<SUBMISSION>
<ACCESSION-NUMBER>0000936392-01-500225
<TYPE>10-K
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20010930
<FILING-DATE>20011109
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>QUALCOMM INC/DE
<CIK>0000804328
<ASSIGNED-SIC>3663
<IRS-NUMBER>953685934
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0930
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-K
<ACT>34
<FILE-NUMBER>000-19528
<FILM-NUMBER>1780923
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>5775 MOREHOUSE DR
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92121
<PHONE>8585871121
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>5775 MOREHOUSE DR
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92121
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>a76829e10-k.htm
<DESCRIPTION>FORM 10-K FISCAL YEAR ENDED SEPTEMBER 30, 2001
<TEXT>
<HTML>
<HEAD>
<TITLE>Qualcomm Inc. Form 10-K</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
 <HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="center">
<B><FONT size="5">UNITED STATES SECURITIES AND EXCHANGE
COMMISSION</FONT></B>

<DIV align="center">
<B><FONT size="2">Washington, D.C. 20549</FONT></B>
</DIV>

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<HR size="1" width="30%" align="center" noshade>

<P align="center">
<B><FONT size="5">FORM 10-K</FONT></B>

<P align="center">
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<P align="left">
<B><FONT size="2">(Mark One)</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="3%"></TD>
	<TD width="93%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><B><FONT face="wingdings">&#120;</FONT></B></TD>
	<TD align="left">
	<B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">For the fiscal year ended September&nbsp;30,
2001</FONT></B>

<P align="center">
<B><FONT size="2">OR</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="3%"></TD>
	<TD width="93%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT face="wingdings">&#111;</FONT></TD>
	<TD align="left">
	<B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">For the transition period from
<U>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</U> to
<U>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</U>&nbsp;.</FONT></B>

<P align="center">
<B><FONT size="2">Commission file number 0-19528</FONT></B>

<P align="center">
<B><FONT size="6">QUALCOMM Incorporated</FONT></B>

<DIV align="center">
<B><FONT size="2">(Exact name of registrant as specified in its
charter)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="center" valign="top">
	<B><FONT size="2">Delaware<BR>
	(State or other jurisdiction of<BR>
	incorporation or organization)</FONT></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<B><FONT size="2">95-3685934<BR>
	(I.R.S. Employer<BR>
	Identification No.)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<B><FONT size="2">5775 Morehouse Drive San Diego, California<BR>
	(Address of principal executive offices)</FONT></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<B><FONT size="2">92121-1714<BR>
	(Zip Code)</FONT></B></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">(858)&nbsp;587-1121</FONT></B>

<DIV align="center">
<B><FONT size="2">(Registrant&#146;s telephone number, including
area code)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Securities registered pursuant to
Section&nbsp;12(b) of the Act:</FONT></B>

<DIV align="center">
<B><FONT size="2">None</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Securities registered pursuant to
Section&nbsp;12(g) of the Act:</FONT></B>

<DIV align="center">
<B><FONT size="2">Common Stock, $.0001 par value</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Title of Class)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate by check mark whether the registrant
(1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12&nbsp;months (or for such shorter period
that the registrant was required to file such reports), and
(2)&nbsp;has been subject to such filing requirements for the
past 90&nbsp;days.&nbsp;&nbsp;Yes&nbsp;
<FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp;No&nbsp;
<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation&nbsp;S-K
(Section&nbsp;229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant&#146;s
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form&nbsp;10-K or
any amendment to this
Form&nbsp;10-K.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The aggregate market value of the voting and
non-voting common equity held by non-affiliates of the
registrant as of November&nbsp;2, 2001 was $38,831,227,160.*
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of shares outstanding of the
registrant&#146;s Common Stock was 764,419,066 as of
November&nbsp;2, 2001.
</FONT>

<P align="center">
<B><FONT size="2">DOCUMENTS INCORPORATED BY REFERENCE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Portions of the registrant&#146;s Definitive
Proxy Statement to be filed with the Commission pursuant to
Regulation&nbsp;14A in connection with the registrant&#146;s
2002 Annual Meeting of Stockholders, to be filed subsequent to
the date hereof, are incorporated by reference into Part III of
this Report. Such Definitive Proxy Statement will be filed with
the Securities and Exchange Commission not later than
120&nbsp;days after the conclusion of the registrant&#146;s
fiscal year ended September&nbsp;30, 2001.
</FONT>

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<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="2%"></TD>
	<TD width="2%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">*&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Excludes the Common Stock held by executive
	officers, directors and stockholders whose ownership exceeds 5%
	of the Common Stock outstanding at November&nbsp;2, 2001. This
	calculation does not reflect a determination that such persons
	are affiliates for any other purposes.
	</FONT></TD>
</TR>

</TABLE>

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<HR size="1" width="100%" align="left" noshade>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">TRADEMARKS AND TRADE NAMES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">PART I</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">ITEM 1. BUSINESS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Overview</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">Wireless Telecommunications Industry Overview</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">The Evolution of Wireless Standards</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Operating Segments</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">Research and Development</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">Sales and Marketing</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">Competition</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">Patents, Trademarks and Trade Secrets</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">Employees</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">Executive Officers</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">RISK FACTORS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">ITEM 2.PROPERTIES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">ITEM 3.LEGAL PROCEEDINGS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#016">ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#017">ITEM 5.MARKET FOR REGISTRANT&#146;S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#018">ITEM 6.SELECTED CONSOLIDATED FINANCIAL DATA</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#019">ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#020">ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">PART III</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#022">ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#023">ITEM 11. EXECUTIVE COMPENSATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#024">ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#025">ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#026">PART IV</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#027">ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K</A></TD></TR>
<TR><TD colspan="9"><A HREF="a76829ex10-44.txt">EXHIBIT 10.44</A></TD></TR>
<TR><TD colspan="9"><A HREF="a76829ex10-45.txt">EXHIBIT 10.45</A></TD></TR>
<TR><TD colspan="9"><A HREF="a76829ex10-46.txt">EXHIBIT 10.46</A></TD></TR>
<TR><TD colspan="9"><A HREF="a76829ex23-1.txt">EXHIBIT 23.1</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>

<P align="center">
<B><FONT size="2">FORM&nbsp;10-K</FONT></B>

<DIV align="center">
<B><FONT size="2">FOR THE FISCAL YEAR ENDED SEPTEMBER&nbsp;30,
2001</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">INDEX</FONT></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="8" align="left" valign="top">
	<FONT size="2">PART I
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;1.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Business
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Overview
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Wireless Telecommunications Industry Overview
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">The Evolution of Wireless Standards
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Operating Segments
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Research and Development
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Sales and Marketing
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Competition
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Patents, Trademarks and Trade Secrets
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employees
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Executive Officers
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Risk Factors
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;2.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Properties
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;3.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Legal Proceedings
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;4.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Submission of Matters to a Vote of Security
	Holders
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="8" align="left" valign="top">
	<FONT size="2">PART II
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;5.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Market for Registrant&#146;s Common Equity and
	Related Stockholder Matters
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;6.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Selected Consolidated Financial Data
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;7.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Management&#146;s Discussion and Analysis of
	Financial Condition and Results of Operation
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;7A.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Quantitative and Qualitative Disclosure about
	Market Risk
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;8.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Financial Statements and Supplementary Data
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;9.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Changes in and Disagreements with Accountants on
	Accounting and Financial Disclosure
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="8" align="left" valign="top">
	<FONT size="2">PART III
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 10.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Directors and Executive Officers of the Registrant
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;11.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Executive Compensation
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;12.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Security Ownership of Certain Beneficial Owners
	and Management
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;13.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certain Relationships and Related Transactions
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="8" align="left" valign="top">
	<FONT size="2">PART IV
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;14.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Exhibits, Financial Statement Schedules and
	Reports on Form&nbsp; 8-K
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<!-- link1 "TRADEMARKS AND TRADE NAMES" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center">
<B><FONT size="2">TRADEMARKS AND TRADE NAMES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QUALCOMM&#174;, QUALCOMM Wireless Business
Solutions&#174;, OmniTRACS&#174;, OmniOne&#153;,
TruckMAIL&#153;, OmniExpress&#153;, LINQ&#153;, Eudora&#174;,
QCP&#174;, QCT&#174;, MSM3000<SUP>TM</SUP>, MSM3300&#153;,
MSM5000&#153;, MSM&nbsp;5010&#153;, MSM5100&#153;,
MSM5105&#153;, MSM5200&#153;, MSM5500&#153;, MSM6000&#153;,
MSM6050&#153;, MSM6100&#153;, MSM6200&#153;, MSM6300&#153;,
MSM6500&#153;, MSM6600&#153;, CSM5000&#153;, CSM5200&#153;,
CSM5500&#153;, RFR3300&#153;, RFT3100&#153;, PM1000&#153;,
SURF3300&#153;, gpsOne<SUP>TM</SUP>, SnapTrack&#174; and
BREW&#153; are trademarks and/or service marks of QUALCOMM
Incorporated. QUALCOMM, QUALCOMM Wireless Business Solutions,
QWBS, eQCOM, QUALCOMM CDMA Technologies, QCT, QUALCOMM
Technology Licensing, QTL, QUALCOMM Wireless Systems, QWS,
QUALCOMM Wireless and Internet Group, QUALCOMM Digital Media,
QDM, QUALCOMM Internet Services, QIS, QUALCOMM Consumer
Products, QCP and SnapTrack are trade names of QUALCOMM
Incorporated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QUALCOMM Personal Electronics and QPE are
trademarks, service marks and trade names of QUALCOMM Personal
Electronics. Wingcast is a trademark, service mark and/or trade
name of Wingcast LLC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">cdmaOne&#153; is a trademark of the CDMA
Development Group. CDMA2000 is a service mark and certification
mark of the Telecommunications Industry Association.
Globalstar&#153; is a trademark and service mark of Globalstar,
L.P.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All other trademarks, service marks and/or trade
names appearing in this document are the property of their
respective holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In this document, the words &#147;we,&#148;
&#147;our,&#148; &#147;ours&#148; and &#147;us&#148; refer only
to QUALCOMM Incorporated and not any other person or entity.
</FONT>

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<!-- link1 "PART I" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="left">
<B><FONT size="2">PART I</FONT></B>

<!-- link1 "ITEM 1. BUSINESS" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;1.&nbsp; BUSINESS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Annual Report (including the following
section regarding Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations) contains
forward-looking statements regarding our business, financial
condition, results of operations and prospects. Words such as
&#147;expects,&#148; &#147;anticipates,&#148;
&#147;intends,&#148; &#147;plans,&#148; &#147;believes,&#148;
&#147;seeks,&#148; &#147;estimates&#148; and similar expressions
or variations of such words are intended to identify
forward-looking statements, but are not the exclusive means of
identifying forward-looking statements in this Annual Report.
Additionally, statements concerning future matters such as the
development of new products, enhancements or technologies, sales
levels, expense levels and other statements regarding matters
that are not historical are forward-looking statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although forward-looking statements in this
Annual Report reflect the good faith judgment of our management,
such statements can only be based on facts and factors currently
known by us. Consequently, forward-looking statements are
inherently subject to risks and uncertainties and actual results
and outcomes may differ materially from the results and outcomes
discussed in or anticipated by the forward-looking statements.
Factors that could cause or contribute to such differences in
results and outcomes include without limitation those discussed
under the heading &#147;Risk Factors&#148; below, as well as
those discussed elsewhere in this Annual Report. Readers are
urged not to place undue reliance on these forward-looking
statements, which speak only as of the date of this Annual
Report. We undertake no obligation to revise or update any
forward-looking statements in order to reflect any event or
circumstance that may arise after the date of this Annual
Report. Readers are urged to carefully review and consider the
various disclosures made in this Annual Report, which attempt to
advise interested parties of the risks and factors that may
affect our business, financial condition, results of operations
and prospects. Our consolidated financial data includes
SnapTrack, Inc. and other consolidated subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We were incorporated in 1985 under the laws of
the state of California. In 1991, we reincorporated in the state
of Delaware.
</FONT>

<!-- link2 "Overview" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since first proposing CDMA technology to the
wireless industry in 1989, we have been the pioneer of CDMA
technology for commercial wireless applications. Our
intellectual property portfolio is widely recognized as
essential for the development, manufacture and sale of products
implementing the cdmaOne, CDMA2000 1X/1xEV-DO, WCDMA, and
TD-SCDMA wireless air interface standards. We have significant
engineering resources, including engineers with substantial
expertise in CDMA technology. Utilizing these resources, we
expect to develop new CDMA-based technology, participate in the
formation of new wireless telecommunications standards and
assist in deployments of working networks around the world. We
license and receive license fees and royalty payments on our
CDMA technology from major domestic and international
telecommunications equipment suppliers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a leading developer and supplier of
CDMA-based integrated circuits and system software for wireless
voice and data communications and Global Positioning System
(GPS)&nbsp;products. We offer complete system solutions
including software and integrated circuits for wireless handsets
and infrastructure equipment. This complete system solution
approach provides customers with advanced wireless technology,
enhanced component integration and interoperability, and reduced
time to market. We provide integrated circuits and system
software to many of the world&#146;s leading wireless handset
and infrastructure manufacturers. We have broad and unique
expertise in designing and developing CDMA-based integrated
circuits, the associated software, reference designs and tools,
and we have the expertise to provide the technical support
necessary to create a complete CDMA system solution. We plan to
further integrate additional components and functionality into a
single integrated circuit to help our customers reduce product
costs and size and to simplify customers&#146; design processes.
In addition, we will continue to provide high quality support to
enable our customers to reduce their design cycles and meet
their time to market objectives.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide satellite and terrestrial-based
two-way data messaging and position reporting services for
transportation companies and private fleets. We design,
manufacture and distribute products and provide services for our
OmniTRACS and TruckMAIL (satellite-based mobile communications
system), OmniEx-
</FONT>

<P align="center"><FONT size="2">1
</FONT>
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<DIV align="left">
<FONT size="2">press (terrestrial CDMA-based system) and LINQ
(terrestrial GSM-based system) worldwide. Transportation
companies and private fleets use our products to communicate
with drivers, monitor vehicle location and provide customer
service. We also integrate the mobile data with operations
software, such as dispatch, payroll and accounting, so end-users
can manage their information and operations.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide an open applications platform for
wireless devices to provide solutions for the wireless industry
as it moves toward wireless Internet convergence. The platform,
our Binary Runtime Environment for Wireless (BREW), is a thin
applications environment that provides applications developers
with an open standard platform for wireless devices on which to
develop their products. The BREW platform currently leverages
the capabilities available in QUALCOMM CDMA Technologies&#146;
(QCT)&nbsp;integrated circuits, system software and Wireless
Internet Launchpad software, enabling development of
feature-rich applications and content while reducing memory
overhead and maximizing system performance. The BREW platform
also enables over-the-air downloads of applications by end users
directly to their BREW-enabled handsets. In November 2001, Korea
Telecom FreeTel Co., Ltd. (KTFreeTel), a leading CDMA carrier in
Korea, began commercial service of BREW-enabled applications and
services to subscribers, providing end users the ability to
download wireless applications over the air and customize their
phones with software that meets their individual needs.
KTFreeTel&#146;s wireless multimedia service runs on a CDMA2000
1X high-speed data network and is available to end users on
color display handsets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September&nbsp;2001, The Carmel Group forecast
that 840 million people will subscribe to mobile
telecommunications service by the end of this calendar year and
that the figure will grow to 1.66 billion globally by the end of
2006, exceeding fixed wireline phones subscribers. Wireless
networks based on the current implementation of our CDMA
technology, referred to as cdmaOne, have been commercially
deployed or are under development or trials in 50 countries
around the world, with 44 countries already in commercial
operations. According to the European Mobile Communications
Cellular Database, CDMA carriers had over 104&nbsp;million
commercial subscribers worldwide in September 2001. In
October&nbsp;2001, the CDMA Development Group reported that, as
of June&nbsp;2001, the Asia Pacific region continues to be the
largest CDMA market with nearly 40 million users, representing
annual growth of 19&nbsp;percent. Latin America demonstrated
significant gains in the last year, increasing 99&nbsp;percent
to a total of approximately 17 million subscribers. This makes
CDMA the fastest growing wireless technology in the Latin
America region. In North America, CDMA carriers added more than
15 million new subscribers, bringing the total CDMA subscribers
to approximately 38 million, which is significantly more than
other technologies deployed in the North America region.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our third generation (3G) CDMA2000&nbsp;1X
technology was commercially deployed in October&nbsp;2000 in
South Korea where there are approximately two million
CDMA2000&nbsp;1X subscribers as of November&nbsp;2001.
Commercial deployment is scheduled by the end of calendar year
2001 in the United States, which will make CDMA2000&nbsp;1X the
first 3G technology to be commercially deployed in the United
States. In September&nbsp;2001, the CDMA Development Group
reported that more than 24 models of CDMA2000 enabled handsets
are on the market today.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We continue to invest heavily in research and
development initiatives focused on extending our leadership
position in the market for wireless telecommunications products
using CDMA technology. We are developing and commercializing
CDMA technology and products to support high-speed wireless
Internet access and multimode, multi-band, multi-network
products, including cdmaOne, CDMA2000 1X/1xEV-DO, GSM/GPRS,
WCDMA and position location technologies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to remain a technology leader in the
high-speed wireless data and Internet access market. We are
devoting significant research and development resources toward
innovations in this area, including efforts relating to the
International Telecommunications Union 3G standards. We believe
that high-speed data transmission offers significant growth
opportunities in the wireless telecommunications industry, which
will enable our customers to integrate new features such as
Internet access and advanced multimedia capabilities into new
products. We believe 1xEV-DO technology will provide a high
speed, cost-effective, fixed and mobile alternative for Internet
access, competing with digital subscriber line, cable and
satellite networks. 1xEV-DO technology is designed to enable
existing wireless carriers and future CDMA2000 service providers
to obtain higher capacities and superior performance by
optimizing voice and data spectrum separately, while serving
both applications from the same base station.
</FONT>

<P align="center"><FONT size="2">2
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to continue to actively support the
rapid deployment of CDMA-based systems and technologies and the
growing demand for high speed, high capacity, wireless data and
Internet access enabled by CDMA technology to grow our royalty
revenues and integrated circuit and software sales. We plan to
continue to broadly grant royalty-bearing licenses to our
technology and patents for CDMA and other wireless applications.
In December&nbsp;2000, we announced a new CDMA license program
designed to allow selected early stage companies to issue equity
to us as a means of paying part of the license fees payable
under our CDMA license agreements. We record license fee
revenues based on the fair value of the equity instruments
received, if determinable. This program does not affect the
licensees&#146; obligations to pay royalties under their CDMA
license agreements. The amount of cash consideration and the
timing of revenue recognition varies depending on the terms of
each agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We make strategic investments to promote the
worldwide adoption of CDMA products and services for wireless
voice and Internet data communications. Our strategy is to
invest in CDMA carriers, licensed device manufacturers and
start-up companies that we believe open new markets for CDMA
technology, support the design and introduction of new
CDMA-based products or possess unique capabilities or
technology. Examples include our investments in Leap Wireless
International, Inc. (Leap Wireless), KTFreeTel and Inquam
Limited (Inquam). In addition, QUALCOMM Ventures, an internal
organization, selects and manages strategic investments in early
stage companies and, from time to time, venture funds or
incubators, or other entities that have the requisite expertise,
resources and networking capabilities to identify and create (or
assist others in creating) products, software or technologies
focused on the CDMA wireless telecommunications market. For
example, we have an interest in QUALCOMM/ Hansol iV CDMA Fund, a
partnership formed to invest in early stage companies engaged in
the development of CDMA products to support the adoption of CDMA
and the wireless Internet. We also provide financing to CDMA
carriers to facilitate the marketing and sale of CDMA equipment
by licensed manufacturers. We have provided equipment financing
to Ericsson on a shared basis with respect to their sale of CDMA
infrastructure in Brazil, Mexico and elsewhere. Most of our
strategic investments entail a high degree of risk and will not
become liquid until more than one year from the date of
investment, if at all. To the extent such investments become
liquid and meet strategic objectives, we attempt to make regular
periodic sales that are recognized in net investment income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have entered and expect to continue to enter
into alliances and joint ventures with strategic partners that
are designed to increase wireless usage and dependence on
wireless devices. Examples include, Technicolor Digital Cinema
LCC (Digital Cinema), a joint venture that will market the
QUALCOMM Digital Cinema System, and Wingcast LCC (Wingcast), a
joint venture with Ford Motor Company formed to develop and
deliver wireless mobility services into cars and trucks. We also
have strategic alliances that relate to our QCT business
segment. These partnerships and alliances are designed to ensure
product leadership and competitive advantages in the
marketplace. In October 2001, Wireless Knowledge Inc. (Wireless
Knowledge), a joint venture we established with Microsoft Corp.
(Microsoft) in 1998, acquired all shares held by Microsoft in
exchange for an agreement that Microsoft&#146;s royalty
obligations under a Development, License, and Alliance Agreement
dated July&nbsp;19, 2000 by and between Wireless Knowledge and
Microsoft would be considered fully paid, and certain other
consideration. As a result, Wireless Knowledge will become our
subsidiary. The new structure will enable Wireless Knowledge to
accelerate the adoption of next generation mobility solutions
running on CDMA2000 and WCDMA wireless data networks.
</FONT>

<!-- link2 "Wireless Telecommunications Industry Overview" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="left">
<B><FONT size="2">Wireless Telecommunications Industry
Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Wireless telecommunications equipment and
services have enjoyed tremendous growth worldwide in both
numbers of subscribers and subscriber usage. Growth in the
market for wireless telecommunications services has
traditionally been fueled by demand for voice communications.
There have been several factors responsible for this increasing
demand, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="4%"></TD>
	<TD width="93%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">an increasingly mobile workforce with increased
	need for wireless voice communications;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">lower cost of service, including flat-rate and
	bundled long-distance call pricing plans;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">wireless networks becoming the primary
	communications infrastructure in developing countries due to the
	higher costs of and longer time required for installing wireline
	networks;
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">3
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="4%"></TD>
	<TD width="93%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">regulatory environments worldwide favoring
	increased competition in wireless telecommunications; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">increased security, privacy, call clarity and
	security of digital networks based on digital second-generation
	wireless technology standards.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the tremendous demand for wireless
voice services, wireless service providers are increasingly
focused on providing wireless data services, including wireless
access to the Internet and position location services. In May
2001, the IDC estimated that nearly 1 billion people, about 15%
of the world&#146;s population, will be using the Internet by
2005, which we expect will result in significant demand for
access to the Internet through wireless networks. We believe
wireless technology standards enabling faster data transmission
rates and the introduction of Internet-enabled handsets will
facilitate mobile Internet access and accelerate the
proliferation of Internet use on a global basis. Critical to the
adoption of wireless Internet devices and services is high-speed
data connectivity, which is driving the evolution of wireless
standards. We expect that the spread of high-speed,
cost-effective Internet access will encourage the development of
other remote supervision, position location and telemetry
applications.
</FONT>

<!-- link2 "The Evolution of Wireless Standards" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="left">
<B><FONT size="2">The Evolution of Wireless Standards</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The significant growth in wireless penetration
worldwide and demand for enhanced network functionality requires
constant innovation to further improve network reliability,
expand capacity and introduce new types of services. To meet
these requirements, progressive generations of wireless
telecommunications technology standards have evolved.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">First Generation.</FONT></I><FONT size="2">
The first generation wireless telecommunications standard,
widely deployed in the late 1980s, was based on analog
technology. While this generation helped fuel the adoption of
wireless telecommunications usage, the technology is
characterized by inherent capacity limitations, minimal data
transfer capabilities, low security, inconsistent service levels
and significant power consumption.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Second Generation.</FONT></I><FONT size="2">
As the deployment of cellular phone systems grew, the
limitations of analog technology drove the development of second
generation, digital-based technology standards. Second
generation digital technology provides for significantly
enhanced efficiency within a broadcast spectrum as well as
greatly increased capacity compared to analog systems. Second
generation technologies also enabled numerous enhanced services,
including paging, e-mail and facsimile, connections to computer
networks, greater privacy, lower prices, a greater number of
service options and greater fraud protection. The three main
second-generation digital technologies are CDMA, called cdmaOne
or IS-95A/B, a technology we developed and patented, Time
Division Multiple Access&nbsp;(TDMA) and Global System for
Mobile Communications&nbsp;(GSM), a form of TDMA.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our CDMA technology offers 10 to 20&nbsp;times
the capacity of analog systems and more than three times the
capacity of TDMA-based systems through more efficient
utilization of wireless carriers&#146; licensed spectrum. Some
of the advantages of CDMA technology over both analog and
TDMA-based technologies include enhanced voice quality, enhanced
call security, increased network capacity, fewer dropped calls,
compatibility with Internet protocols, lower power and extended
talk time, lower infrastructure costs and easier transition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Many GSM operators are expected to deploy GPRS, a
packet data technology, as a 2.5G&nbsp;bridge technology while
waiting for 3G&nbsp;WCDMA to become available. GPRS is the only
widely anticipated packet data technology that is not
CDMA-based. We do not believe that GPRS will be competitive with
CDMA-based packet data services, either on a cost or performance
basis, although it will be widely deployed in GSM networks.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Third Generation.</FONT></I><FONT size="2"> As
demand for wireless networks that carry both data and voice
traffic at faster speeds has increased significantly, several
3G&nbsp;wireless standards have been proposed to the
International Telecommunications Union by a variety of companies
and alliances. These proposals include both CDMA and TDMA-based
technologies. The International Telecommunications Union, based
in Geneva, Switzerland, is an international union that
determines which technology or technologies will be established
as 3G standards.
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<DIV align="left">
<FONT size="2">A technology standard selected for 3G must
efficiently support significantly increased data speeds and
capacity over limited spectrum bandwidth, thereby enabling new
and enhanced services and applications such as mobile
e-commerce, position location and mobile multimedia Web
browsing, including music and video downloads.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CDMA-Based 3G
Technology.</FONT></I><FONT size="2"> A 3G standard encompassing
three CDMA wireless operating modes has been adopted by the
International Telecommunications Union. These three modes are:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(1)&nbsp; two versions of CDMA2000, or
Multi-Carrier;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(2)&nbsp; WCDMA, or Direct Spread; and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(3)&nbsp; Time Division Duplex.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The two versions of CDMA2000 are CDMA2000 1X (up
to 307 kbps peak rates) and 1xEV-DO (1.25&nbsp;MHz channel
bandwidth), a standard for high-speed wireless data (up to
2.4&nbsp;Mbps peak rates) that supports higher data rates than
WCDMA (5&nbsp;MHz channel bandwidth). CDMA2000 1X/1xEV-DO
utilizes the same standard channel bandwidth as existing cdmaOne
systems and, as a result, is compatible with wireless
telecommunications carriers&#146; existing network equipment. We
believe CDMA2000&nbsp;1X provides approximately twice the voice
capacity of cdmaOne and six to eight times that of TDMA-based
networks. Additionally, CDMA2000&nbsp;1X initially provides peak
data rates of 144 kbps, with growth to 307&nbsp;kbps planned,
longer battery life and position location functionality in
compliance with FCC mandates for emergency 911 calls. Commercial
deployment of CDMA2000&nbsp;1X began in October 2000 in South
Korea with approximately two million CDMA2000&nbsp;1X
subscribers as of November 2001. Commercial deployment is
scheduled by the end of the calendar year 2001 in the United
States, which will make CDMA2000&nbsp;1X the first
3G&nbsp;technology to be commercially deployed in the United
States. Our 3G&nbsp;licensees include Nokia, Ericsson, Motorola,
Lucent, Samsung, LG Electronics, Hynix (formerly, Hyundai
Electronics), Hitachi, NEC, Nortel, Toshiba, Sanyo, Sharp, Sony,
Fujitsu, Denso, Agilent, and Kyocera, among others. Operators
choosing CDMA2000&nbsp;1X and 1xEV-DO are expected to have a
significant time-to-market advantage over operators choosing
WCDMA. In all cases, the royalty rate paid to us is not
dependent upon which standard is implemented in the product. The
royalty rate to be paid by a licensee for 3G&nbsp;CDMA products
is no less than the rate that licensee will pay for
second-generation cdmaOne products.
</FONT>

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<P align="left">
<B><FONT size="2">Operating Segments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our corporate structure is organized into two
business groups, QUALCOMM CDMA Technologies Group and QUALCOMM
Wireless and Internet Group. The QUALCOMM CDMA Technologies
Group is a reportable segment. The QUALCOMM Wireless and
Internet Group includes two reportable segments, QUALCOMM
Technology Licensing and QUALCOMM Wireless Systems, and other
nonreportable segments.
</FONT>

<P align="left">
<B><FONT size="2">QUALCOMM CDMA Technologies Group</FONT></B>

<P align="left">
<I><FONT size="2">CDMA Technologies Segment (QCT)</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QCT is the leading developer and supplier of
CDMA-based integrated circuits and system software for wireless
voice and data communications and global positioning systems
products. QCT offers complete system solutions including
software and integrated circuits for wireless handsets and
infrastructure equipment. This complete system solution approach
provides customers with advanced wireless technology, enhanced
component integration and interoperability, and reduced time to
market. QCT provides integrated circuits and system software to
many of the world&#146;s leading wireless handset and
infrastructure manufacturers. Through fiscal year 2001, QCT has
shipped Mobile Station Modem&nbsp;(MSM) integrated circuit
solutions for more than 175&nbsp;million CDMA handsets worldwide
and has shipped over 500&nbsp;million integrated circuits in
total.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QCT supports both wireless handset and
infrastructure manufacturers. For wireless handset
manufacturers, QCT&#146;s products include baseband and system
software, radio frequency, intermediate frequency, and power
management devices. These robust, highly integrated solutions
enable manufacturers to design very
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">small, feature-rich handsets with longer standby
times that support existing cdmaOne and 3G services. For
wireless infrastructure manufacturers, QCT offers CDMA
integrated circuits and system software that provide wireless
standards-compliant processing of voice and data signals to and
from wireless handsets. In addition to the key components in a
wireless system, QCT provides our customers with system
reference designs and development tools to assist in customizing
features and user interfaces, in integrating our solutions with
components developed by others, and testing interoperability
with existing and planned networks. Together, the handset and
infrastructure products and services form complete system
solutions for the wireless communications industry. QCT is also
closely aligned with manufacturers and carriers in product
plans, design specifications and development timelines.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our gpsOne solution meets the FCC&#146;s mandate
requiring wireless carriers to provide the location of emergency
911&nbsp;calls. This fiscal year we performed the first
demonstration of over-the-air technology that will enable
enhanced 911&nbsp;deployments for wireless handsets and the
delivery of a wide range of wireless location-based consumer
information services, including navigation information,
area-specific weather forecasts, traffic reports and commercial
tracking services, as well as a broad range of e-commerce and
entertainment applications: including localized travel, event
ticket bookings, zone-based advertising, community information,
localized on-line chat and bulletin boards. We also introduced
the commercial availability of SnapCore, a multimode global
positioning system wireless location product. Recently, we were
awarded a patent for locating or tracking wireless devices via
the Internet and client-server-based computer networks. In
addition, we released SnapSmart&nbsp;v3.0, a location server
software product, and SnapWARN (Wide Area Reference Network), a
GPS system data feed product, to support gpsOne deployments in
North America.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The MSM3300 integrated circuit and system
software provides advanced technologies, including gpsOne
position-location technology and Bluetooth connectivity
technology as well as multimedia features. We recently began
shipping samples of the Radio Frequency Receiver 3300 (RFR3300),
the first front-end receiver to integrate GPS capability with
CDMA position location-enabled phones.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have developed 1xEV-DO technology designed to
provide reliable, cost-effective and always-on wireless Internet
access to consumers. It is fully compatible with existing
cdmaOne and 3G CDMA2000 1X technologies, and has been
standardized as part of the CDMA2000 mode of the 3G standard.
The versatility of 1xEV-DO allows the technology to be embedded
in handsets, laptop and handheld computers, and other fixed,
portable and mobile devices; 1xEV-DO enables manufacturers to
deliver products with access to services that were previously
only available through wired connections to the Internet or
enterprise networks. The 1xEV-DO technology allows carriers to
leverage their current infrastructure investment and maintain
backward compatibility with existing subscriber equipment. We
are designing and developing an end-to-end solution, both
infrastructure and handset integrated circuits, in support of
the industry-wide movement to standardize, develop and deploy
1xEV-DO technology in cdmaOne networks.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The MSM5000, MSM5100, and MSM5105 integrated
circuits and system software are the world&#146;s first
integrated circuits and software implementations of the 3G
CDMA2000 standards. The MSM5000 digital baseband solution is
designed to support CDMA2000 1X for operation in a single 1.25
MHz channel. The CDMA2000 1X standard is fully compatible with
current cdmaOne networks, allowing carriers to deploy 3G
networks while maintaining existing coverage for all
subscribers, eliminating the expense of moving to a new network.
The MSM5000 features peak data rates of 153.6 kbps, provides up
to a 50&nbsp;percent increase in handset standby time, and is
feature- and pin-compatible with the MSM3000, allowing
manufacturers currently producing handsets using the MSM3000 to
rapidly implement 3G CDMA2000 1X technology in their handsets.
QCT&#146;s Cell Site Modem (CSM)5000 base station solution is
the industry&#146;s first to support the CDMA2000 1X standard,
based on IS-2000 for CDMA base stations as specified by the
International Telecommunications Union. The CSM5000 solution
provides carriers with up to twice the overall voice user
capacity of IS-95A and IS-95B systems. The MSM5100 is the
world&#146;s first 3G CDMA2000 1X solution with advanced
position location capabilities. The MSM5105 3G CDMA2000 1X
solution offers improved voice capacity and the introduction of
new 3G services for mainstream subscribers. We conducted the
industry&#146;s first mobile Internet protocol call using the
MSM5105 integrated circuit with Nortel Networks. The CSM5200 and
MSM5200 integrated circuits provide the first end-to-end
infrastructure and handset solution for WCDMA. The MSM5200
solution incorporates wireless Internet and multimedia
applications, including the
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">integrated features of the Wireless Internet
Launchpad suite. The CSM5500 and MSM5500 integrated circuits
offer the world&#146;s first 1xEV-DO handset and infrastructure
modem solutions for high-speed data. This complete solution
supports data rates of up to 2.4 Mbps for the 1xEV standard, as
well as CDMA2000 1X, and offers backward compatibility with
IS-95 A/ B CDMA systems. QCT&#146;s MSM6xxx family of products,
incorporating radioOne technology, will enable true global
wireless roaming across CDMA2000 1X, 1xEV-DO, WCDMA and GSM/
GPRS networks.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">QUALCOMM Wireless &#38; Internet
Group</FONT></B>

<P align="left">
<I><FONT size="2">Technology Licensing Segment (QTL)</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QUALCOMM&#146;s Technology Licensing segment
generates revenue from license fees for our CDMA technologies
and patents (e.g., cdmaOne, CDMA2000, WCDMA and TD-SCDMA) as
well as ongoing royalties based on worldwide sales by licensees
that design, manufacture and sell products incorporating our
CDMA technology. License fees are generally nonrefundable and
may be paid in one or more installments. From time to time we
may accept equity interest in a licensee as payment of a portion
of the license fee. Ongoing royalties are nonrefundable,
generally based upon a percentage of the selling price of
licensed products, and are recognized as income when earned
based upon the date of such sale. Revenues generated from
royalties are subject to quarterly and annual fluctuations.
Fluctuations are the result of variations in product pricing and
quantities of sales by our licensees and the impact of currency
fluctuations associated with royalties generated from
international sales.
</FONT>

<P align="left">
<I><FONT size="2">Wireless Systems Segment (QWS)</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QUALCOMM&#146;s Wireless Systems segment is
comprised of two divisions, Wireless Business Solutions and
Wireless Systems.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Wireless Business Solutions.
</FONT></I><FONT size="2">We provide satellite and
terrestrial-based two-way data messaging and position reporting
services for transportation companies and private fleets. The
satellite-based OmniTRACS system was first introduced in the
United States in 1988 and is currently operating in 32
countries. In 2000, we introduced and launched commercial sales
of our OmniExpress system, a terrestrial CDMA-based system.
Through September&nbsp;2001, we have sold over 400,000
OmniTRACS, TruckMAIL, OmniExpress and LINQ systems worldwide.
Message transmission and position tracking for the OmniTRACS and
TruckMAIL systems are provided by use of leased Ku-band and
C-band transponders on commercially available geostationary
earth orbit satellites. The OmniExpress and LINQ systems use
wireless digital telecommunications networks for messaging
transmission, and the GPS constellation for position tracking.
These mobile communications systems help transportation
companies and private fleets improve the rate of return on
assets and increase efficiency and safety by improving
communications between drivers and dispatchers. System features
include status updates, load and pick-up reports, position
reports at regular intervals, and vehicle and driving
performance information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, we manufacture and sell
OmniTRACS, TruckMAIL and OmniExpress mobile communications
systems and related software packages and provide ongoing
messaging and maintenance services. Customers in the United
States include nearly 1,400 companies, primarily in the trucking
industry. We have sold OmniTRACS system products for use by
private trucking fleets, service vans, ships, trains, federal
emergency vehicles, and for oil and gas pipeline control and
monitoring sites. Message transmissions for operations in the
United States are formatted and processed at our Network
Management Center in San Diego, California, with a
fully-redundant backup Network Management Center located in Las
Vegas, Nevada. We estimate the Network Management Center
currently processes over seven million messages and position
reports per day.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We announced a new wireless solution for the
transportation industry using digital mobile devices that will
provide transportation companies a portable communications tool
for fleet management called OmniOne. The OmniOne application is
designed to run on our BREW platform, a standard execution
environment for wireless devices.
</FONT>

<P align="center"><FONT size="2">7
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Outside of the United States, we work with
telecommunications companies and carriers to establish the
OmniTRACS system solution concept and products in foreign
markets. The OmniTRACS system is currently operating throughout
Europe and in the Middle East, Argentina, Brazil, Canada, China,
Japan, Mexico, and South Korea. Internationally, we generate
revenues from the OmniTRACS system through license fees, sales
of network products and terminals, messaging and service fees.
Service providers that operate network management centers for a
region under our granted licenses provide OmniTRACS messaging
services. We also run QUALCOMM Wireless Business Solutions
Europe bv, a Netherlands subsidiary, that brings mobile
communications products and messaging services to the European
market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Wireless Systems. </FONT></I><FONT size="2">In
1994, we formed Globalstar L.P. (Globalstar) with Loral Space
and Communications, Ltd. and other companies to design,
construct and operate a worldwide, low-Earth-orbit
satellite-based telecommunications system (the Globalstar
System). Through a constellation of 48 satellites, this system
is designed to connect with existing terrestrial
telecommunications systems to create a seamless global network,
enabling users to call and send data to and from virtually any
place in the world. We currently hold an approximate 6.3%
interest in Globalstar through certain limited partnerships and
other indirect interests.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have contracts with Globalstar to design,
develop and manufacture subscriber products and ground
telecommunications equipment. On January&nbsp;16, 2001,
Globalstar announced that, in order to have sufficient funds
available for the continued progress of its marketing and
service activities, it had suspended indefinitely principal and
interest payments on all of its debt, including its vendor
financing obligations. Globalstar also announced the retention
of a financial adviser to assist in developing future
initiatives, including restructuring Globalstar&#146;s debt,
identifying funding opportunities and pursuing other strategic
alternatives. Efforts, by Globalstar, to restructure its debt
are on-going, and work on a final plan is expected to continue.
During fiscal 2001, we recorded $636 million in net charges to
fully reserve Globalstar-related assets. We expect our
Globalstar-related revenues to be negligible for fiscal 2002.
</FONT>

<P align="left">
<I><FONT size="2">Other Divisions</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other divisions included in the QUALCOMM Wireless
and Internet Group are QUALCOMM Internet Services (QIS)&nbsp;and
QUALCOMM Digital Media (QDM).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">QUALCOMM Internet
Services.</FONT></I><FONT size="2"> The QIS division was formed
in November&nbsp;2000 to focus on wireless applications and
services development. In January&nbsp;2001, we announced our
open applications platform for wireless devices to provide
solutions for the wireless industry as it moves toward wireless
Internet convergence. Our BREW product is a thin applications
execution platform that provides applications developers with an
open, standard platform for wireless communications devices on
which to develop their products. The BREW platform currently
leverages the capabilities available in QCT&#146;s integrated
circuits, system software and Wireless Internet Launchpad
software, enabling development of feature-rich applications and
content while reducing memory overhead and maximizing system
performance. When carriers commercially deploy the BREW
platform, it will also enable over-the-air downloads of
applications by end users directly to their BREW-enabled
handsets. The complete BREW solution provided by QIS includes
the BREW platform, the BREW Software Development Kit for
developers, the BREW Porting Kit for device manufacturers and
the BREW Distribution System, which manages application
distribution from developers to carrier networks and includes
all the associated business systems for tracking and managing
end user downloading of BREW applications and payment for
applications.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our multi-platform Eudora e-mail software
products have millions of users worldwide. We provide the Eudora
e-mail software to users via electronic download and on CD.
Eudora generates revenues from sponsor advertising within the
program, retail sales and site licenses. To support ad serving
into the user interface, we developed proprietary XML-based
content-serving technology that caches ads for the Eudora client
software. We also offer the Eudora Internet Suite, containing
both a browser and e-mail client for the Palm OS, and several
e-mail-server products. We expect revenues from Eudora to be
negligible in fiscal 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">QUALCOMM Digital Media.
</FONT></I><FONT size="2">The QDM division is comprised of the
Digital Cinema and Government Systems businesses.
</FONT>

<P align="center"><FONT size="2">8
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are developing an end-to-end Digital Cinema
System for the delivery of motion pictures to theatres
worldwide. The Digital Cinema System combines our expertise in
advanced image compression, electronic security, network
management, integrated circuit design and satellite
telecommunications technologies and will provide a turn-key
solution to the industry for the secure delivery of digitized
motion pictures to theatres worldwide. We are marketing our
system and technology to the motion picture industry and
participating in the industry-wide standards setting process. In
addition, we will promote our image compression and electronic
security technologies for other potential applications within
the entertainment industry including such areas as archiving,
asset management and production and distribution of electronic
media content in various forms. In May&nbsp;2000, we entered
into a strategic alliance with Technicolor Digital Cinema, Inc.
(Technicolor) and formed a joint venture, Technicolor Digital
Cinema, LLC. The venture will market the QUALCOMM Digital Cinema
System and work with the motion picture industry as a technology
enabler and service provider while supporting open standards for
the digital delivery of motion pictures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Government Systems business provides
development, hardware and analytical expertise to United States
government agencies involving wireless communications
technologies. We have developed a CDMA wireless terrestrial
phone for the United States government, the QSec-800, which
operates in enhanced security modes and incorporates end-to-end
encryption. Initial phones were shipped for testing and
verification over a commercial cellular network. In addition,
for United States government applications, we have developed a
micro base station, the QUALCOMM Deployable Personal
Communication System (QDPCS), which provides a scaleable
turn-key mobile communications system supporting both commercial
and secure phone communications. Additionally, OmniTRACS
products and services are being marketed and sold for United
States government worldwide applications. These products along
with products from future development efforts would likely
service a wide range of United States government, as well as
potential commercial applications.
</FONT>

<P align="left">
<B><FONT size="2">Other Businesses</FONT></B>

<P align="left">
<I><FONT size="2">Consumer Products Segment (QCP)</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February&nbsp;2000, we sold our
terrestrial-based CDMA wireless consumer phone business,
including our phone inventory, manufacturing equipment and
customer commitments, to Kyocera Wireless (Kyocera). We received
$242 million for the net assets sold. Under the agreement with
Kyocera, Kyocera agreed to purchase a majority of their CDMA
integrated circuits and system software requirements from us for
a period of five years. Kyocera will continue their existing
royalty-bearing CDMA license agreement with us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the agreement with Kyocera, we formed
a new subsidiary that has a substantial number of employees from
QUALCOMM Consumer Products business to provide services to
Kyocera on a cost-plus basis to support Kyocera&#146;s phone
business for up to three years. In addition, selected employees
of QUALCOMM Personal Electronics&nbsp;(QPE), our 51% owned
consolidated subsidiary and manufacturer of phones for us, were
transferred to Kyocera. As a condition of the purchase, QPE paid
down and cancelled its two revolving credit agreements. We
recorded $83&nbsp;million in charges during fiscal 2000 to
reflect the estimated difference between the carrying value of
the net assets and the consideration to be received from
Kyocera, less costs to sell, and employee termination costs.
</FONT>

