreparably harmed. Stockholders could view
defaulting the Minimum Tender Condition as unachievable and tender so as to
timely the receive the Tender Offer Price. If shares held by Next Level's
officers are included in the "minority," then stockholders are more likely to
withhold tender because they will believe it is possible to defeat the Minimum
Tender Condition.

     106.  Finally, Next Level and its stockholders are being irreparable harmed
by the disclosure violations committed by Motorola in the Schedule TO. False and
misleading disclosures by a controlling stockholder in a tender offer to
minority stockholders constitute irreparable harm as a matter of law.

                                     DAMAGES

     107.  In addition to the irreparable harm being inflicted to Motorola on
Next Level and its stockholders, Motorola already has inflicted and is
continuing to inflict damages on the Company in the hundreds of millions of
dollars. Motorola damaged Next Level by starving it for funds, failing to
approve a long-term financing strategy, vetoing third party financing proposals,
and providing funds only on a last-minute stop-gap basis. Since August 2002,
Motorola deliberately has deprived Next Level of funds as part of its plan to
squeeze out Next Level's minority stockholders at an inadequate price.
Motorola's actions have damaged Next Level by preventing it from growing and
achieving the business results and profitability that Next Level otherwise could
have achieved.

     108.  Motorola also has damaged and continues to damage Next Level by
mining the Company for information in violation of the NDA and Motorola's
fiduciary duties. Motorola now possesses Next Level's highly confidential,
propriety, non-public information and can compete with Next Level to Motorola's
benefit and Next Level's detriment. The intrinsic value of Next Level and

                                      -38-


its business has been damaged significantly by Motorola's misappropriation of
documents and information.

     109.  Motorola's failure to support Next Level with financing and the
launch of the Tender Offer have further harmed Next Level by preventing or
delaying customer purchases of Next Level products. Motorola's past action have
forced Next Level to lay off employees, depriving Next Level of the human
capital in which its business depends. Motorola's Tender Offer has created
substantial uncertainty in Next Level's employee ranks, causing additional loss
of human capital. Motorola's course of conduct and the Tender Offer also have
damaged Next Level in the public markets. Motorola has failed to assist Next
Level and had impeded Next Level's efforts to address its Nasdaq issues. As a
result of Motorola's efforts and the Tender Offer, Motorola now faces a threat
of delisting by Nasdaq.

     110.  Motorola's past actions and its Tender Offer also have caused
significant reputational damage to Next Level. In the past, Motorola has forced
Next Level to restructure its relationships with key suppliers and has damaged
Next Level's interactions with customers. The false and misleading disclosures
in Motorola's Schedule TO call into question the viability of Next Level's
business, the success of its products, and the competence of its management.
These actions have inflicted substantial damage on Next Level and its business.

     111.  As a result of Motorola's conduct, Next Level's business has been
prevented from achieving the value its otherwise would have achieved. Motorola's
actions affirmatively have harmed Next Level's business and reduced Next Level's
intrinsic value. Motorola's actions also have crippled Next Level going forward
so the Next Level will be unable to achieve the value that it otherwise could
have delivered to its stockholders.

                                      -39-


                                     COUNT I
                    (BREACH OF THE NON-DISCLOSURE AGREEMENT)

     112.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     113.  After obtaining highly confidential, proprietary, non-public
information from Company management and during its "due diligence"
investigation, Motorola possessed Confidential Proprietary Information about the
Company pursuant to the NDA.

     114.  The NDA requires the Motorola maintain the confidentiality of the
Next Level's Confidential Proprietary Information and use Next Level's
Confidential Proprietary Information "only in conjunction with entering into a
business relationship for the sale of Next Level products."

     115.  By using Confidential Proprietary Information to plan, launch and
carry out the Tender Offer, Motorola violated the NDA. Moreover, that violation
is continuing and is inflicting harm on Next Level that is not remediable in
monetary damages.

     116.  Plaintiffs have no adequate remedy at law.

                                    COUNT II
                   (BREACH OF FIDUCIARY DUTY: INSIDER TRADING)

     117.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     118.  After obtaining highly confidential, proprietary, non-public
information from Company management and during its "due diligence"
investigation, Motorola possessed inside information about the Company.

     119.  By using inside information to plan, launch and carry out the
Tender Offer, Motorola violated its fiduciary duties. Moreover, that violation
is continuing and is inflicting harm on Next Level that is not redemiable in
monetary damages.