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<P align="left">
<B><FONT size="2">Research and Development</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The wireless telecommunications industry is
characterized by rapid technological change, requiring a
continuous effort to enhance existing products and develop new
products and technologies. Our research and development team has
a strong and proven track record of innovation in wireless
communications technologies. Our research and development
expenditures in fiscal years 2001, 2000 and 1999 totaled
approximately $415&nbsp;million, $340&nbsp;million and
$381&nbsp;million, respectively. Research and development
expenditures in fiscal years 2001 and 2000, are primarily
related to integrated circuit product initiatives to support
high-speed wireless Internet access and multimode, multi-band,
multi-network, products including cdmaOne,
CDMA2000&nbsp;1X/1xEV-DO, GSM/GPRS, WCDMA and position location
technologies. Fiscal 1999 expenditures included the development
of CDMA-based technology phones and infrastructure equipment
prior to the
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">sale of these businesses. We intend to use our
substantial engineering resources and expertise to develop new
technologies, applications and services and make them available
to licensees to help grow the wireless telecommunications market
and generate new or expanded licensing opportunities. In
addition to internally sponsored research and development, we
perform contract research and development for various government
agencies and commercial contractors.
</FONT>
</DIV>

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<P align="left">
<B><FONT size="2">Sales and Marketing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QCT markets and sells products in the United
States through a sales force based in San Diego, California, and
internationally through a direct sales force based in South
Korea, Japan, China and Germany. QCT&#146;s sales and marketing
strategy is to achieve design wins with technology leaders in
our targeted markets by, among other things, providing superior
field application and engineering support.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Wireless Business Solutions division markets
and sells products through a sales force, partnerships, and
distributors based in the United States, Europe, the Middle
East, Argentina, Brazil, Canada, China, Japan, South Korea and
Mexico. Wireless Business Solutions&#146; sales and marketing
strategy is to achieve contract wins in our target markets by
providing high-value wireless fleet management solutions to the
transportation industry and other logistics-based businesses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QIS develops and sells business-to-business
products through a team based in San Diego, California to
companies worldwide. The QIS sales and marketing strategy is to
achieve contract wins with companies in our target markets by
providing comprehensive technology solutions to help them
provide the next generation of wireless applications and
services that combine data and voice capabilities to suit end
users&#146; needs in a converged wireless Internet world.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marketing activities include participation in
technical conferences, business cases, competitive analyses and
other marketing collateral, publication of customer deployments,
new product information and educational articles in industry
journals, maintenance of our World Wide Web site and direct
marketing to prospective customers. In July&nbsp;2001, we opened
our CDMA Development Center in China, a 43,000&nbsp;square foot
facility in what is popularly known as &#145;China&#146;s
Silicon Valley.&#146; The center provides training, support and
equipment testing services to manufacturers and mobile carriers
in China, as well as supporting research and development of
3G&nbsp;wireless standards based on CDMA. The center will house
our CDMA University, which will offer classroom and hands-on
training programs and a highly-integrated test program designed
to enable time and cost savings when bringing products to
market. The center and its staff are focused on providing China
with the resources to enable the most timely development of its
mobile communications industry using our technologies and
applications, such as cdmaOne, CDMA2000&nbsp;1X/1xEV-DO and the
BREW platform. The center will also support the transfer of
hardware and software technologies for product development and
manufacturing, as well as implementation methods to licensed
manufacturers, carriers and government bodies in China.
</FONT>

<!-- link1 "Competition" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="left">
<B><FONT size="2">Competition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Competition in the wireless telecommunications
industry in the United States and throughout the world continues
to increase at a rapid pace, as businesses and foreign
governments realize the market potential of telecommunications
services. There can be no assurance that we will be able to
compete successfully or that new technologies and products that
are more commercially effective than our technologies and
products will not be developed. Many of our current and
prospective competitors have substantially greater financial,
technical, marketing, sales and distribution resources. In
addition, many of these companies are licensees of our
technology, and have established market positions, trade names,
trademarks, patents, copyrights, intellectual property rights
and substantial technological capabilities. We may face
competition throughout the world with new technologies and
services introduced in the future. Although we intend to employ
relatively new technologies, there will be a continuing
competitive threat from even newer technologies that may render
our technologies obsolete. We also expect that the price we
charge for our products and services may continue to decline as
competition intensifies.
</FONT>

<P align="center"><FONT size="2">10
</FONT>

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

<P align="left">
<I><FONT size="2">CDMA Technologies Segment (QCT)</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The markets in which our QCT division operates
are intensely competitive. QCT competes worldwide with a number
of United States and international manufacturers. As a result of
the trend toward global expansion by foreign and domestic
competitors, technological and public policy changes, and
relatively low barriers to entry in the industry, we anticipate
that additional competitors will enter this market. We believe
that the principal competitive factors for CDMA integrated
circuit providers to our addressed markets are product
performance, level of integration, quality, compliance with
industry standards, price, time to market, system cost, design
and engineering capabilities, new product innovation and
customer support. The specific bases on which we compete against
alternative CDMA integrated circuit providers vary by product
platform. We also compete against alternative wireless
communications technologies including but not limited to GSM,
TDMA and analog.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QCT&#146;s current competitors include major
semiconductor companies such as Intel, Texas Instruments,
PrairieComm, LSI Logic and Philips, as well as major
telecommunication equipment companies such as Motorola, Nokia
and Matsushita. In addition, QCT faces competition from the
in-house development efforts of many of our key customers,
including Samsung, as well as QCT also faces competition from
start-up ventures, several of which have begun shipping
commercial products.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our competitors may devote a significantly
greater amount of their financial, technical, marketing and
other resources to aggressively market competitive
telecommunications systems or develop and adopt competitive
digital cellular technologies, and those efforts may materially
and adversely affect QCT. Moreover, competitors may offer more
attractive product pricing or financing terms than we do as a
means of gaining access to the wireless telecommunications
markets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have entered into arrangements with LSI Logic,
Philips, Motorola, Lucent, Texas Instruments and PrairieComm
permitting those companies to manufacture and sell to
QUALCOMM&#146;s subscriber unit licensees certain CDMA
application-specific integrated circuits utilizing certain of
QUALCOMM&#146;s patents. In every case, the right of the
subscriber unit licensees to use such integrated circuits is
subject to the payment of royalties to us on the products into
which the integrated circuits are incorporated. To date, most
subscriber equipment licensees have elected to purchase their
CDMA integrated circuits and system software requirements from
us.
</FONT>

<P align="left">
<I><FONT size="2">Technology Licensing Segment (QTL)</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of our strategy to generate new licensing
revenues, significant resources are allocated to develop leading
edge technology for the telecommunications industry. We face
competition in the development of intellectual property for
next-generation digital wireless communications technology and
services. There are no guarantees that our technologies will
continue to be adopted or we will be able to secure patents for
our technology to subsequently license. Furthermore, there are
no guarantees that existing systems and applications cannot be
replaced by competitors&#146; technologies, thereby jeopardizing
our existing royalty and licensing revenues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On a worldwide basis, we currently compete
primarily with two digital wireless telecommunications
technologies, TDMA and GSM. TDMA has been deployed primarily in
the United States and Latin America, while GSM has been
extensively utilized in Europe, much of Asia and certain other
markets. To date, GSM has been more widely adopted than CDMA,
and, although CDMA technology has been proposed for all third
generation wireless systems, there can be no assurance that
wireless communications service providers will select CDMA for
their networks or update to third generation technology. In
addition, GSM operators may deploy GPRS as a 2.5G&nbsp;bridge
technology while waiting for third generation WCDMA to become
available and/or cost effective for their system. GPRS is the
only widely anticipated packet data technology that is not
CDMA-based.
</FONT>

<P align="center"><FONT size="2">11
</FONT>

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

<P align="left">
<I><FONT size="2">Wireless Systems Segment (QWS)</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Existing competitors offering alternatives to our
OmniTRACS, TruckMAIL, OmniExpress and LINQ system products are
aggressively pricing their products and services and could
continue to do so in the future. In addition, these competitors
are offering new value-added products and services similar in
many cases to our existing or developing technologies. Emergence
of new competitors, particularly those offering low cost
terrestrial-based products, may impact margins and intensify
competition in new markets.
</FONT>

<!-- link1 "Patents, Trademarks and Trade Secrets" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="left">
<B><FONT size="2">Patents, Trademarks and Trade
Secrets</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We rely on a combination of patents, copyrights,
trade secrets, trademarks and proprietary information to
maintain and enhance our competitive position. We have been
granted more than 650 United States patents and have over 1,200
patent applications pending in the United States. The vast
majority of such patents and patent applications relate to our
CDMA digital wireless communications technology. We also have
and will continue to actively file for patent protection around
the world and have received CDMA patents with broad coverage
throughout most of the world, including China, Japan, South
Korea, Europe, Brazil, North America and elsewhere. There can be
no assurance that the pending patent applications will be
granted, that our patents or copyrights will provide adequate
protection, or that our competitors will not independently
develop or initiate technologies that are substantially
equivalent or superior to our technologies. There can also be no
assurance that the confidentiality agreements upon which we rely
to protect our trade secrets and proprietary information will be
adequate. The cost of defending our intellectual property has
been and may continue to be significant. From time to time,
certain companies may assert exclusive patent, copyright and
other intellectual proprietary rights to technologies that are
claimed to be important to the industry or to us. In addition,
from time to time third parties provide us with copies of their
patents relating to spread spectrum and other digital wireless
communications technologies and offer licenses to such
technologies. We evaluate such patents and the advisability of
such licenses. If any of our products were found to infringe on
protected technology, we could be required to redesign such
products, license such technology, and/or pay damages to the
infringed party. If we are unable to license protected
technology used in our products or to redesign such products, we
could be prohibited from marketing and selling such products.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A number of companies have each advised the
Telecommunication Industry Association&nbsp;(TIA) and other CDMA
standards setting bodies that they hold patent rights in
technology embodied in such standards. If we and other product
manufacturers are required to obtain additional licenses and/or
pay royalties to one or more patent holders, this could have a
material adverse effect on the commercial implementation of our
CDMA technology.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The standards bodies and the International
Telecommunications Union have been informed that we hold
essential intellectual property rights for the 3G standards that
are based on CDMA. We have committed to the International
Telecommunications Union to license our essential patents for
these CDMA standards on a fair and reasonable basis free from
unfair discrimination.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under our CDMA license agreements, licensees are
generally required to pay us license fees as well as ongoing
royalties based on a percentage of the selling price of CDMA
subscriber, infrastructure, test and integrated circuits
products. License fees are paid in one or more installments,
while royalties generally continue throughout the life of the
licensed patents. Our CDMA license agreements generally provide
cross-licenses to us to use certain of our licensees&#146;
technology to manufacture and sell certain CDMA products. In
most cases, our use of our licensees&#146; technology is royalty
free. However, under some of the licenses, if we incorporate
certain of the licensed technology into certain of our products,
we are obligated to pay royalties on the sale of such products.
For a limited period of time, Motorola is entitled, subject to
the terms of their license agreement, to share in a percentage
of certain third-party subscriber unit royalties paid by
licensees to us. For a limited period of time, the Korean
Electronics Telecommunications Research Institute&nbsp;(ETRI) is
entitled, subject to the terms of a development agreement with
us, to share in a percentage of subscriber and infrastructure
royalties paid by certain Korean licensees for sales of those
CDMA products sold solely for use in Korea.
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of our strategy to generate licensing
revenues and support worldwide adoption of our CDMA technology,
we license to third parties the rights to design, manufacture
and sell products utilizing our CDMA technology. The following
table lists the majority of our current CDMA licensees:
</FONT>

<P align="left">
<B><U><FONT size="2">Infrastructure</FONT></U></B>

<DIV align="left">
<FONT size="2">Airvana, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Alps Electric Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Cisco Systems, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">COM DEV International, Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Eastern Communication Company Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Fujitsu Limited
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Gbase Communications
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Great Dragon Information Technology
&nbsp;&nbsp;&nbsp;&nbsp;Corporation Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hitachi Kokusai Electric, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hitachi, Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Huawei Technologies Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hynix Semiconductor, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Kisan Telecom Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">LG Electronics
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Lucent Technologies Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Matsushita Communication Industrial
&nbsp;&nbsp;&nbsp;&nbsp;Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Mitsubishi Electric Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Motorola, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">NEC Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Nokia Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">NORTEL Networks Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Samsung Electronics Co.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Telefonaktiebolaget LM Ericsson
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">ZTE Corporation
</FONT>
</DIV>

<P align="left">
<B><U><FONT size="2">Cable and Repeaters</FONT></U></B>

<DIV align="left">
<FONT size="2">EMS Technologies, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Transcept
</FONT>
</DIV>

<P align="left">
<B><U><FONT size="2">Test Equipment</FONT></U></B>

<DIV align="left">
<FONT size="2">Acterna Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Advantest Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Agilent Technologies, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Allen Telecom Group
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Ando Electric Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Anritsu Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Comarco Wireless Technologies, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hewlett-Packard Company
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">IFR Systems, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Japan Radio Company, Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">LCC International, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Matsushita Communication Industrial
&nbsp;&nbsp;&nbsp;&nbsp;Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Mobens Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Motorola, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Rohde &#38; Schwarz GmbH &#38; Co.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Rotadata Limited
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Sage Instruments
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Spirent Communications
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Tektronix, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Telefonaktiebolaget LM Ericsson
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Thales Instrument Limited
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Willtech, Inc.
</FONT>
</DIV>

<DIV align="left">
<B><U><FONT size="2">Subscriber Equipment</FONT></U></B>
</DIV>

<DIV align="left">
<FONT size="2">Acer Communications and Multimedia,
&nbsp;&nbsp;&nbsp;&nbsp;Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">AirPrime Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Alps Electric Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Appeal Telecom Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Axesstel, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Bellwave, Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Casio Computer Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">COM DEV International, Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Compal Electronics, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Cyberlane Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Denso Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">eAnywhere Tech Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">ETRONICS Corp.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Fujitsu Limited
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Garmin Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Glenayre Electronics, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">GTRAN Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Haier Group Company
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Handspring, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hanwha Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">High Tech Computer Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hitachi Kokusai Electric Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hitachi, Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hynix Semiconductor, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">INTERCUBE Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Kenwood Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Koninklijke Philips Electronics N.V.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Kyocera Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">LG Electronics Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Lucent Technologies Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Matsushita Communication Industrial
&nbsp;&nbsp;&nbsp;&nbsp;Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Matsushita Electronic Components
&nbsp;&nbsp;&nbsp;&nbsp;Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Maxon Telecom Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Mitsubishi Electric Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Motorola, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">NEC Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">NG Industrial Ltda.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Nokia Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Novatel Wireless Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Pantech Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Qualified Mobile Telecommunications
&nbsp;&nbsp;&nbsp;&nbsp;Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Research In Motion Limited
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Samsung Electronics Co.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Sanyo Electric Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Seiko Instruments Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Sewon Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Sharp Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Siemens Information &#38; Communication
&nbsp;&nbsp;&nbsp;&nbsp;Mobile LLP
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Sierra Wireless, SRL
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">SK Telecom Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Sony Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Standard Telecom Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Synertek, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Telefonaktiebolaget LM Ericsson
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Teleion Wireless
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Tellus Technology
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Telson Electronics Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Telson Information &#38; Communications
&nbsp;&nbsp;&nbsp;&nbsp;Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Toshiba Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Uniden Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">United Computer &#38; Telecommunication,
&nbsp;&nbsp;&nbsp;&nbsp;Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Westech Korea, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Wide Telecom Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">YISO Telecom Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">ZTE Corporation
</FONT>
</DIV>

<P align="left">
<B><U><FONT size="2">Subscriber Equipment
(Globalstar)</FONT></U></B>

<DIV align="left">
<FONT size="2">Telefonaktiebolaget LM Ericsson
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Tellit Mobile Terminals S.p.A.
</FONT>
</DIV>

<P align="left">
<B><U><FONT size="2">ASICs</FONT></U></B>

<DIV align="left">
<FONT size="2">Koninklijke Philips Electronics N.V.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">LSI Logic Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">PrairieComm Incorporated
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Texas Instruments
</FONT>
</DIV>

<P align="left">
<B><U><FONT size="2">Research &#38; Development</FONT></U></B>

<DIV align="left">
<FONT size="2">Beijing Telecommunications Equipment
&nbsp;&nbsp;&nbsp;&nbsp;Factory
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Chunghwa Telecom Laboratories
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Datang Telecom Technology Co, Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hangzhou Unitop Electric Co.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Hisense Group Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Langchao Group
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">LT Netcomm (S.H.) Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Ningbo Bird Co., Ltd.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Xiamen Overseas Chinese Electronics
&nbsp;&nbsp;&nbsp;&nbsp;Co., Ltd.
</FONT>
</DIV>

<P align="center"><FONT size="2">13
</FONT>

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<DIV align="left"><A NAME="011"></A></DIV>

<P align="left">
<B><FONT size="2">Employees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2001, we employed
approximately 6,500 full-time and temporary employees.
</FONT>

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<DIV align="left"><A NAME="012"></A></DIV>

<P align="left">
<B><FONT size="2">Executive Officers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our executive officers and their ages as of
September&nbsp;30, 2001 are as follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Irwin Mark Jacobs, age 67, one of the founders of
the Company, has served as Chairman of the Board of Directors
and Chief Executive Officer of the Company since it began
operations in July&nbsp;1985. He served as the Company&#146;s
President prior to May&nbsp;1992. Before joining the Company, he
was executive vice president and a director of M/ A-COM
LINKABIT, Inc., a telecommunications company. From
October&nbsp;1968 to April&nbsp;1985, he held various executive
positions at LINKABIT (M/ A-COM LINKABIT after
August&nbsp;1980), a company he co-founded. During most of his
period of service with LINKABIT, he was chairman, president and
chief executive officer and was at all times a director. He
received his B.E.E. degree from Cornell University and his M.S.
and Sc.D. degrees from the Massachusetts Institute of
Technology. Dr.&nbsp;Jacobs is a member of the National Academy
of Engineering and the American Academy of Arts and Sciences and
was awarded the National Medal of Technology in 1994.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Anthony S. Thornley, age 55, was appointed Chief
Operating Officer of the Company in July&nbsp;2001. He continues
to serve as the Company&#146;s Chief Financial Officer, a
position he has held since March&nbsp;1994. He served as
Executive Vice President from November&nbsp;1997 to
July&nbsp;2001. Prior to joining the Company, he was with
Nortel, a telecommunications equipment manufacturer, for sixteen
years in various financial and information systems management
positions, including Vice President, Public Networks, Vice
President Finance NT World Trade and Corporate Controller Nortel
Limited. He has also worked for Coopers and Lybrand and is a
Fellow of the Institute of Chartered Accountants in England and
Wales. Mr. Thornley received his Bachelor&#146;s of Science
degree in Chemistry from the University of Manchester, England.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Steven R. Altman, age 40, has served as Executive
Vice President of the Company since November&nbsp;1997. He also
has served as President of the Company&#146;s Technology
Transfer and Strategic Alliance Division, which is responsible
for, among other things, licensing the Company&#146;s
intellectual property, since September&nbsp;1995. He served as
General Counsel of the Company from October&nbsp;1989 through
September&nbsp;2000. He was named Vice President in
December&nbsp;1992, was promoted to Senior Vice President in
February&nbsp;1996 and was promoted to Executive Vice President
in November&nbsp;1997. Prior to joining the Company in
October&nbsp;1989, he was a business lawyer in the San Diego law
firm of Gray, Cary, Ware &#38; Freidenrich, where he specialized
in intellectual property, mergers and acquisitions, securities
and general corporate matters. Mr.&nbsp;Altman received a B.S.
degree from Northern Arizona University and a Juris Doctor from
the University of San Diego.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Franklin P. Antonio, age 49, one of the founders
of the Company, has served as Executive Vice President and Chief
Technical Officer of the Company since July&nbsp;1996, as Senior
Vice President of Engineering from September&nbsp;1992 to
July&nbsp;1996, and as Vice President of Engineering of the
Company from August&nbsp;1985 to September&nbsp;1992. He served
as a Director of the Company from August&nbsp;1985 until
February&nbsp;1989. Prior to joining QUALCOMM, he was Assistant
Vice President of Engineering of M/ A-COM LINKABIT where he held
various technical and management positions from May&nbsp;1972
through July&nbsp;1985. Mr.&nbsp;Antonio received his B.A.
degree in Applied Physics and Information Science from the
University of California, San Diego.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Paul E. Jacobs, age 38, was appointed President
of the QUALCOMM Wireless &#38; Internet Group in July&nbsp;2001.
He oversees the QUALCOMM Technology Licensing division, the
QUALCOMM Internet Services division, the QUALCOMM Wireless
Business Solutions division, and the QUALCOMM Digital Media
division. He has served as Executive Vice President of the
Company since February&nbsp;2000. He currently serves as a
member of the board for Wireless Knowledge, Ignition Corp, and
Wingcast, all of which are privately-held companies. He served
as President of the Consumer Products Division from
February&nbsp;1997 to February&nbsp;2000 and as Senior Vice
President of the Company and Vice President and General Manager
of the Consumer Products Division from April&nbsp;1995 to
February&nbsp;1997. He joined the Company in September&nbsp;1990
as Senior Engineer and was promoted to Engineering Director in
April&nbsp;1993. Dr.&nbsp;Jacobs holds a B.S. degree in
Electrical Engineering and Computer Science, M.S. degree in
Electrical Engineering and Ph.D. degree in
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<DIV align="left">
<FONT size="2">Electrical Engineering and Computer Science from
the University of California, Berkeley. Dr.&nbsp;Paul Jacobs is
the son of Dr.&nbsp;Irwin Mark Jacobs, Chairman of the Board of
Directors and Chief Executive Officer of the Company.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Donald E. Schrock, age 56, was appointed
President of QUALCOMM CDMA Technologies Group in July&nbsp;2001,
overseeing QUALCOMM CDMA Technologies and SnapTrack. He has
served as Senior Vice President of the Company since February
1997 and President of CDMA Technologies Division since
October&nbsp;1997. He joined the Company in January&nbsp;1996 as
Corporate Vice President and in June&nbsp;1996 was promoted to
General Manager, QCT Products Division. Prior to joining
QUALCOMM, he was Group Vice President and Division Manager with
Hughes Aircraft Company. Prior to his employment with Hughes, he
was Vice President of Operations with Applied Micro Circuits
Corporation. He has also held positions as Vice President/
Division General Manager at Burr-Brown Corporation and spent
15&nbsp;years with Motorola Semiconductor. Mr.&nbsp;Schrock
holds a B.S.E.E. with honors from the University of Illinois, as
well as a M.S.E.E. and Advanced Business Administration degrees
from Arizona State University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jeffrey A. Jacobs, age 35, was appointed
President of QUALCOMM Global Development, an organization
responsible for proliferating CDMA throughout the world, in
May&nbsp;2001. He also manages QUALCOMM Ventures. He served as
Senior Vice President of Business Development from
June&nbsp;1999 to May&nbsp;2001 and Vice President of Business
Development from November&nbsp;1997 to June&nbsp;1999.
Mr.&nbsp;Jacobs founded the QUALCOMM Eudora division in 1993 and
served as Vice President and General Manager of the division
from August&nbsp;1995 to November&nbsp;1997. He joined the
Company in May&nbsp;1986 as a market analyst and held other
management positions at the Company through August&nbsp;1995.
Mr.&nbsp;Jacobs holds a Bachelor of Arts degree in International
Economics from the University of California, Berkeley. Mr.
Jeffrey Jacobs is the son of Dr.&nbsp;Irwin Mark Jacobs,
Chairman of the Board of Directors and Chief Executive Officer
of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Louis Lupin, age 46, was appointed Senior Vice
President and General Counsel of the Company in
September&nbsp;2000. He served as Senior Vice President,
Proprietary Right Counsel from May&nbsp;1998 to
September&nbsp;2000, Vice President, Proprietary Right Counsel
from April&nbsp;1996 to May&nbsp;1998 and Senior Legal Counsel
from February&nbsp;1995 to April&nbsp;1996. Prior to joining the
Company in 1995, he was a partner with Cooley, Godward, Castro,
Huddleson and Tatum where he focused on intellectual property
litigation in the telecommunications, software and biotechnology
industry. Mr.&nbsp;Lupin received his bachelor&#146;s degree
from Swarthmore College and a J.D. from Stanford Law School.
</FONT>

<!-- link1 "RISK FACTORS" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should consider each of the following factors
as well as the other information in this Annual Report in
evaluating our business and our prospects. The risks and
uncertainties described below are not the only ones we face.
Additional risks and uncertainties not presently known to us or
that we currently consider immaterial may also impair our
business operations. If any of the following risks actually
occur, our business and financial results could be harmed. In
that case the trading price of our common stock could decline.
You should also refer to the other information set forth in this
Annual Report, including our financial statements and the
related notes.
</FONT>

<P align="left">
<B><FONT size="2">Risks Related to Our Businesses</FONT></B>

<P align="left">
<I><FONT size="2">A long lasting downturn in the global economy
that impacts the wireless communications industry could
negatively affect our revenues and operating results.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The global economy is in the midst of a slowdown
that has had wide ranging effects on markets that we serve,
particularly wireless communications equipment manufacturers and
network operators. This downturn has had a negative effect on
our revenues from royalties, license fees and integrated circuit
products. We cannot predict the depth or duration of this
downturn, and if it grows more severe or continues for a long
period of time, our ability to increase or maintain our revenues
and operating results may be impaired. In addition, because we
intend to continue to make significant investments in research
and development during
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<DIV align="left">
<FONT size="2">this downturn, and to maintain extensive ongoing
customer service and support capability, any decline in the rate
of growth of our revenues will have a significant adverse impact
on our operating results.
</FONT>
</DIV>

<P align="left">
<I><FONT size="2">If CDMA technology is not widely deployed, or
if delays occur in the adoption of 3G CDMA standards, our
revenues may not grow as anticipated or our stock price could
fall.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We focus our business primarily on developing,
patenting and commercializing CDMA technology for wireless
telecommunications applications. Other digital wireless
communications technologies, particularly GSM technology, have
been more widely adopted than CDMA technology. If CDMA
technology does not become the preferred wireless communications
industry standard in the countries where our products and those
of our customers and licensees are sold, or if wireless
communications service providers do not deploy networks that
utilize CDMA technology, our business and financial results
could suffer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To increase our revenues and market share in
future periods, we are dependent upon the adoption and
commercial deployment of 3G wireless communications equipment,
products and services based on our CDMA technology. Industry and
government participants of the International Telecommunications
Union and regional standards development organizations are
currently considering a variety of standards that may be
utilized in 3G wireless networks. We continue to advocate the
selection of 3G standards based on CDMA technology. We cannot
assure you that any of the standards development organizations
will select the standards that we are advocating. If they select
other standards, our business may suffer, and even if our
standards are selected, we cannot assure you that they will
achieve commercial acceptance in a timely manner, or at all. Our
1xEV-DO was approved by the International Telecommunications
Union for inclusion in the CDMA2000 mode of the 3G standard.
Commercial deployment of CDMA2000 1X began in October&nbsp;2000
in South Korea. A commercial deployment is scheduled by end of
the calendar year for 2001 in the United States, which will make
CDMA2000 1X the first 3G technology to be commercially deployed
in the United States. WCDMA, a technology designed as an
alternative to CDMA2000, is currently in the standardization
process and has been adopted by several European, Japanese and
United States carriers. We expect that, although limited systems
have been placed in service this year, widespread and
standardized WCDMA networks will not begin operation until 2003
or later, given that the WCDMA standard and interoperability
testing is not yet complete. Many GSM operators are expected to
deploy GPRS, a packet data technology, as a 2.5G bridge
technology while waiting for 3G WCDMA to become available. GPRS
is the only widely anticipated packet data technology that is
not CDMA-based. We believe that our CDMA patent portfolio is
applicable to all CDMA systems that may serve as the basis for
such standards. However, we cannot assure you that the wireless
communications industry will adopt 3G standards based on CDMA
technology, or that our CDMA patents will be determined to be
applicable to any proposed 3G standards. If we are unable to
successfully, widely and timely deploy CDMA2000 as the preferred
3G technology, our business and financial results could suffer.
</FONT>

<P align="left">
<I><FONT size="2">Because we have made significant investments
in and loans to CDMA carriers, our financial condition may be
harmed if those CDMA carriers are not successful.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide significant financing to CDMA carriers
to promote the worldwide adoption of CDMA products and services.
Many domestic and international CDMA carriers to whom we have
provided financing have limited operating histories, are faced
with significant capital requirements, are highly leveraged and
have limited financial resources. Carriers to whom we have
provided financing have defaulted on their obligations to us,
and it is possible that others will default on their obligations
to us in the future. Any such defaults could have a material
adverse effect on our financial condition and operating results.
Due to currency fluctuations and international risks, foreign
borrowers may become unable to pay their debts to us from
revenues generated by their projects that are denominated in
local currencies. Further, we may not be permitted to retain a
security interest in any spectrum licenses held by foreign
carriers that we finance. These spectrum licenses initially may
constitute the primary asset of the carriers. The amount of
financing that we currently are providing and that we expect to
provide in the future is substantial.
</FONT>

<P align="center"><FONT size="2">16
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have provided or have committed to provide
significant financing to the following companies:
</FONT>

<P align="left">
<I><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pegaso
 Telecomunicaciones, S.A. de C.V.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provided financing to Pegaso
Telecomunicaciones, S.A. de C.V. (Pegaso) under an equipment
loan and a bridge facility. Pegaso operates a wireless network
in Mexico. At September&nbsp;30, 2001, $674 million is
outstanding under these facilities, net of deferred interest and
unearned fees. On October&nbsp;31, 2001, Pegaso failed to make a
scheduled payment of approximately $3 million under the
equipment loan and also failed to meet covenants related to the
completion of a strategic sale or merger with a third party
under both facilities. Pegaso is currently engaged in strategic
discussions with a third party for a potential sale or merger,
and we are actively working with Pegaso and the third party to
complete a transaction or, alternatively, to assist Pegaso in
raising additional funds. As the transaction did not close on
the targeted date of October&nbsp;31, 2001 and such additional
financing is not certain, we ceased accruing interest on these
loans effective at the beginning of the fourth fiscal quarter of
2001. The bridge facility is collateralized by a second lien on
substantially all of Pegaso&#146;s assets. We also have a
commitment to provide an additional $96 million in long-term
financing under an arrangement with Telefonaktiebolaget LM
Ericsson (Ericsson), subject to Pegaso meeting certain
conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pegaso is at an early stage of development and,
if it remains independent, may not be able to compete
successfully. Competitors in Mexico have greater financial
resources and more established operations than Pegaso. As is
normal for early stage wireless operators, Pegaso is
experiencing significant losses from operations. Pegaso also has
limited cash available to meet its operating and financing
commitments and is therefore dependent on securing additional
financing or completing a strategic arrangement with an existing
carrier.
</FONT>

<P align="left">
<B><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></B><I><FONT size="2">Vesper Holding S.A. and Vesper Sao
Paulo S.A.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Vesper Holding S.A. and Vesper Sao Paulo S.A.
(the Vesper Companies) were formed by a consortium of investors
to provide wireless and wireline telephone services in the
northern region and in the Sao Paulo state of Brazil. At
September&nbsp;30, 2001, our cumulative cash investment,
including long-term financing, in the Vesper Companies and
VeloCom Inc. (VeloCom), an investor in the Vesper Companies,
totaled approximately $418&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the reorganization of the Vesper
Companies initiated during fiscal 2001, we reassessed the
recoverability of our assets related to the Vesper Companies and
VeloCom and recorded $241&nbsp;million in impairment charges. At
September&nbsp;30, 2001, we had approximately $124&nbsp;million
in net assets remaining related to the Vesper Companies and
VeloCom. The Vesper Companies are working to accomplish the
terms of their restructuring with owners, vendors and creditors
which is expected to be completed in the first quarter of our
fiscal 2002. The proposed transaction is contingent on several
factors, and there is a risk it will not close. If the
transaction closes, we expect to acquire an additional interest
in the Vesper Companies for $266&nbsp;million of equity
commitments. We also expect to convert our Term Loan Agreement
with VeloCom into an additional equity interest in VeloCom.
After the close, we expect to hold a 49.9% interest in VeloCom,
and direct and indirect interests in the Vesper Companies of 74%
and 86%, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe the Vesper Companies represent a
strategic opportunity with their extensive installed CDMA
network in Brazil, including the key cities of Sao Paulo and Rio
de Janeiro. The Vesper Companies&#146; debt would be reduced in
the proposed restructuring from approximately $1.3&nbsp;billion
to less than $200&nbsp;million. Additionally, the term of the
remaining debt would be extended through 2005, providing the
Vesper Companies significant operational flexibility to support
a growing business. If the proposed restructuring transaction
closes, we intend to support the Vesper Companies while they,
together with VeloCom, seek to partner with strategic investors
and internationally recognized operators who have the ability to
successfully enhance the Vesper Companies&#146; business and
ultimately assume majority control. We would also consider other
strategic alternatives such as spinning off our investment in
the Vesper Companies to our shareholders. We will consolidate
the results of the Vesper Companies if the proposed transaction
closes in fiscal 2002. The Vesper Companies expect to incur
increasing operating losses and negative cash flows from
operations as they
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<DIV align="left">
<FONT size="2">expand operations and enter new markets, even if
and after they achieve positive cash flows from operations in
the initial operating markets. We may incur significant losses
in the future related to our proposed ownership of the Vesper
Companies, and we cannot assure you that the Vesper Companies
will ever operate profitably. Additional risks and uncertainties
specific to the Vesper Companies include risks associated with:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="4%"></TD>
	<TD width="90%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the implementation of the Vesper Companies&#146;
	restructuring plan;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the upgrade of the existing network to 3G CDMA
	1X, including risks related to the operations of new systems and
	technologies, substantial required expenditures and potential
	unanticipated costs, the adequacy of suppliers and consumer
	acceptance of the products and services to be offered;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the ability to establish a significant market
	presence in new geographic and service markets;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the ability to compete with more well-established
	competitors in Brazil that may offer less expensive products and
	services, desirable or innovative products or have extensive
	resources or better financing;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the availability and cost of capital; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the ability to develop future business
	opportunities critical to the realization of growth potential.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></B><I><FONT size="2">Leap Wireless</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Leap Wireless, a company we spun off in
September&nbsp;1998, is a publicly-traded wireless
telecommunications operating company. Under the terms of the
senior credit facility between us and Leap Wireless, we are
committed to fund up to $125&nbsp;million until the earlier of
settlement of the FCC&#146;s current auction of Personal
Communication System (PCS) spectrum or Leap Wireless&#146;
withdrawal from the auction. We also hold 308,000 units of Leap
Wireless&#146; senior discount notes with detachable warrants
and a warrant to purchase 3,375,000 shares of Leap Wireless. At
September&nbsp;30, 2001, the combined fair values of the senior
discount notes with warrants and the warrant total
$135&nbsp;million, and unrealized losses of $71&nbsp;million are
recorded as a component of comprehensive loss in equity. The
fair value is based on the market price of Leap Wireless. We own
a large number of senior discount notes and warrants to acquire
a large number of shares relative to the trading volumes of
these senior discount notes and shares in the public market, and
the market price may be higher than the prices we would realize
if our shares were sold.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Leap Wireless may incur significant operating
losses and generate significant negative cash flow from
operating activities in the future while it continues to build
out its networks and build its customer base. Leap Wireless
requires significant additional capital to buildout and operate
planned networks and for general working capital needs. Leap
Wireless may not be able to raise additional capital on
acceptable terms, or at all. We cannot assure you that Leap
Wireless will generate profits in the short term or at all or
that we will recover our assets.
</FONT>

<P align="left">
<I><FONT size="2">We derive a significant portion of our revenue
from a limited number of customers and licensees. The loss of
any one of our major customers or licensees could reduce our
revenues and may harm our ability to achieve or sustain
acceptable levels of operating results.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, three customers accounted for 37%
of consolidated revenues. The loss of any one of our QCT
segment&#146;s significant customers or other customers or the
delay, even if only temporary, or cancellation of significant
orders from any of these customers would reduce our revenues in
the period of the cancellation or deferral and could harm our
ability to achieve or sustain acceptable levels of
profitability. Accordingly, unless and until our QCT segment
diversifies and expands its customer base, our future success
will significantly depend upon the timing and size of future
purchase orders, if any, from these customers. Factors that may
impact the size and timing of orders from customers of our QCT
segment include, among others, the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="4%"></TD>
	<TD width="90%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the product requirements of these customers;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the financial and operational success of these
	customers; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the success of these customers&#146; products
	that incorporate our products.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">18
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our QTL segment derives royalty revenues from
shipments by our licensees. We derive a significant portion of
our royalty revenue from a limited number of licensees. Our
future success depends upon the ability of our licensees to
develop and introduce high volume products that achieve and
sustain market acceptance. We cannot assure you that our
licensees will be successful or that the demand for wireless
communications devices and services offered by our licensees
will continue to increase. Any reduction in the demand for
wireless communications devices utilizing our CDMA technology
could have a material adverse effect on our business.
</FONT>

<P align="left">
<I><FONT size="2">We derive a significant portion of our
revenues from sales outside the United States, and numerous
factors related to international business activities subject us
to risks that could reduce the demand for our licensees&#146;
products or our products, negatively affecting our operating
results.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A significant part of our strategy involves our
continued pursuit of growth opportunities in a number of
international markets. We market, sell and service our products
internationally. We have established sales offices around the
world. We will continue to expand our international sales
operations and enter new international markets. This expansion
will require significant management attention and financial
resources to successfully develop direct and indirect
international sales and support channels, and we cannot assure
you that we will be successful or that our expenditures in this
effort will not exceed the amount of any resulting revenues. If
we are not able to maintain or increase international market
demand for our products, then we may not be able to maintain an
acceptable rate of growth in our business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our revenues from international customers as a
percentage of total revenues were 65% in fiscal 2001, 47% in
fiscal 2000 and 38% in fiscal 1999. In many international
markets, barriers to entry are created by long-standing
relationships between our potential customers and their local
providers and protective regulations, including local content
and service requirements. In addition, our pursuit of
international growth opportunities may require significant
investments for an extended period before we realize returns, if
any, on our investments. Our business could be adversely
affected by a variety of uncontrollable and changing factors,
including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="4%"></TD>
	<TD width="90%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">unexpected changes in legal or regulatory
	requirements;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">difficulty in protecting our intellectual
	property rights in a particular foreign jurisdiction;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">our inability to successfully enter a significant
	foreign market, such as China or India;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">cultural differences in the conduct of business;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">difficulty in attracting qualified personnel and
	managing foreign activities;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">recessions in economies outside the United States;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">longer payment cycles for and greater
	difficulties collecting accounts receivable;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">export controls, tariffs and other trade
	protection measures;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">fluctuations in currency exchange rates;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">nationalization, expropriation and limitations on
	repatriation of cash;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">social, economic and political instability;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">natural disasters, acts of terrorism and war;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">taxation; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">changes in United States laws and policies
	affecting trade, foreign investment and loans.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to general risks associated with our
international sales, licensing activities and operations, we are
also subject to risks specific to the individual countries in
which we do business. During fiscal 2001, 35% and 22% of our
revenue was from customers and licensees based in South Korea
and Japan, respectively. A significant downturn in the economies
of Asian countries where many of our customers and licensees are
</FONT>

<P align="center"><FONT size="2">19
</FONT>

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<DIV align="left">
<FONT size="2">located, particularly the economies of South
Korea and Japan, would materially harm our business. We also are
subject to risks in certain markets in which our customers and
licensees grant subsidies on handsets to their subscribers. For
example, in the past the South Korean government limited the
ability of handset manufacturers to provide subsidies on
handsets to their subscribers, and this, in turn, reduced our
revenues from those sources. Further limitations on the ability
of handset manufacturers to sell their products in South Korea,
Japan or in other countries may have additional negative impacts
on our revenues.
</FONT>
</DIV>

<P align="left">
<I><FONT size="2">Foreign currency fluctuations could negatively
affect future product sales or royalty revenue and harm our
ability to collect receivables.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are exposed to risk from fluctuations in
foreign currencies that could impact our operating results,
liquidity and financial condition. As a global concern, we face
exposure to adverse movements in foreign currency exchange rates:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="4%"></TD>
	<TD width="90%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">Financial instruments held by our consolidated
	subsidiaries and other companies in which we invest that are not
	denominated in the functional currency of those entities are
	subject to the effects of currency fluctuations, which may
	affect our reported earnings. Our exposure to emerging market
	currencies may increase as we expand into those markets.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">Declines in currency values in selected regions
	may adversely affect our operating results because our products
	and those of our customers and licensees may become more
	expensive to purchase in the countries of the affected
	currencies. Our trade receivables are generally United States
	dollar denominated. Accordingly, any significant change in the
	value of the dollar against our customers&#146; or
	licensees&#146; functional currencies could result in an
	increase in our customers&#146; or licensees&#146; cash flow
	requirements and could consequently affect our ability to
	collect receivables.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">Foreign CDMA carriers to whom we have provided
	financing may be unable to pay their debts to us from revenues
	generated by their projects that are denominated in local
	currencies.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">Average selling prices for our customers&#146;
	products may be denominated in local currencies, and declines in
	local currency values may adversely affect future royalty
	revenue.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">We may engage in strategic transactions that
could result in significant charges or management disruption and
fail to enhance stockholder value.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From time to time, we consider strategic
transactions and alternatives with the goal of maximizing
stockholder value. In February&nbsp;2000, we completed the sale
of our terrestrial wireless consumer products business to
Kyocera Wireless. In May&nbsp;1999, we completed the sale of our
terrestrial wireless infrastructure business to Ericsson. In
September&nbsp;1998, we completed the spin-off of Leap Wireless.
Additionally, in the past we have acquired businesses, entered
into joint ventures and made strategic investments in early
stage companies and venture funds or incubators to support the
adoption of CDMA and use of the wireless Internet. Most of our
strategic investments entail a high degree of risk and will not
become liquid until more than one year from the date of
investment, if at all.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will continue to evaluate potential strategic
transactions and alternatives that we believe may enhance
stockholder value. These potential future transactions may
include a variety of different business arrangements, including
acquisitions, spin-offs, strategic partnerships, joint ventures,
restructurings, divestitures, business combinations and
investments. Although our goal is to maximize stockholder value,
such transactions may impair stockholder value or otherwise
adversely affect our business and the trading price of our
stock. Any such transaction may require us to incur
non-recurring or other charges and may pose significant
integration challenges and/or management and business
disruptions, any of which could harm our operating results and
business prospects.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

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<P align="left">
<I><FONT size="2">The fair values of our strategic investments
are subject to substantial quarterly and annual fluctuations and
to market downturns. Downward fluctuations and market trends
could adversely affect our operating results.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We maintain strategic holdings of various issuers
and types. These securities include available-for-sale equity
securities and derivative instruments that are recorded on the
balance sheet at fair value. We strategically invest in
companies in the high-technology industry and typically do not
attempt to reduce or eliminate our market exposure.
Available-for-sale equity securities and derivative instruments
recorded at fair value under FAS&nbsp;115 and FAS&nbsp;133,
respectively, subject us to equity price risk. The fair market
values of these equity securities and derivative instruments are
subject to significant price volatility and, in general,
suffered a significant decrease in market value during fiscal
2001. In addition, the realizable value of these securities and
derivative instruments is subject to market and other
conditions. Our investments in specific companies and industry
segments may vary over time, and changes in concentrations may
affect price volatility. We also invest in privately-held
companies, including early stage companies, venture funds or
incubators. These investments are recorded at cost, but the
recorded values may become impaired due to changes in the
companies&#146; condition or prospects. Our strategic
investments are inherently risky as the market for the
technologies or products the investees have under development
may never materialize. As a result, we could lose all or a
portion of our investments in these companies, which could
negatively affect our financial position and operating results.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to our investments in the Vesper
Companies and Leap Wireless, we have a strategic investment in
KTFreeTel, a wireless carrier in Korea. In fiscal 2000, we
purchased 2,565,000 common shares of KTFreeTel, representing a
1.9% interest, for $110 million and an $86 million zero coupon
bond with warrants to purchase approximately 1,851,000
additional shares. If KTFreeTel meets certain obligations
related to the commercial deployment of 1xEV-DO technology, we
will be required to exercise the warrants. The exercise price of
the warrants is expected to be paid by tendering the bond as
payment in full. The combined fair value of the common shares
and bond with warrants is $95 million at September&nbsp;30,
2001, and we have recorded $68 million in unrealized losses as a
component of comprehensive loss in equity. The fair value is
based on the market price of KTFreeTel. We own and hold warrants
to acquire a large number of shares relative to the trading
volumes of these shares in the public market, and the market
price may be higher than the price we would realize if our
shares were sold. Although management believes that KTFreeTel
will be successful and that the KTFreeTel stock price will
recover, there is no assurance that KTFreeTel will continue to
operate profitably or that we will recover our remaining assets.
</FONT>

<P align="left">
<I><FONT size="2">We depend upon a limited number of third-party
manufacturers to produce and test our products. Any disruptions
in the operations of, or the loss of, any of these third parties
could harm our ability to meet our delivery obligations to our
customers and increase our cost of sales.</FONT></I>

<P align="left">
<B><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></B><I><FONT size="2">CDMA Technologies Segment
(QCT)</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We subcontract all of our manufacturing and
assembly, and most of the testing, of our integrated circuits.
We depend upon a limited number of third parties to perform
these functions, some of which are only available from single
sources with which we do not have long-term contracts. During
fiscal 2001, IBM, Motorola, Taiwan Semiconductor Manufacturing
Co. and Texas Instruments were the primary manufacturers of our
family of integrated circuits. Our reliance on a sole-source
vendor primarily occurs during the start-up phase of a new
product.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Once a new product reaches a significant volume
level, we then establish alternative suppliers for technologies
that we consider critical. Our reliance on sole or
limited-source vendors involves risks. These risks include
possible shortages of capacity, product performance shortfalls,
and reduced controls over delivery schedules, manufacturing
capability, quality assurance, quantity and costs. We have no
firm long-term commitments from our manufacturers to supply
products to us for any specific period, or in any specific
quantity, except as may be provided in a particular purchase
order. As a result, these manufacturers may allocate, and in the
past have allocated, capacity to the production of other
products while reducing deliveries to us on short notice.
</FONT>

<P align="center"><FONT size="2">21
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operations also may be harmed by lengthy or
recurring disruptions at any of the facilities of our
manufacturers. These disruptions may include labor strikes, work
stoppages, terrorism, war, fire, earthquake, flooding or other
natural disasters. These disruptions could cause significant
delays in shipments until we are able to shift the products from
an affected manufacturer to another manufacturer. The loss of a
significant third-party manufacturer or the inability of a
third-party manufacturer to meet performance and quality
specifications or delivery schedules could harm our ability to
meet our delivery obligations to our customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, one or more of our manufacturers may
obtain licenses from us to manufacture CDMA integrated circuits
that compete with our products. In this event, the manufacturer
could elect to allocate scarce components and manufacturing
capacity to their own products and reduce deliveries to us. In
the event of a loss of, or a decision to change, a key
third-party manufacturer, qualifying a new manufacturer and
commencing volume production or testing could involve delay and
expense, resulting in lost revenues, reduced operating margins
and possible loss of customers.
</FONT>

<P align="left">
<B><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></B><I><FONT size="2">Wireless Systems Segment
(QWS)</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Several of the critical products and services
used in our existing and proposed products are currently
available only from third-party single or limited sources. These
include items such as electronic and radio frequency components,
and other sophisticated parts and subassemblies which are used
in the OmniTRACS, TruckMAIL, OmniExpress, LINQ, and Globalstar
Systems. These third parties include companies such as M/ A Com,
Rakon, Mini Circuits, Cambridge, Andrews, ADI, Deutsch, PCI, Key
Tronic, Seavey, Symbol, Talon, Thomson Airpax and Eagle Picher.
Our reliance and the reliance of our licensees on sole or
limited source vendors involve risks. These risks include
possible shortages of certain key components, product
performance shortfalls, and reduced control over delivery
schedules, manufacturing capability, quality and costs. In the
event of a long term supply interruption, alternate sources
could be developed in a majority of the cases. The inability to
obtain adequate quantities of significant compliant materials on
a timely basis could have a material adverse effect on our
business, operating results, liquidity and financial position.
</FONT>

<P align="left">
<I><FONT size="2">A reduction or interruption in component
supply or a significant increase in component prices could have
a material adverse effect on our business or
profitability.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our ability to meet customer demands depends, in
part, on our ability to obtain timely and adequate delivery of
parts and components from our suppliers and internal
manufacturing capacity. We have experienced component shortages
in the past, including components for our integrated circuit
products, that have adversely affected our operations. Although
we work closely with our suppliers to avoid these types of
shortages, we may continue to encounter these problems in the
future. A reduction or interruption in component supply or a
significant increase in the price of one or more components
could have a material adverse effect on our business.
</FONT>

<P align="left">
<I><FONT size="2">Defects or errors in our products could harm
our relations with our customers and expose us to liability.
Similar problems related to the products of our customers or
licensees would harm our business.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our software and integrated circuit products are
inherently complex and may contain defects and errors that are
detected only when the products are in use. Further, because our
products perform critical functions in our customers&#146;
products and networks, such defects or errors could have a
serious impact on our customers which could damage our
reputation, harm our customer relationships and expose us to
liability. Defects or impurities in our components, materials or
software or those used by our customers or licensees, equipment
failures or other difficulties could adversely affect our
ability and that of our customers and licensees to ship products
on a timely basis as well as our customers&#146; or
licensees&#146; demand for our products. Any such shipment
delays or declines in demand could reduce our revenues and harm
our ability to achieve or sustain acceptable levels of
profitability. We and our customers or licensees also may
experience component or software failures or defects which could
require significant product recalls, reworks and/or repairs
which are not covered by warranty reserves and which could
consume a substantial portion of the capacity of our third-party
manufacturers or those of our customers or licensees.
</FONT>

<P align="center"><FONT size="2">22
</FONT>

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<P align="left">
<I><FONT size="2">Our operating results are subject to
substantial quarterly and annual fluctuations and to market
downturns.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our revenues, earnings and other operating
results have fluctuated significantly in the past and may
fluctuate significantly in the future. General economic or other
conditions causing a downturn in the market for our products or
technology, affecting the timing of customer orders or causing
cancellations or rescheduling of orders could also adversely
affect our operating results. Moreover, our customers may change
delivery schedules or cancel or reduce orders without incurring
significant penalties and generally are not subject to minimum
purchase requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our future operating results will be affected by
many factors, including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="2%"></TD>
	<TD width="92%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the rate of CDMA technology deployment;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">delays in the adoption of 3G CDMA standards;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">changes in the growth rate of the wireless
	communications industry;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">consolidation in the wireless communications
	industry;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">strategic transactions, such as acquisitions,
	divestitures and investments, including investments in new
	ventures and CDMA carriers;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the collectibility of our trade and finance
	receivables;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the fair values of our strategic equity and
	derivative investments;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">our ability to realize the fair values of our
	investments in thinly-traded public and private markets;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">our ability to retain existing or secure
	anticipated customers, licensees or orders, both domestically
	and internationally;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">the availability and cost of products and
	services from our third-party suppliers;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">our ability to develop, introduce and market new
	technology, products and services on a timely basis;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">foreign currency fluctuations, inflation and
	deflation;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">decreases in average selling prices for our
	products and our customers&#146; products that use our
	technology;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">decreases in demand for our products and our
	customers&#146; products that use our technology;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">intellectual property disputes and litigation;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">government regulations;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">product defects;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">management of inventory in response to shifts in
	market demand;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">energy blackouts and system failures;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">changes in the mix of technology and products
	developed, licensed, produced and sold; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">seasonal customer demand.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The foregoing factors are difficult to forecast
and these, as well as other factors, could harm our quarterly or
annual operating results. If our operating results fail to meet
the expectations of investment analysts or investors in any
period, the market price of our common stock may decline.
</FONT>

<P align="center"><FONT size="2">23
</FONT>

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<P align="left">
<I><FONT size="2">Our industry is subject to intense competition
that could result in declining average selling prices for our
licensees&#146; products and our products, negatively affecting
our revenues and operating results.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently face significant competition in our
markets and expect that intense competition will continue.
Competition in the telecommunications market is based on varying
combinations including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="4%"></TD>
	<TD width="90%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">comprehensiveness of product and technology
	solutions;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">manufacturing capability,
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">scalability and the ability of the system
	solution to meet customers&#146; immediate and future network
	requirements;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">product performance and quality;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">design and engineering capabilities;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">compliance with industry standards;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">time to market;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">system cost; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">customer support.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This competition has resulted and is expected to
continue to result in declining average royalties for our
licensed intellectual property and reduced average selling
prices for our products and those of our customers and
licensees. We anticipate that additional competitors will enter
our markets as a result of growth opportunities in wireless
telecommunications, the trend toward global expansion by foreign
and domestic competitors, technological and public policy
changes and relatively low barriers to entry in selected
segments of the industry.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our competitors include companies that promote
non-CDMA technologies and companies that design competing CDMA
integrated circuits, such as Nokia, Motorola, Philips, Ericsson,
Texas Instruments, Intel, LSI Logic, Nortel, Samsung, Matsushita
and Siemens, all of who are our licensees with the exception of
Intel. With respect to our OmniTRACS, TruckMAIL, OmniExpress,
and LINQ products and services, our existing competitors are
aggressively pricing their products and services and could
continue to do so in the future. In addition, these competitors
are offering new value-added products and services similar in
many cases to those we have developed or are developing.
Emergence of new competitors, particularly those offering low
cost terrestrial-based products and current as well as future
satellite-based systems, may impact margins and intensify
competition in new markets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Many of these current and potential competitors
have advantages over us, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="4%"></TD>
	<TD width="90%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">existing royalty-free cross-licenses to competing
	and emerging technologies;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">longer operating histories and presence in key
	markets;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">greater name recognition;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">access to larger customer bases; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">greater financial, sales and marketing,
	manufacturing, distribution, technical and other resources than
	we have.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of these factors, these competitors
may be more successful than us. In addition, we anticipate
additional competitors will enter the market for products based
on 3G standards. These competitors may have more established
relationships and distribution channels in markets not currently
deploying wireless communications technology. These competitors
also have established or may establish financial or strategic
relationships among themselves or with our existing or potential
customers, resellers or other third parties. These relationships
may affect customers&#146; decisions to purchase products or
license technology from us. Accordingly,
</FONT>

<P align="center"><FONT size="2">24
</FONT>

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<DIV align="left">
<FONT size="2">new competitors or alliances among competitors
could emerge and rapidly acquire significant market share to our
detriment.
</FONT>
</DIV>

<P align="left">
<I><FONT size="2">Our stock price is volatile.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stock market in general, and the stock prices
of technology-based companies in particular, have experienced
extreme volatility that often has been unrelated to the
operating performance of any specific public companies. The
market price of our common stock has fluctuated in the past and
is likely to fluctuate in the future as well. Factors that may
have a significant impact on the market price of our stock
include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="4%"></TD>
	<TD width="90%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">announcements concerning us or our competitors,
	including the selection of wireless communications technology by
	cellular, PCS and Wireless Local Loop service providers and the
	timing of the roll-out of those systems;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">receipt of substantial orders for integrated
	circuits and system software products;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">quality deficiencies in services or products;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">announcements regarding financial developments or
	technological innovations;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">international developments, such as technology
	mandates, political developments or changes in economic policies;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">new commercial products;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">changes in recommendations of securities analysts;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">government regulations;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">acts of terrorism and war;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">proprietary rights or product or patent
	litigation; or
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">strategic transactions, such as acquisitions and
	divestitures.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our future earnings and stock price may be
subject to significant volatility, particularly on a quarterly
basis. Shortfalls in our revenues or earnings in any given
period relative to the levels expected by securities analysts
could immediately, significantly and adversely affect the
trading price of our common stock.
</FONT>

<P align="left">
<I><FONT size="2">Our industry is subject to rapid technological
change that we must keep pace with to successfully
compete.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">New technological innovations generally require a
substantial investment before they are commercially viable. We
may make substantial, non-recoverable investments in new
technologies that do not result in meaningful revenues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The market for our products and technology is
characterized by many factors, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="4%"></TD>
	<TD width="90%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">rapid technological advances and evolving
	industry standards;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">changes in customer requirements;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">frequent introductions of new products and
	enhancements; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">evolving methods of building and operating
	telecommunications systems.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are currently making significant investments
in developing and introducing new products, such as:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="6%"></TD>
	<TD width="4%"></TD>
	<TD width="90%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">integrated circuit product to support high-speed
	wireless Internet access and multimode, multi-band,
	multi-network products including cdmaOne, CDMA2000 1X/1xEV-DO,
	GSM/ GPRS, WCDMA and position location technologies; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2"> &#149;</FONT></TD>
	<TD align="left">
	<FONT size="2">Binary Runtime Environment for Wireless (BREW), a
	thin applications execution platform that provides applications
	developers with an open standard platform for wireless devices
	on which to develop their products.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">25
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our future success will depend on our ability to
continue to develop and introduce new products, technology and
enhancements on a timely basis. Our future success will also
depend on our ability to keep pace with technological
developments, protect our intellectual property, satisfy varying
customer requirements, price our products competitively and
achieve market acceptance. The introduction of products
embodying new technologies and the emergence of new industry
standards could render our existing products and technology, and
products and technology currently under development, obsolete
and unmarketable. If we fail to anticipate or respond adequately
to technological developments or customer requirements, or
experience any significant delays in development, introduction
or shipment of our products and technology in commercial
quantities, our competitive position could be damaged.
</FONT>

<P align="left">
<I><FONT size="2">Consolidations in the wireless communications
industry could adversely affect our business.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The wireless communications industry has
experienced consolidation of participants, and this trend may
continue. If wireless carriers consolidate with companies that
utilize technologies that compete with CDMA, then CDMA may lose
market share unless the surviving entity continues to deploy
CDMA. This consolidation could also result in delays in
purchasing decisions by the merged companies, negatively
affecting our revenues and operating results.
</FONT>

<P align="left">
<I><FONT size="2">The enforcement and protection of our
intellectual property rights may be expensive and could divert
our valuable resources.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We rely primarily on patent, copyright, trademark
and trade secret laws, as well as nondisclosure and
confidentiality agreements and other methods, to protect our
proprietary information, technologies and processes, including
our patent portfolio. Policing unauthorized use of our products
and technologies is difficult. We cannot be certain that the
steps we have taken will prevent the misappropriation or
unauthorized use of our proprietary information and
technologies, particularly in foreign countries where the laws
may not protect our proprietary rights as fully as United States
laws.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The vast majority of our patents and patent
applications relate to our CDMA digital wireless communications
technology and much of the remainder of our patents and patent
applications relate to our gpsOne, BREW, OmniTRACS, Digital
Cinema, Globalstar and Eudora products. Litigation may be
required to enforce our intellectual property rights, protect
our trade secrets or determine the validity and scope of
proprietary rights of others. As a result of any such
litigation, we could lose our proprietary rights or incur
substantial unexpected operating costs. Any action we take to
protect our intellectual property rights could be costly and
could absorb significant management time and attention, which,
in turn, could negatively impact our operating results. In
addition, failure to protect our trademark rights could impair
our brand identity.
</FONT>

<P align="left">
<I><FONT size="2">Claims by third parties that we infringe their
intellectual property or that patents on which we rely are
invalid could adversely affect our business.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From time to time, companies may assert patent,
copyright and other intellectual proprietary rights to our
technologies or technologies used in our industry. These claims
may result in our involvement in litigation. We may not prevail
in such litigation given the complex technical issues and
inherent uncertainties in intellectual property litigation. If
any products incorporating our technology were found to infringe
on protected technology, we could be required to redesign or
license such technology and/or pay damages or other compensation
to the infringed party. If we were unable to license protected
technology used in our products, we could be prohibited from
making and selling such products.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, as the number of competitors in our
market increases and the functionality of products incorporating
our technology is enhanced and overlaps with the products of
other companies, we may become subject to claims of infringement
or misappropriation of the intellectual property rights of
others. Any claims, with or without merit, could be time
consuming, result in costly litigation, divert the efforts of
our technical and management personnel or cause product shipment
delays, any of which could have a material adverse effect upon
our operating results. In any potential dispute involving our
patents or other intellectual property, our licensees could also
become the targets of litigation. This could trigger obligations
on us that could result
</FONT>

<P align="center"><FONT size="2">26
</FONT>

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<DIV align="left">
<FONT size="2">in substantial expenses. In addition to the time
and expense required for us to comply with our obligations to
our licensees, any such litigation could severely disrupt the
business of our licensees, which in turn could hurt our
relations with our licensees and cause our revenues to decrease.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A number of third parties have claimed to own
patents essential to various proposed 3G&nbsp;CDMA standards. If
we are required to obtain additional licenses and/or pay
royalties to one or more patent holders, this could have a
material adverse effect on the commercial implementation of our
CDMA products and technologies and our profitability.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Third parties also may commence actions seeking
to establish the invalidity of our patents. In the event that a
third-party challenges a patent, a court may invalidate the
patent or determine that the patent is not enforceable, which
would harm our competitive position. If any of our key patents
are invalidated, or if the scope of the claims in any of these
patents is limited by court decision, we could be prevented from
licensing the invalidated or limited portion of our technology
and our licensees may be prevented from manufacturing and
selling the products that incorporate such technology without
obtaining a license to use a third-party&#146;s technology. Even
if a third-party challenge is not successful, it could be
expensive and time consuming, divert management attention from
our business and harm our reputation.
</FONT>

<P align="left">
<I><FONT size="2">The high amount of capital required to obtain
radio frequencies licenses could slow the growth of the wireless
communications industry and adversely affect our
business.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our growth is dependent upon the increased use of
wireless communications services that utilize our CDMA
technology. In order to provide wireless communications
services, carriers must obtain rights to use specific radio
frequencies. The allocation of frequencies is regulated in the
United States and other countries throughout the world and
limited spectrum space is allocated to wireless communications
services. Industry growth may be affected by the amount of
capital required to obtain licenses to use new frequencies.
Typically, governments sell these licenses at auctions. Over the
last several years, the amount paid for these licenses has
increased significantly, particularly for frequencies used in
connection with 3G technology. The significant cost of licenses
may slow the growth of the industry if service providers are
unable to obtain or service the additional capital necessary to
implement infrastructure to support 3G technology. Our growth
could be adversely affected if this occurs.
</FONT>

<P align="left">
<I><FONT size="2">Our business and operating results may be
harmed by inflation and deflation.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Inflation has had and may continue to have
adverse effects on the economies and securities markets of
certain countries and could have adverse effects on our
customers, licensees and the projects of CDMA carriers in those
countries, including their ability to obtain financing and repay
debts. Brazil and Mexico, for example, have periodically
experienced relatively high rates of inflation and currency
devaluation. Significant inflation or deflation could have a
material adverse effect on our business, operating results,
liquidity and financial position.
</FONT>

<P align="left">
<I><FONT size="2">If we experience product liability claims or
recalls, we may incur significant expenses and experience
decreased demand for our products.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Testing, manufacturing, marketing and use of our
products and those of our licensees and customers entails the
risk of product liability. Although we believe our product
liability insurance will be adequate to protect against product
liability claims, we cannot assure you that we will be able to
continue to maintain such insurance at a reasonable cost or in
sufficient amounts to protect us against losses due to product
liability. Our inability to maintain insurance at an acceptable
cost or to otherwise protect against potential product liability
claims could prevent or inhibit the commercialization of our
products and those of our licensees and customers and harm our
future operating results. In addition, a product liability claim
or recall could harm our reputation and result in decreased
demand for our products.
</FONT>

<P align="center"><FONT size="2">27
</FONT>

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<P align="left">
<I><FONT size="2">Our business depends on the availability of
satellite and other networks for our OmniTRACS, TruckMAIL,
OmniExpress, LINQ and OmniOne systems and other communications
products.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our OmniTRACS and TruckMAIL systems currently
operate in the United States market on leased Ku-band satellite
transponders. Our data satellite transponder and position
reporting satellite transponder lease runs through October 2006.
Based on system capacity analysis, we believe that the United
States OmniTRACS and TruckMAIL operations will not require
additional transponder capacity in 2002. We believe that in the
event additional transponder capacity would be required in
fiscal 2002 or in future years, additional capacity will be
available on acceptable terms. However, we cannot assure you
that we will be able to acquire additional transponder capacity
on acceptable terms in a timely manner. A failure to maintain
adequate satellite capacity would harm our business, operating
results, liquidity and financial position.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our OmniExpress, LINQ and OmniOne systems are
terrestrial-based products and thus rely on various wireless
terrestrial communications networks operated by third parties.
We believe these terrestrial networks will be available for our
products; however, we cannot assure you that these networks will
continue to be available to us or that they will perform
adequately for our needs. The unavailability or nonperformance
of these network systems could harm our business.
</FONT>

<P align="left">
<I><FONT size="2">Energy blackouts could cause disruption to a
portion of our operations and could have a material adverse
affect on our operating results.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our corporate headquarters, research and
development and some manufacturing facilities are located in the
state of California, which has experienced temporary localized
electricity outages, or rolling blackouts, intermittently over
the past nine months which may continue or worsen into blackouts
of longer duration in the future. These blackouts could cause
disruptions to a portion of our operations and to the operations
of our suppliers, distributors and resellers, and customers,
which could have a material adverse effect on our operating
results.
</FONT>

<P align="left">
<I><FONT size="2">Our business and operations would suffer in
the event of system failures.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Despite the implementation of security measures
and the existence of a Disaster Recovery Plan for our internal
information technology networking systems, our systems are
vulnerable to damages from computer viruses, unauthorized
access, natural disasters, terrorism, war, and telecommunication
failures. Any system failure, accident or security breach that
causes interruptions in our operations could result in a
material disruption to our business. To the extent that any
disruption or security breach results in a loss or damage to our
customers&#146; data or applications, or inappropriate
disclosure of confidential information, we may incur liability
as a result. In addition, we may incur additional costs to
remedy the damages caused by these disruptions or security
breaches.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Message transmissions for domestic OmniTRACS,
TruckMAIL, OmniExpress, and OmniOne operations are formatted and
processed at the Network Management Center in San Diego,
California, which we operate, with a fully-redundant backup
Network Management Center located in Las Vegas, Nevada. Our
Network Management Center operations are subject to system
failures which could interrupt the services and have a material
adverse effect on our operating results.
</FONT>

<P align="left">
<I><FONT size="2">We may need additional capital in the future,
and such additional financing may not be available.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The design, development and commercialization of
digital wireless communications technology and products is
highly capital intensive. For example, we must have the ability
to fund significant capital for our internal research and
development efforts. In addition, terrestrial and satellite
wireless system carriers increasingly have required long-term
financing or equity. In particular, we have substantial debt and
equity funding commitments to various CDMA carriers and
strategic investees. In order to meet our financing needs, we
may be required to raise additional funds from a combination of
sources including potential debt or equity issuances. We cannot
assure you that additional financing will be available on
reasonable terms or at all.
</FONT>

<P align="center"><FONT size="2">28
</FONT>

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<P align="left">
<I><FONT size="2">Government regulation may adversely affect our
business.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our products and those of our customers and
licensees are subject to various Federal Communications
Commission regulations in the United States and other
international regulations. These regulations require that these
products meet certain radio frequency emission standards, not
cause unallowable interference to other services, and in some
cases accept interference from other services. We are also
subject to government regulations and requirements of local
standards bodies outside the United States, where we are less
prominent than local competitors and have less opportunity to
participate in the establishment of regulatory and standards
policies. We are also subject to state and federal health,
safety and environmental regulations, as well as regulations
related to the handling of and access to classified information.
Changes in the regulation of our activities, including changes
in the allocation of available spectrum by the United States
government and other governments, or exclusion of our technology
by a standards body, could have a material adverse effect on our
business, operating results, liquidity and financial position.
</FONT>

<P align="left">
<I><FONT size="2">If wireless handsets pose health and safety
risks, we may be subject to new regulations, and demand for our
products and those of our licensees and customers may
decrease.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Media reports have suggested that radio frequency
emissions from wireless handsets may be linked to various health
concerns, including cancer, and may interfere with various
electronic medical devices, including hearing aids and
pacemakers. Concerns over radio frequency emissions may have the
effect of discouraging the use of wireless handsets, which would
decrease demand for our products and those of our licensees and
customers. In recent years, the FCC and foreign regulatory
agencies have updated the guidelines and methods they use for
evaluating radio frequency emissions from radio equipment,
including wireless handsets. In addition, interest groups have
requested that the FCC investigate claims that wireless
communications technologies pose health concerns and cause
interference with airbags, hearing aids and medical devices.
There also are some safety risks associated with the use of
wireless handsets while driving. Concerns over these safety
risks and the effect of any legislation that may be adopted in
response to these risks could reduce demand for our products and
those of our licensees and customers in the United States as
well as foreign countries.
</FONT>

<P align="left">
<I><FONT size="2">Our business and operating results will be
harmed if we are unable to manage growth in our
business.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since 1996, our businesses have experienced
periods of rapid growth that have placed, and are expected to
continue to place, significant demands on our managerial,
operational and financial resources. In order to manage this
growth, we must continue to improve and expand our management,
operational and financial systems and controls, including
quality control and delivery and service capabilities. We also
need to continue to expand, train and manage our employee base.
We must carefully manage research and development capabilities
and production and inventory levels to meet product demand, new
product introductions and product and technology transitions. We
cannot assure you that we will be able to timely and effectively
meet that demand and maintain the quality standards required by
our existing and potential customers and licensees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, inaccuracies in our demand forecasts
could quickly result in either insufficient or excessive
inventories and disproportionate overhead expenses. If we
ineffectively manage our growth or are unsuccessful in
recruiting and retaining personnel, our business and operating
results will be harmed.
</FONT>

<P align="left">
<I><FONT size="2">We may not be able to attract and retain
qualified personnel necessary for the design, development and
commercialization of our products and technology.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our future success depends largely upon the
continued service of our executive officers and other key
management and technical personnel. Our success also depends on
our ability to continue to attract, retain and motivate
qualified personnel. Our key technical personnel represent a
significant asset, as the source of our technological and
product innovations upon which our revenues are highly
dependent. The competition for these personnel is intense in the
wireless communications industry.
</FONT>

<P align="center"><FONT size="2">29
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may have particular difficulty attracting and
retaining key personnel in periods of poor operating performance
given the significant use of incentive compensation by our
competitors. We do not have employment agreements with our key
management personnel and do not maintain key person life
insurance on any of our personnel. The loss of one or more of
our key employees or our inability to attract, retain and
motivate qualified personnel could negatively impact our ability
to design, develop and commercialize our products and technology.
</FONT>

<P align="left">
<I><FONT size="2">Future changes in financial accounting
standards may cause adverse unexpected revenue fluctuations and
affect our reported results of operations.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A change in accounting policies can have a
significant effect on our reported results and may even affect
our reporting of transactions completed before a change is
announced. New pronouncements and varying interpretations of
pronouncements have occurred with frequency and may occur in the
future. Changes to existing rules or the questioning of current
practices may adversely affect our reported financial results or
the way we conduct our business.
</FONT>

<P align="left">
<I><FONT size="2">Our stockholder rights plan, certificate of
incorporation and Delaware law could adversely affect the
performance of our stock.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation provides for
cumulative voting in the election of directors. In addition, our
certificate of incorporation provides for a classified board of
directors and includes a provision that requires the approval of
holders of at least 66&nbsp;2/3% of our voting stock as a
condition to a merger or certain other business transactions
with, or proposed by, a holder of 15% or more of our voting
stock. This approval is not required in cases where certain of
our directors approve the transaction or where certain minimum
price criteria and other procedural requirements are met. Our
certificate of incorporation also requires the approval of
holders of at least 66&nbsp;2/3% of our voting stock to amend or
change the provisions mentioned relating to the classified
board, cumulative voting or the transaction approval. Under our
bylaws, stockholders are not permitted to call special meetings
of our stockholders. Finally, our certificate of incorporation
provides that any action required or permitted to be taken by
our stockholders must be effected at a duly called annual or
special meeting rather than by any consent in writing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The classified board, transaction approval,
special meeting and other charter provisions may discourage
certain types of transactions involving an actual or potential
change in our control. These provisions may also discourage
certain types of transactions in which our stockholders might
otherwise receive a premium for their shares over then current
market prices and may limit our stockholders&#146; ability to
approve transactions that they may deem to be in their best
interests.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Further, we have distributed a dividend of one
right for each outstanding share of our common stock pursuant to
the terms of our preferred share purchase rights plan. These
rights will cause substantial dilution to the ownership of a
person or group that attempts to acquire us on terms not
approved by our board of directors and may have the effect of
deterring hostile takeover attempts. In addition, our board of
directors has the authority to fix the rights and preferences of
and issue shares of preferred stock. This right may have the
effect of delaying or preventing a change in our control without
action by our stockholders.
</FONT>

<P align="left">
<I><FONT size="2">We are at risk of securities class action
litigation that could result in substantial costs and divert
management&#146;s attention and resources.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the past, securities class action litigation
has often been brought against a company following periods of
volatility in the market price of its securities. Due to the
volatility of our stock price, we may be the target of
securities litigation in the future. Securities litigation could
result in substantial costs and divert management&#146;s
attention and resources.
</FONT>

<P align="center"><FONT size="2">30
</FONT>

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<!-- link2 "ITEM 2.PROPERTIES" -->
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<P align="left">
<B><FONT size="2">ITEM&nbsp;2.&nbsp;PROPERTIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2001, we occupied the
indicated square footage in the owned or leased facilities
described below (in thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">of</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Square</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Buildings</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Location</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Status</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Footage</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Primary Use</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top" nowrap><FONT size="2">United States</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Owned</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,278</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Executive and administrative offices,
	manufacturing, research and development, sales and marketing,
	service functions, and network management hub.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top" nowrap><FONT size="2">United States</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">756</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Administrative offices, research and development,
	sales and marketing, service functions, and network management
	hub.
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">Japan</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Administrative offices and sales and marketing.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">Israel</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Administrative offices and research and
	development.
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">Netherlands</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Administrative offices, research and development
	and sales and marketing.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">England</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Administrative offices, sales and marketing and
	research and development.
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">China</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Administrative offices, sales and marketing and
	research and development.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top" nowrap><FONT size="2">Other International</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Administrative offices and sales and marketing.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="7" align="left" valign="top">
	&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">
	Total square footage
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,214</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the facilities above, we also own
or lease an additional 1,383,800 square feet of properties that
are leased or subleased to third parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our leases expire at varying dates through 2008
not including renewals that would be at our option. Between
December&nbsp;2001 and March&nbsp;2002, we will begin leasing
four additional buildings in the United States totaling 215,212
square feet. With this additional space, we believe that our
facilities will be suitable and adequate for the present
purposes, and that the productive capacity in such facilities is
substantially being utilized. In the future, we may need to
purchase, build or lease additional facilities to meet the
requirements projected in our long-term business plan.
</FONT>

<!-- link2 "ITEM 3.LEGAL PROCEEDINGS" -->
<DIV align="left"><A NAME="015"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;3.&nbsp;LEGAL PROCEEDINGS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Schwartz, et al v.
QUALCOMM</FONT></I><FONT size="2">:&nbsp;On December&nbsp;14,
2000, 77 former employees filed a lawsuit against us in the
District Court for Boulder County, Colorado, alleging claims for
intentional misrepresentation, nondisclosure and concealment,
violation of C.R.S. Section&nbsp;8-2-104 (obtaining workers by
misrepresentation), breach of contract, breach of the implied
covenant of good faith and fair dealing, promissory estoppel,
negligent misrepresentation, unjust enrichment, violation of
California Labor Code Section&nbsp;970, violation of California
Civil Code Sections&nbsp;1709-1710, rescission, violation of
California Business &#38; Professions Code Section&nbsp;17200
and violation of California Civil Code Section&nbsp;1575. Since
then, four other individuals have joined the suit as plaintiffs.
Although there can be no assurance that an unfavorable outcome
of the dispute would not have a material adverse effect on our
operating results, liquidity or financial position, we believe
the claims are without merit and will vigorously defend the
action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">GTE Wireless Incorporated (GTE)&nbsp;v.
QUALCOMM:</FONT></I><FONT size="2">&nbsp;On June&nbsp;29, 1999,
GTE filed an action in the United States District Court for the
Eastern District of Virginia asserting that wireless telephones
sold by us infringe a single patent allegedly owned by GTE. On
September&nbsp;15, 1999, the court granted us motion to transfer
the action to the United States District Court for the Southern
District of California. Trial has been set for June&nbsp;3,
2002. Although there can be no assurance that an unfavorable
outcome of the dispute would not
</FONT>

<P align="center"><FONT size="2">31
</FONT>

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

<DIV align="left">
<FONT size="2">have a material adverse effect on our operating
results, liquidity or financial position, we believe the action
is without merit and will vigorously defend the action.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Durante, et al v.
QUALCOMM:</FONT></I><FONT size="2">&nbsp;On February&nbsp;2,
2000, four former employees file a putative class action against
us, ostensibly on behalf of themselves and those former
employees of us whose employment was terminated in
April&nbsp;1999. Virtually all of the purported class of
plaintiffs received severance packages at the time of the
termination of their employment, in exchange for a release of
claims, other than federal age discrimination claims, against
us. The complaint was filed in California Superior Court in and
for the County of Los Angeles and purports to state ten causes
of action including breach of contract, age discrimination,
violation of Labor Code Section&nbsp;200, violation of Labor
Code Section&nbsp;970, unfair business practices, intentional
infliction of emotional distress, unjust enrichment, breach of
the covenant of good faith and fair dealing, declaratory relief
and undue influence. The complaint seeks an order accelerating
all unvested stock options for the members of the class. On
June&nbsp;27, 2000, the case was ordered transferred from Los
Angeles County Superior Court to San Diego County Superior
Court. On July&nbsp;3, 2000, we removed the case to the United
States District Court for the Southern District of California,
and discovery has commenced. On May&nbsp;29, 2001, the Court
dismissed all plaintiffs&#146; claims except for claims arising
under the federal Age Discrimination in Employment Act. On
July&nbsp;16, 2001, the Court granted conditional class
certification on the remaining claims, to be revisited by the
court at the end of the discovery period. Although there can be
no assurance that an unfavorable outcome of the dispute would
not have a material adverse effect on our operating results,
liquidity or financial position, we believe the claims are
without merit and will vigorously defend the action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Zoltar Satellite Alarm Systems, Inc. v.
QUALCOMM and SnapTrack:</FONT></I><FONT size="2">&nbsp;On
March&nbsp;30, 2001, Zoltar Satellite Alarm Systems, Inc. filed
suit against us and SnapTrack, our wholly owned subsidiary,
alleging infringement of three patents. On August&nbsp;27, 2001,
Zoltar filed an amended complaint adding Sprint Corp. as a named
defendant and narrowing certain infringement claims against us
and SnapTrack. Since then, Zoltar has stated its intention to
dismiss Sprint Corp. as a defendant. We and SnapTrack have filed
responsive pleadings and discovery has commenced. Although there
can be no assurance that an unfavorable outcome of this dispute
would not have a material adverse effect on our operating
results, liquidity or financial position, we believe the claims
are without merit and will vigorously defend the action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are engaged in other legal actions arising in
the ordinary course of our business and believe that the
ultimate outcome of these actions will not have a material
adverse effect on our operating results, liquidity or financial
position.
</FONT>

<!-- link2 "ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS" -->
<DIV align="left"><A NAME="016"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;4.&nbsp;SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No matters were submitted to a vote of security
holders during the quarter ended September&nbsp;30, 2001.
</FONT>

<P align="center"><FONT size="2">32
</FONT>

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

<P align="left">
<B><FONT size="2">PART II</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link2 "ITEM 5.MARKET FOR REGISTRANT&#146;S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS" -->
<DIV align="left"><A NAME="017"></A></DIV>

<DIV align="left">
<B><FONT size="2">ITEM&nbsp;5.&nbsp;MARKET FOR REGISTRANT&#146;S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Market
Information.&nbsp;</FONT></I><FONT size="2">Our Common Stock is
traded on the Nasdaq National Market under the symbol
&#147;QCOM.&#148; The following table sets forth the range of
high and low sales prices on the National Market of the Common
Stock for the periods indicated, as reported by Nasdaq. Such
quotations represent inter-dealer prices without retail markup,
markdown or commission and may not necessarily represent actual
transactions.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">High&nbsp;($)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Low&nbsp;($)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Fiscal 2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">First Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">130.53</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Second Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105.63</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Third Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59.98</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fourth Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78.75</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51.50</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="10"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Fiscal 2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">First Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">107.81</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Second Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89.38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Third Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71.04</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42.75</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fourth Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68.87</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42.60</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of November&nbsp;2, 2001, there were 9,518
holders of record of the Common Stock. On November&nbsp;2, 2001,
the last sale price reported on the Nasdaq National Market for
the Common Stock was $53.52 per share. We have never paid cash
dividends on our Common Stock and have no present intention to
do so.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;2, 1999, our Board of Directors
declared a four-for-one stock split of our common stock and an
increase in the number of authorized shares of common stock to
three billion shares. The stock was distributed on
December&nbsp;30, 1999 to stockholders of record on
December&nbsp;20, 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All references to per share amounts have been
restated to reflect this stock split.
</FONT>

<P align="center"><FONT size="2">33
</FONT>

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

<!-- link1 "ITEM 6.SELECTED CONSOLIDATED FINANCIAL DATA" -->
<DIV align="left"><A NAME="018"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;6.&nbsp;SELECTED CONSOLIDATED
FINANCIAL DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following balance sheet data and statements
of operations for the five years ended September&nbsp;30, 2001
were derived from our audited consolidated financial statements.
Consolidated balance sheets at September&nbsp;30, 2001 and 2000
and the related consolidated statements of operations and of
cash flows for each of the three years in the period ended
September&nbsp;30, 2001 and notes thereto appear elsewhere
herein. The data should be read in conjunction with the annual
consolidated financial statements, related notes and other
financial information appearing elsewhere herein.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">Years Ended September 30(1)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">(in thousands except per share data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Statement of Operations Data:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,679,786</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,196,780</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,937,299</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,347,870</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,096,365</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Operating income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,930</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">722,638</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">405,140</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">242,665</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97,457</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Loss)&nbsp;income before accounting change
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(530,806</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">670,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,532</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">91,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting changes, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net&nbsp;(loss) income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(548,743</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">670,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,532</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">91,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic net&nbsp;(loss) earnings per common
	share(2):
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Loss)&nbsp;income before accounting change
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.71</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.93</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting change, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net&nbsp;(loss) income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.73</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.93</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted net&nbsp;(loss) earnings per common
	share(2)(3):
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Loss)&nbsp;income before accounting change
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.71</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.16</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting change, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net&nbsp;(loss) income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.73</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.16</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Shares used in per share calculations(2)(3):
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">755,969</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">717,205</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">594,714</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">553,623</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">538,681</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">755,969</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">800,121</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">649,889</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">591,697</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">575,097</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pro forma effect of change in accounting
	principle(4):
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">643,181</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">209,062</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110,586</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net earnings per common share&nbsp;&#151; basic
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.90</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net earnings per common share&nbsp;&#151; diluted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.81</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance Sheet Data:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash, cash equivalents and marketable securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,580,512</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,520,914</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,684,926</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">303,324</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">808,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,747,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,062,982</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,534,950</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,566,713</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,274,680</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Company-obligated mandatorily redeemable Trust
	Convertible Preferred Securities of a subsidiary trust holding
	solely debt securities of the Company
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">659,555</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">660,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">660,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,889,815</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,516,328</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,871,755</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">957,596</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,024,178</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Our fiscal year ends on the last Sunday in
	September. As a result, fiscal 2001 includes 53&nbsp;weeks.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">We effected a two-for-one stock split in
	May&nbsp;1999 and a four-for-one stock split in
	December&nbsp;1999. All references to number of shares and per
	share amounts have been restated to reflect these stock splits.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The 2001 diluted shares exclude the potential
	dilutive effect of 51,188,000 incremental shares due to their
	anti-dilutive effect.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(4)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The pro forma effect of change in accounting
	principle reflects the impact of SAB&nbsp;101 on previously
	reported results assuming SAB&nbsp; 101 had been in effect in
	those periods.
	</FONT></TD>
</TR>

</TABLE>

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<P align="left">
<B><FONT size="2">ITEM&nbsp;7.&nbsp;MANAGEMENT&#146;S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except for the historical information contained
herein, the following discussion contains forward-looking
statements that are subject to risks and uncertainties. Actual
results may differ substantially from those referred to herein
due to a number of factors, including but not limited to risks
described in the section entitled Risk Factors and elsewhere in
this Annual Report. Our consolidated financial data includes
SnapTrack, Inc. and other consolidated subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We design, manufacture and market digital
wireless telecommunications products and services based on our
CDMA and other technologies. We license and receive royalty
payments on our CDMA technology from major domestic and
international wireless telecommunications equipment suppliers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a leading developer and supplier of
CDMA-based integrated circuits and system software for wireless
voice and data communications and global positioning system
products. We offer complete system solutions including software
and integrated circuits for wireless handsets and infrastructure
equipment. This complete system solution approach provides
customers with advanced wireless technology, enhanced component
integration and interoperability, and reduced time to market. We
provide integrated circuits and system software to many of the
world&#146;s leading wireless handset and infrastructure
manufacturers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide satellite and terrestrial-based
two-way data messaging and position reporting services for
transportation companies and private fleets. We design,
manufacture and distribute products and provide services for our
OmniTRACS and TruckMAIL (satellite-based mobile communications
system), OmniExpress (terrestrial CDMA-based system) and LINQ
(terrestrial GSM-based system) worldwide. Transportation
companies and private fleets use our products to communicate
with drivers, monitor vehicle location and provide customer
service. We also integrate the mobile data with operations
software, such as dispatch, payroll and accounting, so end-users
can manage their information and operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide an open applications platform for
CDMA-based wireless devices to provide solutions for the
wireless industry as it moves toward wireless Internet
convergence. Our BREW product is a thin applications environment
that provides applications developers with an open standard
platform for wireless devices on which to develop their
products. The BREW platform leverages the capabilities available
in QCT integrated circuits, system software and Wireless
Internet Launchpad software, enabling development of
feature-rich applications and content while reducing memory
overhead and maximizing system performance. The BREW platform
also enables over-the-air downloads of applications by end users
directly to their BREW-enabled handsets. In November&nbsp;2001,
KTFreeTel, a leading CDMA carrier in Korea, began commercial
service of BREW-enabled applications and services to
subscribers, providing end users the ability to download
wireless applications over the air and customize their phones
with software that meets their individual needs.
KTFreeTel&#146;s wireless multimedia service runs on a CDMA2000
1X high-speed data network and is available to end users on
color display handsets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December&nbsp;1999, the Securities and
Exchange Commission (SEC)&nbsp;issued Staff Accounting
Bulletin&nbsp;No.&nbsp;101 (SAB 101), &#147;Revenue Recognition
in Financial Statements.&#148; The SEC staff subsequently
amended SAB 101 to provide registrants with additional time to
implement the standard. We adopted SAB&nbsp;101 in the fourth
quarter of fiscal 2001, applied retroactively to the first
quarter of fiscal 2001. The effect of the adoption of SAB 101 on
our results of operations for fiscal 2001, when applied
retroactively, was to decrease revenue by $40 million and to
increase the loss before income taxes and accounting change by
$51 million. We recorded a $147 million loss, net of taxes of
$98 million, as the cumulative effect of the accounting change
as of the beginning of fiscal 2001 to reflect the deferral of
revenue and expenses related to future periods. For fiscal 2001,
we recognized $95 million in net income before income taxes and
accounting change related to revenue and expense that was
recognized in prior years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the adoption of SAB 101, we generally
recorded revenue from non-refundable license fees on the
effective date of the applicable license agreement. After the
adoption of SAB 101, license fees are recognized
</FONT>

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<DIV align="left">
<FONT size="2">ratably over the estimated period of future
benefit to the licensee. Royalty revenue continues to be
recorded as earned when reasonable estimates of such amounts can
be made.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the adoption of SAB&nbsp;101, we
recorded revenue from hardware product sales at the time of
shipment, or when title and risk of loss passes to the customer,
if later. After adoption of SAB&nbsp;101, revenue and expense
from certain hardware product sales contracted with a continuing
service obligation that is essential to the functionality of the
hardware are recognized ratably over the shorter of the
estimated life of the hardware product or the expected service
period. Revenue from hardware product sales without such a
continuing service obligation is recorded when risk of loss and
title pass to the customer. Messaging revenue continues to be
recorded as earned.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We were required to adopt Statement of Financial
Accounting Standards No.&nbsp;133 (FAS&nbsp;133),
&#147;Accounting for Derivative Instruments and Hedging
Activities,&#148; as of the beginning of fiscal 2001.
FAS&nbsp;133 requires certain derivative instruments to be
recorded at fair value. After adoption of FAS&nbsp;133,
unrealized gains and losses on these derivative instruments are
recorded in the statement of operations. We recorded a $129
million gain, net of taxes of $87 million, as the cumulative
effect of the change in accounting principle as of the beginning
of fiscal 2001. The cumulative effect of the accounting change
related primarily to the recognition of the unrealized gain on a
warrant to purchase 4,500,000 shares of Leap Wireless common
stock issued to us in connection with our spin-off of Leap
Wireless in September&nbsp;1998. Additionally, we recorded $243
million in pre-tax unrealized losses on derivative instruments
during fiscal 2001, primarily resulting from a decline in the
market price of Leap Wireless stock which reduced the fair value
of the Leap Wireless warrant. The new requirement to record
unrealized gains and losses on these instruments in the
statement of operations may cause substantial quarterly and
annual fluctuations in operating results due to stock market
volatility.
</FONT>