     120.  Plaintiffs have no adequate remedy at law.

                                      -40-


                                    COUNT III
           (BREACH OF FIDUCIARY DUTY; FAIR PRICE/SUBSTANTIVE COERCION)

     121.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     122.  By virtue its status as the controlling stockholder of Next Level,
Motorola owes fiduciary duties to Next Level and its minority stockholders.
Motorola has breached its fiduciary duties by launching a substantively coercive
tender offer.

     123.  Motorola's Tender Offer is substantively coercive because Motorola is
offering an unfair price and has timed the tender Offer to take advantage of the
artificially depressed market price Next Level stock, to benefit itself and to
deprive the minority stockholders of any future gains in Next Level's business
and stock price. Motorola's financial advisor admits in the Schedule TO that
Next Level's share price "bears no semblance to Next Level's fundamental value."

     124.  Next Level cannot disclose to its stockholders information that would
remedy the substantive coercion and allow stockholder to evaluate and determine
for themselves Next Level's intrinsic value. The information that stockholders
would need not to have includes detailed information about Next Level's
customers, its relationships with those customers, the achievements of customer
milestones, and the likelihood and magnitude of sales. Next Level cannot
disclose this information because it is bound by confidentiality agreements with
its customers. In any event, Next Level cannot disclose this information without
damaging the customer relationships themselves, impairing Next Level's
negotiating position with its customers, and harming Next Level. Motorola, by
contrast, possesses this highly confidential, non-public, proprietary
information by virtue of its "due diligence" investigation and the reports it
received from Next Level management. Motorola intentionally has timed its Tender
Offer to take advantage of the highly confidential, non-public, proprietary
information it possesses, the fact the Next Level cannot publicly disclose the
information, and the resulting divergence between Next Level's intrinsic value
and the market price.

                                      -41-


     125.  Motorola's Tender Offer poses the significant risk that Next Level's
minority stockholders will tender at the inadequate offered based on ignorance
or a mistaken belief as to the inherent value of Next Level's stock.

     126.  Motorola's launch of a substantively coercive tender offer gives rise
to a duty on the part of Motorola to pay, and a right on the part of Next
Level's minority stockholders to receive, a fair price for their shares.

     127.  Plaintiffs have no adequate remedy at law.

                                    COUNT IV
           (BREACH OF FIDUCIARY DUTY: FAIR PRICE/STRUCTURAL COERCION)

     128.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     129.  By virtue its status as the controlling stockholder of Next Level,
Motorola owes fiduciary duties to Next Level and its minority stockholders.
Motorola has breached its fiduciary duties by launching a structurally coercive
tender offer.

     130.  The Tender Offer is structurally coercive because Motorola is
offering an unfair price and the Tender Offer does not contain sufficient
protection to ensure the Company's public stockholders a free choice in
accepting the Tender Offer consideration or seeking appraisal in a subsequent
short-from merger.

     131.  Motorola has not guaranteed that, following the acquisition of a
sufficient number of shares in the Tender Offer, it will acquire the remaining
public shares at the Tender Offer Price through a short-form merger. In the
Announcement, Motorola stated only that any shares not tendered as "expected" to
be acquired in a subsequent back-end merger. In the Schedule TO, Motorola states
in the Summary that it "will" effect a merger, then later states only that it
"presently intends" to effect a merger. Elsewhere Motorola states that is "may
merge" Next Level with another Motorola subsidiary. These confusing,
non-committal, and internally inconsistent statements do not

                                      -42-


provide the clear commitment required under Delaware law to mitigate the
structural coercion inherent in the Tender Offer.

     132.  Motorola's launch of a structurally coercive tender offer gives rise
to a duty on the part of Motorola to pay, and a right on the part of Next
Level's minority stockholders to receive, a fair price for their shares.

     133.  Plaintiffs have no adequate remedy at law.

                                     COUNT V
    (BREACH OF FIDUCIARY DUTY: FAIR PRICE/RETRIBUTION AND LACK OF ASSURANCES)

     134.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     135.  By virtue its status as the controlling stockholder of Next Level,
Motorola owes fiduciary duties to Next Level and its minority stockholders.
Motorola has breached its fiduciary duties by launching a structurally coercive
tender office.

     136.  The Tender Offer is inherently coercive because Motorola is
threatening retribution if Next Level's stockholders fail to tender. Motorola
has declared that it no longer will support Next Level. Motorola also has failed
to give the Company and its stockholders basic assurances about its willingness
to support Next Level regardless of the outcome of the Tender Offer in response
to a request by the Independent Committee.