<P align="left">
<B><FONT size="2">Strategic Investments and Financing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We make strategic investments to promote the
worldwide adoption of CDMA products and services for wireless
voice and Internet data communications. In general, we enter
into strategic relationships with CDMA carriers and developers
of innovative technologies or products for the wireless
communications industry. QUALCOMM Ventures, an internal
organization, selects and manages strategic investments in early
stage companies and, from time to time, venture funds or
incubators, to support the adoption of CDMA and use of the
wireless Internet. Most of our strategic investments entail a
high degree of risk and will not become liquid until more than
one year from the date of investment, if at all. To the extent
such investments become liquid and meet strategic objectives, we
attempt to make regular periodic sales that are recognized in
investment (expense)&nbsp;income. During fiscal 2002, we may
reduce the planned sale of certain equity investments until
market conditions improve. We regularly monitor and evaluate the
realizable value of our investments in both marketable and
private securities. If events and circumstances indicate that a
decline in the value of these assets has occurred and is other
than temporary, we will record a charge to investment
(expense)&nbsp;income. During fiscal year 2001, we recognized
$287 million in charges related to other-than-temporary losses
on marketable and private securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December&nbsp;2000, we announced a new CDMA
license program designed to allow selected early stage companies
to issue equity to us as a means of paying part of the license
fees payable under our CDMA license agreements. We record
license fee revenues based on the fair value of the equity
instruments received, if determinable. The measurement date for
determination of fair value is the earlier of the date on which
the parties establish a commitment to perform or the date at
which the performance is complete. The evaluation procedures
used to determine fair value include, but are not limited to,
examining the current market price for the shares if the
licensee is publicly traded, examining recent rounds of
financing and the licensee&#146;s business plan if not publicly
traded, and performing other due diligence procedures. This
program will not affect the licensees&#146; obligations to pay
royalties under their CDMA license agreements. The amount of
cash consideration and the timing of revenue recognition varies
depending on the terms of each agreement. During fiscal year
2001, we received $11 million in equity consideration for new or
expanded licenses. In addition, we accepted $9 million in equity
in satisfaction of cash license fee receivables during fiscal
year 2001. At September&nbsp;30, 2001, seven licensees have
participated in this program.
</FONT>

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<P align="left">
<I><FONT size="2">The Vesper Companies</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 1999, we made commitments to invest
approximately $108 million in the Vesper Companies. The Vesper
Companies were formed by a consortium of investors to provide
wireless and wireline telephone services in the northern region
and in the Sao Paulo state of Brazil. We subsequently
participated in additional financing rounds completed by the
Vesper Companies, thereby increasing our initial equity
investment. In addition, we extended long-term financing to the
Vesper Companies related to our financing arrangement with
Ericsson. At September&nbsp;30, 2001, our cumulative cash
investment, including long-term financing, in the Vesper
Companies totaled approximately $241 million. In
January&nbsp;2000, we acquired an approximate 2.5% interest in
VeloCom, an investor in the Vesper Companies, for $15 million.
In December&nbsp;2000, we executed a Term Loan Agreement with
VeloCom in which we agreed to provide $230 million of
convertible debt financing, including $30 million for
capitalized interest. The debt facility has a three-year term
and bears interest at 18%. We funded approximately $172 million
under this facility through September&nbsp;30, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of a reorganization of the Vesper
Companies initiated during fiscal 2001, we reassessed the
recoverability of our assets related to the Vesper Companies and
VeloCom and recorded $32 million in asset impairments and
related charges, $90 million in investment (expense)&nbsp;income
and $120 million in other non-operating charges. At
September&nbsp;30, 2001, we had approximately $124 million in
remaining net assets, primarily consisting of finance
receivables and notes receivable related to the Vesper Companies
and VeloCom. The Vesper Companies are working to accomplish the
terms of their restructuring with owners, vendors and creditors,
which is expected to be completed in the first quarter of our
fiscal 2002. The proposed transaction is contingent on several
factors, and there is a risk it will not close. If the
transaction closes, we expect to acquire an additional interest
in the Vesper Companies for $266 million in equity commitments.
We also expect to convert our Term Loan Agreement with VeloCom
into an additional equity interest in VeloCom. After the close,
we expect to hold a 49.9% interest in VeloCom, and direct and
indirect interests in the Vesper Companies of 74% and 86%,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe the Vesper Companies represent a
strategic opportunity with their extensive installed CDMA
network in Brazil, including the key cities of Sao Paulo and Rio
de Janeiro. The Vesper Companies&#146; debt would be reduced in
the proposed restructuring from approximately $1.3 billion to
less than $200 million. Additionally, the term of the remaining
debt would be extended through 2005, providing the Vesper
Companies significant operational flexibility to support a
growing business. If the proposed restructuring transaction
closes, we intend to support the Vesper Companies while they,
together with VeloCom, seek to partner with strategic investors
and internationally recognized operators who have the ability to
successfully enhance the Vesper Companies&#146; business and
ultimately assume majority control. We would also consider other
strategic alternatives such as spinning off our investment in
the Vesper Companies to our shareholders. We will consolidate
the results of the Vesper Companies if the proposed transaction
closes in fiscal 2002. The Vesper Companies expect to incur
increasing operating losses and negative cash flows from
operations as they expand operations and enter new markets, even
if and after they achieve positive cash flows from operations in
the initial operating markets. We may incur significant losses
in the future related to our proposed ownership of the Vesper
Companies, and we cannot assure you that the Vesper Companies
will ever operate profitably.
</FONT>

<P align="left">
<I><FONT size="2">NextWave Telecom Inc.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November&nbsp;1995, we purchased 1,666,666
shares of Series&nbsp;B common stock in Next<I>Wave</I> Telecom
Inc. (Next<I>Wave</I>), a privately-held company, for $5
million. As part of the share purchase, we received warrants to
buy 1,111,111 additional shares of Series&nbsp;B common stock at
$3 per share. During March&nbsp;1996, we converted a $15 million
note receivable into 5,000,000 shares of Series&nbsp;B common
stock. In June&nbsp;1998, we recorded a $20 million impairment
charge related to our investment in Next<I>Wave</I>.
Subsidiaries of Next<I>Wave </I>filed for bankruptcy protection
in June&nbsp;1998 under Chapter&nbsp;11 of the United States
Bankruptcy Code. Next<I>Wave </I>itself filed for bankruptcy
protection in December&nbsp;1998 under Chapter&nbsp;11 of the
United States Bankruptcy Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August&nbsp;2001, Next<I>Wave </I>filed a plan
of reorganization with the United States Bankruptcy Court which
requires total financing of approximately $5 billion to
build-out an advanced 3G wireless network. The plan provides for
payment of all valid claims against Next<I>Wave</I>, including
the claim of the FCC for the PCS
</FONT>

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<DIV align="left">
<FONT size="2">licenses it granted to Next<I>Wave</I> in 1997,
plus interest as applicable. The plan also provides that
Next<I>Wave&#146;s</I> debt for its C-block and F-block PCS
licenses would be reinstated, with the government receiving all
amounts due up to this point, in full, with the remaining
balance to be paid in installments. Under this plan,
Next<I>Wave</I> indicated that it expects to construct wireless
networks in 95 markets utilizing CDMA2000 1xEV-DO technology.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2001, we sold 150,000 shares of
Next<I>Wave</I> series B common stock and recorded a realized
gain of $1 million. At September&nbsp;30, 2001, we owned
6,516,666 shares of Series&nbsp;B common stock and held warrants
to purchase 1,111,111 shares of Series&nbsp;B common stock for
$3 per share. We also held a $0.4 million promissory note
convertible into 1,019,444 shares of Series&nbsp;C common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August&nbsp;2001, we committed to purchase
2,000,000 shares of Series&nbsp;A preferred stock in the
reorganized Next<I>Wave </I>for $300 million. Our investment was
subject to approval by the United States Bankruptcy Court,
successful consummation of Next<I>Wave</I>&#146;s
August&nbsp;2001 plan of reorganization, satisfactory resolution
of all disputes involving Next<I>Wave</I>&#146;s PCS licenses
and other conditions. Furthermore, our obligation to make this
investment was subject to approval by the Bankruptcy Court on or
before October&nbsp;31, 2001 of the terms and conditions of our
investment, as well as a certain Technology Cooperation
Agreement dated as of August&nbsp;15, 2001, as amended, between
Next<I>Wave</I> and us. Next<I>Wave</I> also was entitled to
terminate the investment commitment if a certain break-up fee
contained in the subject Subscription Agreement was not approved
by the Bankruptcy Court on or before October&nbsp;31, 2001. The
approvals required by October&nbsp;31, 2001 have not been
obtained, and we are entitled to terminate our investment
agreement with Next<I>Wave</I>. Furthermore, on November&nbsp;8,
2001, Next<I>Wave&#146;s</I> bankruptcy counsel publicly
announced that a settlement with the FCC had been reached
pursuant to which Next<I>Wave</I> would relinquish its C-block
and F-block PCS licenses in return for a cash payment from the
FCC. Next<I>Wave&#146;s</I> bankruptcy counsel indicated that if
the settlement receives the necessary approvals, then
Next<I>Wave</I> intends to file a new plan of reorganization
which takes into account the terms of the settlement. Our $300
million commitment is dependent on Next<I>Wave</I> pursuing the
plan of reorganization filed in August, 2001. Accordingly, if
Next<I>Wave</I> does abandon the plan filed in August, 2001 and
proceeds with a new plan, then we will not be obligated to make
the investment. As a result of the uncertainty surrounding
Next<I>Wave&#146;s</I> financing plans, the terms of the
settlement announced November&nbsp;8, 2001 and other factors,
there is significant uncertainty as to whether we will have the
opportunity to make our planned investment in a reorganized
Next<I>Wave.</I>
</FONT>

<P align="left">
<I><FONT size="2">Globalstar L.P.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have contracts with Globalstar to design,
develop and manufacture subscriber products and ground
telecommunications equipment. On January&nbsp;16, 2001,
Globalstar announced that, in order to have sufficient funds
available for the continued progress of its marketing and
service activities, it had suspended indefinitely principal and
interest payments on all of its debt, including its vendor
financing obligations. As a result, Globalstar did not make an
approximate $22 million payment for principal and interest due
to us on January&nbsp;15, 2001. Globalstar also announced the
retention of a financial adviser to assist in developing future
initiatives, including restructuring Globalstar&#146;s debt,
identifying funding opportunities and pursuing other strategic
alternatives. Efforts, by Globalstar, to restructure its debt
are on-going, and work on a final plan is expected to continue.
However, Globalstar&#146;s restructuring has not progressed as
we had anticipated. Based on the current status of
Globalstar&#146;s restructuring efforts, we believe that we will
not receive any of the contractual amounts due. As a result, in
the fourth quarter of fiscal 2001, we recorded $44 million in
net charges to establish reserves against remaining
Globalstar-related assets. During fiscal 2001, we recorded total
net charges of $49 million in cost of revenues, $519 million in
asset impairment and related charges, $10 million in investment
expense and $58 million in other non-operating charges related
primarily to the impairment of certain assets. We expect
Globalstar-related revenues to be negligible for fiscal 2002.
</FONT>

<P align="left">
<I><FONT size="2">Other</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March&nbsp;2001, our wholly owned subsidiary,
3G Investments (Australia) Pty Limited, was awarded 2x10 MHz
licenses in the Australian 3G wireless spectrum auctions for
approximately $84 million. We entered the auctions to acquire
appropriate spectrum to support a high-capacity CDMA2000
1X/1xEV-DO
</FONT>

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<FONT size="2">system in Australia, a country with significant
CDMA growth prospects. Our successful participation in numerous
spectrum auctions in the past has resulted in nationwide CDMA
networks being deployed in other countries, including Mexico,
Chile and Brazil. We are preparing to deploy CDMA2000 1X/1xEV-DO
networks in Australia with commercial 3G services planned in
2002. The licenses can be used for commercial service starting
in October&nbsp;2002. The licenses will cover a total of 12
million potential customers in eight major markets, including
Sydney, Melbourne, Brisbane, Adelaide, Perth, Hobart, Darwin and
Canberra.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October&nbsp;2000, we agreed to invest $200
million in the convertible preferred shares of Inquam Limited
(Inquam). Inquam was formed to acquire, own, develop and manage
wireless communications systems, either directly or indirectly,
with the primary intent of deploying CDMA-based technology. In
addition, we advanced $10 million under a promissory note,
bearing interest at 10%, that matures on January&nbsp;31, 2002.
At September&nbsp;30, 2001, $144 million of the equity funding
commitment is outstanding. We expect to fund the remaining
commitment through June&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provided financing to Pegaso under an
equipment loan and a bridge facility. Pegaso operates a wireless
network in Mexico. At September&nbsp;30, 2001, $260 million and
$414 million are outstanding under the equipment loan and the
bridge facility, respectively, net of deferred interest and
unearned fees. The bridge facility was payable in full on
September&nbsp;19, 2001 or August&nbsp;29, 2002 if certain
milestones were met, including the completion of a strategic
sale or merger with a third party. The bridge facility was
amended in October&nbsp;2001 to, among other things, change the
timing of milestones required for the August&nbsp;29, 2002
maturity from September&nbsp;19 to October&nbsp;31, 2001. A
strategic sale or merger was not completed by October&nbsp;31,
2001, such that Pegaso failed to meet covenants in both the
amended bridge facility and the equipment loan. On
October&nbsp;31, 2001, Pegaso also failed to make a scheduled
payment of approximately $3 million on the equipment loan,
Pegaso is currently engaged in strategic discussions with a
third party for a potential sale or merger, and we are actively
working with Pegaso and the third party to complete a
transaction or, alternatively, to assist Pegaso in raising
additional funds. As the transaction did not close on the
targeted date of October&nbsp;31, 2001 and such additional
financing is not certain, we ceased accruing interest on these
loans effective at the beginning of the fourth fiscal quarter of
2001. The bridge facility is collateralized by a second lien on
substantially all of Pegaso&#146;s assets. We also have a
commitment to provide an additional $96 million in long-term
financing under an arrangement with Ericsson, subject to Pegaso
meeting certain conditions. Pegaso is at an early stage of
development and, if it remains independent, may not be able to
compete successfully. Competitors in Mexico have greater
financial resources and more established operations than Pegaso.
As is normal for early stage wireless operators, Pegaso is
experiencing significant losses from operations. Pegaso also has
limited cash available to meet its operating and financing
commitments and is therefore dependent on securing additional
financing or completing a strategic arrangement with an existing
carrier.
</FONT>

<P align="left">
<B><FONT size="2">Fiscal 2001 Compared to Fiscal 2000</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total revenues for fiscal 2001 were $2,680
million compared to $3,197 million for fiscal 2000. Total
revenues for fiscal 2000 included $435 million in revenue
related to the terrestrial-based CDMA wireless consumer phone
business which was sold in February&nbsp;2000. Excluding the
revenue of the business sold from fiscal 2000, total revenues
decreased by $82 million in fiscal 2001. The decrease is
primarily related to the implementation of SAB&nbsp;101 in
fiscal 2001, lower revenues related to the business with
Globalstar, offset by higher royalties, higher unit shipments
and average selling prices of MSM integrated circuits, higher
CSM infrastructure integrated circuit revenues, and higher
OmniTRACS messaging revenue. Revenue from Samsung Electronics
Company (Samsung), Kyocera Wireless Corp. and LG Electronics,
Inc., customers of both QCT and QTL, comprised an aggregate of
14%, 12% and 10% of total consolidated revenues, respectively,
in fiscal 2001. In fiscal 2000, Samsung accounted for 11% of
total consolidated revenues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cost of revenues for fiscal 2001 was $1,035
million compared to $1,507 million for fiscal 2000. Total cost
of revenues for fiscal 2000 included $433 million in cost of
revenues related to the terrestrial-based CDMA wireless consumer
phone business which was sold in February&nbsp;2000. Excluding
the cost of revenues of the business sold from fiscal 2000,
total cost of revenues decreased by $39 million in fiscal 2001,
consistent with the decrease in revenues. Cost of revenues as a
percentage of revenues was 39% for fiscal 2001 and 2000. Cost
</FONT>

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<DIV align="left">
<FONT size="2">of revenues as a percentage of revenues may
fluctuate in future quarters depending on the mix of products
sold and services provided, royalties and license fees earned,
competitive pricing, new product introduction costs and other
factors.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For fiscal 2001, research and development
expenses were $415 million or 15% of revenues, compared to $340
million or 11% of revenues for fiscal 2000. The dollar and
percentage increases in research and development expenses were
primarily due to increased integrated circuit product
initiatives to support high-speed wireless Internet access and
multimode, multi-band, multi-network products including cdmaOne,
CDMA2000 1X/1xEV-DO, GSM/ GPRS, WCDMA and position location
technologies, offset by a decrease in terrestrial-based CDMA
wireless consumer phone products research and development as a
result of exiting this business in February&nbsp;2000. In
addition, the percentage increase is attributed to a more
significant reduction in revenue relative to research and
development expenses as a result of the sale of the
terrestrial-based CDMA wireless consumer phone business in
February&nbsp;2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For fiscal 2001, selling, general and
administrative expenses were $367 million or 14% of revenues,
compared to $343 million or 11% of revenues for fiscal 2000. The
dollar and percentage increases in selling, general and
administrative expenses from fiscal 2000 were primarily due to
expansion of international business activities in China, Japan,
South Korea and Europe, trade show expenses related to the
expansion of the integrated circuit customer base and product
portfolio and the introduction of our BREW application
development platform, offset by a decrease in marketing costs
for terrestrial-based CDMA wireless consumer phone products as a
result of the sale of the business in February&nbsp;2000. In
addition, the percentage increase is attributed to a more
significant reduction in revenue relative to selling, general
and administrative expenses as a result of the sale of the
terrestrial-based CDMA wireless consumer phone business in
February&nbsp;2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Amortization of goodwill and other
acquisition-related intangible assets was $255 million for
fiscal 2001, compared to $146 million in fiscal 2000. For fiscal
2001, no purchased in-process technology was recorded, compared
to $60 million in fiscal 2000. The increase in amortization in
fiscal 2001 and the purchased in-process technology charge in
fiscal 2000 resulted from the acquisition of SnapTrack, Inc.
(SnapTrack) in March&nbsp;2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For fiscal 2001, asset impairment and related
charges were $550 million, compared to $46 million for fiscal
2000. Asset impairment and related charges during fiscal 2001
were comprised primarily of $519 million in charges resulting
from management&#146;s determination that certain assets related
to the Globalstar business were impaired and $32 million in
charges related to reserves recorded against finance receivables
from the Vesper Companies. Asset impairment and related charges
during fiscal 2000 were primarily related to the sale of the
terrestrial-based CDMA wireless consumer phone business in
February 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For fiscal 2001, other operating expenses were
$51 million, compared to $32 million in fiscal 2000. Other
operating expenses for fiscal 2001 were comprised of a $62
million arbitration decision against us, offset by $11 million
in other income related to the irrevocable transfer of a portion
of an FCC Auction Discount Voucher to a third-party. Other
operating expenses during fiscal 2000 were comprised primarily
of employee termination and other costs related to the sale of
the terrestrial-based CDMA wireless consumer phone business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest expense was $10 million for fiscal 2001,
compared to $5&nbsp;million for fiscal 2000. The increase was
primarily related to interest charges resulting from an
arbitration decision against us, offset by lower interest
expense resulting from decreased bank borrowings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net investment expense was $256 million for
fiscal 2001 compared to net investment income of $494 million
for fiscal 2000. The decrease was primarily due to a $200
million reduction in net realized gains on marketable and other
securities, $243 million in unrealized losses on derivative
instruments, $148 million in unrealized losses related to
other-than-temporary losses on marketable securities, $140
million in unrealized other-than-temporary losses on other
investments and a $20 million increase in equity in losses of
investees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There were no distributions on Trust Convertible
Preferred Securities in fiscal 2001 due to the conversion of all
remaining Trust Convertible Preferred Securities into common
stock during fiscal 2000. We recorded $13 million in
distributions for fiscal 2000.
</FONT>

<P align="center"><FONT size="2">40
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other non-operating charges were approximately
$167 million in fiscal 2001 compared to $2 million in fiscal
2000. Other non-operating charges in fiscal 2001 were primarily
comprised of a $120 million write-down of the note receivable
from VeloCom to its fair value and $58 million in write-downs of
recorded values of a note receivable from Globalstar and
warrants to acquire partnership interests in Globalstar to their
estimated fair values.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Income tax expense was $105 million for fiscal
2001 compared to $527 million for fiscal 2000. The annual
effective tax rate was negative 25% for fiscal 2001, compared to
a 44% rate for fiscal 2000. The estimated annual effective tax
rate is negative primarily as a result of foreign taxes paid for
which it is more likely than not we will not receive a tax
benefit. The difference in the tax rate from the prior year is
primarily due to the loss for fiscal 2001 resulting from certain
asset impairment and related charges. We have provided a
valuation allowance on substantially all of our deferred tax
assets because of uncertainty regarding their realizability due
to the expectation that deductions from future employee stock
option exercises will exceed future taxable income. Our net
deferred tax assets increased by $631 million in fiscal 2001,
and the resulting increase in the valuation allowance was
reflected in part as an increase to the tax expense and in part
as a reduction of stockholders&#146; equity. The total expense
related to the increase in the valuation allowance was $185
million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We recorded an $18 million loss, net of taxes, in
fiscal 2001 as the net cumulative effect of changes in
accounting principle at September&nbsp;25, 2000. The cumulative
effect of the adoption of SAB 101 was a $147 million loss, net
of taxes, offset by a $129 million gain, net of taxes, resulting
from the cumulative effect of the adoption of FAS&nbsp;133. The
gain resulting from the adoption of FAS&nbsp;133 related
primarily to the unrealized gain on a warrant to purchase
4,500,000 shares of Leap Wireless common stock issued to us in
connection with our spin-off of Leap Wireless in
September&nbsp;1998.
</FONT>

<P align="left">
<B><FONT size="2">Fiscal 2000 Compared to Fiscal 1999</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total revenues for fiscal 2000 were $3,197
million compared to $3,937 million for fiscal 1999. The decrease
in revenue for fiscal 2000 was primarily due to a decrease in
revenues from the terrestrial CDMA wireless consumer phone
business which was sold in February&nbsp;2000, a decrease in the
wireless infrastructure product revenue related to the sale of
this business in May&nbsp;1999 and a decrease in average selling
prices of integrated circuits, offset by significant increases
in royalty revenues and in CDMA integrated circuits unit volume.
Revenue from one South Korean customer, Samsung Electronics
Company, by the QCT and QTL segments comprised an aggregate of
11% and 9% of total revenues in fiscal 2000 and 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cost of revenues for fiscal 2000 was $1,507
million compared to $2,485 million for fiscal 1999. The decrease
in cost of revenues was primarily due to a decrease in the
terrestrial CDMA wireless consumer phone product costs as a
result of the sale of the business in February&nbsp;2000, a
decrease in the wireless infrastructure product costs related to
the sale of this business in May&nbsp;1999, and a reduction in
the unit cost of integrated circuits, offset by a significant
increase in CDMA integrated circuits unit volume. Cost of
revenues decreased as a percentage of revenues to 47% for fiscal
2000 from 63% for fiscal 1999. This is primarily due to a change
in business strategy resulting in a higher percentage of
revenues from high margin integrated circuits and system
software and royalties and lower revenues from lower gross
margin terrestrial CDMA wireless consumer phones and
infrastructure businesses exited in fiscal 2000 and fiscal 1999,
respectively. Cost of revenues as a percentage of revenues may
fluctuate in future quarters depending on mix of products sold,
competitive pricing, new product introduction costs and other
factors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For fiscal 2000, research and development
expenses were $340 million or 11% of revenues, compared to $381
million or 10% of revenues for fiscal 1999. The decrease in
research and development expenses was due to a decrease in
terrestrial CDMA wireless consumer phone and infrastructure
product research and development as a result of exiting these
businesses, offset by increased integrated circuit product
initiatives and software development efforts and new 1xEV-DO
products.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For fiscal 2000, selling, general and
administrative expenses were $343 million or 11% of revenues,
compared to $425 million or 11% of revenues for fiscal 1999. The
dollar decrease in selling, general and administrative expenses
from fiscal 1999 was due to a decrease in marketing costs in
terrestrial CDMA wireless consumer phone products as a result of
the sale of the business in February&nbsp;2000 and a decrease in
</FONT>

<P align="center"><FONT size="2">41
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<DIV align="left">
<FONT size="2">selling, general and administrative expenses for
terrestrial CDMA wireless infrastructure products as a result of
the sale of this business in May&nbsp;1999, partially offset by
continued growth in personnel and associated overhead expenses
necessary to support other growing business operations, employer
payroll tax on employee non-qualified stock option exercises and
investor relations expenses.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Amortization of goodwill and other
acquisition-related intangible assets increased to $146 million
for fiscal 2000 compared to $1 million for fiscal 1999,
primarily due to the acquisition of SnapTrack in March&nbsp;2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Purchased in-process technology of $60 million
for fiscal 2000 resulted from the acquisition of SnapTrack.
Purchased in-process technology was expensed upon acquisition
because technological feasibility had not been established and
no future alternative uses existed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For fiscal 2000, asset impairment and related
charges were $46 million, compared to $143 million for fiscal
1999. Asset impairment and related charges during fiscal 2000
were comprised primarily of charges to reflect the estimated
difference between the carrying value of the net assets and the
consideration received from Kyocera related to the sale of the
terrestrial CDMA wireless consumer phone business, less costs to
sell. During fiscal 1999, asset impairment and related charges
were comprised primarily of $66 million in charges to reflect
the difference between the carrying value of the net assets to
be sold to Ericsson and the net consideration received and
various license and settlement agreements in connection
therewith and $77 million in charges to reduce the carrying
value of certain other assets related to our terrestrial CDMA
wireless infrastructure business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For fiscal 2000, other operating expenses were
$32 million, compared to $97 million for fiscal 1999. Other
operating expenses during fiscal 2000 were comprised primarily
of employee termination costs related to the sale of the
terrestrial CDMA wireless consumer phone business to Kyocera.
Other operating expenses for fiscal 1999 were comprised
primarily of payroll and compensation benefits provided to
employees transferred to Ericsson related to the sale of our
terrestrial CDMA wireless infrastructure business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest expense was $5 million for fiscal 2000,
compared to $15 million for fiscal 1999. The decrease was due to
decreased bank borrowings by QPE and the subsequent payoff and
cancellation of the QPE bank lines of credit in
February&nbsp;2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net investment income was $494 million for fiscal
2000 compared to $25 million for fiscal 1999. The increase was
primarily due to a $270 million realized gain on the sale of
marketable securities and a $195 million increase in income
related to interest earned on higher cash balances and interest
earned on finance receivables.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Distributions on Trust Convertible Preferred
Securities decreased to $13 million for fiscal 2000 compared to
$39 million for fiscal 1999 as a result of conversions of the
5&nbsp;3/4% Trust Convertible Preferred Securities outstanding
into common stock. During the second quarter of fiscal 2000, all
remaining Trust Convertible Preferred Securities were converted
into common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2000, we recorded $2 million in net
non-operating other charges, including $6 million in charges
relating to amounts advanced to Metrosvyaz, and the release of a
$4 million contingent liability due to a settlement. During
fiscal 1999, we recorded $69 million in non-operating charges,
including $37 million related to the Ericsson transaction and
$15 million related to the write-off of non-operating assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Income tax expense was $527 million for fiscal
2000 compared to $106 million for fiscal 1999. The annual
effective tax rate was 44% for fiscal 2000, compared to 35% for
fiscal 1999. The higher tax rate is primarily a result of
nondeductible charges for purchased in-process technology and
amortization of goodwill and higher pre-tax earnings relative to
tax deductions. We have provided a valuation allowance on our
net deferred tax assets because of uncertainty regarding their
realizability due to the expectation that deductions from future
employee stock option exercises and related deductions will
exceed future taxable income.
</FONT>

<P align="center"><FONT size="2">42
</FONT>

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<P align="left">
<B><FONT size="2">Our Segment Results for Fiscal 2001 Compared
to Fiscal 2000</FONT></B>

<P align="left">
<B><FONT size="2">CDMA Technologies Segment (QCT)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QCT segment revenues for fiscal 2001 were $1,365
million compared to $1,239 million fiscal 2000. Earnings before
taxes for fiscal 2001 were $306 million compared to $392 million
for fiscal 2000. Revenues increased due to higher unit shipments
and average selling prices of MSM integrated circuits and higher
shipments of CSM infrastructure integrated circuit voice
channels to wireless communications manufacturers. The decrease
in earnings before taxes was primarily due to increased research
and development, as well as increased general, administrative,
selling and marketing expenses. The increased research and
development is primarily associated with new integrated circuit
product and technology initiatives to support high-speed
wireless Internet access and multi-band, multimode,
multi-network, products including cdmaOne, CDMA2000 1X/1xEV-DO,
GSM/ GPRS, WCDMA and position location technologies, as well as
increased advertising expenses for these products. Approximately
58 million MSM integrated circuits were sold during fiscal 2001,
compared to approximately 52 million for fiscal 2000.
Approximately nine million CSM infrastructure integrated
circuits equivalent voice channels were sold during fiscal 2001,
compared to approximately two million for fiscal 2000.
</FONT>

<P align="left">
<B><FONT size="2">Technology Licensing Segment (QTL)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QTL segment revenues for fiscal 2001 were $782
million compared to $705 million for fiscal 2000. Earnings
before taxes for fiscal 2001 were $717 million compared to $633
million for fiscal 2000. The increase in revenues and earnings
before taxes was primarily due to an increase in royalties
resulting from an increase in worldwide demand for products
based on CDMA technologies, offset by the impact of adopting SAB
101. Earnings before taxes included $11 million in other income
related to the irrevocable transfer of a portion of an FCC
Auction Discount Voucher to a third-party.
</FONT>

<P align="left">
<B><FONT size="2">Wireless Systems Segment (QWS)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QWS segment revenues for fiscal 2001 were $408
million compared to $721 million for fiscal 2000. Earnings
before taxes for fiscal 2001 of $66 million compared to earnings
before taxes of $272 million for fiscal 2000. Revenues and
earnings decreased primarily due to significantly lower
shipments of Globalstar portable and fixed phones to service
providers and the decision to not recognize revenue on business
with Globalstar before cash is received, offset by an increase
in OmniTRACS messaging services revenue. We shipped
approximately 43,000 OmniTRACS and other related communications
systems during fiscal 2001, compared to approximately 56,000 in
fiscal 2000. The decrease in unit shipments is due to United
States economic conditions affecting the domestic long-haul
trucking industry. We shipped less than 100 Globalstar portable
and fixed phones in fiscal 2001 compared to 96,000 in fiscal
2000. The decrease in unit shipments is primarily due to the
pending restructuring of Globalstar and other uncertainties
related to the Globalstar business. Given the current reduced
level of business related to Globalstar, we have transferred a
number of our QWS staff into other parts of our business to meet
staffing needs.
</FONT>

<P align="left">
<B><FONT size="2">Liquidity and Capital Resources</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We anticipate that our cash and cash equivalents
and marketable securities balances of $2,581 million at
September&nbsp;30, 2001, including interest to be earned
thereon, will be used to fund our working and other capital
requirements, including investments in other companies and other
assets to support the growth of our business, financing for
customers of CDMA infrastructure products in accordance with the
agreement with Ericsson, financing under agreements with CDMA
telecommunications carriers, and other commitments. In the event
additional needs for cash arise, we may raise additional funds
from a combination of sources including potential debt and
equity issuance. On July&nbsp;24, 2001, we announced that we no
longer plan to spin-off our integrated circuits and system
software business. Although we are withdrawing the plan to
spin-off this business, we would reconsider if conflicts arise
that adversely affect our ability to operate each business in
the best interests of our stockholders.
</FONT>

<P align="center"><FONT size="2">43
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, $691 million in cash was provided
by operating activities, compared to $791 million in cash
provided by operating activities in fiscal 2000. Cash provided
by operating activities in fiscal 2001 and fiscal 2000 includes
$1,051 million and $1,283 million, respectively, of net cash
flow provided by operations. In fiscal 2001, cash flow provided
by operations were offset by increases in finance receivables
and inventories and a reduction in trade accounts payable,
payroll, benefits and other liabilities, offset by a decrease in
accounts receivable and other assets and an increase in unearned
revenue. In fiscal 2000, cash flow provided by operations were
offset by an increase in finance receivables and decreases in
accounts payable and payroll, benefits and other liabilities,
offset by a decrease in accounts receivables. These changes for
fiscal year 2001 and 2000 totaled $360 million and $492 million,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, $149 million in cash was used in
investing activities, primarily including $247 million for other
investments and acquisitions, $226 million for the issuance of
notes receivable, $84 million for the purchase of wireless
licenses, $114 million in capital expenditures and $205 million
in net purchases of available-for-sale securities, offset by
$672 million in net maturities of held-to-maturity securities,
$16 million on collection of notes receivables and $27 million
in proceeds from the sale of investments. We intend to continue
our strategic investment activities to promote the worldwide
adoption of CDMA products and the growth of CDMA-based wireless
data and wireless Internet products and solutions. As part of
these investment activities, we may provide financing to
facilitate the marketing and sale of CDMA equipment by
authorized suppliers. In addition to our commitments to the
Vesper Companies and Inquam, equity funding commitments related
to other strategic investments total $48 million at
September&nbsp;30, 2001, which we intend to fund through fiscal
2009.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, our financing activities provided
$134 million, comprised primarily of the issuance of common
stock under our stock option and employee stock purchase plans.
In fiscal 2000, our financing activities provided $28 million,
including $144 million from the issuance of common stock under
our stock option and employee stock purchase plans, offset by
$112 million in net repayments under bank lines of credit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2001, our remaining
commitments to extend long-term financing to certain CDMA
customers of Ericsson totaled approximately $531 million,
including $96 million for Pegaso. The commitment to fund $400
million of this amount expires on November&nbsp;6, 2003. The
funding of the remaining $131 million, if it occurs, is not
subject to a fixed expiration date. The financing commitments
are subject to the CDMA customers meeting conditions prescribed
in the financing arrangements and, in certain cases, to Ericsson
also financing a portion of such sales and services. Such
financing is generally collateralized by the related equipment.
Commitments represent the maximum amounts to be financed under
these arrangements; actual financing may be in lesser amounts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the terms of the senior credit facility
between us and Leap Wireless, we are committed to fund up to
$125 million until the earlier of settlement of the FCC&#146;s
current auction of PCS spectrum or Leap Wireless&#146;
withdrawal from the auction. At September&nbsp;30, 2001, no cash
has been advanced to Leap Wireless, but $1 million in loan fees
and accrued interest are outstanding under the facility.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the financing commitments to Leap
Wireless and Ericsson, we had $4 million of letters of credit
and $12 million of other financial guarantees and commitments
outstanding as of September&nbsp;30, 2001, none of which are
collateralized.
</FONT>

<P align="left">
<B><FONT size="2">Future Accounting Requirements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July&nbsp;2001, the Financial Accounting
Standards Board (FASB)&nbsp;issued FASB Statements Nos.&nbsp;141
and 142 (FAS&nbsp;141 and FAS&nbsp;142), &#147;Business
Combinations&#148; and &#147;Goodwill and Other Intangible
Assets.&#148; FAS&nbsp;141 replaces APB&nbsp;16 and eliminates
pooling-of-interests accounting prospectively. It also provides
guidance on purchase accounting related to the recognition of
intangible assets and accounting for negative goodwill.
FAS&nbsp;142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Under
FAS&nbsp;142, goodwill will be tested annually and whenever
events or circumstances occur indicating that goodwill might be
impaired. FAS 141 and FAS&nbsp;142 are effective for all
business combinations completed after June&nbsp;30, 2001. Upon
adoption of FAS&nbsp;142, amortization of goodwill recorded for
business combinations consummated prior to July&nbsp;1, 2001
will cease, and intangible assets acquired prior to July&nbsp;1,
</FONT>

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<DIV align="left">
<FONT size="2">2001 that do not meet the criteria for
recognition under FAS&nbsp;141 will be reclassified to goodwill.
Companies are required to adopt FAS&nbsp;142 for fiscal years
beginning after December&nbsp;15, 2001, but early adoption is
permitted. We will adopt FAS&nbsp;142 on September&nbsp;30,
2002, the beginning of fiscal 2003. In connection with the
adoption of FAS&nbsp;142, we will be required to perform a
transitional goodwill impairment assessment. We have not yet
determined the impact these standards will have on our operating
results and financial position.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August&nbsp;2001, the FASB issued
FAS&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets.&#148; FAS&nbsp;144 replaces FAS&nbsp;121,
&#147;Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of.&#148; The FASB issued
FAS&nbsp;144 to establish a single accounting model, based on
the framework established in FAS&nbsp;121, as FAS&nbsp;121 did
not address the accounting for a segment of a business accounted
for as a discontinued operation under APB&nbsp;30,
&#147;Reporting The Results of Operations&nbsp;&#151; Reporting
The Effects of Disposal of a Segment of a Business, and
Extraordinary Unusual and Infrequently Occuring Events and
Transactions.&#148; FAS&nbsp;144 also resolves significant
implementation issues related to FAS&nbsp;121. Companies are
required to adopt FAS&nbsp;144 for fiscal years beginning after
December&nbsp;15, 2001, but early adoption is permitted. We will
adopt FAS&nbsp;144 as of the beginning of fiscal 2003. We have
not yet determined the impact this standard will have on our
operating results and financial position.
</FONT>

<P align="left">
<B><FONT size="2">ITEM&nbsp;7a.&nbsp;&nbsp;&nbsp;QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest Rate Market Risk.
</FONT></I><FONT size="2">We have fixed income securities
consisting of cash equivalents and investments in marketable
debt securities. Investments in marketable debt securities are
classified as available-for-sale and held-to-maturity. Interest
income earned on our short-term investment portfolio is affected
by changes in the general level of United States interest rates,
while interest income earned on long-term fixed income
investments is not affected in the near term. (See Note 2 to the
Consolidated Financial Statements for information about
investments in marketable debt securities.)
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Finance receivables bear interest at both fixed
and variable rates (see Note&nbsp;3 to the Consolidated
Financial Statements for information about finance receivables).
Interest earned on certain finance receivables is at variable
interest rates and is affected by changes in the general level
of United States interest rates and/or LIBOR. Fair values will
vary as interest rates change.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have other notes receivable from third parties
included in other assets. These facilities bear interest at
variable rates. Interest earned on credit facilities included in
other assets is affected by changes in LIBOR, and fair value
will vary as interest rates change.
</FONT>

<P align="center"><FONT size="2">45
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table provides information about
our financial instruments that are sensitive to changes in
interest rates. All financial instruments are held for purposes
other than trading. For our fixed income investment portfolio,
finance receivables and credit facilities in other assets, the
table presents principal cash flows and related weighted-average
yield at cost and contractual interest rates for fixed income
securities and finance receivables or other credit facilities,
respectively, by expected maturity dates. Additionally, we have
assumed that our fixed income securities are similar enough to
aggregate those securities for presentation purposes.
</FONT>

<P align="center">
<B><FONT size="2">Interest Rate Sensitivity</FONT></B>

<DIV align="center">
<B><FONT size="2">Principal Amount by Expected
Maturity</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Average Interest Rate</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

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

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">No Single</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Maturity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Fixed income securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">281</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">379</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">220</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">15</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">19</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">121</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,035</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,044</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Interest rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">6.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">4.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">5.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">5.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">4.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">4.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Finance receivables:
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Fixed rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">28</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">419</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">448</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">425</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Interest rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">17.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">12.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">18.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Variable rate (LIBOR)
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">25</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">58</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">96</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">62</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">698</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">941</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">319</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Margin over LIBOR
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">4.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">4.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">5.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">5.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">6.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">3.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Credit facilities in other assets:
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Fixed rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">34</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">196</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">232</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">101</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Interest rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">11.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">4.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">10.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Variable rate (LIBOR)
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">39</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">26</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">67</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">42</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Margin over LIBOR
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">12.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">0.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Equity Price Risk.
</FONT></I><FONT size="2">We hold available-for-sale securities
and derivative instruments subject to equity price risk.
Available-for-sale equity securities and derivative instruments
recorded at fair value under FAS 115 and FAS 133, respectively,
subject us to equity price risk. The fair values of
available-for-sale securities total $199 million and $426
million, respectively, at September&nbsp;30, 2001 and at
September&nbsp;24, 2000. The fair values of these securities are
based on the market prices of the securities. To the extent we
own a large number of securities relative to the trading volumes
of these securities, the market prices may be higher than the
prices we would realize if our shares were sold. The
available-for-sale securities are held for purposes other than
trading. As of September&nbsp;30, 2001, two securities
constituted approximately 20% of the fair value of the
available-for-sale securities portfolio.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We received a warrant in connection with the Leap
Wireless spin-off to purchase Leap Wireless common stock at
$6.11 per share. At September&nbsp;30, 2001, we are entitled to
purchase 3,375,000 shares of Leap Wireless common stock (see
Notes 1 and 15 to the Consolidated Financial Statements for a
description of our accounting policy for this instrument and
further information). The recorded and fair values of the
warrant are $49 million and $250 million, respectively, at
September&nbsp;30, 2001 and at September&nbsp;24, 2000. The
estimated fair value of the warrant is directly correlated to
movements in the price of the Leap Wireless stock. The warrant
is held for purposes other than trading. During fiscal 2001, we
recorded $243 million in losses on derivative instruments,
offset by a $129 million accounting change, net of income taxes,
primarily related to this warrant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We strategically invest in companies in the
high-technology industry, and typically do not attempt to reduce
or eliminate our market exposure on these securities. During
fiscal 2001, many high-technology stocks experienced a
significant decrease in value, negatively affecting the fair
value of our available-for-sale equity securities and derivative
instruments. Investment concentrations in specific companies and
industry segments may vary over time, and changes in
concentrations may affect the overall price volatility.
</FONT>

<P align="center"><FONT size="2">46
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our strategic investments in other entities
consist substantially of investments accounted for under the
equity and cost methods that are predominantly closely held and
not publicly traded. These investments are held for purposes
other than trading. Accordingly, we believe that our exposure to
market risk from these investments is not material.
Additionally, we do not anticipate any near-term changes in the
nature of our market risk exposures or in management&#146;s
objectives and strategies with respect to managing such
exposures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Foreign Exchange Market Risk.
</FONT></I><FONT size="2">See Note 1 to the Consolidated
Financial Statements for a description of our foreign currency
accounting policies and information about our currency exposure
management practices. We manage our exposure to foreign exchange
market risks, when deemed appropriate, through the use of
derivative financial instruments, consisting primarily of
forward contracts. Derivative financial instruments are viewed
as risk management tools and are not used for speculative or
trading purposes. At September&nbsp;30, 2001 we had one foreign
currency forward contract outstanding; no such contracts were
outstanding at September&nbsp;24, 2000. The amount of the
unrealized loss as of September&nbsp;30, 2001 is not material.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Financial instruments held by consolidated
subsidiaries and equity method investees which are not
denominated in the functional currency of those entities are
subject to the effects of currency fluctuations, which may
affect reported earnings. As a global concern, we face exposure
to adverse movements in foreign currency exchange rates. At the
present time, we may hedge currency exposures associated with
certain assets and liabilities denominated in nonfunctional
currencies and certain anticipated nonfunctional currency
transactions. As a result, we could suffer unanticipated gains
or losses on anticipated foreign currency cash flows, as well as
economic loss with respect to the recoverability of investments.
While we may hedge certain transactions with non-United States
customers, declines in currency values in certain regions may,
if not reversed, adversely affect future product sales because
our products may become more expensive to purchase in the
countries of the affected currencies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Finance receivables and notes receivable from
international carriers that do not use the United States dollar
as their functional currencies subject us to credit risk.
Because our financing is dollar denominated, any significant
change in the value of the dollar against the debtors&#146;
functional currencies could result in an increase in the
debtor&#146;s cash flow requirements and could thereby affect
our ability to collect our receivables. At September&nbsp;30,
2001, finance receivables from international customers totaled
$735 million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our analysis methods used to assess and mitigate
risk discussed above should not be considered projections of
future risks.
</FONT>

<!-- link2 "ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" -->
<DIV align="left"><A NAME="019"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;8.&nbsp;FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our consolidated financial statements at
September&nbsp;30, 2001 and 2000 and the Report of
PricewaterhouseCoopers LLP, Independent Accountants, are
included in this Annual Report on Form&nbsp;10-K on pages F-1
through F-33.
</FONT>

<!-- link2 "ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE" -->
<DIV align="left"><A NAME="020"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;9.&nbsp;CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None.
</FONT>

<P align="center"><FONT size="2">47
</FONT>

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

<!-- link1 "PART III" -->
<DIV align="left"><A NAME="021"></A></DIV>

<P align="left">
<B><FONT size="2">PART III</FONT></B>

<!-- link2 "ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT" -->
<DIV align="left"><A NAME="022"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;10.&nbsp;&nbsp;&nbsp;DIRECTORS AND
EXECUTIVE OFFICERS OF THE REGISTRANT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required by this item regarding
directors is incorporated by reference to our Incorporated
Definitive Proxy Statement to be filed with the Securities and
Exchange Commission in connection with the Annual Meeting of
Stockholders to be held in 2002 (the &#147;Proxy
Statement&#148;) under the heading &#147;Election of
Directors.&#148; Information regarding executive officers is set
forth in Item&nbsp;1 of Part&nbsp;I of this Report under the
caption &#147;Executive Officers.&#148;
</FONT>