     137.  Motorola's coercive tender offer gives rise to a duty on the part of
Motorola to pay, and a right on the part of Next Level's minority stockholders
to receive, a fair price for their shares.

     138.  Plaintiffs have no adequate remedy at law.

                                    COUNT VI
           (BREACH OF FIDUCIARY DUTY: ENTIRE FAIRNESS FOR TENDER OFFER
                AS A TRANSACTION WITH A CONTROLLING STOCKHOLDER)

     139.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

                                      -43-


     140.  By virtue of the fact that Motorola is the controlling stockholder of
Next Level, Motorola stands in a fiduciary relationship with the minority
stockholders of Next Level and must deal with the Company's public stockholders
fairly and in good faith.

     141.  Because Motorola is Next Level's controlling stockholder, Motorola's
actions are subject to review for entire fairness, whether Motorola proceeds by
tender offer or by negotiated merger. Motorola is neither following a fair
process nor offering a fair price.

     142.  As a result of Motorola's actions, Next Level and its minority
stockholders have been and will be irreparably harmed. Unless enjoined by this
Court, Motorola will continue to breach its fiduciary duties owned to Next
Level's minority stockholders, all to the irreparable harm of Next Level and its
public stockholders.

     143.  Plaintiffs have no adequate remedy at law.

                                    COUNT VII
    (BREACH OF FIDUCIARY DUTY: MISAPPROPRIATION OF CONFIDENTIAL INFORMATION)

     144.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     145.  As the controlling stockholder of Next Level, Motorola owes the
minority stockholders of Next Level the highest fiduciary duties of loyalty,
candor and good faith.

     146.  By obtaining extensive, non-public, highly confidential "due
diligence" information for use in planning and carrying out the Tender Offer,
Motorola breached its fiduciary duties of loyalty, candor and good faith.

     147.  Motorola further breached its fiduciary duties of loyalty, candor and
good faith by acting upon the confidential information it received unlawfully
from the Current Motorola Directors and through the "due diligence" process.
Motorola knowingly and in bad faith used confidential information of Next Level
- - information which never should have been disclosed to Motorola - for its own
benefit.

                                      -44-


     148.  As a result of the actions of the Current Motorola Directors and
Motorola, Next Level and its minority stockholders have been and will be
irreparably harmed.

     149.  Plaintiffs have no adequate remedy at law.

                                   COUNT VIII
                (BREACH OF FIDUCIARY DUTY: USE OF BLOCKING RIGHT)

     150.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     151.  As the controlling stockholder of Next Level, Motorola owes the
minority stockholders of Next Level the highest fiduciary duties of loyalty,
candor and good faith.

     152.  By failing to provide its consent to the adoption of a stockholders
right plan, Motorola has breached and is breaching its fiduciary duties to Next
Level's minority stockholders by unlawfully impairing the ability of the
Independent Committee to negotiate on behalf of the minority stockholders.

     153.  In the absence of relief from this Court, Next Level and its minority
stockholders will be threatened with irreparable harm from the purported
restrictions in the Credit Agreement and the Blocking Preferred on the ability
of the Independent Committee to consider the adoption of a stockholder rights
plan in connection with its analysis of the Tender Offer. Regardless of the
validity of those restrictions, their existence irreparably harms Next Level and
its minority stockholders by making it appear as if Next Level cannot defined
against the Tender Offer.

     154.  Plaintiffs have no adequate remedy at law.

                                    COUNT IX
                     (BREACH OF FIDUCIARY DUTY: DISCLOSURE)

     155.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     156.  As the controlling stockholder of Next Level, Motorola owes the
minority stockholders of Next Level the highest fiduciary duties of candor and
full disclosure. In asking Next

                                      -45-


Level's minority stockholders to tender their shares into the Tender Offer,
Motorola is obligated to disclose fully and fairly all material information
within its control.

     157.  Motorola has breached its duty of disclosure by making false and
misleading statements on the Schedule TO. These misstatements and omissions are
depriving the Next Level minority stockholders the opportunity to make fully
informed decisions with respect to the Proposed Transaction.

     158.  These material misstatements are a breach of Motorola's duty of
candor and fully disclosure to the Company's minority stockholders and prevent
the minority stockholders from making a free, uncoerced and informed decision
whether to tender their shares into the Tender Offer.

     159.  As a result of Motorola's actions, Next Level and its minority
stockholders have been and will be damaged. Unless enjoined by this Court,
Motorola will continue to breach its fiduciary duties owed to Next Level's
minority stockholders, all to the irreparable harm of Next Level and its public
stockholders.

     160.  Plaintiffs have no adequate remedy at law.

                                     COUNT X
        (BREACH OF FIDUCIARY DUTY: ENTIRE FAIRNESS FOR CREDIT AGREEMENT,
                   FINANCING FACILITY AND BLOCKING PREFERRED)

     161.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     162.  The execution of the Credit Agreement, the execution of the Financing
Facility and the issuance to Motorola of the Series A Preferred was, in each
instance, a transaction between Motorola and its majority-owned subsidiary. The
Series A-1 and Series A-2 Preferred were issued when Motorola exercised its
option under the Financial Facility to receive preferred stock in return for any
drawn down by Next Level on the Financial Facility. Because Motorola stood on
both

                                      -46-


sides of each of there transaction as a controlling stockholders, Motorola must
prove that they were entirely fair. Motorola cannot meet this burden.

     163.  At the time Next Level entered into the Credit Agreement, a majority
of the Board consisted of Motorola designees or persons under Motorola's
domination and control. At the time the Series A Preferred was issued, a
majority of the Board consisted of Motorola designees or persons under
Motorola's domination and control. The Series A-1 and Series A-2 Preferred were
issued when Motorola exercised its options under the Financial Facility to
receive preferred stock in return for any drawn down by Next Level on the
Financial Facility. At the time Next Level entered into the Financing Facility,
a majority of the Board consisted of Motorola designees or persons under
Motorola's domination and control. Because a majority of the Board was
interested in and could not act independently with respect to there
transactions, Motorola must prove that they were entirely fair. Motorola cannot
meet their burden.

     164.  In the absence of the relief from this Court, Next Level and its
minority stockholders will be threatened with irreparable harm from the arguable
restrictions in the Credit Agreement and Blocking Preferred on the ability of
the Independent Committee to consider the adoption of a stockholder rights plan
in connection with its analysis of the Tender Offer.

     165.  Plaintiffs have no adequate remedy at law.

                                    COUNT XI
  (DECLARATORY JUDGMENT: INVALIDITY OF CREDIT AGREEMENT AND BLOCKING PREFERRED)

     166.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

     167.  Motorola's action in launching the Tender Offer have created a
justiciable controversy as to whether the Independent Committee may use all of
the means available to it under Delaware law to carry out its unremitting
fiduciary duties and safeguard the interests of the Company's public
stockholders in connection with the Tender Offer. Next Level believes that the

                                      -47-


Independent Committee has the power to adopt a stockholder rights plan in
response to the unfair and coercive Tender Offer. Motorola, on the other hand,
undoubtedly will argue that the Blocking Preferred and the Credit Agreement
prohibit the Independent Committee and the Board from authorizing the issuance
of rights in connection with the adoption of a rights plan without Motorola's
consent.

     168.  To the extent that specific provisions in the Blocking Preferred or
the Credit Agreement prevent the adoption of a rights a plan, those provisions
limit impermissibly and undeniably the right to the Next Level directors under 8
Del. C Section 141(a) to manage the business and affairs of the Company and
their ability to safeguard the interest of the Company and its minority
stockholders. Motorola's refusal to provide its consent to the issuance of
rights likewise is an unlawful infringement upon the right of the Next Level
directors to manage the business and affairs of the Company.

     169.  Accordingly, a real and justiciable controversy exists between
Motorola and Next Level concerning their legal rights and obligations. Moreover,
in the absence of declaratory relief Next Level and its minority stockholders
will be threatened with irreparable harm from the inability of the Independent
Committee to consider the adoption of a stockholder rights plan in connection
with its analysis of the Tender Offer or take various other protective measures.
As a result, plaintiff is entitled, pursuant to 10 Del. C. Section 6501 ET.
SEQ., to a declaratory judgement that the Credit Agreement and the Blocking
Preferred do not restrict or prohibit the ability of the Independent Committee
or the Board to adopt a stockholder rights plan or authorize the issuance of
rights thereunder.

                                    COUNT XII
             (DECLARATORY JUDGEMENT: MAJORITY OF MINORITY PROVISION)

     170.  Plaintiffs repeat and reallege the foregoing paragraphs as if fully
set forth herein.

                                      -48-


     171.  The Tender Offer is purportedly conditioned upon, among other
things, the tender of a majority of Next Level shares not held by Motorola and
its affiliates.