<!-- link2 "ITEM 11. EXECUTIVE COMPENSATION" -->
<DIV align="left"><A NAME="023"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;11.&nbsp;&nbsp;&nbsp;EXECUTIVE
COMPENSATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required by this item is
incorporated by reference to the Proxy Statement under the
heading &#147;Executive Compensation.&#148;
</FONT>

<!-- link2 "ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" -->
<DIV align="left"><A NAME="024"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;12.&nbsp;&nbsp;&nbsp;SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required by this item is
incorporated by reference to the Proxy Statement under the
heading &#147;Security Ownership of Certain Beneficial Owners
and Management.&#148;
</FONT>

<!-- link2 "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->
<DIV align="left"><A NAME="025"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;13.&nbsp;&nbsp;&nbsp;CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required by this item is
incorporated by reference to the Proxy Statement under the
heading &#147;Certain Transactions.&#148;
</FONT>

<!-- link1 "PART IV" -->
<DIV align="left"><A NAME="026"></A></DIV>

<P align="left">
<B><FONT size="2">PART IV</FONT></B>

<!-- link2 "ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K" -->
<DIV align="left"><A NAME="027"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;14.&nbsp;&nbsp;&nbsp;EXHIBITS,
FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM&nbsp;8-K</FONT></B>

<P align="left">
<FONT size="2">The following documents are filed as part of this
report:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="76%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="5" align="left" valign="top">
	<FONT size="2">(a)&nbsp;&nbsp;Financial Statements:
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">(1)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Report of Independent Accountants
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Consolidated Balance Sheets at September&nbsp;30,
	2001 and 2000
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Consolidated Statements of Operations for Fiscal
	2001, 2000, and 1999
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Consolidated Statements of Cash Flows for Fiscal
	2001, 2000 and 1999
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Consolidated Statements of Stockholders&#146;
	Equity for Fiscal 2001, 2000 and 1999
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Notes to Consolidated Financial Statements
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">(2)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;II-Valuation and Qualifying Accounts
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">S-1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Financial statement schedules other than those
listed above have been omitted because they are either not
required, not applicable or the information is otherwise
included.
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2.2
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Asset Purchase Agreement dated as of
	March&nbsp;24, 1999 between the Company and Telefonaktiebolaget
	LM Ericsson.(20)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2.3
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Asset Purchase Agreement dated as of
	December&nbsp;22, 1999 among the Company, Kyocera Wireless Corp.
	and Kyocera International, Inc.(25)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2.4
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Agreement and Plan of Merger and Reorganization
	dated as of January&nbsp;25, 2000 among the Company, Falcon
	Acquisition Corporation and SnapTrack, Inc.(27)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3.1
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Restated Certificate of Incorporation.(1)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">48
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3.2
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Certificate of Amendment of Restated Certificate
	of Incorporation.(7)(26)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3.3
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Certificate of Designation of Preferences.(12)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3.4
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Bylaws.(2)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3.5
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Amendment of the Bylaws.(14)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.1
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Indemnity Agreement between the Company,
	each director and certain officers.(2)(11)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.2
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">1991 Stock Option Plan, as amended.(11)(18)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.4
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Supplemental Stock Option Grant under the
	1991 Stock Option Plan.(2)(11)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.5
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">1991 Employee Stock Purchase Plan.(11)(18)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.6
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Employee Stock Purchase Plan Offering
	under the 1991 Employee Stock Purchase Plan.(2)(11)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.10
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Agreement dated April&nbsp;17, 1989 between the
	Company and PACTEL Corporation.(2)(3)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.11
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">CDMA Technology Agreement and related Patent
	License Agreement, each dated July&nbsp;3, 1990 between the
	Company and American Telephone &#38; Telegraph Company.(2)(3)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.12
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">DS-CDMA Technology Agreement and related Patent
	License Agreement, each dated September&nbsp;26, 1990 between
	the Company and MOTOROLA, Inc.(2)(3)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.13
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">JSM Shareholders Agreement dated May&nbsp;24,
	1991 between the Company, C. Itoh, Ltd. and Nippon Steel
	Corporation.(2)(3)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.14
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">401(k) Plan.(2)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.15
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Amendments dated January&nbsp;15, 1992 and
	February&nbsp;7, 1992 to that certain Technology Agreement dated
	July&nbsp;3, 1990 with American Telephone&nbsp;&#38; Telegraph
	Company.(4)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.16
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Amendment dated January&nbsp;21, 1992 to that
	certain Technology Agreement dated September&nbsp;26, 1990 with
	MOTOROLA, Inc.(4)(5)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.17
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Non-Employee Directors&#146; Stock Option Plan
	(the &#147;Directors&#146; Plan&#148;).(11)(12)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.18
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Stock Option Grant under the
	Directors&#146; Plan, with related schedule.(6)(11)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.20
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Contract dated March&nbsp;18, 1994 between the
	Company and Globalstar, L.P.(7)(8)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.21
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Executive Retirement Matching Contribution Plan,
	as amended.(11)(25)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.22
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">1996 Non-qualified Employee Stock Purchase
	Plan.(10)(11)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.23
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Stockholder Rights Plan.(9)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.25
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Credit Agreement dated as of March&nbsp;11, 1998,
	among QUALCOMM Incorporated, as Borrower, the Lender Parties,
	Bank of America&nbsp;N.T.&nbsp;&#38;&nbsp;S.A., as
	Administrative Agent, Syndication Agent and Initial Issuing
	Bank, and Citibank,&nbsp;N.A., as Documentation Agent and
	Syndication Agent.(15)(16)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.26
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Warrant dated as of September&nbsp;23, 1998
	issued to the Company by Leap Wireless International, Inc.(17)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.27
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Credit Agreement dated as of September&nbsp;23,
	1998 between the Company and Leap Wireless International,
	Inc.(17)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.28
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Master Agreement Regarding Equipment Procurement
	dated as of September&nbsp;23, 1998 between the Company and Leap
	Wireless International, Inc.(17)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.29
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">1998 Non-Employee Director&#146;s Stock Option
	Plan.(11)(18)
	</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.31
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Credit Agreement dated as of March&nbsp;24, 1999,
	among QUALCOMM Incorporated, as Borrower, the Lender Parties,
	Bank of America National Trust&nbsp;&#38; Savings Association as
	Administrative Agent and Syndication Agent, and Citibank&nbsp;
	N.A., as Documentation Agent and Syndication Agent.(20)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">49
</FONT>

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

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.32
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Multi-Product License Agreement between QUALCOMM
	Incorporated and Telefonaktiebolaget&nbsp;LM Ericsson dated
	March&nbsp;24, 1999.(20)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.33
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Subscriber Unit License Agreement between
	QUALCOMM Incorporated and Telefonaktiebolaget&nbsp;LM Ericsson
	dated March&nbsp;24, 1999.(20)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.34
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Settlement Agreement and Mutual Release between
	QUALCOMM Incorporated and Telefonaktiebolaget&nbsp;LM Ericsson
	dated March&nbsp;24, 1999.(20)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.35
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">First Amendment to Revolving Credit Agreement
	between QUALCOMM Incorporated, Bank of America National
	Trust&nbsp;&#38; Savings Association, et&nbsp;al, and
	Citibank&nbsp;N.A. dated March&nbsp; 24, 1999.(20)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.36
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Amendment No.&nbsp;1 dated as of May&nbsp;24,
	1999 to the Asset purchase Agreement dated as of March&nbsp;24,
	1999 between QUALCOMM Incorporated and
	Telefonaktiebolaget&nbsp;LM Ericsson&nbsp; (publ).(21)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.37
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Amendment to Stockholder Rights Plan dated
	November&nbsp;15, 1999.(22)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.38
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Credit Agreement dated as of May&nbsp;5, 2000
	between Globalstar, L.P. and the Company. (23)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.39
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">2001 Stock Option Plan.(28)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.40
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Stock Option Grant Notice and Agreement under the
	2001 Stock Option Plan.(28)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.41
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">2001 Employee Stock Purchase Plan.(28)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.42
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">2001 Non-Employee Directors&#146; Stock Option
	Plan.(28)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.43
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Stock Option Grant Notice and Agreement under the
	2001 Non-Employee Directors&#146; Stock Option Plan.(28)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.44
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Bridge Loan Agreement dated as of May&nbsp;27,
	1999 with Amendments hereto, among QUALCOMM Incorporated, as
	lender, and PEGASO COMUNICACIONES&nbsp;Y SISTEMAS,
	S.A.&nbsp;DE&nbsp;C.V., as Borrower, and CITIBANK,&nbsp;N.A., as
	administrative agent for Lender, and SOCIETE GENERALE, as
	Syndication Agent, and ABN AMRO BANK&nbsp;N.V., as Documentation
	Agent.(30)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.45
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Common Agreement dated December&nbsp;15, 1998,
	among PEGASO COMUNICACIONES&nbsp;Y SISTEMAS,
	S.A.&nbsp;DE&nbsp;C.V., PEGASO PCS, S.A.&nbsp;DE&nbsp;C.V.,
	PEGASO TELECOMUNICACIONES, S.A.&nbsp;DE&nbsp;C.V., PEGASO
	RECURSOS HUMANOS. S.A.&nbsp;DE&nbsp;C.V. and CITIBANK, NA., as
	Intercreditor Agent, and CITIBANK MEXICO,&nbsp;S.A., GRUPO
	FINANCIERO CITIBANK, as Collateral Agent and CITIBANK
	INTERNATIONAL PLC, as Alcatel Administrative Agent,&nbsp;N.A.,
	and ABN AMRO BANK&nbsp;N.V., as QUALCOMM Administrative
	Agent.(30)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.46
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Credit Agreement dated as of September&nbsp;25,
	1998 with Amendments hereto, among QUALCOMM Incorporated, as
	lender, PEGASO COMUNICACIONES&nbsp;Y SISTEMAS,
	S.A.&nbsp;DE&nbsp;C.V., as borrower.(30)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">21
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Subsidiaries of the Registrant.(29)
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">23.1
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Consent of PricewaterhouseCoopers LLP.
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">24.1
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Power of Attorney. Reference is made to
	page&nbsp;48.
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Registration Statement on Form S-3 (No.&nbsp; 33-62724).
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Registration Statement on Form&nbsp;S-1 (No.&nbsp;33-42782).
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Certain confidential portions deleted pursuant to
	Order Granting Application or Confidential Treatment pursuant to
	Rule&nbsp;24b-2 under the Securities Exchange Act of 1934 dated
	December&nbsp;12, 1991.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(4)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to Registrant&#146;s Annual
	Report on Form&nbsp;10-K for the fiscal year ended
	September&nbsp;27, 1992.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">50
</FONT>

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

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
	<TD><FONT size="2">(5)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Certain confidential portions deleted pursuant to
	Order Granting Application for Confidential Treatment pursuant
	to Rule&nbsp;24b-2 under the Securities Exchange Act of 1934
	dated March&nbsp;19, 1993.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(6)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Annual Report on Form&nbsp;10-K for the fiscal year ended
	September&nbsp;26, 1993.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(7)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Quarterly Report on Form&nbsp;10-Q for the quarter ended
	March&nbsp;27, 1994, as amended.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(8)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Certain confidential portions deleted pursuant to
	Order Granting Application for Confidential Treatment pursuant
	to Rule&nbsp;24b-2 under the Securities Exchange Act of 1934
	dated July&nbsp;7, 1994.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(9)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Current Report on Form&nbsp;8-K filed on September&nbsp;26, 1995.
	</FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="5%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(10)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Registration Statement on Form&nbsp;S-8 (File No.&nbsp;333-2750)
	filed on March&nbsp;25, 1996.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(11)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Indicates management or compensatory plan or
	arrangement required to be identified pursuant to
	Item&nbsp;14(c).
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(12)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Annual Report on Form&nbsp;10-K for the fiscal year ended
	September&nbsp;29, 1996.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(13)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Registration Statement on Form&nbsp;S-3 (No.&nbsp;333-26069).
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(14)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Annual Report on Form&nbsp;10-K for the fiscal year ended
	September&nbsp;28, 1997.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(15)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Quarterly Report on Form&nbsp;10-Q for the quarter ended
	March&nbsp;29, 1998.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(16)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Certain confidential portions deleted pursuant to
	Order Granting Application for Confidential Treatment pursuant
	to Rule&nbsp;24b-2 under the Securities Exchange Act of 1934
	dated July&nbsp;14, 1998.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(17)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registration Statement
	on Form&nbsp;10, as amended, initially filed on July&nbsp;1,
	1998 by Leap Wireless International, Inc. (File
	No.&nbsp;0-29752).
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(18)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Registration Statement on Form&nbsp;S-8 (File
	No.&nbsp;333-69457) filed on December&nbsp;22, 1998.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(19)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Quarterly Report on Form&nbsp;10-Q for the quarter ended
	December&nbsp;27, 1998.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(20)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Quarterly Report on Form&nbsp;10-Q for the quarter ended
	March&nbsp;28, 1999.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(21)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Current Report on Form&nbsp;8-K filed on May&nbsp;24, 1999.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(22)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Annual Report on Form&nbsp;10-K for the fiscal year ended
	September&nbsp;26, 1999.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(23)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Quarterly Report on
	Form&nbsp;10-Q filed by Globalstar Telecommunications Limited
	for the quarter ended March&nbsp;31, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(24)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Quarterly Report on Form&nbsp;10-Q for the quarter ended
	March&nbsp;26, 1999.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(25)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Quarterly Report on Form&nbsp;10-Q for the quarter ended
	December&nbsp;26, 1999.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(26)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Current Report on Form&nbsp;8-K filed on December&nbsp;23, 1999.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(27)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Current Report on Form&nbsp;8-K filed on March&nbsp;11, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(28)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Quarterly Report on Form&nbsp;10-Q for the quarter ended
	April&nbsp;1, 2001. The compensatory plan contract or
	arrangement of which the Company&#146;s directors and named
	executive officers may participate.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(29)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Annual Report on Form&nbsp;10-K for the fiscal year ended
	September&nbsp;30, 2000.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">51
</FONT>

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

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="5%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(30)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Filed as an exhibit to the Registrant&#146;s
	Annual Report on Form&nbsp;10-K for the fiscal year ended
	September&nbsp;30, 2001.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">52
</FONT>

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

<P align="left">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of Section&nbsp;13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="38%"></TD>
	<TD width="62%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<FONT size="2">QUALCOMM Incorporated
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<FONT size="2">/s/ IRWIN MARK JACOBS
	</FONT></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="center">
	<FONT size="2">Irwin Mark Jacobs
	</FONT></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="center">
	<FONT size="2">Chief Executive Officer and Chairman
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Dated: November&nbsp;9, 2001
</FONT>

<P align="center"><FONT size="2">53
</FONT>

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

<P align="left">
<B><FONT size="2">POWER OF ATTORNEY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Know all persons by these presents, that each
person whose signature appears below constitutes and appoints
Irwin Mark Jacobs and Anthony S. Thornley, and each of them, as
his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his
name, place, and stead, in any and all capacities, to sign any
and all amendments to this Report, and to file the same, with
all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming that all
said attorneys-in-fact and agents, or any of them or their or
his substitute or substituted, may lawfully do or cause to be
done by virtue thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Exchange Act of 1934, the following persons on behalf of
Registrant in the capacities and on the dates indicated have
signed this Report below.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="center" valign="top">
	<FONT size="2">/s/ IRWIN MARK JACOBS<BR>
	<HR size="1" noshade>Irwin Mark Jacobs
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Chief Executive Officer and Chairman<BR>
	(Principal Executive Officer)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ ANTHONY S. THORNLEY<BR>
	<HR size="1" noshade>Anthony S. Thornley
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Chief Operating Officer<BR>
	and Chief Financial Officer<BR>
	(Principal Financial and Accounting Officer)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="center" valign="top">
	<FONT size="2">/s/ RICHARD C. ATKINSON<BR>
	<HR size="1" noshade>Richard C. Atkinson
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ ADELIA A. COFFMAN<BR>
	<HR size="1" noshade>Adelia A. Coffman
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="center" valign="top">
	<FONT size="2">/s/ DIANA LADY DOUGAN<BR>
	<HR size="1" noshade>Diana Lady Dougan
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ NEIL KADISHA<BR>
	<HR size="1" noshade>Neil Kadisha
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="center" valign="top">
	<FONT size="2">/s/ ROBERT E. KAHN<BR>
	<HR size="1" noshade>Robert E. Kahn
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ JEROME S. KATZIN<BR>
	<HR size="1" noshade>Jerome S. Katzin
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="center" valign="top">
	<FONT size="2">/s/ DUANE A. NELLES<BR>
	<HR size="1" noshade>Duane A. Nelles
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ PETER M. SACERDOTE<BR>
	<HR size="1" noshade>Peter M. Sacerdote
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="center" valign="top">
	<FONT size="2">/s/ FRANK SAVAGE<BR>
	<HR size="1" noshade>Frank Savage
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ BRENT SCOWCROFT<BR>
	<HR size="1" noshade>Brent Scowcroft
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="center" valign="top">
	<FONT size="2">/s/ MARC I. STERN<BR>
	<HR size="1" noshade>Marc I. Stern
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ RICHARD SULPIZIO<BR>
	<HR size="1" noshade>Richard Sulpizio
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top">
	<FONT size="2">November&nbsp;9, 2001
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">54
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT ACCOUNTANTS</FONT></B>

<P align="left">
<FONT size="2">To the Board of Directors and Stockholders of
QUALCOMM Incorporated
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, the consolidated financial
statements listed in the index appearing under
Item&nbsp;14(a)(1) on page&nbsp;48 present fairly, in all
material respects, the financial position of QUALCOMM
Incorporated and its subsidiaries (the &#147;Company&#148;) at
September&nbsp;30, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in
the period ended September&nbsp;30, 2001 in conformity with
accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement
schedule listed in the index appearing under Item&nbsp;14(a)(2)
on page&nbsp;48 presents fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements. These financial
statements and financial statement schedule are the
responsibility of the Company&#146;s management; our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note&nbsp;1 to the consolidated
financial statements, the Company changed its method of
recognizing revenue and adopted Statement of Financial
Accounting Standard No.&nbsp;133, &#147;Accounting for
Derivative Instruments and Hedging Activities,&#148; during the
year ended September&nbsp;30, 2001.
</FONT>

<P align="left">
<FONT size="2">PRICEWATERHOUSECOOPERS LLP
</FONT>

<P align="left">
<FONT size="2">San Diego, California
</FONT>

<DIV align="left">
<FONT size="2">November&nbsp;5, 2001
</FONT>
</DIV>

<P align="center"><FONT size="2">F-1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>

<DIV align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEETS</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(In thousands, except share data)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">ASSETS</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current assets:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,388,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">716,871</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketable securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">894,577</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,055,522</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts receivable, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">517,557</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">606,979</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Finance receivables, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,345</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">128,515</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventories, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95,863</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">85,366</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other current assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">147,814</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">136,727</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total current assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,054,758</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,729,980</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketable securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">297,333</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">748,521</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Finance receivables, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">733,491</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">799,404</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">263,520</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">384,859</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property, plant and equipment, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">431,396</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">431,705</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Goodwill, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">585,046</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">821,834</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">381,589</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">146,679</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,747,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,062,982</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="11" align="center" valign="top">
	<B><FONT size="2">LIABILITIES AND STOCKHOLDERS&#146;
	EQUITY</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current liabilities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Trade accounts payable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,433</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112,856</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Payroll and other benefits related liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">117,795</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">128,836</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unearned revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">184,461</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68,419</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other current liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112,300</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162,182</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total current liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">520,989</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">472,293</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unearned revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">295,005</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">497</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,437</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,221</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">851,431</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">500,011</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commitments and contingencies (Notes 3, 4 and 11)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Minority interest in consolidated subsidiaries
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,887</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,643</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stockholders&#146; equity:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Preferred stock, $0.0001 par value; issuable in
	series; 8,000 shares authorized; none outstanding at
	September&nbsp;30, 2001 and 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stock, $0.0001 par value; 3,000,000 shares
	authorized; 763,289 and 747,651 shares outstanding at
	September&nbsp;30, 2001 and 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Paid-in capital
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,791,559</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,653,818</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Retained earnings
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">322,347</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">871,090</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accumulated other comprehensive loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(224,167</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,655</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,889,815</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,516,328</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total liabilities and stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,747,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,062,982</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes.
</FONT>

<P align="center"><FONT size="2">F-2
</FONT>

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

<P align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>

<DIV align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF
OPERATIONS</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(In thousands, except per share
data)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,679,786</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,196,780</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,937,299</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Operating expenses:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,035,103</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,507,122</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,485,072</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Research and development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">414,760</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">340,407</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">381,139</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Selling, general and administrative
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">367,155</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">342,940</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">425,118</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of goodwill and other
	acquisition-related intangible assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">255,230</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,643</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">823</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased in-process technology
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,030</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Asset impairment and related charges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">549,783</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45,743</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,338</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50,825</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,257</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,669</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total operating expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,672,856</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,474,142</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,532,159</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Operating income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,930</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">722,638</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">405,140</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,235</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,923</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(14,698</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investment (expense)&nbsp;income, net
	(Note&nbsp;6)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(255,999</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">494,191</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,576</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Distributions on Trust Convertible Preferred
	Securities of subsidiary trust
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,039</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(39,297</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other (Note 4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(167,001</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,062</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(69,035</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Loss) income before income taxes and accounting
	change
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(426,305</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,196,805</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">306,686</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(104,501</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(526,594</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(105,807</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Loss) income before accounting change
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(530,806</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">670,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting changes, net of tax (Note 1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net (loss)&nbsp;income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(548,743</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">670,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic net (loss)&nbsp;earnings per common share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Loss) income before accounting change
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.71</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.93</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting change, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net (loss)&nbsp;income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.73</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.93</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted net (loss)&nbsp;earnings per common share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Loss) income before accounting change
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.71</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting change, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net (loss)&nbsp;income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.73</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Shares used in per share calculations:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">755,969</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">717,205</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">594,714</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">755,969</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">800,121</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">649,889</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes.
</FONT>

<P align="center"><FONT size="2">F-3
</FONT>

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

<P align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>

<DIV align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CASH
FLOWS</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(In thousands)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September&nbsp;30</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Operating Activities:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net (loss)&nbsp;income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(548,743</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">670,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation and amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">319,811</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">243,842</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">158,429</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased in-process technology
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,030</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Asset impairment and other non-cash charges and
	credits
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">733,476</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75,872</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">268,881</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized gains on marketable securities and
	investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(70,146</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(270,132</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,663</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unrealized loss on derivative instruments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">243,308</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unrealized other-than-temporary losses on
	marketable securities and other investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">287,174</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Minority interest in income of consolidated
	subsidiaries
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,769</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,264</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,066</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity in losses of investees
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,192</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,117</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,140</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Non-cash income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,948</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">481,621</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(96,595</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting changes, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,937</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Increase (decrease)&nbsp;in cash resulting from
	changes in:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts receivable, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,541</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">233,281</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(275,846</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Finance receivables, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(354,140</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(372,072</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(304,546</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventories, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(40,735</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(68,776</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,519</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(29,757</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,206</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Trade accounts payable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,838</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(164,756</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,826</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Payroll, benefits, and other liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(67,440</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(99,976</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">191,187</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unearned revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,012</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,495</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash provided by operating activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">691,491</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">790,781</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180,507</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Investing Activities:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital expenditures
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(114,191</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(163,182</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(180,237</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of wireless licenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(83,774</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of available-for-sale securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,182,698</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(993,512</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from sale of available-for-sale
	securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">977,285</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">571,492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,163</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of held-to-maturity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(301,870</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,392,310</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(858,108</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maturities of held-to-maturity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">973,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,218,189</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">150,873</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance of notes receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(225,747</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(214,267</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(171,414</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Collection of notes receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,581</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">229,654</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45,754</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from sale of businesses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,097</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from sale of other investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,730</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other investments and acquisitions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(246,538</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(273,668</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(43,568</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other items, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,921</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,963</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,192</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash used by investing activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(149,422</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(764,651</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(953,632</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Financing Activities:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net borrowings under bank lines of credit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(112,000</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(39,000</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proceeds from issuance of common stock
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">132,690</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,768</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,311,925</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other items, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">895</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,148</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,621</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash provided by financing activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">133,585</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,620</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,270,304</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Effect of exchange rate changes on cash
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,923</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,009</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Net increase in cash and cash
	equivalents</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">671,731</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56,855</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">484,170</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Cash and cash equivalents at beginning of
	year</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">716,871</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">660,016</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175,846</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Cash and cash equivalents at end of
	year</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,388,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">716,871</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">660,016</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes.
</FONT>

<P align="center"><FONT size="2">F-4
</FONT>

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

<P align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>

<DIV align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146;
EQUITY</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(In thousands)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated Other</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Paid-in</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Retained</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Comprehensive</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Stockholders&#146;</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capital</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Earnings</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income(Loss)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Equity</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance at September&nbsp;30, 1998</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">564,726</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">959,218</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,678</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">957,596</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Components of comprehensive income:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency translation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(26,100</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(26,100</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Change in unrealized gain on securities, net of
	income taxes of $74,410
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110,690</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110,690</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total comprehensive income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">285,469</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exercise of stock options
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,994</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,223</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,228</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax benefit from exercise of stock options
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">290,817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">290,817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance for Employee Stock Purchase and
	Executive Retirement Plans
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,994</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,570</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,571</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stock-based compensation expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,613</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,613</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sale of common stock
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,079,312</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,079,315</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance of common stock upon conversion of Trust
	Convertible Preferred Securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">445</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">445</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjustment to spin-off of Leap Wireless (Note 15)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,701</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,701</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance at September&nbsp;30, 1999</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">646,363</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,587,899</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">82,912</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,871,755</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Components of comprehensive income:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">670,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">670,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency translation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,756</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,756</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Change in unrealized gain on securities, net of
	income taxes of $45,185
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67,216</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67,216</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reclassification adjustment for gains included in
	net income, net of income taxes of $108,593
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(161,539</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(161,539</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total comprehensive income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">578,644</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exercise of stock options and warrants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109,825</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109,827</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax benefit from exercise of stock options
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217,846</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217,846</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance for Employee Stock Purchase and
	Executive Retirement Plans
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">749</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,186</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,186</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stock-based compensation expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,400</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,400</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Shares issued for business acquisitions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,815</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,036,940</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,036,941</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance of common stock upon conversion of Trust
	Convertible Preferred Securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72,623</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">644,722</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">644,729</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance at September&nbsp;30, 2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">747,651</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,653,818</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">871,090</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,655</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,516,328</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Components of comprehensive loss:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(548,743</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(548,743</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency translation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(39,515</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(39,515</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Change in unrealized loss on securities, net of
	income taxes of $42,551
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(222,931</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(222,931</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reclassification adjustment for gains included in
	net loss, net of income taxes of $18,181
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(27,044</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(27,044</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-5
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated Other</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Paid-in</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Retained</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Comprehensive</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Stockholders&#146;</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capital</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Earnings</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income(Loss)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Equity</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reclassification adjustment for
	other-than-temporary losses on marketable securities included in
	net loss, net of income taxes of $47,092
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70,053</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70,053</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reclassification adjustment for losses included
	in accounting change, net of income taxes of $2,638
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,925</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,925</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total comprehensive loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(764,255</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exercise of stock options
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,831</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">92,051</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">92,052</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance for Employee Stock Purchase and
	Executive Retirement Plans
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">758</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,639</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,639</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stock-based compensation expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,661</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,661</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Shares issued for business acquisitions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjustment to spin-off of Leap Wireless (Note 15)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,390</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,390</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance at September&nbsp;30, 2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">763,289</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,791,559</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">322,347</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(224,167</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,889,815</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes.
</FONT>

<P align="center"><FONT size="2">F-6
</FONT>

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

<P align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Note 1&nbsp;&#151; The Company and its
Significant Accounting Policies</FONT></B>

<P align="left">
<I><FONT size="2">The Company</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">QUALCOMM Incorporated (the Company or QUALCOMM),
a Delaware corporation, develops, designs, manufactures and
markets digital wireless telecommunications products and
services based on its Code Division Multiple Access (CDMA)
technology. The Company licenses and receives royalty payments
on its CDMA technology from major domestic and international
wireless telecommunications equipment suppliers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is also a leading developer and
supplier of CDMA-based integrated circuits and system software
for wireless voice and data communications and global
positioning system products. The Company offers a complete
system solution including software and integrated circuits for
wireless handsets and infrastructure equipment. This complete
system solution approach provides customers with advanced
wireless technology, enhanced component integration and
interoperability, and reduced time to market. The Company
provides integrated circuits and system software to many of the
world&#146;s leading wireless handset and infrastructure
manufacturers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company provides satellite and
terrestrial-based two-way data messaging and position reporting
services for transportation companies and private fleets. The
Company develops, designs, manufactures and distributes products
and provides services for OmniTRACS and TruckMAIL
(satellite-based mobile communications system), OmniExpress
(terrestrial CDMA-based system) and LINQ (terrestrial GSM-based
system) worldwide. Transportation companies and private fleets
use the Company&#146;s products to communicate with drivers,
monitor vehicle location and provide customer service. The
Company also integrates the mobile data with operations
software, such as dispatch, payroll and accounting, so end-users
can manage their information and operations.
</FONT>

<P align="left">
<I><FONT size="2">Principles of Consolidation</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s consolidated financial
statements include the assets, liabilities and operating results
of majority-owned subsidiaries and other subsidiaries controlled
by the Company. The ownership of the other interest holders of
consolidated subsidiaries is reflected as minority interest. All
significant intercompany accounts and transactions have been
eliminated.
</FONT>

<P align="left">
<I><FONT size="2">Financial Statement Preparation</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect the reported amounts and the disclosure
of contingent amounts in the Company&#146;s financial statements
and the accompanying notes. Actual results could differ from
those estimates. Certain prior year amounts have been
reclassified to conform to the current year presentation.
</FONT>

<P align="left">
<I><FONT size="2">Fiscal Year</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company operates and reports using a
52&#150;53&nbsp;week fiscal year ending on the last Sunday in
September. As a result, the fiscal years ended
September&nbsp;30, 2001, 2000, and 1999 include 53&nbsp;weeks,
52&nbsp;weeks, and 52&nbsp;weeks, respectively. For presentation
purposes, the Company has indicated its fiscal years as ending
on September&nbsp;30.
</FONT>

<P align="left">
<I><FONT size="2">Revenues</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December&nbsp;1999, the Securities and
Exchange Commission (SEC)&nbsp;issued Staff Accounting Bulletin
No.&nbsp;101 (SAB&nbsp;101), &#147;Revenue Recognition in
Financial Statements.&#148; The SEC staff subsequently amended
</FONT>

<P align="center"><FONT size="2">F-7
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">SAB&nbsp;101 to provide registrants with
additional time to implement the standard. The Company adopted
SAB&nbsp;101 in the fourth quarter of fiscal 2001, applied
retroactively to the first quarter of fiscal&nbsp;2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the adoption of SAB&nbsp;101, the
Company generally recorded revenue from non-refundable license
fees on the effective date of the applicable license agreement.
After the adoption of SAB&nbsp;101, license fees are recognized
ratably over the estimated period of future benefit to the
licensee. Royalty revenue continues to be recorded as earned
when reasonable estimates of such amounts can be made.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the adoption of SAB&nbsp;101, the
Company recorded revenue from hardware product sales at the time
of shipment, or when title and risk of loss passed to the
customer, if later. After adoption of SAB&nbsp;101, revenue and
expense from certain hardware product sales contracted with a
continuing service obligation that is essential to the
functionality of the hardware are recognized ratably over the
shorter of the estimated life of the hardware product or the
expected service period. Revenue from hardware product sales
without such a continuing service obligation is recorded when
risk of loss and title pass to the customer. Messaging revenue
continues to be recorded as earned.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect of the adoption of SAB&nbsp;101 on the
Company&#146;s quarterly results of operations for fiscal 2001,
when applied retroactively, and the pro forma effect on the
results of operations for the fourth quarter of fiscal 2000 are
presented in the summarized quarterly data note (Note&nbsp;18).
The unaudited pro forma effect of the adoption of SAB&nbsp;101
on the Company&#146;s fiscal 2000 and 1999 results of
operations, assuming SAB 101 had been adopted in those years,
are as follows (in thousands, except per share data):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">643,181</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">209,062</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic earnings (loss)&nbsp;per common share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.90</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted earnings (loss)&nbsp;per common share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.81</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recorded a $147&nbsp;million loss,
net of taxes of $98&nbsp;million, as the cumulative effect of
the accounting change as of the beginning of fiscal 2001 to
reflect the deferral of revenue and expenses related to future
periods. For fiscal 2001, the Company recognized
$95&nbsp;million in net income before income taxes and
accounting change related to revenue and expense that was
recognized in prior years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenue from providing services is recorded when
earned. Revenue from long-term contracts is generally recognized
using the percentage-of-completion method, based on costs
incurred compared with total estimated costs. Billings on
uncompleted contracts in excess of incurred cost and accrued
profits are classified as unearned revenue. Estimated contract
losses are recognized when determined. If substantive
uncertainty related to customer acceptance exists or the
contract&#146;s duration is less than three months, the Company
uses the completed-contract method.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recognizes software license revenue
when all of the following criteria are met: execution of a
written agreement; delivery of software; the license fee is
fixed and determinable; collectibility of the proceeds is
probable; and vendor-specific objective evidence exists to
allocate the total fee to elements of multiple-element
arrangements, including post contract customer support.
Vendor-specific objective evidence is based on the price charged
when an element is sold separately, or if not yet sold
separately, the price established by authorized management or a
substantive renewal rate for post-contract customer support. If
the Company does not have sufficient evidence of the fair value
of undelivered elements, revenue is recognized ratably over the
support period when the undelivered element is post-contract
customer support.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unearned revenue consists primarily of fees
related to software products and other intellectual property for
which delivery is not yet complete and to hardware products
sales contracted with a continuing service obligation.
</FONT>

<P align="center"><FONT size="2">F-8
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<I><FONT size="2">Research and Development</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Costs incurred in research and development are
expensed as incurred.
</FONT>

<P align="left">
<I><FONT size="2">Shipping and Handling Costs</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Costs incurred for shipping and handling costs
are included in cost of revenues when incurred. Amounts billed
to a customer for shipping and handling are reported as revenue.
</FONT>

<P align="left">
<I><FONT size="2">Concentrations</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A significant portion of the Company&#146;s
revenues are concentrated with a limited number of customers as
the worldwide market for wireless telephone systems and products
is dominated by a small number of large corporations and
government agencies. During fiscal 2001, sales to two South
Korean customers and one Japanese customer by the QCT, QTL and
other nonreportable segments (Note 12) comprised 37% of
consolidated revenues. During fiscal 2000 and 1999, sales to one
South Korean customer by the QCT and QTL segments comprised 11%
and 9% of consolidated revenues, respectively. During fiscal
2001, 2000 and 1999, revenues from Globalstar (Note&nbsp;4)
accounted for 1%, 7% and 11% of consolidated revenues,
respectively. At September&nbsp;30, 2001, accounts receivable
from two South Korean customers comprised 25% of net receivables.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues from international customers were
approximately 65%, 47% and 38% of total revenues in fiscal 2001,
2000 and 1999, respectively.
</FONT>

<P align="left">
<I><FONT size="2">Cash Equivalents</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company considers all highly liquid
investments with original maturities of three months or less to
be cash equivalents. Cash equivalents are comprised of money
market funds, certificates of deposit, commercial paper, loan
participations, medium-term notes, United States treasuries and
government agencies&#146; securities. The carrying amounts
approximate fair value due to the short maturities of these
instruments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s policy is to place its cash,
cash equivalents and investments with high quality financial
institutions, government agencies and corporate entities to
limit the amount of credit exposure.
</FONT>

<P align="left">
<I><FONT size="2">Marketable Securities</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management determines the appropriate
classification of marketable securities at the time of purchase
and reevaluates such designation as of each balance sheet date.
Held-to-maturity securities are carried at amortized cost, which
approximates fair value. Available-for-sale securities are
stated at fair value as determined by the most recently traded
price of each security at the balance sheet date. The net
unrealized gains or losses on available-for-sale securities are
reported as a component of comprehensive income (loss), net of
tax, unless the Company provides a valuation allowance against
the tax benefit resulting from the loss. The specific
identification method is used to compute the realized gains and
losses on debt and equity securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company regularly monitors and evaluates the
realizable value of its marketable securities. If events and
circumstances indicate that a decline in the value of these
assets has occurred and is other than temporary, the Company
records a charge to investment (expense)&nbsp;income.
</FONT>

<P align="center"><FONT size="2">F-9
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<I><FONT size="2">Inventories</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Inventories are valued at the lower of cost or
market using the first-in, first-out method.
</FONT>

<P align="left">
<I><FONT size="2">Property, Plant and Equipment</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property, plant and equipment are recorded at
cost and depreciated or amortized using the straight-line method
over their estimated useful lives. Buildings and building
improvements are depreciated over thirty years and fifteen
years, respectively. Leasehold improvements are amortized over
the shorter of their estimated useful lives or the remaining
term of the related lease. Direct external and internal costs of
developing software for internal use are capitalized subsequent
to the preliminary stage of development. Other property, plant
and equipment have useful lives ranging from two to five years.
Maintenance, repairs, and minor renewals and betterments are
charged to expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the retirement or disposition of property,
plant and equipment, the related cost and accumulated
depreciation or amortization are removed and the gain or loss is
recorded.
</FONT>

<P align="left">
<I><FONT size="2">Other Investments</FONT></I>

<P align="left">
<B><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></B><I><FONT size="2">Investments in Other
Entities</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company makes strategic investments in
companies that have developed or are developing innovative
wireless data applications and wireless carriers that promote
the worldwide deployment of CDMA systems. Investments in
corporate entities with less than a 20% voting interest are
generally accounted for under the cost method. The Company uses
the equity method to account for investments in corporate
entities in which it has a voting interest of 20% to 50% and
other than minor to 50% ownership interests in partnerships and
limited liability corporations, or in which it otherwise has the
ability to exercise significant influence. Under the equity
method, the investment is originally recorded at cost and
adjusted to recognize the Company&#146;s share of net earnings
or losses of the investee, limited to the extent of the
Company&#146;s investment in, advances to and financial
guarantees that create additional basis in the investee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company regularly monitors and evaluates the
realizable value of its investments. If events and circumstances
indicate that a decline in the value of these assets has
occurred and is other than temporary, the Company records a
charge to investment income (expense).
</FONT>

<P align="left">
<B><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></B><I><FONT size="2">Derivatives</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company adopted Statement of Financial
Accounting Standard No.&nbsp;133 (FAS 133), &#147;Accounting for
Derivative Instruments and Hedging Activities,&#148; as of the
beginning of fiscal 2001. FAS 133 requires certain derivative
instruments to be recorded at fair value. Derivative instruments
held by the Company are comprised of warrants and other rights
to purchase equity interests in certain other companies related
to strategic investment and financing activities. The Company
recorded a $129 million gain, net of taxes of $87 million, as
the cumulative effect of the change in accounting principle as
of the beginning of fiscal 2001. The cumulative effect of the
accounting change related primarily to the recognition of the
unrealized gain on a warrant to purchase 4,500,000 shares of
Leap Wireless International, Inc. (Leap Wireless) common stock
issued to the Company in connection with its spin-off of Leap
Wireless in September&nbsp;1998 (Note 15).
</FONT>

<P align="left">
<I><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrants
</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company holds warrants to purchase equity
interests in certain other companies related to its strategic
investment activities. The Company&#146;s warrants are not held
for trading purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the adoption of FAS 133, warrants to
purchase equity interests in publicly-traded companies that
could not be net settled were stated at fair value and
classified as available-for-sale or held-to-maturity,
</FONT>

<P align="center"><FONT size="2">F-10
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">consistent with the expected classification of
the underlying equity securities. Changes in fair value were
recorded as a component of comprehensive income (loss). All
other warrants were carried at cost.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the adoption of FAS 133, the Company&#146;s
warrants to purchase equity interest in certain publicly-traded
companies continue to be recorded at fair value. Changes in fair
value are recorded in investment (expense)&nbsp;income, as a
change in unrealized gain on derivative instruments because the
warrants do not meet the requirements for hedge accounting.
Realized derivative gains and losses are reclassified from the
change in unrealized gains on derivative instruments to net
realized gains (losses)&nbsp;on marketable securities upon the
sale of the underlying equity investment. During fiscal 2001,
$18 million of unrealized derivative gains were reclassified to
realized gains (losses)&nbsp;on the sale of marketable
securities. Warrants in privately-held companies are carried at
cost as those warrants are excluded from the scope of
FAS&nbsp;133.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2001 and 2000, the
Company&#146;s warrant balances were included in other assets
and none of the Company&#146;s warrants were designated as
hedges.
</FONT>

<P align="left">
<I><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forward
 Contracts</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company enters into foreign currency forward
contracts to hedge certain foreign currency transactions and
probable anticipated foreign currency transactions. Prior to the
adoption of FAS 133, gains and losses arising from foreign
currency forward contracts offset gains and losses resulting
from the underlying hedged transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the adoption of FAS 133, unrealized gains
and losses arising from foreign currency forward contracts are
reported in investment (expense)&nbsp;income as a change in
unrealized gain on derivative instruments because the forward
contracts are not designated as hedging instruments. Upon
settlement of the foreign currency forward contracts, the
unrealized gains and losses are reclassified to realized gains
on derivative instruments. The Company did not have any foreign
currency forward contracts designated as a hedging instrument
during fiscal 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company had one foreign currency forward
contract outstanding as of September&nbsp;30, 2001; no such
contracts were outstanding as of September&nbsp;30, 2000. The
amount of the unrealized loss as of September&nbsp;30, 2001 was
not material.
</FONT>

<P align="left">
<I><FONT size="2">Goodwill and Other Intangible Assets</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Goodwill represents the excess of purchase price
and related costs over the value assigned to the net tangible
and identifiable intangible assets of businesses acquired.
Goodwill is amortized on a straight-line basis over its useful
life, ranging from three to four years. Other intangible assets
are amortized on a straight-line basis over their useful lives,
ranging from three to twenty years. Software development costs
are capitalized when a product&#146;s technological feasibility
has been established through the date a product is available for
general release to customers.
</FONT>

<P align="left">
<I><FONT size="2">Long-Lived and Intangible Assets</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company assesses potential impairments to its
long-lived assets and intangible assets when there is evidence
that events or changes in circumstances indicate that the
carrying amount of an asset may not be recovered. An impairment
loss is recognized when the undiscounted cash flows expected to
be generated by an asset (or group of assets) is less than its
carrying amount. Any required impairment loss is measured as the
amount by which the asset&#146;s carrying value exceeds its fair
value, and is recorded as a reduction in the carrying value of
the related asset and a charge to operating results.
</FONT>

<P align="center"><FONT size="2">F-11
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<I><FONT size="2">Warranty</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Estimated future warranty obligations related to
certain products are provided by charges to operations in the
period in which the related revenue is recognized.
</FONT>

<P align="left">
<I><FONT size="2">Stock-Based Compensation</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company measures compensation expense for its
stock-based employee compensation using the intrinsic value
method and provides pro forma disclosures of net income and net
earnings per common share as if the fair value method had been
applied in measuring compensation expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Equity instruments issued to non-employees for
goods or services are accounted for at fair value and are marked
to market until service is complete or a performance commitment
date is reached.
</FONT>

<P align="left">
<I><FONT size="2">Foreign Currency</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Foreign subsidiaries operating in a local
currency environment use the local currency as the functional
currency. Assets and liabilities are translated to United States
dollars at year-end exchange rates; revenues, expenses, gains
and losses are translated at rates of exchange that approximate
the rates in effect at the transaction date. Resulting
remeasurement gains or losses are recognized as a component of
other comprehensive income. During fiscal 1999, a significant
devaluation of the Brazilian real resulted in a $25 million
translation loss that was recorded as a component of other
comprehensive income. The functional currency of the
Company&#146;s foreign investees that do not use local
currencies is the United States dollar. Where the United States
dollar is the functional currency, the monetary assets and
liabilities are translated into United States dollars at the
exchange rate in effect at the balance sheet date. Revenues,
expenses, gains and losses associated with the monetary assets
and liabilities are translated at the rates of exchange that
approximate the rates in effect at the transaction date.
Non-monetary assets and liabilities and related elements of
expense, gains and losses are translated at historical rates.
Resulting remeasurement gains or losses of these foreign
investees are recognized in the statement of income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2001, 2000 and 1999, net foreign
currency transaction gains and losses included in the
Company&#146;s statements of operations were not material.
</FONT>

<P align="left">
<I><FONT size="2">Income Taxes</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Current income tax expense is the amount of
income taxes expected to be payable for the current year, prior
to the recognition of benefits from stock option deductions. The
asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences
of temporary differences between the carrying amounts and the
tax bases of assets and liabilities. Valuation allowances are
established when necessary to reduce deferred tax assets to the
amount expected to more likely than not be realized in future
tax returns. Tax law and rate changes are reflected in income in
the period such changes are enacted.
</FONT>

<P align="left">
<I><FONT size="2">Comprehensive Income</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Comprehensive income (loss)&nbsp;is defined as
the change in equity of a business enterprise during a period
from transactions and other events and circumstances from
non-owner sources, including foreign currency translation
adjustments and unrealized gains and losses on marketable
securities. The Company presents other comprehensive income
(loss)&nbsp;in its consolidated statements of stockholders&#146;
equity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The reclassification adjustment for
other-than-temporary losses on marketable securities results
from the recognition of unrealized losses in the statement of
operations resulting from declines in the market prices of those
securities deemed to be other-than-temporary. The
reclassification adjustment for net realized losses
(gains)&nbsp;results from the recognition of the net realized
losses or gains in the statement of operations when the
marketable securities are sold. The reclassification adjustment
for losses included in the accounting change
</FONT>

<P align="center"><FONT size="2">F-12
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">results from the recognition of unrealized losses
attributable to derivative instruments as of the beginning of
fiscal 2001 in the statement of operations as a result of the
implementation of FAS 133. Unrealized losses on certain
derivative instruments subject to FAS 133 were previously
recorded as a component of other comprehensive income (loss).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Components of accumulated other comprehensive
loss consisted of the following (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency translation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(64,537</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25,022</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized (loss) gain on marketable securities,
	net of income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(159,630</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,367</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(224,167</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,655</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<I><FONT size="2">Stock Splits</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;14, 1999, the Company&#146;s Board
of Directors declared a two-for-one stock split of the
Company&#146;s common stock in the form of a stock dividend. The
stock dividend was distributed on May&nbsp;10, 1999 to
stockholders of record on April&nbsp;21, 1999. On
November&nbsp;2, 1999, the Company&#146;s Board of Directors
declared a four-for-one stock split of the Company&#146;s common
stock and an increase in the number of authorized shares of
common stock to three billion shares. The stock was distributed
on December&nbsp;30, 1999 to stockholders of record on
December&nbsp;20, 1999. All references to per share amounts have
been restated to reflect these stock splits.
</FONT>

<P align="left">
<I><FONT size="2">Net Earnings Per Common Share</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Basic earnings per common share are calculated by
dividing net income by the weighted average number of common
shares outstanding during the reporting period. Diluted earnings
per common share (diluted EPS) reflect the potential dilutive
effect, calculated using the treasury stock method, of
additional common shares that are issuable upon exercise of
outstanding stock options and warrants and the potential
dilutive effect for the period prior to conversion of shares
issuable upon conversion of Trust Convertible Preferred
Securities, determined on an if-converted basis, as follows (in
thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September 30,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">64,802</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,175</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Trust Convertible Preferred Securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,114</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">82,916</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,175</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The diluted share base for fiscal 2001 excluded
the potential dilutive effect of 51,188,000 incremental shares
related to outstanding stock options, calculated using the
treasury stock method, due to their anti-dilutive effect as a
result of the Company&#146;s loss before accounting change.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Options outstanding during the years ended
September&nbsp;30, 2001, 2000 and 1999 to purchase approximately
14,427,000, 2,625,000, and 13,494,000&nbsp;shares of common
stock, respectively, were not included in the computation of
diluted EPS because the options&#146; exercise prices were
greater than the average market prices of the common stock
during the period and, therefore, the effect would be
anti-dilutive. Net income in the computation of diluted EPS for
fiscal 2000 was increased by $7&nbsp;million, representing the
assumed savings of distributions, net of taxes, on the Trust
Convertible Preferred Securities. The additional common shares
assuming the conversion of the Trust Convertible Preferred
Securities (Note&nbsp;7) were not included for purposes of
computing diluted EPS for fiscal 1999 because the effect would
have been anti-dilutive.
</FONT>

<P align="center"><FONT size="2">F-13
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<I><FONT size="2">Future Accounting Requirements</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July&nbsp;2001, the Financial Accounting
Standards Board (FASB) issued FASB Statements Nos.&nbsp;141 and
142 (FAS&nbsp;141 and FAS&nbsp;142), &#147;Business
Combinations&#148; and &#147;Goodwill and Other Intangible
Assets.&#148; FAS&nbsp;141 replaces APB&nbsp;16 and eliminates
pooling-of-interests accounting prospectively. It also provides
guidance on purchase accounting related to the recognition of
intangible assets and accounting for negative goodwill.
FAS&nbsp;142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Under
FAS&nbsp;142, goodwill will be tested annually and whenever
events or circumstances occur indicating that goodwill might be
impaired. FAS&nbsp;141 and FAS&nbsp;142 are effective for all
business combinations completed after June&nbsp;30, 2001. Upon
adoption of FAS&nbsp;142, amortization of goodwill recorded for
business combinations consummated prior to July&nbsp;1, 2001
will cease, and intangible assets acquired prior to July&nbsp;1,
2001 that do not meet the criteria for recognition under
FAS&nbsp;141 will be reclassified to goodwill. Companies are
required to adopt FAS&nbsp;142 for fiscal years beginning after
December&nbsp;15, 2001, but early adoption is permitted. The
Company will adopt FAS&nbsp;142 as of the beginning of fiscal
2003. In connection with the adoption of FAS&nbsp;142, the
Company will be required to perform a transitional goodwill
impairment assessment. The Company has not yet determined the
impact these standards will have on its operating results and
financial position.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August&nbsp;2001, the FASB issued
FAS&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets.&#148; FAS&nbsp;144 replaces FAS&nbsp;121,
&#147;Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of.&#148; The FASB issued
FAS&nbsp;144 to establish a single accounting model, based on
the framework established in FAS&nbsp;121, as FAS&nbsp;121 did
not address the accounting for a segment of a business accounted
for as a discontinued operation under APB&nbsp;30,
&#147;Reporting The Results of
Operations&nbsp;&#151;&nbsp;Reporting The Effects of Disposal of
a Segment of a Business, and Extraordinary Unusual and
Infrequently Occurring Events and Transactions.&#148;
FAS&nbsp;144 also resolves significant implementation issues
related to FAS&nbsp;121. Companies are required to adopt
FAS&nbsp;144 for fiscal years beginning after December&nbsp;15,
2001, but early adoption is permitted. The Company will adopt
FAS&nbsp;144 as of the beginning of fiscal 2003. The Company has
not yet determined the impact this standard will have on its
operating results and financial position.
</FONT>

<P align="center"><FONT size="2">F-14
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Note 2&nbsp;&#151; Marketable
Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marketable securities were comprised as follows
(in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Current</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Noncurrent</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Held-to-maturity:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Certificates of deposit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">290</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">201,338</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial paper
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">289,761</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">U.S. government securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Corporate medium-term notes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">227,022</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">194,576</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99,698</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">312,791</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">227,312</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">685,675</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105,898</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">322,791</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Available-for-sale:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial paper
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,956</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Federal agencies
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,078</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">U.S. government securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">231,903</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110,256</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Corporate medium-term notes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">216,512</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,748</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Mortgage and asset-backed securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115,095</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">147,887</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">191,435</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">425,730</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">667,265</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">369,847</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">191,435</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">425,730</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">894,577</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,055,522</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">297,333</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">748,521</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Available-for-sale equity securities include debt
securities issued by a publicly-traded company that are recorded
at fair value. The fair value of these debt securities was
$77&nbsp;million and $136&nbsp;million at September&nbsp;30,
2001 and 2000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2001, the contractual
maturities of debt securities were as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Years to Maturity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">No Single</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Less than</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">One to</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Maturity</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">One Year</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Five Years</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Held-to-maturity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">227,312</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99,698</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Available-for-sale
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,395</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">533,098</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115,095</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">238,707</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">632,796</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">121,295</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Securities with no single maturity date include
mortgage-backed securities and asset-backed securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Available-for-sale securities were comprised as
follows at September&nbsp;30 (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Unrealized</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Unrealized</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Cost</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gains</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Losses</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">374,799</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,388</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(179,075</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">199,112</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Debt securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">643,531</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,070</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">659,588</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,018,330</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,458</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(179,088</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">858,700</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">400,114</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180,787</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(155,171</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">425,730</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Debt securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">368,095</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,446</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(694</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">369,847</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">768,209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">183,233</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(155,865</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">795,577</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-15
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair values of held-to-maturity debt
securities at September&nbsp;30, 2001 and 2000 approximate cost.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April&nbsp;2000, the Company purchased
approximately 11,500,000 shares of the common stock of NetZero,
Inc. (NetZero), representing a 9.9% interest, for
$144&nbsp;million in cash. NetZero was a publicly-traded company
that provided Internet access and services to consumers and
on-line direct marketing services to advertisers. Effective
September&nbsp;26, 2001, NetZero and Juno Online Services, Inc.
completed a merger and became United Online, Inc. (United
Online). The Company received 2,300,000 shares of United Online
for its 11,500,000 shares of NetZero, representing an
approximate 5.7% interest in United Online. During fiscal 2001,
the Company recorded an other-than-temporary impairment charge
of $134&nbsp;million in investment (expense)&nbsp;income related
to this investment. The fair value of the United Online
investment was $5&nbsp;million at September&nbsp;30, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February&nbsp;2000, the Company purchased
308,000 units of Leap Wireless&#146; senior discount notes with
detachable warrants for $150&nbsp;million. The notes mature in
April&nbsp;2010 and bear interest at 14.5%. The warrants entitle
each holder to purchase 2.503 common shares per each senior
discount note unit held. The exercise price is $96.80 per common
share. Upon the adoption of FAS&nbsp;133, the Company bifurcated
the warrants from the senior discount notes and accounted for
the warrants separately. The resulting adjustment was recorded
as an accounting change, net of tax, and subsequent changes in
fair value of the warrants were recorded in investment
(expense)&nbsp;income. The fair values of the senior discount
notes and the warrants were $77&nbsp;million and
$10&nbsp;million, respectively, at September&nbsp;30, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November&nbsp;1999, the Company purchased
2,565,000 common shares of Korea Telecom Freetel Co., Ltd.
(KTFreeTel), representing a 1.9% interest, for $110 million and
an $86&nbsp;million zero coupon bond with warrants to purchase
approximately 1,851,000 additional shares. If KTFreeTel meets
certain obligations related to the commercial deployment of
1xEV-DO technology, the Company will be required to exercise the
warrants. The exercise price of the warrants is expected to be
paid by tendering the bond as payment in full. If KTFreeTel does
not meet such obligations, the Company will have the right to
redeem the bond at face value plus a premium equal to 10% per
year. Upon the adoption of FAS&nbsp;133, the Company bifurcated
the warrants from the zero coupon bond and accounted for the
warrants separately. The resulting adjustment was recorded as an
accounting change, net of tax, and subsequent changes in fair
value of the warrants were recorded in investment
(expense)&nbsp;income. The Company used the cost method to
account for 1,924,000 of the common shares and approximately
1,388,000 shares under warrant through June&nbsp;1, 2001 as
those shares were restricted. Subsequent to that date, the
Company used the fair value method to account for all of the
common shares and the warrants, recording changes in fair value
as a component of comprehensive loss, net of tax, and investment
(expense) income, respectively. The combined fair value of the
common shares and bond with warrants was $95&nbsp;million at
September&nbsp;30, 2001.
</FONT>

<P align="left">
<B><FONT size="2">Note 3&nbsp;&#151; Composition of Certain
Financial Statement Captions</FONT></B>

<P align="left">
<I><FONT size="2">Accounts Receivable</FONT></I>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Trade, net of allowance for doubtful accounts of
	$15,756 and $9,610, respectively
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">493,930</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">542,288</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term contracts:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Billed
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,917</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,059</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unbilled
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,846</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,185</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,447</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">517,557</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">606,979</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-16
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unbilled receivables represent costs and profits
recorded in excess of amounts billable pursuant to contract
provisions and are expected to be realized within one year.
</FONT>

<P align="left">
<I><FONT size="2">Finance Receivables</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Finance receivables result from arrangements in
which the Company has agreed to provide its customers or certain
CDMA customers of Telefonaktiebolaget LM&nbsp;Ericsson
(Ericsson) (Note&nbsp;14) with long-term interest bearing debt
financing for the purchase of equipment and/or services. Finance
receivables were comprised as follows:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Finance receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,388,684</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">939,063</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Allowance for doubtful receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(644,848</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,144</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">743,836</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">927,919</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current maturities, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,345</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">128,515</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Noncurrent finance receivables, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">733,491</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">799,404</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2001 and 2000, the fair
value of finance receivables approximated $744&nbsp;million and
$826&nbsp;million, respectively. The fair value of finance
receivables is estimated by discounting the future cash flows
using current interest rates at which similar financing would be
provided to similar customers for the same remaining maturities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Maturities of finance receivables at
September&nbsp;30, 2001 were as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Fiscal Year Ending September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2002
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,713</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2003
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,255</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2004
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58,191</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2005
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,261</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,069</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Thereafter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,116,195</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,388,684</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Maturities after 2006 include finance receivables
which have been fully reserved or which the Company has not or
does not expect to receive payments in accordance with the
scheduled maturities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2001, remaining commitments
to extend long-term financing by the Company to certain CDMA
customers of Ericsson (Note&nbsp;14) totaled approximately
$531&nbsp;million. The commitment to fund $400&nbsp;million of
this amount expires on November&nbsp;6, 2003. The funding of the
remaining $131&nbsp;million, if it occurs, is not subject to a
fixed expiration date. The financing commitments are subject to
the CDMA customers meeting conditions prescribed in the
financing arrangements and, in certain cases, to Ericsson also
financing a portion of such sales and services. Such financing
is generally collateralized by the related equipment.
Commitments represent the maximum amounts to be financed under
these arrangements; actual financing may be in lesser amounts.
</FONT>

<P align="center"><FONT size="2">F-17
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<I><FONT size="2">Inventories</FONT></I>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Raw materials
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,251</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47,952</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Work-in-process
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,346</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,370</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Finished goods
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,266</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,044</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95,863</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">85,366</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<I><FONT size="2">Property, Plant and Equipment</FONT></I>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Land
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,093</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,953</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Buildings and improvements
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">280,851</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">279,265</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Computer equipment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">283,293</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,675</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Machinery and equipment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">176,300</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">193,194</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Furniture and office equipment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,393</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Leasehold improvements
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,798</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">839,920</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">813,309</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less accumulated depreciation and amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(408,524</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(381,604</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">431,396</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">431,705</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Depreciation and amortization expense related to
property, plant, and equipment for fiscal 2001, 2000, and 1999
was $91&nbsp;million, $109&nbsp;million and $151&nbsp;million,
respectively. At September&nbsp;30, 2001 and 2000, buildings and
improvements and leasehold improvements with a net book value of
$91&nbsp;million and $145&nbsp;million, respectively, including
accumulated depreciation and amortization of $37&nbsp;million
and $36&nbsp;million, respectively, were leased or held for
lease to third parties.
</FONT>

<P align="left">
<I><FONT size="2">Intangible Assets</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2001 and 2000, goodwill was
presented net of $389 million and $144&nbsp;million in
accumulated amortization, respectively. At September&nbsp;30,
2001 and 2000, intangible assets totaled $121&nbsp;million and
$45&nbsp;million, respectively, net of $21&nbsp;million and
$8&nbsp;million in accumulated amortization, respectively.
During fiscal 2001, the Company acquired licenses in the
Australian 3G wireless spectrum auctions. At September&nbsp;30,
2001, intangible assets included $78&nbsp;million related to
these licenses. The Company will begin amortizing the licenses
upon the commercial launch of the system in Australia, which is
expected to occur in October&nbsp;2002. The licenses will be
amortized over their expected useful lives of 15&nbsp;years.
Capitalized software development costs were $16&nbsp;million and
$6&nbsp;million, at September&nbsp;30, 2001 and 2000,
respectively. Accumulated amortization was $6 million at
September&nbsp;30, 2001 and 2000. Amortization expense for
fiscal 2001, 2000, and 1999 was not material.
</FONT>

<P align="left">
<B><FONT size="2">Note 4&nbsp;&#151; Investments in Other
Entities</FONT></B>

<P align="left">
<I><FONT size="2">Vesper Holding S.A. and Vesper Sao Paulo
S.A.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 1999, the Company made commitments to
invest approximately $108&nbsp;million in Vesper Holding S.A.
and Vesper Sao&nbsp;Paulo S.A. (the Vesper Companies), formerly
know as Canbra Holdings, S.A. and
</FONT>

<P align="center"><FONT size="2">F-18
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">Megatel Holdings, S.A., respectively. The Vesper
Companies were formed by a consortium of investors to provide
wireless and wireline telephone services in the northern region
and in the Sao&nbsp;Paulo state of Brazil. The Company
subsequently participated in additional financing rounds
completed by the Vesper Companies, thereby increasing the
Company&#146;s initial equity investment. In addition, the
Company extended long-term financing to the Vesper Companies
related to the Company&#146;s financing arrangement with
Ericsson (Note&nbsp;3). At September&nbsp;30, 2001, the
Company&#146;s cumulative cash investment, including long-term
financing, in the Vesper Companies totaled approximately $241
million. In January&nbsp;2000, the Company acquired an
approximate 2.5% interest in VeloCom, Inc. (VeloCom), an
investor in the Vesper Companies, for $15 million. In
December&nbsp;2000, the Company executed a Term Loan Agreement
with VeloCom in which the Company agreed to provide $230 million
of convertible debt financing, including $30 million for
capitalized interest. The debt facility has a three-year term
and bears interest at 18%. The Company funded approximately $172
million under this facility through September&nbsp;30, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of a reorganization of the Vesper
Companies initiated during fiscal 2001, the Company reassessed
the recoverability of its assets related to the Vesper Companies
and VeloCom and recorded $32 million in asset impairments and
related charges, $90 million in investment (expense) income and
$120 million in other non-operating charges. At
September&nbsp;30, 2001, the Company had approximately $124
million in remaining net assets, primarily consisting of finance
receivables and notes receivable, net of allowances of $174
million, related to the Vesper Companies and VeloCom. The
Company has not recognized interest income since the impairment
and will evaluate whether to recognize interest income
subsequent to the reorganization. The Vesper Companies are
working to accomplish the terms of their restructuring with
owners, vendors and creditors, which is expected to be completed
in the first quarter of fiscal 2002. The proposed transaction is
contingent on several factors, and there is a risk it will not
close. If the transaction closes, the Company expects to acquire
an additional interest in the Vesper Companies for $266 million
in equity commitments. The Company also expects to convert its
Term Loan Agreement with VeloCom into an additional equity
interest in VeloCom. After the close, the Company expects to
hold a 49.9% interest in VeloCom, and direct and indirect
interests in the Vesper Companies of 74% and 86%, respectively.
The Company will consolidate the results of the Vesper Companies
if the proposed transaction closes in fiscal 2002. The Vesper
Companies expect to incur increasing operating losses and
negative cash flows from operations as they expand operations
and enter new markets, even if and after they achieve positive
cash flows from operations in the initial operating markets. The
Company may incur significant losses in the future related to
its proposed ownership of the Vesper Companies, and the Vesper
Companies may never operate profitably.
</FONT>

<P align="left">
<I><FONT size="2">Globalstar L.P.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has contracts with Globalstar L.P.
(Globalstar) to design, develop and manufacture subscriber
products and ground communications systems utilizing CDMA
technology and to provide contract development services.
Globalstar was formed to design, construct, and operate a
worldwide, low-Earth-orbit satellite-based telecommunications
system (the Globalstar System).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through partnership interests held in certain
intermediate limited partnerships and other indirect interests,
the Company owns an approximate 6.3% interest in Globalstar, a
limited partnership formed to develop, own and operate the
Globalstar System. The Company accounts for its investment under
the equity method. As a result of the intermediate limited
partnership agreements, Globalstar profits and losses are
allocated to the Company in accordance with its percentage
ownership interest, provided that no loss shall be allocated to
the Company if such allocation would create negative balances in
the Company&#146;s intermediate partnership adjusted capital
accounts. For financial reporting purposes, the Company&#146;s
investment in the intermediate partnerships had no basis during
each of fiscal 2001, 2000 and 1999, and, as a result, the
Company has not recorded any equity losses during those
respective fiscal years.
</FONT>

<P align="center"><FONT size="2">F-19
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;30, 2000, Globalstar defaulted on a
$250 million bank facility that QUALCOMM partially guaranteed in
1996. As a result of this default, QUALCOMM&#146;s guaranty was
called, and QUALCOMM paid $22 million to the subject banks in
full satisfaction of this guaranty plus interest. Pursuant to an
agreement entered into in 1996, with respect to the original
provision of this guaranty, QUALCOMM accepted a subordinated
promissory note issued by Globalstar with a principal amount
equal to the amount QUALCOMM paid under its guaranty (the
Globalstar Promissory Note). The Globalstar Promissory Note
bears interest at LIBOR plus 3%, and principal and interest are
due and payable in full on June&nbsp;30, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company continues to provide services and
sell products under a number of development and production
contracts involving the Globalstar System. Starting in the first
quarter of fiscal 2001, the Company decided to not recognize
revenue on business with Globalstar before cash is received.
Revenues resulting from the agreements with Globalstar for
fiscal 2001, 2000 and 1999 were $35 million, $219 million and
$435 million, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;16, 2001, Globalstar announced
that, in order to have sufficient funds available for the
continued progress of its marketing and service activities, it
had suspended indefinitely principal and interest payments on
all of its debt, including its vendor financing obligations. As
a result, Globalstar did not make an approximate $22 million
payment for principal and interest due to QUALCOMM on
January&nbsp;15, 2001. Globalstar also announced the retention
of a financial adviser to assist in developing future
initiatives, including restructuring Globalstar&#146;s debt,
identifying funding opportunities and pursuing other strategic
alternatives. Efforts, by Globalstar, to restructure its debt
are on-going, and work on a final plan is expected to continue.
However, Globalstar&#146;s restructuring has not progressed as
the Company had anticipated. Based on the current status of
Globalstar&#146;s restructuring efforts, the Company believes it
will not receive any of the contractual amounts due. As a
result, the Company recorded $44 million in net charges to
establish reserves against remaining Globalstar-related assets
in the fourth quarter of fiscal 2001. During fiscal 2001, the
Company recorded total net charges of $49 million in cost of
revenues, $519 million in asset impairment and related charges,
$10 million in investment expense and $58 million in other
non-operating charges related primarily to the impairment of
certain assets. Valuation allowances have been established
against the entire finance and note receivables balances
totaling $602 million, and the Company does not anticipate
recognition of any interest income in the future.
</FONT>

<P align="left">
<I><FONT size="2">Inquam Limited</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2000, the Company agreed to invest
$200 million in the convertible preferred shares of Inquam
Limited (Inquam). Inquam was formed to acquire, own, develop and
manage wireless communications systems, either directly or
indirectly, with the primary intent of deploying CDMA-based
technology. In addition, QUALCOMM advanced $10 million under a
promissory note, bearing interest at 10%, that matures on
January&nbsp;31, 2002. At September&nbsp;30, 2001, $144 million
of the equity funding commitment was outstanding. The Company
expects to fund the remaining commitment through June 2002.
</FONT>

<P align="left">
<I><FONT size="2">Wingcast, LLC</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2000, Ford Motor Company and QUALCOMM
created a new company, Wingcast, LLC (Wingcast), to develop and
deliver wireless mobility services into cars and trucks.
QUALCOMM committed to contribute $125 million to the initial
capital of Wingcast, including up to $75 million in cash and $50
million in non-cash consideration. QUALCOMM may be further
committed to fund an additional $75 million in cash upon vehicle
manufacturers committing to enable certain volumes of vehicles
to use Wingcast&#146;s services. QUALCOMM holds a 15% interest
in Wingcast. At September&nbsp;30, 2001, $50 million of the
initial $75 million cash commitment was outstanding and remained
subject to certain conditions, and Wingcast had not met the
performance milestones related to the additional $75 million
cash commitment. Performance milestones must be completed by
April&nbsp;2003 or before Wingcast&#146;s initial public
offering.
</FONT>

<P align="center"><FONT size="2">F-20
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<I><FONT size="2">QUALCOMM Personal Electronics</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 1994, a subsidiary of the Company and a
subsidiary of Sony Electronics Inc. (Sony Electronics) entered
into a general partnership, QUALCOMM Personal Electronics (QPE),
to manufacture CDMA consumer equipment for cellular, PCS and
other wireless applications. The Company owns 51% of the venture
and consolidates QPE in its financial statements. Sony
Electronics&#146; 49% general partnership share in QPE is
presented as a minority interest in the Company&#146;s financial
statements. In February 2000, the Company sold its
terrestrial-based CDMA wireless consumer phone business (Note
14). As a result, QPE has no on-going operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2001, QPE distributed certain
assets to its owners based on their pro-rata ownership
interests. Sony Electronics&#146; share of the distribution
reimbursed the Company for cash advanced to and the forgiveness
of receivables from Sony Electronics in February 2000 related to
the sale of the Company&#146;s terrestrial-based CDMA wireless
consumer phone business (Note&nbsp;14). The distribution by QPE
reduced the minority interest liability to Sony Electronics and
a related receivable included in other current assets by $40
million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2000 and 1999, QPE sales to Sony
Electronics amounted to $6 million and $249 million,
respectively. Purchases of inventory and capital equipment from
Sony Electronics and other Sony affiliates during fiscal 2000
and 1999 amounted to $3 million and $80 million, respectively.
At September&nbsp;30, 2001 and 2000, outstanding accounts
receivable from Sony Electronics amounted to none and $2
million, respectively. The $2 million receivable at September
30, 2000 was the result of on-going business unrelated to QPE.
At September&nbsp;30, 1999, accounts payable to all Sony
Electronics affiliated companies amounted to $14 million.
</FONT>

<P align="left">
<I><FONT size="2">NextWave Telecom Inc.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November&nbsp;1995, the Company purchased
1,666,666 shares of Series&nbsp;B common stock in
Next<I>Wave</I> Telecom Inc. (Next<I>Wave</I>), a privately-held
company, for $5 million. As part of the share purchase, the
Company received warrants to buy 1,111,111 additional shares of
Series&nbsp;B common stock at $3 per share. During
March&nbsp;1996, the Company converted a $15 million note
receivable into 5,000,000 shares of Series&nbsp;B common stock.
In June&nbsp;1998, the Company recorded a $20 million impairment
charge related to the Company&#146;s investment in
Next<I>Wave</I>. Subsidiaries of Next<I>Wave</I> filed for
bankruptcy protection in June&nbsp;1998 under Chapter&nbsp;11 of
the United States Bankruptcy Code. Next<I>Wave </I>itself filed
for bankruptcy protection in December&nbsp;1998 under
Chapter&nbsp;11 of the United States Bankruptcy Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2001, Next<I>Wave </I>filed a plan of
reorganization with the United States Bankruptcy Court which
requires total financing of approximately $5 billion to
build-out an advanced 3G wireless network. The plan provides for
payment of all valid claims against Next<I>Wave,</I> including
the claim of the FCC for the PCS licenses it granted to
Next<I>Wave</I> in 1997, plus interest as applicable. The plan
also provides that Next<I>Wave</I>&#146;s debt for its C-block
and F-block PCS licenses would be reinstated, with the
government receiving all amounts due up to this point, in full,
with the remaining balance to be paid in installments. Under
this plan, Next<I>Wave </I>indicated that it expects to
construct wireless networks in 95 markets utilizing CDMA2000
1xEV-DO technology.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2001, the Company sold 150,000
shares of Next<I>Wave </I>series&nbsp;B common stock and
recorded a realized gain of $1 million. At September&nbsp;30,
2001, the Company owned 6,516,666 shares of Series&nbsp;B common
stock and held warrants to purchase 1,111,111 shares of
Series&nbsp;B common stock for $3 per share. The Company also
held a $0.4 million promissory note convertible into 1,019,444
shares of Series&nbsp;C common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August&nbsp;2001, the Company committed to
purchase 2,000,000 shares of Series&nbsp;A preferred stock in
the reorganized Next<I>Wave</I> for $300 million. The
Company&#146;s investment was subject to approval by the United
States Bankruptcy Court, successful consummation of
Next<I>Wave</I>&#146;s August&nbsp;2001 plan of reorganization,
</FONT>

<P align="center"><FONT size="2">F-21
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">satisfactory resolution of all disputes involving
Next<I>Wave&#146;s</I> PCS licenses and other conditions.
Furthermore, the Company&#146;s obligation to make this
investment was subject to approval by the Bankruptcy Court on or
before October&nbsp;31, 2001 of the terms and conditions of the
Company&#146;s investment, as well as a certain Technology
Cooperation Agreement dated as of August&nbsp;15, 2001, as
amended, between Next<I>Wave</I> and QUALCOMM. Next<I>Wave</I>
also was entitled to terminate the investment commitment if a
certain break-up fee contained in the subject Subscription
Agreement was not approved by the Bankruptcy Court on or before
October&nbsp;31, 2001. The approvals required by
October&nbsp;31, 2001 have not been obtained, and the Company is
entitled to terminate its investment agreement with
Next<I>Wave.</I> The Company&#146;s $300 million commitment is
dependent on Next<I>Wave</I> pursuing the plan of reorganization
filed in August, 2001. Accordingly, if Next<I>Wave</I> abandons
the plan filed in August, 2001 and proceeds with a new plan,
then the Company will not be obligated to make the investment.
As a result of the uncertainty surrounding
Next<I>Wave&#146;s</I> financing plans, the terms of a
settlement with the FCC and other factors, there is significant
uncertainty as to whether the Company will have the opportunity
to make its planned investment in a reorganized Next<I>Wave.</I>
</FONT>

<P align="left">
<I><FONT size="2">Other</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other strategic investments as of
September&nbsp;30, 2001 and 2000, amounted to $184 million and
$148 million, respectively. At September&nbsp;30, 2001,
effective ownership interests in the investees ranged from 1% to
50%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Funding commitments related to these investments
totaled $48 million at September&nbsp;30, 2001, which the
Company expects to fund through fiscal 2009. Such commitments
are subject to the investees meeting certain conditions; actual
equity funding may be in lesser amounts. It is not practicable
to estimate the fair value of these investments as the
investments are predominantly closely held and not publicly
traded. An investee&#146;s failure to successfully develop and
provide competitive products and services due to lack of
financing, market demand or unfavorable economic environment
could adversely affect the value of the Company&#146;s
investment in the investee. There can be no assurance that the
investees will be successful in their efforts.
</FONT>

<P align="left">
<B><FONT size="2">Note 5&nbsp;&#151; Debt and Credit
Facilities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company had an unsecured credit facility
under which banks were committed to make up to $400 million in
revolving loans to the Company. The credit facility was
cancelled in January&nbsp;2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under terms of two identical revolving credit
agreements, cancelled in February&nbsp;2000 as a condition of
the sale of the Company&#146;s terrestrial-based CDMA wireless
consumer phone business (Note&nbsp;14), QPE (Note&nbsp;4) could
borrow a total of $150 million. The interest under the
facilities was at the applicable LIBOR rate plus 0.5%. The
weighted average interest rate on outstanding borrowings was
6.4% and 5.9% during fiscal 2000 and 1999, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash amounts paid for interest were $11 million
in fiscal 2001, $5 million in fiscal 2000 and $11 million in
fiscal 1999. Cash paid for interest in fiscal 2001 included
$8&nbsp;million related to an arbitration decision against the
Company.
</FONT>

<P align="center"><FONT size="2">F-22
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Note 6&nbsp;&#151; Investment (Expense)
Income</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investment (expense)&nbsp;income for the years
ended September&nbsp;30 was comprised as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">243,298</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">245,440</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50,392</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized gains on marketable securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63,420</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">270,132</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,663</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized gains on other investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,267</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized gains on derivative instruments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">459</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss on cancellation of warrants (Note&nbsp;15)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,273</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized other-than-temporary losses on
	marketable securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(147,649</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized other-than-temporary losses on other
	investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(139,525</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Change in unrealized gain on derivative
	instruments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(243,308</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Minority interest in income of consolidated
	subsidiaries
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,769</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6,264</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,066</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity in losses of investees
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(35,192</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,117</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,140</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(255,999</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">494,191</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,576</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Note 7&nbsp;&#151; Trust Convertible Preferred
Securities of Subsidiary</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February&nbsp;1997, QUALCOMM Financial
Trust&nbsp;I (the Trust), the Company&#146;s wholly-owned
subsidiary trust created under the laws of the State of
Delaware, completed a private placement of $660 million of
5&nbsp;3/4% Trust Convertible Preferred Securities. The sole
assets of the Trust were QUALCOMM Incorporated 5&nbsp;3/4%
Convertible Subordinated Debentures due February&nbsp;24, 2012.
The Company fully and unconditionally guaranteed the obligations
of the Trust related to the Trust Convertible Preferred
Securities. The Trust Convertible Preferred Securities were
convertible into Company common stock at the rate of 5.5056
shares of Company common stock for each Trust Convertible
Preferred Security (equivalent to a conversion price of
$9.082054 per share of common stock). Distributions on the Trust
Convertible Preferred Securities were payable quarterly by the
Trust. The Trust Convertible Preferred Securities were subject
to mandatory redemption on February&nbsp;24, 2012, at a
redemption price of $50 per preferred security. The Company had
the right to convert the Trust Convertible Preferred Securities,
in whole or in part, on or after March&nbsp;4, 2000. The Company
was required to pay a premium over the initial conversion price
if securities were converted prior to March&nbsp;4, 2002. As a
result of the Leap Wireless Spin-off, and pursuant to a
resolution of the Board of Directors of QUALCOMM, each QUALCOMM
Trust Convertible Preferred Security was convertible, subject
and pursuant to the terms of the Convertible Subordinated
Debentures, into both QUALCOMM common stock and Leap Wireless
common stock at the rate of 5.5056 and 0.17205 shares,
respectively, for each QUALCOMM Trust Convertible Preferred
Security.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2000, approximately 13,191,000
Trust Convertible Preferred Securities were converted into
approximately 72,623,000 shares of common stock. As of
September&nbsp;30, 2000, all Trust Convertible Preferred
Securities had been converted into common stock.
</FONT>

<P align="center"><FONT size="2">F-23
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Note 8&nbsp;&#151; Income Taxes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of income tax provision for the
years ended September&nbsp;30 were as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current provision:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Federal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">274,316</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">289,135</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,534</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">State
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,640</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54,423</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">77,276</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,385</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,657</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">421,232</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">405,943</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">202,402</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred (benefit)&nbsp;provision:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Federal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(279,730</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97,522</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(86,996</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">State
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(37,001</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,129</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,599</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(316,731</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">120,651</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(96,595</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">104,501</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">526,594</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105,807</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a reconciliation from the
expected statutory federal income tax provision to the
Company&#146;s actual income tax provision for the years ended
September&nbsp;30 (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Expected income tax provision at federal
	statutory tax rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(149,208</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">418,881</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">107,363</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">State income tax (benefit)&nbsp;provision, net of
	federal benefit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,168</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,234</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,951</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">77,277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,385</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,657</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Permanent differences
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,567</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,382</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(701</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign differential
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,665</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,896</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Goodwill amortization and purchased in-process
	technology
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95,728</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,811</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Valuation allowance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">185,217</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax credits
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(101,044</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(104,497</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(56,800</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Alternative Minimum Tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,165</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,302</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,498</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">528</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Actual income tax provision
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">104,501</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">526,594</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105,807</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company did not provide for United States
income taxes and foreign withholding taxes on a cumulative total
of approximately $217 million of undistributed earnings for
certain non-United States subsidiaries. The Company intends to
reinvest these earnings indefinitely in operations outside the
United States.
</FONT>

<P align="center"><FONT size="2">F-24
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2001 and 2000, the Company
had net deferred tax assets as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accrued liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">451,912</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">127,942</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">186,094</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,153</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized loss on marketable securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,988</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,658</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unused net operating losses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">184,725</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">289,613</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax credits
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">324,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">214,349</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized loss on investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,720</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total gross assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,309,232</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">710,715</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Valuation allowance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,208,107</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(584,001</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total net deferred assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">101,125</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">126,714</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased intangible assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,319</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,496</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred contract costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(42,524</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized gain on marketable securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,817</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(73,659</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other basis differences
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36,434</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(41,559</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total deferred liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(94,094</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(126,714</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has provided a valuation allowance on
substantially all of its net deferred tax assets because of
uncertainty regarding their realizability due to the expectation
that deductions from future employee stock option exercises and
related deductions will exceed future taxable income. If and
when recognized, the tax benefit of these deferred assets will
primarily be accounted for as a credit to stockholders&#146;
equity rather than as a reduction of the income tax provision.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2001, the Company had
unused net operating losses, manufacturing, research, foreign
tax and alternative minimum tax credits expiring from 2002
through 2021. The unused net operating tax losses were generated
by the exercise of non-qualified employee stock options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash amounts paid for income taxes were
$75&nbsp;million, $44&nbsp;million and $68&nbsp;million for
fiscal 2001, 2000 and 1999, respectively.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;9&nbsp;&#151; Capital
Stock</FONT></B>

<P align="left">
<I><FONT size="2">Common Stock Warrants</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2000, the Company assumed warrants to
purchase 11,000, 68,000, and 7,000&nbsp;shares of common stock
at $10.21, $2.91, and $6.56&nbsp;per share, respectively, as a
result of the acquisition of SnapTrack. In April 2000, the
Company issued 86,000&nbsp;shares of common stock upon the
exercise of the warrants.
</FONT>

<P align="left">
<I><FONT size="2">Preferred Stock</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has 8,000,000 shares of preferred
stock authorized for issuance in one or more series, at a par
value of $0.0001 per share. In conjunction with the distribution
of Preferred Share Purchase Rights, the Company&#146;s Board of
Directors designated 1,500,000 shares of preferred stock as
Series&nbsp;A Junior Participating Preferred Stock and reserved
such shares for issuance upon exercise of the Preferred Share
Purchase Rights. At September&nbsp;30, 2001 and 2000, no shares
of preferred stock were outstanding.
</FONT>

<P align="left">
<I><FONT size="2">Preferred Share Purchase Rights Plan</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 1996, the Board of Directors
implemented a Preferred Share Purchase Rights Plan (Rights Plan)
to protect stockholders&#146; rights in the event of a proposed
takeover of the Company. Under the Rights
</FONT>

<P align="center"><FONT size="2">F-25
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">Plan, the Company declared a dividend of one
preferred share purchase right (a Right) for each share of the
Company&#146;s common stock outstanding. Pursuant to the Rights
Plan, each Right entitles the registered holder to purchase from
the Company a one one-hundredth share of Series&nbsp;A Junior
Participating Preferred Stock, $0.0001&nbsp;par value per share,
at a purchase price of $250. In November 1999, the Rights Plan
was amended to provide that the purchase price be set at $400.
The Rights are exercisable only if a person or group (an
Acquiring Person) acquires beneficial ownership of 15% or more
of the Company&#146;s outstanding shares of common stock. Upon
exercise, holders, other than an Acquiring Person, will have the
right, subject to termination, to receive the Company&#146;s
common stock or other securities, cash or other assets having a
market value, as defined, equal to twice such purchase price.
The Rights, which expire on September&nbsp;25, 2005, are
redeemable in whole, but not in part, at the Company&#146;s
option at any time for a price of $0.005&nbsp;per Right.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;10&nbsp;&#151; Employee Benefit
Plans</FONT></B>

<P align="left">
<I><FONT size="2">Employee Savings and Retirement Plan</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has a 401(k) plan that allows
eligible employees to contribute up to 15% of their salary,
subject to annual limits. The Company matches a portion of the
employee contributions and may, at its discretion, make
additional contributions based upon earnings. The Company&#146;s
contribution expense for fiscal 2001, 2000 and 1999 was
$19&nbsp;million, $17&nbsp;million and $17&nbsp;million,
respectively.
</FONT>

<P align="left">
<I><FONT size="2">Stock Option Plans</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors may grant options to
selected employees, directors and consultants to the Company to
purchase shares of the Company&#146;s common stock at a price
not less than the fair market value of the stock at the date of
grant. The 2001 Stock Option Plan (the 2001 Plan) was adopted
and replaced the 1991 Stock Option Plan (the 1991 Plan) which
expired in August 2001. The shares reserved under the 2001 Plan
are equal to the number of shares available for future grant
under the 1991 Plan on the date the 2001 Plan was approved by
the Company&#146;s stockholders. At that date, 50,541,570 shares
were available for future grants under the 2001 Plan. This share
amount is automatically increased by the amount equal to the
number of shares subject to any outstanding option under the
1991 Plan that expires or is terminated or cancelled following
the date that the 2001 Plan was approved by stockholders. The
Board of Directors of the Company may terminate the 2001 Plan at
any time. The 2001 Plan provides for the grant of both incentive
stock options and non-qualified stock options. Generally,
options outstanding vest over periods not exceeding six years
and are exercisable for up to ten years from the grant date. At
September&nbsp;30, 2001, options for 57,787,000 shares were
exercisable at prices ranging from $1.09 to $172.38 for an
aggregate exercise price of $682 million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has adopted the 2001 Non-Employee
Directors&#146; Stock Option Plan (the 2001 Directors&#146;
Plan) which replaces the 1998 Non-Employee Directors&#146; Stock
Option Plan. The shares reserved under the 2001 Directors&#146;
Plan are equal to the number of shares available for future
grant under the 1998 Directors&#146; Plan on the date the 2001
Directors&#146; Plan was approved by the Company&#146;s
stockholders. At that date, 2,050,000 shares were available for
future grants under the 2001 Directors&#146; Plan. This share
amount is automatically increased by the amount equal to the
number of shares subject to any outstanding option under the
1998 Directors&#146; Plan that expires or is terminated or
cancelled following the date that the 2001 Directors&#146; Plan
was approved by stockholders. The Board of Directors of the
Company may terminate the 2001 Directors&#146; Plan at any time.
This plan provides for non-qualified stock options to be granted
to non-employee directors at fair market value, vesting over
periods not exceeding five years and are exercisable for up to
ten years from the grant date. At September&nbsp;30, 2001,
options for 2,678,000 shares were exercisable at prices ranging
from $2.78 to $133.00 per share for an aggregate exercise price
of $18 million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2000, the Company assumed 1,560,000
outstanding stock options under the SnapTrack, Inc. 1995 Stock
Option Plan (the SnapTrack Plan), as amended with respect to the
acquisition. The SnapTrack Plan expired on the date of
acquisition, and no additional shares may be granted under that
plan. The
</FONT>

<P align="center"><FONT size="2">F-26
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">SnapTrack Plan provided for the grant of both
incentive stock options and non-qualified stock options.
Generally, options outstanding vest over periods not exceeding
four years and are exercisable for up to ten years from the
grant date. At September&nbsp;30, 2001, options for 283,000
shares were exercisable at prices ranging from $0.02 to $5.26
for an aggregate exercise price of $0.4 million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A summary of stock option transactions for the
plans follows (number of shares in thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Options Outstanding</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Exercise Price Per Share</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Available</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">for Grant</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Range</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance at September&nbsp;30, 1998</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,824</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180,572</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.61 to $8.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Additional shares reserved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options granted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(18,964</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,964</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.95 to 48.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13.03</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options canceled
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,336</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25,336</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.61 to 29.39</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options exercised
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(48,994</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.61 to 8.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.39</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance at September&nbsp;30, 1999</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66,196</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">125,206</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.09 to $48.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Additional shares reserved(a)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,560</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options assumed(a)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,560</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,560</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02 to 5.30</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options granted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,523</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,523</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46.93 to 172.38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">84.30</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options canceled
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,306</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,306</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.06 to 140.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13.94</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options exercised
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,015</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02 to 112.50</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.96</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance at September&nbsp;30, 2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,979</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109,968</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02 to $172.38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Additional shares reserved(a)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options assumed(a)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02 to 5.30</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Plan shares expired(b)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options granted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,589</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,589</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.54 to 100.50</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options cancelled
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,557</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,557</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.02 to 140.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.83</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options exercised
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(14,831</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.13 to 83.50</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance at September&nbsp;30, 2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47,889</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,175</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02 to $172.38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
	<TD><FONT size="2">(a)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Represents activity related to options that were
	assumed as a result of the acquisition of SnapTrack in
	March&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(b)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Represents shares available for future grant
	cancelled pursuant to the SnapTrack escrow agreement.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-27
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes information about
fixed stock options outstanding at September&nbsp;30, 2001
(number of shares in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="21%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Options Outstanding</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Options Exercisable</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Contractual</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Range of</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Life</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Exercise Prices</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(In Years)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$0.02 to $3.39
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,978</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.92</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,893</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.94</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$3.43 to $6.21
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,190</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.03</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,220</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.95</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$6.25 to $8.01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,767</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,399</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.09</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$8.02 to $19.25
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,753</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.08</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13.94</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,196</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.04</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$23.83 to $66.33
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,794</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.89</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,524</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.82</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$66.35 to $83.50
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.73</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75.27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,044</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">77.67</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$86.00 to $172.38
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,044</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.89</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,472</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">102.82</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,175</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,748</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.52</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<I><FONT size="2">Employee Stock Purchase Plans</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has employee stock purchase plans for
all eligible employees to purchase shares of common stock at 85%
of the lower of the fair market value on the first or the last
day of each six-month offering period. Employees may authorize
the Company to withhold up to 15% of their compensation during
any offering period, subject to certain limitations. The 2001
Employee Stock Purchase Plan (the 2001 Purchase Plan) was
adopted and replaces the 1991 Employee Stock Purchase Plan which
expired in August 2001. The 2001 Purchase Plan authorizes up to
12,154,733 shares to be granted until the Board of Directors of
the Company terminates the 2001 Purchase Plan. The 1996
Non-Qualified Employee Stock Purchase Plan authorizes up to
200,000 shares to be granted at anytime. During fiscal 2001,
2000 and 1999, shares totaling 758,000, 749,000 and 4,774,000
were issued under the plans at an average price of $50.16,
$37.75 and $5.44 per share, respectively. At September&nbsp;30,
2001, 12,240,049 shares were reserved for future issuance.
</FONT>