     172.  Next Level's officers beneficially own shares of Next Level common
stock.

     173.  Motorola's actions in launching the Tender Offer have created a
justiciable controversy as to whether the shares held by Next level's officers
should be included in determining the tender of shares into the Tender Offer by
"a majority of Next level shares not held by Motorola and its affiliates". It is
unclear under the terms of the Tender Offer and in light of the current state of
Delaware law whether these shares should be included in calculating the
"majority of the minority" due to the officers' position worth the Company. Next
Level belives that if officers determine NOT to tender their shares, then their
beneficially-owned shares should be included as "minority shares" in the
denominator when calculating whether the Tender Offer satisfies its "majority of
the minority" condition. On the other hand, Motorola undoubtedly will argue
that, as officers of the Company, these shares should not be included in
performing the calculation.

     174.  Accordingly, a real and justiciable controversy exists between
Motorola and Next Level concerning the Tender Offer and the proper applications
of the "majority of the minority" condition. In the absence of the declaratory
relief, Next Level and its minority stockholders will be threatened with
irreparable harm from the inability of Company's minority stockholders to enjoy
the benefits afforded to them by a true and properly functioning "majority of
the minority" requirement. As a result, plaintiff is entitled, pursuant to 10
DEL.C SECTION 6501 ET SEQ., to a declaratory judgement that, if Next level's
officers agree NOT to tender their shares, then the shares should be included as
"minority shares" in the denominator when determining whether a majority of the
Next Level shares not held by Motorola and its affiliates are tendered into the
Tender Offer.

     WHEREFORE, plaintiffs demand judgement as follows:

                                      -49-


           a.   Enjoining, preliminary and permanently, Motorola and all
persons acting in concert with Motorola from proceeding with the Tender Offer
or taking any steps to give effect to the Tender Offer or the Merger;

           b.   If the Tender Offer and/or the Merger is consummated before
judgment is entered in this action, rescinding the Tender Offer and/or the
Merger;

           c.   Declaring that Motorola has violated its fiduciary duties to
Next Level and its minority stockholders;

           d.   Declaring that the Tender Offer is subject to review for entire
fairness;

           e.   Determining that Motorola is obligated to get Next Level's
stockholders a fair price in connection with the Tender Offer;

           f.   Requiring that appropriate corrective disclosures be made to
cure all of the materially false and misleading statements and omissions made by
Motorola;

           g.   Declaring that the Credit Agreement and the Blocking Preferred
are void and invalid, either in totality or to the extent the prevent the Next
Level Board from adopting a stockholder rights plan;

           h.   Declaring that, if Next Level's officers agree NOT to tender
their shares, then the shares should be included as "minority shares" in the
denominator when determining whether a majority of the Next Level shares not
held by Motorola and its affiliates are tendered into the Tender Offer;

           i.   Awarding substantial damages to Next Level in an amount to be
determined at trial;

           j.   Awarding plaintiffs their fees and expenses, including
reasonable attorneys' fees incurred in this action; and

                                      -50-


           k.   Granting such other and further relief as the Court may deem
just and equitable.

                                            /s/ Kevin G. Abrams
                                            ------------------------------------
OF COUNSEL:                                 Kevin G. Abrams
                                            J. Travis Laster
Hugh Steven Wilson                          Thad J. Bracegirdle
Latham & Watkins LLP                        Kelly C. Ashby
701 B Street, Suite 2100                    Evan O. Williford
San Diego, CA 92101-8197                    Lisa M. Zwally
(619) 236-1234                              Richards, Layton & Finger, P.A.
                                            One Rodney Square, P.O. Box 551
Charles W. Cox, II                          Wilmington, DE 19899
Latham & Watkins LLP                        (302) 651-7700
633 West Fifth Street, Suite 4000
Los Angeles, California 90071               Attorney for Plaintiffs
(213) 485-1234

Dated:  February 4, 2003

                                      -51-


                                        Next Level Communications, Inc.

                                        By: /s/ Keith A.Zar
                                            ------------------------------------
                                            Name: Keith A.Zar
                                            Title: Senior Vice President,General
                                        Counsel, Secretary, and Chief
Sworn to and subscribed before me       Administrative Officer
this __ day of February, 2003

- ----------------------------
Notary Public

My Commission expires_______