<P align="left">
<I><FONT size="2">Executive Retirement Plans</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has voluntary retirement plans that
allow eligible executives to defer up to 100% of their income on
a pre-tax basis. On a quarterly basis, the Company matches up to
10% of the participants&#146; deferral in Company common stock
based on the then-current market price, to be distributed to the
participant upon eligible retirement. The income deferred and
the Company match held in trust are unsecured and subject to the
claims of general creditors of the Company. Company
contributions begin vesting based on certain minimum
participation or service requirements, and are fully vested at
age 65. Participants who terminate employment forfeit their
unvested shares. All shares forfeited are used to reduce the
Company&#146;s future matching contributions. The plans
authorize up to 800,000 shares to be allocated to participants
at anytime. During fiscal 2001 and 2000, no shares were issued
under the plans. During fiscal 1999, there were 220,000 shares,
net of forfeitures, issued under the plans. The Company&#146;s
matching contribution net of amounts forfeited during fiscal
2001, 2000 and 1999 amounted to $3 million, $2 million and $1
million, respectively. At September&nbsp;30, 2001, 307,753
shares, including 129,137 issued and unallocated forfeited
shares, were reserved for future allocation.
</FONT>

<P align="center"><FONT size="2">F-28
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<I><FONT size="2">Accounting for Stock-Based
Compensation</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pro forma information regarding net income and
net earnings per common share has been estimated at the date of
grant using the Black-Scholes option-pricing model based on the
following assumptions:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Employee Stock</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Stock Option Plans</FONT></B></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Purchase Plans</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Risk-free interest rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.3%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.2%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.4%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.7%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.7%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Volatility
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividend yield
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Expected life (years)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Black-Scholes option-pricing model was
developed for use in estimating the fair value of traded options
that have no vesting restrictions and are fully transferable and
negotiable in a free trading market. In addition, option
valuation models require the input of highly subjective
assumptions, including the expected stock price volatility.
Because the Company&#146;s options have characteristics
significantly different from those of traded options, and
because changes in the subjective input assumptions can
materially affect the fair value estimate, in the opinion of
management, the existing models do not necessarily provide a
reliable single measure of the fair value of its options. The
weighted average estimated fair values of stock options granted
during fiscal years 2001, 2000 and 1999 were $44.25, $48.62 and
$7.14 per share, respectively. The weighted average estimated
fair values of shares granted under the Employee Stock Purchase
Plans during fiscal years 2001, 2000 and 1999 were $24.20,
$31.95 and $2.80, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of pro forma disclosures, the
estimated fair value of the options is assumed to be amortized
to expense over the options&#146; vesting periods. The pro forma
effects of recognizing compensation expense under the fair value
method on net income and net earnings per common share for the
years ended September&nbsp;30 were as follows (in thousands,
except for net earnings per share):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">As reported</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Pro forma</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">As reported</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Pro forma</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">As reported</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Pro forma</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net (loss) income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(548,743</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(715,867</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">670,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">570,044</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">149,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.73</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.95</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.93</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.79</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.73</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.95</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.71</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.23</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effects on pro forma disclosures of applying
the fair value method are not likely to be representative of the
effects on pro forma disclosures of future years because the
fair value method is applicable only to options granted
subsequent to September&nbsp;30, 1995.
</FONT>

<P align="left">
<B><FONT size="2">Note 11&nbsp;&#151; Commitments and
Contingencies</FONT></B>

<P align="left">
<I><FONT size="2">Litigation</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Schwartz, et al v.QUALCOMM:
</FONT></I><FONT size="2">On December&nbsp;14, 2000, 77 former
QUALCOMM employees filed a lawsuit against the Company in the
District Court for Boulder County, Colorado, alleging claims for
intentional misrepresentation, nondisclosure and concealment,
violation of C.R.S. Section&nbsp;8-2-104 (obtaining workers by
misrepresentation), breach of contract, breach of the implied
covenant of good faith and fair dealing, promissory estoppel,
negligent misrepresentation, unjust enrichment, violation of
California Labor Code Section&nbsp;970, violation of California
Civil Code Sections&nbsp;1709-1710, rescission, violation of
California Business &#38; Professions Code Section&nbsp;17200
and violation of California Civil Code Section&nbsp;1575. Since
then, four other individuals have joined the suit as plaintiffs.
Although there can be no assurance that an
</FONT>

<P align="center"><FONT size="2">F-29
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">unfavorable outcome of the dispute would not have
a material adverse effect on the Company&#146;s operating
results, liquidity or financial position, the Company believes
the claims are without merit and will vigorously defend the
action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">GTE Wireless Incorporated
(GTE)&nbsp;v.QUALCOMM: </FONT></I><FONT size="2">On
June&nbsp;29, 1999, GTE filed an action in the United States
District Court for the Eastern District of Virginia asserting
that wireless telephones sold by the Company infringe a single
patent allegedly owned by GTE. On September&nbsp;15, 1999, the
Court granted the Company&#146;s motion to transfer the action
to the United States District Court for the Southern District of
California. Trial has been set for June&nbsp;3, 2002. Although
there can be no assurance that an unfavorable outcome of the
dispute would not have a material adverse effect on the
Company&#146;s operating results, liquidity or financial
position, the Company believes the action is without merit and
will vigorously defend the action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Durante, et al v. QUALCOMM:
</FONT></I><FONT size="2">On February&nbsp;2, 2000, four former
QUALCOMM employees filed a putative class action against the
Company, ostensibly on behalf of themselves and those former
employees of the Company whose employment was terminated in
April 1999. Virtually all of the purported class of plaintiffs
received severance packages at the time of the termination of
their employment, in exchange for a release of claims, other
than federal age discrimination claims, against the Company. The
complaint was filed in California Superior Court in and for the
County of Los Angeles and purports to state ten causes of action
including breach of contract, age discrimination, violation of
Labor Code Section&nbsp;200, violation of Labor Code
Section&nbsp;970, unfair business practices, intentional
infliction of emotional distress, unjust enrichment, breach of
the covenant of good faith and fair dealing, declaratory relief
and undue influence. The complaint seeks an order accelerating
all unvested stock options for the members of the class. On
June&nbsp;27, 2000, the case was ordered transferred from Los
Angeles County Superior Court to San Diego County Superior
Court. On July&nbsp;3, 2000, the Company removed the case to the
United States District Court for the Southern District of
California, and discovery has commenced. On May&nbsp;29, 2001,
the Court dismissed all plaintiffs&#146; claims except for
claims arising under the federal Age Discrimination in
Employment Act. On July&nbsp;16, 2001, the Court granted
condition class certification on the remaining claims, to be
revisited by the Court at the end of the discovery period.
Although there can be no assurance that an unfavorable outcome
of the dispute would not have a material adverse effect on the
Company&#146;s operating results, liquidity or financial
position, the Company believes the claims are without merit and
will vigorously defend the action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Zoltar Satellite Alarm Systems, Inc. v.
QUALCOMM and SnapTrack: </FONT></I><FONT size="2">On
March&nbsp;30, 2001, Zoltar Satellite Alarm Systems, Inc. filed
suit against QUALCOMM and SnapTrack, a QUALCOMM wholly-owned
subsidiary, alleging infringement of three patents. On
August&nbsp;27, 2001, Zoltar filed an amended complaint adding
Sprint Corp. as a named defendant and narrowing certain
infringement claims against QUALCOMM and SnapTrack. Since then,
Zoltar has stated its intention to dismiss Sprint Corp. as a
defendant. QUALCOMM and SnapTrack have filed responsive
pleadings and discovery has commenced. Although there can be no
assurance that an unfavorable outcome of this dispute would not
have a material adverse effect on QUALCOMM&#146;s operating
results, liquidity or financial position, QUALCOMM believes the
claims are without merit and will vigorously defend the action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is engaged in other legal actions
arising in the ordinary course of its business and believes that
the ultimate outcome of these actions will not have a material
adverse effect on its operating results, liquidity or financial
position.
</FONT>

<P align="left">
<I><FONT size="2">Operating Leases</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company leases certain of its facilities and
equipment under noncancelable operating leases, with terms
ranging from two to ten years and with provisions for
cost-of-living increases. Rental expense for these facilities
and equipment for fiscal 2001, 2000 and 1999 was $28 million,
$19 million and $17 million, respectively. Future minimum lease
payments in each of the next five years from fiscal 2002 through
2006 are $35 million, $27 million, $17 million, $13 million and
$10 million, respectively, and $13 million thereafter.
</FONT>

<P align="center"><FONT size="2">F-30
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<I><FONT size="2">Purchase Obligations</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has agreements with certain suppliers
to purchase components and estimates its noncancelable
obligations under these agreements to be approximately $1
million through fiscal 2003. The Company also has commitments to
purchase telecommunications and research and development
services for approximately $28 million in fiscal 2002 and $16
million in each of the subsequent fiscal years through 2006.
</FONT>

<P align="left">
<I><FONT size="2">Letters of Credit, Financial Guarantees and
Other Financial Commitments</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;22, 1999 and April&nbsp;25,
2000, the Company and Pegaso Telecomunicaciones, S.A. de C.V.
(Pegaso) executed commitment letters in which the Company agreed
to underwrite up to $500 million of debt financing to Pegaso and
its wholly-owned subsidiary, Pegaso Comunicaciones y Sistemas, a
CDMA wireless operating company in Mexico. No amounts were drawn
on this commitment, and it expired on June&nbsp;15, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 1999, the Company agreed to advance $115
million, including capitalized interest, under a bridge facility
to Pegaso. Subsequent amendments to the bridge facility extended
amounts available under the facility and its final maturity and
increased the interest rate. At the end of fiscal 2001, $414
million was outstanding under the bridge facility, net of
deferred interest and unearned fees. The facility was payable in
full on September&nbsp;19, 2001 or August&nbsp;29, 2002 if
certain milestones were met, including the completion of a
strategic sale or merger with a third party. The bridge facility
was amended in October 2001 to, among other things, change the
timing of milestones required for the August&nbsp;29, 2002
maturity from September&nbsp;19 to October&nbsp;31, 2001 and
reduce the interest rate from 20% to 19% on a prospective basis
in exchange for the granting of a second lien on substantially
all of Pegaso&#146;s assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company also has an equipment loan facility
with Pegaso. At September&nbsp;31, 2001, $260 million was
outstanding under the equipment loan facility, net of deferred
interest and unearned fees. The equipment loan facility is
payable through December&nbsp;31, 2006 and bears interest at
LIBOR plus 4.5%. The Company has a further commitment to provide
an additional $96 million in long-term financing to Pegaso under
its arrangement with Ericsson (Note&nbsp;3), subject to Pegaso
meeting certain conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A strategic sale or merger was not completed by
October&nbsp;31, 2001, such that Pegaso failed to meet covenants
in both the amended bridge facility and the equipment loan. On
October&nbsp;31, 2001, Pegaso also failed to make a scheduled
payment of approximately $3 million on the equipment loan.
Pegaso is currently engaged in strategic discussions with a
third party for a potential sale or merger, and the Company is
actively working with Pegaso and the third party to complete a
transaction or, alternatively, to assist Pegaso in raising
additional funds. As the transaction did not close on the
targeted date of October&nbsp;31, 2001 and such additional
financing is not certain, the Company ceased accruing interest
on these loans effective at the beginning of the fourth fiscal
quarter of 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March&nbsp;2001, the Company transferred a
$125&nbsp;million Auction Discount Voucher&nbsp;(ADV) to Leap
Wireless to support its spectrum acquisition activities in the
FCC&#146;s current auction of PCS spectrum. The transfer was
funded under the Company&#146;s $125&nbsp;million senior credit
facility with Leap Wireless, and the face value was recorded as
a note receivable on the Company&#146;s balance sheet. The
facility is repayable in a lump sum payment, including principal
and interest accrued through October 2002, no later than
March&nbsp;9, 2006. After October&nbsp;2002, interest is payable
semi-annually. The facility bears interest at LIBOR plus 7.5%.
The Company deferred the recognition of income related to the
ADV transfer due to Leap Wireless&#146; right to return the ADV
in satisfaction of the note within two years upon the occurrence
of certain future events. In August 2001, Leap Wireless
transferred the ADV back to the Company, and the Company removed
the note
</FONT>

<P align="center"><FONT size="2">F-31
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">receivable and the related deferred income from
the balance sheet. In September 2001, the Company recognized
$11&nbsp;million in other operating income related to the
irrevocable transfer of a portion of the ADV to another
third-party. Under the terms of the senior credit facility with
Leap Wireless, the Company is committed to fund up to
$125&nbsp;million as a result of the return of the ADV until the
earlier of settlement of the FCC auction or Leap Wireless&#146;
withdrawal from the auction. At September&nbsp;30, 2001, no cash
has been advanced to Leap Wireless, but $1&nbsp;million in loan
fees and accrued interest were outstanding under the facility.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the financing commitments to Leap
Wireless and Ericsson (Note&nbsp;3), the Company had
$4&nbsp;million of letters of credit and $12&nbsp;million of
other financial guarantees and commitments outstanding as of
September&nbsp;30, 2001, none of which were collateralized.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;12&nbsp;&#151; Segment
Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is organized on the basis of products
and services. Reportable segments are as follows: QUALCOMM CDMA
Technologies&nbsp;(QCT) is a leading developer and supplier
worldwide of CDMA-based integrated circuits and system software
for wireless voice and data communications and global
positioning products; QUALCOMM Technology Licensing
(QTL)&nbsp;licenses third parties to design, manufacture, and
sell products incorporating the Company&#146;s technologies; and
QUALCOMM Wireless Systems&nbsp;(QWS) designs, manufactures,
markets, and deploys infrastructure and handset products for use
in terrestrial and non-terrestrial CDMA wireless and satellite
networks and provides satellite and terrestrial-based two-way
data messaging and position reporting services to transportation
companies and private fleets. The Company sold its
terrestrial-based CDMA wireless consumer phone business, the
former operating segment, QUALCOMM Consumer Products (QCP), to
Kyocera in February&nbsp;2000 (Note&nbsp;14).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company evaluates the performance of its
segments based on earnings before income taxes and accounting
change (EBT), excluding certain impairment and other charges
that are not allocated to the segments for management reporting
purposes. EBT includes the allocation of certain corporate
expenses to the segments, including depreciation and
amortization expense related to unallocated corporate assets.
Segment data includes intersegment revenues. Segment assets are
comprised of accounts receivable, finance receivables and
inventory. Total segment assets differ from total assets on a
consolidated basis as a result of unallocated corporate assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below presents information about
reported segments for the years ended September&nbsp;30 (in
thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Reconciling</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">QCT</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">QTL</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">QWS</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Items</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,364,687</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">781,939</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">407,686</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">125,474</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,679,786</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">EBT
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">305,546</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">716,643</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66,155</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,514,649</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(426,305</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">296,638</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180,276</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">829,432</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,440,787</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,747,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,238,702</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">705,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">720,907</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">531,687</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,196,780</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">EBT
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,519</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">633,336</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">272,202</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(100,252</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,196,805</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">296,054</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">160,604</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,118,644</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,487,680</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,062,982</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">1999</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,133,422</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">454,163</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">939,780</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,409,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,937,299</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">EBT
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">427,994</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">404,947</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,220</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(546,475</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">306,686</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">187,517</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">91,368</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">868,143</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,387,922</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,534,950</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-32
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other reconciling items for the years ended
September&nbsp;30 were comprised as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Revenues</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues from external customers of QCP segment
	sold
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">541,856</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,469,637</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Elimination of intersegment revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(61,444</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(190,950</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(382,796</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other products
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">186,918</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180,781</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">323,093</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reconciling items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">125,474</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">531,687</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,409,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Earnings before income taxes</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unallocated corporate expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,138,323</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(337,456</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(337,723</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">EBT of QCP segment sold
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(70,073</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(39,983</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unallocated interest expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,632</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,204</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,595</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unallocated investment (loss)&nbsp;income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(334,631</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,749</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,610</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Distributions on Trust Convertible Preferred
	Securities of subsidiary trust
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,039</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(39,297</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Intracompany eliminations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,547</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(73,848</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(130,676</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36,610</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,619</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,811</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reconciling items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,514,649</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(100,252</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(546,475</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, revenues between operating segments
are based on prevailing market rates or an approximation
thereof. Unallocated corporate expenses for fiscal 2001 included
$626 million in charges related to the Globalstar business
(Note&nbsp;4), $152 million in charges related to the Vesper
Companies (Note&nbsp;4), and $252&nbsp;million for amortization
of goodwill and other acquisition-related intangible assets.
Unallocated corporate expenses for fiscal 2000 included $83
million in charges related to the sale of the terrestrial-based
CDMA wireless consumer phone business (Note&nbsp;14), $60
million for in-process technology related to the SnapTrack
acquisition (Note 13), and $146 million for amortization of
goodwill and other acquisition-related intangible assets.
Unallocated corporate expenses for fiscal 1999 include $331
million related to the sale of certain assets of the
Company&#146;s terrestrial CDMA wireless infrastructure business
(Note&nbsp;14), restructuring charges (Note&nbsp;16) and other
asset impairments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Specified items included in segment EBT for years
ended September&nbsp;30 were as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">QCT</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">QTL</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">QWS</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues from external customers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,360,427</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">727,564</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">404,877</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Intersegment revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,260</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54,375</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,366</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81,358</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity in losses of investees
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,056</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues from external customers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,130,216</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">628,766</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">715,161</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Intersegment revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,486</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">76,718</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,746</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110,419</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity in losses of investees
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,206</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">1999</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues from external customers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">896,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">343,242</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">928,696</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Intersegment revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">236,938</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110,921</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,084</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,889</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity in losses of investees
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,074</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-33
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales information by geographic area for the
years ended September&nbsp;30 was as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">942,579</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,681,104</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,459,838</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">South Korea
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">937,504</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">711,588</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">881,494</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other Foreign
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">799,703</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">804,088</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">595,967</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,679,786</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,196,780</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,937,299</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company distinguishes revenues from external
customers by geographic areas based on customer location.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The net book value of long-lived assets located
outside of the United States was $10 million, $10 million and
$16 million at September&nbsp;30, 2001, 2000 and 1999,
respectively.
</FONT>

<P align="left">
<B><FONT size="2">Note 13&nbsp;&#151; Acquisitions</FONT></B>

<P align="left">
<I><FONT size="2">SnapTrack, Inc.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March&nbsp;2000, the Company completed the
acquisition of all of the outstanding capital stock of
SnapTrack, Inc. (SnapTrack), a developer of wireless position
location technology, in a transaction accounted for as a
purchase. The purchase price was approximately $1&nbsp;billion,
representing the value of QUALCOMM shares issued to effect the
purchase, the value of vested and unvested options and warrants
exchanged at the closing date and estimated transaction costs of
$2&nbsp;million. The allocation of purchase price, based on the
estimated fair values of the acquired assets and assumed
liabilities, reflects acquired goodwill of $948 million,
purchased in-process technology of $60 million and other
intangible assets of $34 million. Tangible assets acquired and
liabilities assumed were not material to the Company&#146;s
financial statements. Amounts allocated to goodwill and other
intangible assets are amortized on a straight-line basis over
their estimated useful lives of four years. The acquisition has
been treated as a non-cash transaction in the statement of cash
flows.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Purchased in-process technology was expensed upon
acquisition because technological feasibility had not been
established and no future alternative uses existed. The fair
values for each of the in-process technologies were determined
by estimating the resulting net cash flows from such products
after their completion and commercialization, discounting the
net cash flows to present value, and applying the percentage
completion of the projects thereto. The fair value of in-process
technology was determined to be $60 million, including
Multimedia ASIC ($27 million), Server Release 2.0 ($23 million),
DSP Release 2.0 ($8 million) and the pager product ($2 million).
Net cash flow projections were made based on an assessment of
customer needs and the expected pricing and cost structure. If
these projects are not developed, future revenue and
profitability of QUALCOMM may be adversely affected.
Additionally, the value of other intangible assets acquired may
become impaired.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements include the
operating results of SnapTrack from the date of acquisition.
Unaudited pro forma operating results for the Company, assuming
the acquisition of SnapTrack had been made at the beginning of
the years ended September&nbsp;30, were as follows (in
thousands, except per share data):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,197,119</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,937,364</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">619,226</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(50,915</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic earnings (loss)&nbsp;per common share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.86</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.08</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted earnings (loss)&nbsp;per common share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.78</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.08</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-34
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These pro forma results have been prepared for
comparative purposes only and may not be indicative of the
operating results which actually would have occurred had the
combination been in effect at the beginning of the respective
periods or of future operating results of the consolidated
entities.
</FONT>

<P align="left">
<B><FONT size="2">Note 14&nbsp;&#151; Disposition of Assets and
Other Charges</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February&nbsp;2000, the Company sold its
terrestrial-based CDMA wireless consumer phone business,
including its phone inventory, manufacturing equipment and
customer commitments, to Kyocera Wireless (Kyocera). Under the
agreement with Kyocera, Kyocera agreed to purchase a majority of
its CDMA integrated circuit sets and system software
requirements from QUALCOMM for a period of five years. Kyocera
will continue its existing royalty-bearing CDMA license
agreement with QUALCOMM. QUALCOMM received $242 million,
including interest, during fiscal 2000 for the net assets sold.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the agreement with Kyocera, QUALCOMM
formed a new subsidiary that has a substantial number of
employees from QUALCOMM Consumer Products business to provide
services to Kyocera on a cost-plus basis to support
Kyocera&#146;s phone business for up to three years. In
addition, selected employees of QPE were transferred to Kyocera.
As a condition of the purchase, QPE paid down and cancelled its
two revolving credit agreements. QUALCOMM recorded $83 million
in charges during fiscal 2000 to reflect the estimated
difference between the carrying value of the net assets and the
consideration received from Kyocera, less costs to sell, and
employee termination costs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May&nbsp;1999, the Company sold certain of its
assets related to its terrestrial CDMA wireless infrastructure
business to Ericsson and entered into various license and
settlement agreements with Ericsson. Pursuant to the
Company&#146;s agreement with Ericsson, the Company has and will
extend financing for possible future sales by Ericsson of
infrastructure equipment and related services to specific
customers in certain geographic areas, including Brazil, Chile,
Mexico, and Russia or in other areas selected by Ericsson
(Note&nbsp;3). The Company recorded charges of $251 million
during fiscal 1999 related to the sale of its terrestrial CDMA
wireless infrastructure business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company leases certain facilities to Ericsson
and Kyocera under noncancelable operating leases, with
provisions for cost-of-living increases. The leases expire on
various dates through May&nbsp;31, 2004 and February&nbsp;20,
2005, respectively, and generally provide for renewal options
thereafter. Future minimum rentals in each of the next four
years from fiscal 2002 to 2005 are $21 million, $21 million, $17
million and $4&nbsp;million, including $1&nbsp;million in fiscal
2002 and fiscal 2003 related to subleases.
</FONT>

<P align="left">
<B><FONT size="2">Note 15&nbsp;&#151; Spin-Off of Leap Wireless
International, Inc.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;23, 1998, the Company completed
the spin-off and distribution (the Distribution or Leap Wireless
Spin-off) to its stockholders of shares of Leap Wireless. In
connection with the Distribution, the Company transferred to
Leap Wireless its joint venture and equity interests in certain
domestic and international emerging terrestrial-based wireless
telecommunications operating companies and recorded a $17
million liability in connection with its agreement to transfer
its ownership interest in Telesystems of Ukraine (TOU), a
wireless telecommunications company in Ukraine, and its working
capital loan receivable from TOU (TOU assets) to Leap Wireless
if certain events occurred within 18 months of the Leap Wireless
Spin-off. During the first six months of fiscal 1999, the
Company provided an additional $2 million working capital loan
to TOU and recorded 100% of the losses of TOU, net of
eliminations, because the other investors&#146; equity interests
were depleted. In March&nbsp;1999, the Company reassessed the
recoverability of TOU assets in light of certain developments
affecting the TOU business and the disposition of other assets
related to the terrestrial CDMA wireless infrastructure business
(Note&nbsp;14). As a result, the Company recorded a $15 million
non-operating charge to write off the TOU assets, as well as a
$12 million charge to operations to write off other assets
related to the TOU contract, and the adjusted liability to
transfer TOU to Leap Wireless of $15 million was reversed
against equity as an adjustment to the Distribution. As of
September&nbsp;30, 1999, all TOU assets
</FONT>

<P align="center"><FONT size="2">F-35
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">were written off. In fiscal 2001, the Company
assessed its remaining liabilities related to the Leap Wireless
spin-off and reversed $2 million against equity as an adjustment
to the Distribution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the Distribution, Leap
Wireless issued to QUALCOMM a warrant to purchase 5,500,000
shares of Leap Wireless common stock at $6.10625 per share. The
Company recorded the warrant at its predecessor basis of $24
million net of the related deferred tax liability. In
March&nbsp;1999, the Company agreed to reduce the number of
shares under warrant to 4,500,000 in exchange for
$3&nbsp;million in consideration from Leap Wireless, resulting
in a pre-tax loss of $3&nbsp;million. The Company agreed to the
cancellation to enable Leap Wireless to meet Federal
Communications Commission regulatory requirements. At
September&nbsp;30, 2001 and 2000, the Company had the right to
purchase 3,375,000 and 4,500,000 shares, respectively, of Leap
Wireless common stock under warrants. The estimated fair values
of the warrant at September&nbsp;30, 2001 and 2000 were $49
million and $250 million, respectively, as calculated using the
Black-Scholes option-pricing model.
</FONT>

<P align="left">
<B><FONT size="2">Note 16&nbsp;&#151; Restructuring</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During January&nbsp;1999, the Company completed a
review of its operating structure to identify opportunities to
improve operating effectiveness in connection with the
Company&#146;s plan to exit certain activities in its
infrastructure equipment business. As a result of this review,
management approved a formal restructuring plan that eliminated
651 positions. The Company recorded charges to operations of $15
million during the second quarter of fiscal 1999, including $10
million in employee termination costs, $3&nbsp;million in asset
impairments and $1&nbsp;million in estimated net losses on
subleases or lease cancellation penalties. The activities
related to the restructuring have been completed. The following
table presents the roll forward from the initial provision
during fiscal 1999 to September&nbsp;30, 2000 (in thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Provisions</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Deductions</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Deductions</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Employee termination costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,162</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,162</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Facility exit costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,397</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,866</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">531</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(531</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,559</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(14,028</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">531</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(531</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Note 17&nbsp;&#151; Subsequent Events
(Unaudited)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective October&nbsp;25, 2001, Wireless
Knowledge Inc. (Wireless Knowledge), a joint venture established
by QUALCOMM and Microsoft Corp. (Microsoft) in 1998, acquired
all shares held by Microsoft in exchange for an agreement that
Microsoft&#146;s royalty obligations under a Development,
License, and Alliance Agreement dated July&nbsp;19, 2000 by and
between Wireless Knowledge and Microsoft would be considered
fully paid, and certain other consideration. As a result,
Wireless Knowledge will become a subsidiary of QUALCOMM.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;18&nbsp;&#151; Summarized Quarterly
Data</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following financial information reflects all
normal recurring adjustments that are, in the opinion of
management, necessary for a fair statement of the results of the
interim periods. In the fourth quarter of fiscal 2001, the
Company modified its revenue recognition policy on adoption of
SAB No.&nbsp;101 (Note&nbsp;1).
</FONT>

<P align="center"><FONT size="2">F-36
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below presents quarterly data for the
year ended September&nbsp;30, 2001, as reported and as adjusted
for the impact of the adoption of SAB No.&nbsp;101, and for the
year ended 2000, as reported. (in thousands, except per share
data):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1st Quarter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2nd Quarter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">3rd Quarter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">4th Quarter</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">684,021</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">713,255</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">640,027</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment (4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(28,812</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,893</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,571</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">655,209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">717,148</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">656,598</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">650,831</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross profit(2)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">388,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">459,758</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">407,157</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment (4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(33,821</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">552</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,510</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">354,279</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">460,310</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">420,667</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">409,427</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Loss) income before accounting changes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(357,558</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">149,072</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(274,736</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment (4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17,304</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">380</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,847</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(374,862</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">149,452</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(260,889</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(44,507</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting changes, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">128,815</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment (4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(146,752</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net (loss) income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(228,743</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">149,072</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(274,736</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment (4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(164,056</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">380</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,847</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(392,799</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">149,452</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(260,889</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(44,507</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic net (loss) earnings per common share(3)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss before accounting changes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.48</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.36</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment(4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.50</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.34</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting changes, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment(4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.19</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net (loss)&nbsp;income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.31</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.36</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment(4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.21</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.52</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.34</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted net (loss)&nbsp;earnings per common
	share(3)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss before accounting changes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.48</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.36</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment(4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.50</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.34</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-37
</FONT>

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

<DIV align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1st Quarter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2nd Quarter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">3rd Quarter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">4th Quarter</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounting changes, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment(4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.19</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported on Form&nbsp;10-Q
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.31</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.36</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Impact of SAB101 adjustment(4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.21</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.52</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.34</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000(5)</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,120,073</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">727,741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">713,521</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">635,445</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross profit(2)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">471,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">377,345</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">438,569</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">402,419</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">177,119</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">199,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">154,701</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">138,675</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic net earnings per common share(3)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted net earnings per common share(3)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.23</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The decrease in revenues from the first quarter
	to the second quarter of fiscal 2000 was primarily due to a
	decrease in the terrestrial-based CDMA wireless consumer product
	revenue as a result of the sale of the business in
	February&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Gross profit is calculated by subtracting cost of
	revenues from total revenues.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Earnings per share are computed independently for
	each quarter and the full year based upon respective average
	shares outstanding. Therefore, the sum of the quarterly net
	earnings per share amounts may not equal the annual amounts
	reported.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(4)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">See Note&nbsp;1 for an explanation of the impact
	of the adoption of SAB101.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(5)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The pro forma impact of the adoption of SAB101 on
	fourth quarter fiscal 2000 results was to decrease revenues by
	$21 million, gross profit by $23 million, net income by $12
	million, basic net earnings per common share by $0.02, and
	diluted net earnings per common share by $0.01.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-38
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">SCHEDULE II</FONT></B>

<P align="center">
<B><FONT size="2">QUALCOMM INCORPORATED</FONT></B>

<P align="center">
<B><FONT size="2">VALUATION AND QUALIFYING ACCOUNTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><FONT size="1">BALANCE</FONT></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">CHARGED</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">AT</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">TO</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">BALANCE</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">BEGINNING</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">COSTS</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">AT</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">OF</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">AND</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">END OF</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">PERIOD(A)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">EXPENSES</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">DEDUCTIONS</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">OTHER</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">PERIOD(A)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Year ended September&nbsp;30, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Allowance for doubtful accounts:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&#151;&nbsp;trade receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(21,933</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,154</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,766</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(B)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,276</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&#151;&nbsp;finance receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,955</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,909</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">241</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,623</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventory reserves
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(42,786</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,840</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,284</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,458</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(B)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(44,884</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(69,674</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(30,903</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,291</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,503</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(77,783</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Year ended September&nbsp;30, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Allowance for doubtful accounts:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&#151;&nbsp;trade receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,276</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,195</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,471</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,610</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&#151;&nbsp;finance receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,623</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(525</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,144</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventory reserves
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(44,884</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(46,615</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,028</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,637</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(C)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(20,834</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Valuation allowance on deferred tax assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(584,001</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)(D)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(584,001</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(77,783</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(42,945</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,503</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(545,364</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(625,589</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Year ended September&nbsp;30, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Allowance for doubtful accounts:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&#151;&nbsp;trade receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,610</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,412</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,266</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,756</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&#151;&nbsp;finance receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,144</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(633,743</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(644,848</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&#151;&nbsp;notes receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(155,107</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(155,107</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventory reserves
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(20,834</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(65,268</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(77,285</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Valuation allowance on deferred tax assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(584,001</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(185,217</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(438,889</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)(E)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,208,107</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(625,589</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,049,747</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,122</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(438,889</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,101,103</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
	<TD><FONT size="2">(A)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The Company&#146;s fiscal year ends on the last
	Sunday of September.
	</FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
	<TD><FONT size="2">(B)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Disposition in connection with sale of assets
	related to the terrestrial CDMA wireless infrastructure business
	in May&nbsp;1999.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(C)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Disposition in connection with the sale of assets
	related to the terrestrial-based CDMA wireless consumer phone
	business in February 2000.
	</FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
	<TD><FONT size="2">(D)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Balance was charged to paid-in-capital (see Note
	8 to the Consolidated Financial Statements).
	</FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
	<TD><FONT size="2">(E)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Of this amount, $64,171 was charged against the
	tax benefit as a component of comprehensive loss related to the
	Company&#146;s temporary losses on marketable securities and
	$374,718 was charged to paid-in-capital (see Note 8 to the
	Consolidated Financial Statements).
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-1
</FONT>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.44
<SEQUENCE>3
<FILENAME>a76829ex10-44.txt
<DESCRIPTION>EXHIBIT 10.44
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.44

               --------------------------------------------------

                              BRIDGE LOAN AGREEMENT

                            dated as of May 27, 1999

               --------------------------------------------------

                                  by and among

                 PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.
                                   as Borrower

                   THE MEMBERS OF BORROWER GROUP NAMED HEREIN

                            THE LENDERS PARTY HERETO

                                 CITIBANK, N.A.
                             as Administrative Agent

                                SOCIETE GENERALE
                              as Syndication Agent

                                       and

                               ABN AMRO BANK N.V.
                             as Documentation Agent




                       Milbank, Tweed, Hadley & McCloy LLP


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                   PAGE
                                                                                                   ----
<S>                                                                                                <C>
SECTION 1.  DEFINITIONS..........................................................................    2

   1.1    DEFINED TERMS.........................................................................     2
   1.2    OTHER INTERPRETIVE PROVISIONS.........................................................    23
   1.3    ACCOUNTING TERMS; GAAP................................................................    23

SECTION 2.  THE CREDITS.........................................................................    24

   2.1    SYNDICATED WORKING CAPITAL FACILITY...................................................    24
   2.2    VENDOR WORKING CAPITAL FACILITY.......................................................    25
   2.3    CAPITALIZED INTEREST FACILITY.........................................................    25
   2.4    LETTERS OF CREDIT.....................................................................    25
   2.5    LOANS AND BORROWINGS..................................................................    30
   2.6    REQUESTS FOR BORROWINGS...............................................................    31
   2.7    FUNDING OF BORROWINGS.................................................................    34
   2.8    INTEREST ELECTIONS....................................................................    35
   2.9    TERMINATION AND REDUCTION OF, AND INCREASES IN, COMMITMENTS; FURTHER SYNDICATION......    36
   2.10   REPAYMENT OF LOANS....................................................................    39
   2.11   EVIDENCE OF DEBT......................................................................    39
   2.12   INTEREST..............................................................................    41
   2.13   ADDITIONAL INTEREST ON EURODOLLAR LOANS; INTEREST RATE DETERMINATIONS;
          ALTERNATE RATE OF INTEREST............................................................    43
   2.14   VOLUNTARY PREPAYMENTS.................................................................    43
   2.15   MANDATORY PREPAYMENTS.................................................................    44
   2.16   SYNDICATION...........................................................................    45

SECTION 3.  FEES; CONSIDERATION FOR QUALCOMM GUARANTY...........................................    45

   3.1    FEES..................................................................................    45
   3.2    CONSIDERATION FOR QUALCOMM GUARANTY...................................................    46

SECTION 4.  YIELD PROTECTION; PAYMENTS; TAXES; ETC..............................................    46

   4.1    INCREASED COSTS.......................................................................    46
   4.2    BREAK FUNDING PAYMENTS................................................................    47
   4.3    ILLEGALITY............................................................................    47
   4.4    TAXES.................................................................................    48
   4.5    PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS...........................    49
   4.6    MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS........................................    51

SECTION 5.  CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT.................................    52

   5.1    CONDITIONS PRECEDENT TO THE INITIAL SYNDICATED WORKING CAPITAL LOANS AND THE
          FIRST LETTER OF CREDIT................................................................    52
   5.2    CONDITIONS PRECEDENT TO THE INITIAL VENDOR WORKING CAPITAL LOANS, THE INITIAL
          CAPITALIZED INTEREST LOANS, AND THE QUALCOMM SATISFACTION OF CONDITIONS PRECEDENT
          LETTER................................................................................    54
   5.3    FURTHER CONDITIONS PRECEDENT TO CERTAIN LOANS AND LETTERS OF CREDIT...................    57
   5.4    CONDITIONS PRECEDENT TO CAPITALIZED INTEREST LOANS AND TO CERTAIN TERM LOANS..........    57
   5.5    FURTHER CONDITIONS PRECEDENT TO SYNDICATED WORKING CAPITAL LOANS AND LETTERS OF
          CREDIT................................................................................    58

SECTION 6.  REPRESENTATIONS, WARRANTIES AND AGREEMENTS..........................................    58

   6.1    SENIOR DEBT; NON-VENDOR FINANCING.....................................................    59
   6.2    APPROVALS.............................................................................    59
   6.3    CORPORATE STATUS......................................................................    59
</TABLE>


                                       i
<PAGE>

<TABLE>
<CAPTION>
                                                                                                   PAGE
                                                                                                   ----
<S>                                                                                                <C>
   6.4    CORPORATE POWER AND AUTHORITY.........................................................    59
   6.5    VALID AND BINDING OBLIGATION..........................................................    59
   6.6    NO VIOLATION..........................................................................    60
   6.7    PERMITS...............................................................................    60
   6.8    FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED LIABILITIES; ETC...............    60
   6.9    LITIGATION; LABOR DISPUTES............................................................    61
   6.10   TAX RETURNS AND PAYMENTS..............................................................    61
   6.11   CAPITALIZATION........................................................................    62
   6.12   SUBSIDIARIES..........................................................................    62
   6.13   COMPLIANCE WITH APPLICABLE LAW........................................................    63
   6.14   PROPERTY RIGHTS.......................................................................    63
   6.15   SINGLE-PURPOSE........................................................................    63
   6.16   FEES AND ENFORCEMENT..................................................................    63
   6.17   FOREIGN EXCHANGE APPROVALS............................................................    64
   6.18   LIENS.................................................................................    64
   6.19   TITLE.................................................................................    64
   6.20   LOAN DOCUMENTS........................................................................    64
   6.21   CERTAIN ANCILLARY SERVICES............................................................    65
   6.22   ENVIRONMENTAL MATTERS.................................................................    65
   6.23   INVESTMENT COMPANY ACT................................................................    65
   6.24   TRUE AND COMPLETE DISCLOSURE..........................................................    65
   6.25   NO ADDITIONAL FEES....................................................................    66
   6.26   USE OF PROCEEDS.......................................................................    66
   6.27   INSURANCE.............................................................................    66
   6.28   PRIVATE ACTIVITIES; IMMUNITY..........................................................    66
   6.29   NO SUBORDINATION......................................................................    67
   6.30   LICENSES..............................................................................    67
   6.31   OPERATOR AGREEMENTS...................................................................    67
   6.32   EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS............................................    67
   6.33   YEAR 2000.............................................................................    68
   6.34   INDEBTEDNESS..........................................................................    68
   6.35   BUDGET................................................................................    68

SECTION 7.  AFFIRMATIVE COVENANTS...............................................................    68

   7.1    INFORMATION COVENANTS.................................................................    69
   7.2    PERMITS; ENFORCEMENT OF TRANSACTION DOCUMENTS.........................................    72
   7.3    PROPER LEGAL FORM.....................................................................    73
   7.4    TRANSLATIONS..........................................................................    73
   7.5    NEW SUBSIDIARIES......................................................................    73
   7.6    CONSENTS, APPROVALS...................................................................    74
   7.7    USURY PERMIT..........................................................................    74

SECTION 8.  NEGATIVE COVENANTS..................................................................    74

   8.1    NO PREPAYMENTS........................................................................    74
   8.2    FUNDAMENTAL CHANGES...................................................................    74
   8.3    IMMUNITY..............................................................................    74
   8.4    ASSET SALES...........................................................................    75
   8.5    RESTRICTED PAYMENTS...................................................................    75

SECTION 9.  EVENTS OF DEFAULT...................................................................    75

   9.1    EVENTS OF DEFAULT.....................................................................    75
   9.2    REMEDIES..............................................................................    78
   9.3    EXERCISE OF REMEDIES..................................................................    78
</TABLE>


                                       ii
<PAGE>

<TABLE>
<CAPTION>
                                                                                                   PAGE
                                                                                                   ----
<S>                                                                                                <C>
SECTION 10. ADMINISTRATIVE AGENT................................................................    79

   10.1   APPOINTMENT OF ADMINISTRATIVE AGENT...................................................    79
   10.2   RIGHTS AND POWERS AS LENDER...........................................................    79
   10.3   DELEGATION OF DUTIES BY ADMINISTRATIVE AGENT..........................................    79
   10.4   LIABILITY OF ADMINISTRATIVE AGENT.....................................................    79
   10.5   RELIANCE BY ADMINISTRATIVE AGENT......................................................    80
   10.6   NON-RELIANCE BY LENDERS...............................................................    80
   10.7   INDEMNIFICATION.......................................................................    80
   10.8   SUCCESSOR ADMINISTRATIVE AGENT........................................................    81

SECTION 11. MISCELLANEOUS.......................................................................    81

   11.1   NOTICES...............................................................................    81
   11.2   WAIVERS; AMENDMENTS...................................................................    82
   11.3   EXPENSES, INDEMNITY, DAMAGE WAIVER....................................................    83
   11.4   SUCCESSORS AND ASSIGNS; PARTICIPATIONS................................................    84
   11.5   SURVIVAL..............................................................................    86
   11.6   COUNTERPARTS; INTEGRATION; EFFECTIVENESS..............................................    87
   11.7   RIGHT OF SET-OFF......................................................................    87
   11.8   SEVERABILITY..........................................................................    87
   11.9   GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS............................    87
   11.10  WAIVER OF JURY TRIAL..................................................................    89
   11.11  HEADINGS..............................................................................    89
   11.12  CONFIDENTIALITY.......................................................................    89
   11.13  INTEREST RATE LIMITATION..............................................................    90
   11.14  CURRENCY OF PAYMENT...................................................................    90
   11.15  JUDGMENT CURRENCY.....................................................................    90
   11.16  ENGLISH LANGUAGE......................................................................    90
   11.17  REINSTATEMENT.........................................................................    91
   11.18  QUALCOMM RIGHT OF SUBROGATION.........................................................    91
   11.19  NO THIRD-PARTY BENEFICIARIES..........................................................    91
</TABLE>


                                       iii
<PAGE>

                                        EXHIBITS

Exhibit A                          Form of Pagare
Exhibit B-1                        Form of Borrowing Request
Exhibit B-2                        Form of Budget Breakdown Certificate
Exhibit C                          Form of Capitalized Interest Loan Request
Exhibit D                          Form of Interest  Election Request
Exhibit E                          Form of Assignment and Assumption Agreement
Exhibit F                          Amendment No. 1 to Common Agreement
Exhibit G                          Amendment No. 1 to QUALCOMM Credit Agreement
Exhibit H                          Form of Administrative Questionnaire

                                        SCHEDULES

Schedule 2.1                       Syndicated Working Capital Commitments
Schedule 2.2                       Vendor Working Capital Commitments
Schedule 2.3                       Capitalized Interest Commitments
Schedule 6.10                      Withholding Taxes
Schedule 6.11                      Capitalization
Schedule 6.16                      Unpaid Taxes
Schedule 6.22                      Environmental Matters
Schedule 6.25                      Broker's Fees
Schedule 6.30                      Licenses
Schedule 6.34                      Indebtedness


                                       iv
<PAGE>

                              BRIDGE LOAN AGREEMENT

       This BRIDGE LOAN AGREEMENT (this "Agreement"), dated as of May 27, 1999,
among PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico ("Borrower"), PEGASO
TELECOMUNICACIONES, S.A. DE C.V., a sociedad anonima de capital variable
organized under the laws of Mexico, PEGASO PCS, S.A. DE C.V., a sociedad anonima
de capital variable organized under the laws of Mexico, PEGASO RECURSOS HUMANOS,
S.A. DE C.V., a sociedad anonima de capital variable organized under the laws of
Mexico, QUALCOMM INCORPORATED, a corporation organized under the laws of
Delaware, ("QUALCOMM") and the Syndicated Lenders (as defined below) from time
to time party hereto (each Syndicated Lender, together with QUALCOMM, a "Lender"
and, collectively, "Lenders"), CITIBANK, N.A., a national banking association,
in its capacity as administrative agent for Lenders ("Administrative Agent"),
SOCIETE GENERALE, as Syndication Agent, and ABN AMRO BANK N.V., as Documentation
Agent.

                                   WITNESSETH

              A. Borrower desires to obtain from the Working Capital Lenders (as
defined below) Working Capital Facilities (as defined below) in the aggregate
principal amount of up to One Hundred Million Dollars ($100,000,000) for the
purposes of financing Borrower's working capital needs and for capital
expenditures and other purposes, all as more particularly described below;

              B. Borrower desires to obtain from the Capitalized Interest
Lenders (as defined below) a credit facility to finance the interest payments,
when and as due, under the Working Capital Facilities, in an aggregate principal
amount of up to Fifteen Million Dollars ($15,000,000), all as more particularly
described below; and

              C. Lenders are willing to supply such financing subject to the
terms and conditions and in reliance on the representations and warranties set
forth in this Agreement and the other documents executed in connection herewith;

              NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants set forth below, Borrower, Lenders and
Administrative Agent agree as follows:

SECTION 1. DEFINITIONS

       1.1 Defined Terms. As used in this Agreement, the following terms have
the respective meanings set forth below or set forth in the referenced provision
following such term:

              "Additional Lender" shall have the meaning assigned in Section
2.9(f).


                                       1
<PAGE>

              "Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement.

              "Administrative Agent's Account" shall mean such account located
in New York, New York as is specified in writing by Administrative Agent to
Borrower and Lenders from time to time.

              "Administrative Agent's Fee Letter" shall mean that letter
agreement dated the date hereof by and between Borrower and Administrative Agent
regarding payment of fees in connection with Administrative Agent's duties in
its capacity as Administrative Agent.

              "Administrative Questionnaire" shall mean an Administrative
Questionnaire in a form supplied by the Administrative Agent.

              "Affiliate" shall mean, with respect to a specified Person, any
other Person which directly or indirectly controls, or is under common control
with, such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns directly or indirectly 10% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, (i) no individual
shall be deemed to be an Affiliate of a Person solely by reason of his or her
being a director, committee member, officer or employee of such person and (ii)
each member of the Borrower Group and each of their respective Affiliates shall
be deemed to be an Affiliate of each other member of the Borrower Group.

              "Agreement" shall mean this Bridge Loan Agreement, as the same may
be from time to time further modified, amended, supplemented or restated.

              "Alcatel" shall mean Alcatel, a corporation duly organized under
the laws of France.

              "Alcatel Credit Agreement" shall mean the Credit Agreement, dated
as of December 15, 1998, among Borrower, the lenders thereunder and Citibank
International plc, as Alcatel Administrative Agent.

              "Applicable Law" shall mean any constitution, statute, law, rule,
regulation, ordinance, judgment, order, decree, Permit, or any published
directive, guideline, requirement or other governmental restriction which has
the force of law, or any determination by, or interpretation of any of the
foregoing by, any judicial authority, binding on a given Person whether in
effect as of the date hereof or as of any date thereafter, including all
applicable Environmental Laws.


                                       2
<PAGE>

              "Applicable Margin" shall mean (i) for Eurodollar Loans, six
percent (6%); and (ii) for Base Rate Loans, five percent (5%); provided that in
each case, the Applicable Margin shall increase by one-half of one percent
(0.5%) on each Interest Adjustment Date.

              "Assignment Agreement" shall mean the Assignment and Assumption
Agreement in the form of Exhibit E (appropriately completed).

              "Authorized Officer" shall mean, with respect to any Person, the
Managing Director, the President, the Vice President, the Chief Financial
Officer, the Assistant Vice President, the Treasurer, the Assistant Treasurer or
equivalent officers of such Person and, with respect to Borrower, shall include
any officer or representative holding any of the foregoing positions (or their
equivalent) whose name appears on a certificate of incumbency delivered
concurrently with the execution of this Agreement, as such certificate of
incumbency may be amended, supplemented or replaced from time to time to
identify names of the individuals then holding such offices or the names of such
representatives and the capacity in which they are acting.

              "Availability Period" shall mean, for any Lender, (i) with respect
to such Lender's Syndicated Working Capital Commitment, the period from the
Closing Date until the Commitment Termination Date applicable to the Syndicated
Working Capital Facility, (ii) with respect to such Lender's Vendor Working
Capital Commitment, the period from (A) the date that is 90 days after the
Closing Date, if such Lender is QUALCOMM, or such earlier date as QUALCOMM may
elect by written notice to Borrower and Administrative Agent, or (B) the Closing
Date, if such Lender is an Additional Lender acquiring such Vendor Working
Capital Commitment in accordance with Section 2.9(f), until, in each case, the
Commitment Termination Date applicable to the Vendor Working Capital Facility,
(iii) with respect to such Lender's Term Loan Commitment, the Commitment
Termination Date applicable to the Syndicated Working Capital Facility, and (iv)
with respect to such Lender's Capitalized Interest Commitment, the period from
the Closing Date until the Commitment Termination Date applicable to the
Capitalized Interest Facility.

              "Base Rate" shall mean, for any period, a fluctuating interest
rate per annum in effect from time to time, which rate per annum shall at all
times be equal to the higher of:

              (a) the rate of interest announced publicly by Citibank in New
York, New York from time to time as Citibank's base rate; and

              (b) 1/2 of one percent per annum above the Federal Funds Rate for
such period.

              "Base Rate Loan" shall mean any Loan bearing interest at the Base
Rate.

              "Borrower" shall have the meaning provided in the first paragraph
of this Agreement.

              "Borrower Group" shall mean (i) Borrower, (ii) Holdings, (iii)
Pegaso PCS, (iv) Personnel Co. (v) the respective Subsidiaries of each of the
foregoing in existence as of the


                                       3
<PAGE>

Closing Date, and (vi) any Subsidiary of any of the foregoing which is formed,
established, purchased or acquired after the Closing Date as described in
Section 7.5. Any reference to a "member" or to a "member of the Borrower Group"
shall mean one or more of the Persons described in clause (i) through (vi) of
this definition.

              "Borrower Obligations" shall mean all obligations of Borrower now
existing or hereinafter arising, direct or indirect, absolute or contingent, due
or to become due, under this Agreement, the Pagares or any other Loan Document
to which Borrower is a party, including, without duplication, (i) payment of the
principal of and interest on the Loans and the reimbursement obligations of
Borrower in connection with the Letters of Credit, (ii) payment of all fees,
expenses, indemnities and other amounts under the Loan Documents, and (iii) all
other obligations, duties and liabilities of Borrower under or in connection
with the Loan Documents (whether or not evidenced by any note, bond or other
instrument and whether or not for the payment of money).

              "Borrowing" shall mean the incurrence by Borrower of Loans of the
same Type, on the same date, and under the same Facility, and, in the case of
Eurodollar Loans, having the same Interest Period.

              "Borrowing Request" shall mean a request by Borrower for a
Borrowing in accordance with Section 2.6.

              "Budget" shall mean the Initial Budget, as the same shall be
updated by Borrower with the prior written consent of QUALCOMM.

              "Budget Breakdown" shall have the meaning assigned in Section
2.6(b).

              "Business" shall mean the business of development, operation and
use of the Licenses (and, subject to the terms and conditions set forth in the
Vendor Facilities, other new licenses and/or concessions issued to any member of
the Borrower Group) and pursuant thereto the installation and operation of
terrestrial-based wireless telecommunications systems in Mexico and, to the
extent integral to such wireless terrestrial-based telecommunications systems,
long-distance telecommunications systems in Mexico.

              "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks are authorized or required by law to close
in New York City or in the Federal District of Mexico; provided that, when used
in conjunction with any Eurodollar Loan, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.

              "Business Plan" shall mean the Business Plan dated as of March 19,
1999, as updated from time to time as provided in Section 7.1(d).

              "Capital Lease" as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of such Person.


                                       4
<PAGE>

              "Capital Stock" of any Person shall mean any and all shares,
interest, rights to purchase, warrants, options, participations or other
equivalents of or interest in (however designated) the common or preferred
equity or preference share capital of such Person, including partnership
interests.

              "Capitalized Interest Commitment" shall mean, with respect to each
Capitalized Interest Lender, the amount set forth on Schedule 2.3 as such
Lender's "Capitalized Interest Commitment," as such amount may be adjusted from
time to time pursuant to the terms of this Agreement.

              "Capitalized Interest Commitment Percentage" shall mean, with
respect to any Capitalized Interest Lender, the percentage equivalent of such
Lender's Capitalized Interest Commitment divided by the Total Capitalized
Interest Commitment.

              "Capitalized Interest Facility" shall mean the extension of credit
to Borrower by the Capitalized Interest Lenders as set forth in Section 2.3.

              "Capitalized Interest Lenders" shall mean any Lender having a
Capitalized Interest Commitment.

              "Capitalized Interest Loans" shall mean loans made to Borrower by
Capitalized Interest Lenders under the Capitalized Interest Facility pursuant to
this Agreement.

              "Capitalized Interest Loan Request" shall have the meaning set
forth in Section 2.6(c).

              "Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of any Person in each case taken at the amount thereof accounted
for as liabilities in accordance with GAAP.

              "Cash Flow Forecast" shall mean the Initial Cash Flow Forecast, as
the same shall be updated as required pursuant to Section 7.1(e).

              "Change of Control" shall mean (i) the failure at any time and for
any reason prior to the consummation of a Qualified Public Offering of (a) the
Original Mexican Shareholders to own at least 51% of the voting Capital Stock of
Holdings, or (b) Leap to own, directly or indirectly through a wholly-owned
Subsidiary, at least 20% of the Capital Stock of Holdings, or (ii) at any time
after the consummation of a Qualified Public Offering, any transaction or series
of transactions whereby (A) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of voting Capital Stock of Holdings representing
35% or more of the combined voting power of all voting stock of Holdings, or (B)
during any period of 18 consecutive months, commencing before or after the date
of this Agreement, individuals who at the beginning of such 18 month period were
directors of Holdings, together with such directors who are approved by
directors who were directors at the beginning of such period, shall cease for
any reason to constitute a majority of board of directors of Holdings; or (iii)
any Person or two or more Persons acting in concert shall have


                                       5
<PAGE>

acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their acquisition of
the power to exercise, directly or indirectly, a controlling influence over the
management or policies of Holdings, or (iv) the failure for any reason of
Holdings to own (beneficially and of record) all of the Capital Stock of each of
Borrower, Pegaso, PCS and Personnel Co. (other than one share of such Capital
Stock which is owned, and shall continue to be owned, by another member of the
Borrower Group). Notwithstanding the foregoing, any such transaction or series
of transactions described in clause (ii) above shall not constitute a Change of
Control if the Original Mexican Shareholders, Leap and their wholly-owned
Subsidiaries continue to own, directly or indirectly, in the aggregate a greater
percentage of the voting Capital Stock of Holdings than any other Person or two
or more Persons acting in concert.

              "Charter Documents" shall mean, with respect to any Person, the
articles of incorporation, by-laws, partnership agreements or such other
documents or instruments which are required to be registered or lodged in the
place of incorporation or organization of such Person and which establish the
legal existence of such Person. With respect to Holdings, the term "Charter
Documents" shall also include the Joint Venture Agreement.

              "Citibank" shall mean Citibank, N.A., a national banking
association.

              "Class", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are Syndicated
Working Capital Loans, Term Loans, Vendor Working Capital Loans or Capitalized
Interest Loans.

              "Closing Date" shall mean the date upon which each condition set
forth in Section 5.1 has been satisfied, or waived by each Lender.

              "Commitment" shall mean, (a) with respect to each Syndicated
Lender, its Syndicated Working Capital Commitment or its Term Loan Commitment,
as the case may be, (b) with respect to each Vendor Working Capital Lender, its
Vendor Working Capital Commitment, and (c) with respect to each Capitalized
Interest Lender, its Capitalized Interest Commitment.

              "Commitment Termination Date" shall mean, for any Lender, (a) with
respect to such Lender's Syndicated Working Capital Commitment, the date that is
364 days after Closing Date, subject to Section 2.10(b), (b) with respect to
such Lender's Vendor Working Capital Commitment, the Scheduled Maturity Date,
and (c) with respect to such Lender's Capitalized Interest Commitment, the
Scheduled Maturity Date; provided, in each case, that if any such date is not a
Business Day, the relevant Commitment Termination Date for such Lender shall be
the immediately preceding Business Day. When the term "Commitment Termination
Date" is used in this Agreement without reference to any particular Lender or
Facility, such term shall, in such instance, be deemed to be a reference to the
latest Commitment Termination Date of any of the Lenders under any Facilities
then in effect hereunder.

              "Common Agreement" shall mean the Common Agreement dated as of
December 15, 1998 among each member of the Borrower Group, Citibank N.A., as
Intercreditor Agent, Citibank Mexico, S.A., Grupo Financiero Citibank, as
Collateral Agent, Citibank International


                                       6
<PAGE>

plc, as Alcatel Administrative Agent, and ABN AMRO Bank N.V., as QUALCOMM
Administrative Agent.

              "Contingent Obligations" shall mean as to any Person any
obligation of such Person Guaranteeing or intending to Guarantee any
Indebtedness ("primary obligations") of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including any obligation of such
Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (d) otherwise
to assure, indemnify or hold harmless the owner of such primary obligation
against loss in respect thereof (other than indemnity obligations arising in the
ordinary course of business), provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined in good faith.

              "Counter-Guarantors" shall mean collectively Leap and Alejandro
Burillo Azcarraga.

              "Counter-Guaranties" shall mean collectively each of those
guaranty agreements, dated as of the date hereof, executed by the
Counter-Guarantors, respectively, in favor of QUALCOMM.

              "Covered Pops" shall mean, as of any date of determination, Pops
for those geographical areas as to which (a) Borrower has the right under valid,
enforceable and effective Licenses owned by Borrower to provide PCS and WLL
services, and (b) Borrower has, as of such date of determination, constructed or
intends to construct facilities to provide such services.

              "Deemed Capitalized Interest Loan Request" shall have the meaning
set forth in Section 2.6(c).

              "Default" shall mean any event, act or condition which, with the
giving of notice, lapse of time, fulfillment of any condition or any combination
thereof, would become an Event of Default.

              "Dollars" or "$" shall mean the lawful currency of the United
States.

              "Eligible Assignee" shall mean (i) a commercial bank organized
under the laws of the United States, or any state thereof, (ii) a commercial
bank organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, which is acting


                                       7
<PAGE>

through a branch or agency located in the United States; which, in each case
(under clauses (i) and (ii) above) has a combined capital and surplus of at
least two hundred million dollars ($200,000,000); (iii) a Person that is
primarily engaged in the business of banking and that is a Lender or a
Subsidiary or Affiliate of a Lender; or (iv) a finance company, financial
institution, fund or any other Person that has a combined capital and surplus of
at least two hundred million dollars ($200,000,000) and is approved in writing
by Administrative Agent and QUALCOMM (which approval shall not be unreasonably
withheld); provided, however, that none of the Borrower Group or their
respective Affiliates (other than Affiliates that are commercial banks, finance
companies, financial institution or funds that would otherwise qualify
hereunder) shall qualify as an Eligible Assignee.

              "Environmental Claims" shall mean, with respect to any Person, any
notice, claim, administrative, regulatory or judicial action, suit, judgment,
demand or other communication (whether written or oral) by any other Person
alleging or asserting such Person's liability (contingent or otherwise) for
investigatory costs, cleanup or environmental remediation costs, governmental
response costs, damages to natural resources or other property of such Person,
personal injuries, fines or penalties arising out of, based on or directly or
indirectly resulting from (i) the generation, presence, use, handling,
transportation, storage, treatment, disposal or release or threatened release
into the environment of any Hazardous Material at any location, whether or not
owned by such Person, (ii) exposure to any Hazardous Materials, (iii) any fact,
circumstance, condition or occurrence forming the basis of any violation, or
alleged violation, of any Environmental Law, or (iv) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing. The term "Environmental Claim" shall
include, (a) any and all claims by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (b) any and all claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.

              "Environmental Law" shall mean any statute, law, rule, regulation,
code, ordinance, order, decree, judgment, injunction, notice, policy having the
force of law, or binding agreement issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material or to health and safety matters.

              "Eurocurrency Liabilities" shall have the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

              "Eurodollar Loan" shall mean any Loan bearing interest at the
Eurodollar Rate.

              "Eurodollar Rate" shall mean, for any Interest Period for each
Eurodollar Loan, the rate per annum (rounded upward, if necessary, to the
nearest whole multiple of 1/16 of 1% per annum) appearing on Telerate Page 3750
as of 11:00 A.M. (London time) on the date (as to any Interest Period, the
"Determination Date") that is two Business Days before the first day of


                                       8
<PAGE>

such Interest Period, as LIBOR for a period equal to such Interest Period. In
the event that Telerate Page 3750 shall cease to report such LIBOR or, in the
reasonable judgement of the Required Syndicated Lenders, shall cease to
accurately reflect such LIBOR, then the "Eurodollar Rate" with respect to such
Interest Period for such Eurodollar Loan shall be the rate per annum equal to
the average of the rate per annum at which deposits in U.S. dollars are offered
by the principal office of each of the Reference Banks in London, England to
leading banks in the London interbank market at 11:00 A.M. (London time) on the
Determination Date in an amount substantially equal to such Reference Bank's
Eurodollar Loan comprising part of the related Borrowing and for a period equal
to such Interest Period or, if no Reference Bank has a Eurodollar Loan
constituting part of the related Borrowing, the rate per annum at which deposits
in U.S. dollars are offered by the principal office of Citibank in London,
England to leading banks in the London interbank market at 11:00 A.M. (London
time) on the Determination Date in an amount substantially equal to the
aggregate of all Eurodollar Loans constituting part of the related Borrowing and
for a period equal to such Interest Period. The Eurodollar Rate for any Interest
Period for each Eurodollar Loan shall be determined by Administrative Agent on
the basis of the applicable rate appearing on Telerate Page 3750 as aforesaid
(or the applicable rates furnished to and received by Administrative Agent from
the Reference Banks) on the Determination Date for such Interest Period,
subject, however, to the provisions of Section 2.13.

              "Eurodollar Rate Reserve Percentage" of any Lender for any
Interest Period for any Eurodollar Borrowing shall mean the reserve percentage
applicable during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those days in
such Interest Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for such Lender with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal to such
Interest Period.

              "Event of Default" shall have the meaning set forth in Section
9.1.

              "Excluded Taxes" shall mean, with respect to Administrative Agent,
any Lender, the Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
Borrower is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by Borrower under Section 4.6(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender's failure to comply
with Section 4.4(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from Borrower with respect
to such withholding tax pursuant to Section 4.4(a).


                                       9
<PAGE>

              "Existing Equity" shall mean the equity capital contributed to
Holdings by the Existing Shareholders and the New Shareholders (in consideration
for Capital Stock of Holdings issued to such shareholders) prior to the Closing
Date.

              "Existing Equity Commitments" shall mean (i) the commitments of
the Original Mexican Shareholders as set forth in Article III of the Joint
Venture Agreement and in resolutions adopted at various shareholder meetings
pursuant to which such Persons have become obligated to contribute specified
amounts of equity capital to Holdings on or prior to the dates specified therein
in consideration for Capital Stock to be issued by Holdings and (ii) any
obligation of Alcatel existing or under negotiation on the date hereof to
purchase equity capital of Holdings.

              "Existing Shareholders" shall have the meaning set forth in the
Joint Venture Agreement.

              "Exposure" shall mean, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Loans and its LC
Exposure, if any, at such time.

              "Facility" shall mean, respectively, each of the Syndicated
Working Capital Facility, the Vendor Working Capital Facility, and the
Capitalized Interest Facility.

              "Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by Administrative Agent from three Federal funds
brokers of recognized standing selected by Administrative Agent.

              "Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 3.1.

              "Fiscal Year" shall mean the accounting year of any member of the
Borrower Group, as the case may be.

              "Foreign Lender" shall mean any Lender (other than QUALCOMM) that
is organized under the laws of a jurisdiction other than Mexico.

              "GAAP" shall mean generally accepted accounting principles in
Mexico as in effect from time to time, it being understood and agreed that
determinations in accordance with GAAP (i) for purposes of Section 7, including
defined terms as used therein, are subject (to the extent provided therein) to
Section 1.3 and shall include U.S. GAAP reconciliations, and (ii) for the
purposes of any other Section, to the extent that GAAP is limited, qualified or
modified in any such particular Section of this Agreement, such determinations
are subject to such limitations, qualifications or modifications as are set
forth in such Section (but only as applied to such Section).


                                       10
<PAGE>

              "Good Faith Contest" shall mean, with respect to the payment of
Taxes or any other claims or liabilities by any Person, the satisfaction of each
of the following conditions: (i) the validity or amount thereof is being
diligently contested in good faith by such Person by appropriate proceedings
timely instituted, (ii) during the period of such contest, the enforcement of
any contested item is effectively stayed, (iii) during the period of such
contest, such Person maintains sufficient reserves for the payment of such Taxes
or other claims or liabilities if determined adversely, and (iv) such contest
and any resultant failure to pay or discharge the claimed or assessed amount is
not reasonably likely to have a Material Adverse Effect.

              "Government of Mexico" shall mean the Government of Mexico,
including any instrumentality, subdivision, authority, agency, ministry or
statutory or legal entity or person (whether autonomous or not) thereof.

              "Governmental Authority" shall mean the government of the United
States, Mexico or any other nation or any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

              "GTE" shall mean GTE Data Services Mexico, S.A. de C.V., a
sociedad anonima de capital variable organized under the laws of Mexico.

              "GTE Deferred Fee" shall mean the portion of the fee payable to
Leap Wireless Mexico pursuant to the Operator Agreement the payment of which is
deferred in connection with a possible investment by GTE Corporation, or any of
its affiliates, in Borrower.

              "GTE Operator Agreement" shall mean the Management and Operator
Agreement between Leap Wireless Mexico and GTE.

              "Guarantors" shall mean (i) Pegaso PCS, (ii) Personnel Co. (iii)
Holdings, and (iv) any other Subsidiary of a member of the Borrower Group
executing a Guaranty Agreement as required by Section 7.5.

              "Guaranty" by any Person shall mean any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing in any manner any
Indebtedness of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise), (ii) as an account party in respect of any letter of
credit or letter of guaranty issued to support such Indebtedness or obligation
or (iii) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided that the term
"Guaranty" shall not include (x) endorsements for collection or deposit in the
ordinary course of business, or (y) indemnity or hold harmless provisions
included in contracts entered into in the ordinary course of business. The term
"Guaranty" or "Guaranteed" used as a verb has a correlative meaning.


                                       11
<PAGE>

              "Guaranty Agreements" shall mean any agreement by which a
Guarantor Guarantees the obligations of Borrower under this Agreement, including
the Pegaso Guaranty Agreement.

              "Guaranty Fee" shall have the meaning set forth in the QUALCOMM
Guaranty.

              "Guaranty Trust Agreement" shall mean the Irrevocable
Administration and Guaranty Trust Agreement executed by the Counter-Guarantors
and the trustee thereunder, with respect to the Stock Options granted to the
Counter-Guarantors.

              "Hazardous Materials" shall mean (i) all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes, (ii) any other chemicals, materials or substances defined as or
included in the definition "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wasted," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any applicable Environmental Law and (iii) any
other chemical, material, substance or waste of any nature regulated pursuant to
any Environmental Law.

              "Holdings" shall mean Pegaso Telecomunicaciones, S.A. de C.V., a
sociedad anonima de capital variable organized under the laws of Mexico.

              "Indebtedness" shall mean, as to any Person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money, (ii) all obligations of such Person for the deferred
purchase price of property or services, other than the GTE Deferred Fee and
trade accounts payable arising, and accrued expenses incurred, in the ordinary
course of business so long as such trade accounts payable are payable (and are
paid) within 90 days of the date the respective goods are delivered or the
respective services are rendered, (iii) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (iv) the currently available
amount of all letters of credit issued for the account of such Person and all
outstanding reimbursement obligations with respect to such letters of credit,
(v) all liabilities secured by any Lien on any property owned by such Person,
(vi) any Guaranty of Indebtedness by such Person, (vii) all obligations under
trade or bankers' acceptances, (viii) Capitalized Lease Obligations, (ix) all
net obligations under agreements providing for swaps, ceiling rates, ceiling and
floor rates, contingent participation or other hedging mechanisms with respect
to the payment of interest or the convertibility of currency, (x) all
obligations under any conditional sale agreement or other title retention
agreement and (xi) all Contingent Obligations of such Person.

              "Indemnified Taxes" shall mean Taxes other than Excluded Taxes.

              "Independent Accountant" shall mean PricewaterhouseCoopers LLP or
any replacement therefor of international recognized standing appointed by the
Borrower Group.

              "Initial Budget" shall mean the Borrower Group's budget for the
18-month period commencing on the Closing Date in form and substance
satisfactory to QUALCOMM, which


                                       12
<PAGE>

shall set forth the aggregate projected expenditures of the Borrower Group for
each Permitted Usage Category set forth therein for the eighteen (18) months
following the Closing Date.

              "Initial Cash Flow Forecast" shall mean the Borrower Group's cash
flow forecast for the six month period beginning April 1, 1999, in form and
substance reasonably satisfactory to QUALCOMM.

              "Interest Adjustment Date" shall mean (i) the date that is on the
one-year anniversary of the Closing Date, and (ii) each date, prior to, but not
including, the Scheduled Maturity Date, that is ninety (90) days following the
previous Interest Adjustment Date.

              "Interest Election Request" shall mean a request by Borrower to
convert or continue a Borrowing in accordance with Section 2.8.

              "Interest Payment Date" shall mean each date on which interest is
payable on the Loans.

              "Interest Period" shall mean, with respect to each Eurodollar
Loan, the period commencing on the date of the making or continuation of or
conversion to such Eurodollar Loan and ending one, three or six months
thereafter, as Borrower may elect in the applicable Interest Election Request;
provided that:

              (a) any Interest Period (other than an Interest Period determined
pursuant to clause (c) below) that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the immediately preceding Business Day;

              (b) any Interest Period applicable to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last Business
Day of the appropriate subsequent calendar month;

              (c) no Interest Period with respect to a Eurodollar Loan of any
Facility shall end after the Commitment Termination Date for such Facility;

              (d) no Interest Period applicable to a Eurodollar Loan shall have
a duration of less than one month, and if any Interest Period applicable to such
Eurodollar Loan would be for a shorter period, such Interest Period shall not be
available hereunder; and

              (e) subject to the foregoing clauses (a) through (d), until the
earlier of (i) ninety (90) days after the Closing Date and (ii) the date on
which the Total Syndicated Working Capital Commitment is increased pursuant to
Section 2.9(f) up to $100,000,000, the Interest Period with respect to each
Eurodollar Loan shall be the period commencing on the date of the making or
continuation of or conversion to such Eurodollar Loan and ending one month
thereafter.


                                       13
<PAGE>

              "Investment Company Act of 1940" shall mean the U.S. Investment
Company Act of 1940, and the rules and regulations promulgated thereunder.

              "Issuing Bank" shall mean Citibank, in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity as provided
in Section 2.4(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which
case the term "Issuing Bank" shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.

              "Joint Venture Agreement" shall mean the Joint Venture Agreement,
entered into as of July 16, 1998 by and among the Pegaso Comunicaciones y
Servicios, S.A. de C.V., Corporativo del Valle de Mexico, S.A. de C.V.,
Alejandro Burillo Azcarraga, Leap Mexico, Holdings, International Equity
Investments, Inc., NI MEDIA EQUITY, LLC, and LAIF X Ltd., as in effect on the
Closing Date.

              "Judgment Currency" shall have the meaning set forth in Section
11.15.

              "LC Disbursement" shall mean a payment made by the Issuing Bank
pursuant to a Letter of Credit.

              "LC Exposure" shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(b) the aggregate amount of all LC Disbursements that have not yet been
reimbursed by or on behalf of Borrower at such time. The LC Exposure of any
Syndicated Lender at any time shall be its Syndicated Working Capital Commitment
Percentage of the total LC Exposure at such time.

              "Leap" shall mean Leap Wireless International, Inc., a corporation
organized under the laws of Delaware.

              "Leap Wireless Mexico" shall mean Leap Wireless Mexico S.A. de
C.V., a corporation organized under the laws of Mexico.

              "Leap Mexico" shall mean Leap PCS Mexico, Inc., a corporation
organized under the laws of California, formerly known as QUALCOMM PCS Mexico,
Inc.

              "Lenders" shall mean the Syndicated Lenders, the Capitalized
Interest Lender and the Vendor Working Capital Lender and any other Person that
shall have become a party hereto pursuant to an Assignment Agreement, other than
any such Person that ceases to be a party hereto pursuant to an Assignment
Agreement.

              "Letter of Credit" shall mean any letter of credit issued pursuant
to this Agreement.

              "LIBOR" shall mean the rate at which deposits in U.S. dollars are
offered to leading banks in the London interbank market.


                                       14
<PAGE>

              "Licenses" shall mean the Frequency Band Concessions (as defined
in the Common Agreement) and the Telecommunication Networks Concession (as
defined in the Common Agreement) and any other licenses granted to the Borrower
by the Secretaria de Comunicaciones y Transportes in connection with the
Business.

              "Lien" shall mean any security interest, mortgage, pledge,
assignment by way of security, charge, lease, easement, servitude, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement of any kind or nature whatsoever including (i) any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under any recording or notice statute, and any lease
having substantially the same effect as any of the foregoing, and (ii) any
designation (except as contemplated by this Agreement) of loss payees or
beneficiaries or any similar arrangement under any insurance contract.

              "Loan" shall mean a Syndicated Working Capital Loan, a Vendor
Working Capital Loan, or a Capitalized Interest Loan, and "Loans" shall mean all
of such loans, collectively, unless the context otherwise requires.

              "Loan Document Currency" shall have the meaning set forth in
Section 11.14.

              "Loan Documents" shall mean, collectively, the following
agreements and instruments: (i) this Agreement, (ii) the Pagares, (iii) each
Guaranty Agreement, (iv) the Reimbursement Agreement, (v) Administrative Agent's
Fee Letter, (vi) the QUALCOMM Fee Letter, (vii) the Stock Options, (viii) any
Letter of Credit or related Letter of Credit application, (ix) the QUALCOMM
Guaranty, (x) an agreement dated as of the Closing Date among QUALCOMM and the
members of the Borrower Group regarding the waiver of certain conditions under
Section 5.2, and (xi) any other agreements or instruments that may be executed
and delivered in favor of Administrative Agent or one or more Lenders pursuant
to or in connection with this Agreement or any of the above-listed documents.

              "Material Adverse Effect" shall mean an event, circumstance,
occurrence or condition which has caused or could reasonably be expected to
cause, as of any date of determination, a material and adverse effect on (i) the
business, assets, liabilities, operations, prospects or condition (financial or
otherwise) of the Borrower Group (taken as a whole), (ii) the ability of
Borrower to perform Borrower Obligations or the ability of the Borrower Group
(taken as a whole) to perform its (or their) material Obligations under the Loan
Documents (including its (or their) ability to pay its (or their) obligations
under the Loan Documents as such obligations become due), (iii) the legality,
validity or enforceability of any of the Loan Documents or (iv) the rights of or
benefits available to the Lenders under the Loan Documents; provided, however,
that, after the Closing Date, clause (ii) of this definition shall apply only
for purposes of Sections 5.3(c) and 9.1(k).

              "Maturity" or "maturity" shall mean the earlier of (i) the
Scheduled Maturity Date and (ii) the date on which (A) the Loans have been
accelerated pursuant to Section 9.2 or (B) the Loans have been prepaid in full
and the Commitments terminated pursuant to this Agreement.

              "Mexico" shall mean the United Mexican States.


                                       15
<PAGE>

              "New Shareholders" shall have the meaning set forth in the Joint
Venture Agreement.

              "Obligation Currency" shall have the meaning set forth in Section
11.15.

              "Obligations" shall mean all Borrower Obligations and all other
obligations of members of the Borrower Group now existing or hereinafter
arising, direct or indirect, absolute or contingent, due or to become due, under
any of the Loan Documents, including, without duplication, (i) the principal of
and interest on the Loans, the reimbursement obligations of Borrower in
connection with Letters of Credit, the reimbursement obligations of the Borrower
Group pursuant to the Reimbursement Agreement and all other obligations,
advances, debts and liabilities of members of the Borrower Group, including
indemnities, and fees and interest incurred under, arising out of or in
connection with the this Agreement or any other Loan Document (whether or not
evidenced by any note, bond or other instrument and whether or not for the
payment of money), (ii) the obligations of Borrower to make deposits to the cash
collateral account described in Section 2.4(j), and (iii) the expenses of any
exercise by Administrative Agent or any Lender of its rights or remedies under
this Agreement or any other Loan Document, together with attorneys' fees and
court costs.

              "Operator Agreement" shall mean the Management and Operator
Agreement between Borrower and Leap Wireless Mexico.

              "Original Mexican Shareholders" shall mean Pegaso Comunicaciones y
Servicios, S.A. de C.V., Corporativo del Valle de Mexico, S. A. de C. V. and
Alejandro Burillo Azcarraga.

              "Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.

              "Pagare" or "Pagares" shall have the meaning set forth in Section
2.11(d).

              "Pegaso Guaranty Agreement" shall mean the Guaranty Agreement
dated as of the Closing Date as executed by each of the Guarantors in favor of
Administrative Agent for the benefit and on behalf of Lenders.

              "Pegaso PCS" shall mean Pegaso PCS, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of Mexico.

              "Permit" shall have the meaning set forth in Section 6.7.

              "Permitted Lien" shall have the meaning set forth in Section 6.01
of the Common Agreement as in effect on the date hereof.

              "Permitted Usage Category" shall mean one or more of the following
categories of expenditures, as the context shall require: (i) network operating
expenses, general and administrative expenses, sales and marketing expenses,
Taxes and interest expense (except that


                                       16
<PAGE>

no proceeds of Syndicated Working Capital Loans may be used to pay any interest
due on any Loans under this Agreement or the Pagares), other than handset
purchases (ii) handset purchases, (iii) capital expenditures not financed under
the Vendor Facilities and (iv) all amounts due and payable on the Closing Date
under the QUALCOMM Bridge Notes, and any other non-interest financing costs and
expenses payable under or in connection with the Loan Documents.

              "Person" shall mean any natural person, corporation, partnership,
joint venture, association, limited liability company, joint stock company,
trust, unincorporated organization or Governmental Authority or other entity.

              "Personnel Co." shall mean Pegaso Recursos Humanos, S.A. de C.V.,
a sociedad anonima de capital variable organized under the laws of Mexico.

              "Pesos" or "Ps." shall mean the lawful currency of Mexico.

              "Pops" shall mean population, as based on specific population
estimates of geographic areas as determined in accordance with those population
estimates provided by Comision Federal de Telecomunicaciones of Mexico in
connection with the bidding for and award of the Licenses.

              "QUALCOMM" shall mean QUALCOMM Incorporated, a corporation
organized under the laws of Delaware.

              "QUALCOMM Bridge Notes" shall mean the pagares dated April 16,
1999 and April 29, 1999, each between Borrower and QUALCOMM, evidencing loans by
QUALCOMM to Borrower in the aggregate principal amount of $20,119,444.

              "QUALCOMM Credit Agreement" shall mean the Amended and Restated
Credit Agreement dated as of December 15, 1998, between Borrower, the lenders
thereunder and ABN AMRO Bank N.V., as QUALCOMM Administrative Agent.

              "QUALCOMM Event" shall mean, so long (i) as any Obligations owing
to Administrative Agent or any Syndicated Lender remain unpaid or unsatisfied,
(ii) any Syndicated Working Capital Loans, Term Loans or Letters of Credit
remain outstanding, or (iii) any Syndicated Lender has any Commitment or any
Exposure under this Agreement, any of the following: (a) any event constituting
a "Guarantor Event of Default" under the QUALCOMM Guaranty; (b) any actual or
purported repudiation, revocation or rescission by QUALCOMM of the QUALCOMM
Guaranty, or QUALCOMM's obligations under the QUALCOMM Guaranty; or (c) the
QUALCOMM Guaranty shall cease to remain in full force and effect.

              "QUALCOMM Fee Letter" shall mean that letter agreement dated the
date hereof by and among the Borrower Group and QUALCOMM regarding the payment
of fees and other compensation in connection with the delivery by QUALCOMM of
the QUALCOMM Guaranty.

              "QUALCOMM Guaranty" shall mean that Guaranty Agreement, dated as
of the date hereof, between QUALCOMM and Administrative Agent pursuant to which
QUALCOMM


                                       17
<PAGE>

has guaranteed the obligations of Borrower under this Agreement and the Pagares
as therein provided.

              "Qualified Public Offering" shall mean a public offering of common
stock of Holdings, (i) in which the offering is made by Holdings and the
proceeds are to used by Holdings in its Business, (ii) the amount received by
Holdings (net of commissions, discounts and expenses) is not less than
$75,000,000, and (iii) such offering results in the common stock (or depository
receipts with respect thereto) of Holdings being listed on a national securities
market in the United States or in the European Union.

              "Reference Banks" shall mean Citibank, ABN AMRO Bank N.V. and
Societe Generale.

              "Register" shall have the meaning provided in Section 11.4(c).

              "Registered Financial Institution" shall mean a bank or other
financial institution duly registered in the Registry of Foreign Banks of
Mexico, Financing Entities, Pension Funds and Investments Funds.

              "Registration Rights Agreements" shall mean the Registration
Rights Agreement dated as of July 16, 1998 by and among Holdings and the
Sponsors as amended as of the date hereof.

              "Reimbursement Agreement" shall mean that Reimbursement Agreement
dated as of the date hereof by and among the members of the Borrower Group and
QUALCOMM, with respect to Borrower's reimbursement obligations to QUALCOMM in
connection with any payments made by QUALCOMM under the QUALCOMM Guaranty.

              "Related Parties" shall mean, with respect to any specified
Person, such Person's Affiliates and the respective directors, officers,
employees, agents and advisors of such Person and such Person's Affiliates.

              "Required Capitalized Interest Lenders" shall mean, at any time,
the Capitalized Interest Lenders having Exposures under the Capitalized Interest
Facility and unused Capitalized Interest Commitments representing at least 51%
of the sum of the total Exposures under the Capitalized Interest Facility and
unused Capitalized Interest Commitments of all Capitalized Interest Lenders at
such time.

              "Required Lenders" shall mean, at any time, all of the following:
(a) the Required Syndicated Lenders, (b) the Required Vendor Working Capital
Lenders, and (c) the Required Capitalized Interest Lenders.

              "Required Syndicated Lenders" shall mean, at any time, the
Syndicated Lenders having Exposures under the Working Capital Facility and
unused Working Capital Commitments (or, following the Commitment Termination
Date, Term Loans) representing at least 51% of the sum of the total Exposures
under the Working Capital Facility and unused Working Capital Commitments (or,
following the Commitment Termination Date, Term Loans)


                                       18
<PAGE>

of all Syndicated Lenders at such time; provided, however, that references to
"Required Syndicated Lenders" shall be deemed to be references to "Required
Lenders" (and clause (a) of the definition of "Required Lenders" shall be
disregarded) if (i) the Exposures of all Syndicated Lenders shall have been
reduced to zero, (ii) all Syndicated Working Capital Commitments, all Term Loan
Commitments and all LC Exposures shall have been terminated, (iii) all
Syndicated Working Capital Loans and all Term Loans shall have been repaid, (iv)
no Letters of Credit shall be outstanding, and (v) all other Obligations payable
to any Syndicated Lender or to the Administrative Agent shall have been paid in
full.

              "Required Vendor Working Capital Lenders" shall mean, at any time,
the Vendor Working Capital Lenders having Exposures under the Vendor Working
Capital Facility and unused Working Capital Commitments representing at least
51% of the sum of the total Exposures under the Vendor Working Capital Facility
and unused Working Capital Commitments of all Vendor Working Capital Lenders at
such time.

              "Responsible Officer" shall mean, with respect to any member of
the Borrower Group, the President, Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer or General Counsel of such member, or any
Person having a similar function.

              "Satisfaction of QUALCOMM Conditions Precedent Letter" shall mean
that letter of QUALCOMM to Administrative Agent indicating that the conditions
precedent set forth in Section 5.2 and 5.3 have occurred or been waived, in each
case to the satisfaction of QUALCOMM.

              "SEC" shall mean the U.S. Securities and Exchange Commission.

              "Scheduled Maturity Date" shall mean the date that is 18 months
after the Closing Date; provided, that if such date is not a Business Day, the
Scheduled Maturity Date shall be the immediately preceding Business Day.

              "Senior Indebtedness" shall have the meaning set forth in Annex A
to the Common Agreement as in effect on the date hereof .

              "Sponsors" shall mean collectively all of the shareholders of
Holdings, which as of the date hereof are Leap Mexico, the Original Mexican
Shareholders and the New Shareholders.

              "Sponsors Negative Pledge Agreement" shall mean the Negative
Pledge Agreement, dated as of April 12, 1999, pursuant to which each of the
Sponsors has agreed not to grant a Lien to any third party on the Capital Stock
of Holdings held by such Sponsor, to the extent provided therein.

              "Stock Options" shall mean collectively the Stock Option
Agreements of even date herewith granted by Holdings in favor of QUALCOMM and
each of the Counter-Guarantors.


                                       19
<PAGE>

              "Subsidiary" shall mean, for any Person, any other Person (whether
now existing or hereafter organized) for which at least a majority of the
securities or other ownership interests having ordinary voting power for the
election of directors or other managers are at the time owned or controlled by
such first Person or one or more Subsidiaries of such first Person or any
combination thereof.

              "Syndicated Lender" shall mean any Lender having a Syndicated
Working Capital Commitment or a Term Loan Commitment.

              "Syndicated Working Capital Commitment" shall mean, with respect
to each Syndicated Lender, the amount set forth on Schedule 2.1 as such
Syndicated Lender's "Syndicated Working Capital Commitment", as such amount may
be adjusted from time to time pursuant to the terms of this Agreement.

              "Syndicated Working Capital Commitment Percentage" shall mean,
with respect to any Syndicated Lender, the percentage equivalent of such
Syndicated Lender's Syndicated Working Capital Commitment divided by either (a)
if the Term-Out Option shall not have become effective for any reason, the Total
Syndicated Working Capital Commitment or (b) if, subject to the terms and
conditions hereof, the Term-Out Option shall have become effective, the Total
Term Loan Commitment.

              "Syndicated Working Capital Facility" shall mean the extension of
credit to Borrower by the Syndicated Lenders as set forth in Section 2.1.

              "Syndicated Working Capital Loans" shall mean loans made to
Borrower by the Syndicated Lenders under the Syndicated Working Capital Facility
pursuant to this Agreement, as described in clause (a) of Section 2.1.

              "Syndication" shall have the meaning assigned in Section 2.16.

              "System" shall mean the wireless broadband PCS system to be
constructed and rolled out by the Borrower Group pursuant to the Business Plan.

              "Taxes" shall mean all taxes of every kind (including gross and
net income, gross and net receipts, capital gains, excess profits and minimum
taxes, taxes on tax preferences, capital, net worth, franchise, sales, use
value-added, stamp, documentary, excise, property and other similar taxes),
charges and withholdings, levies, imposts, duties, fees and deductions imposed
by any Governmental Authority, together with all interest, additions to tax,
penalties and similar add-ons payable with respect thereto.

              "Tax Return" shall mean any return, declaration, report, claim for
refund or information return or statement relating to Taxes or any amendment
thereto, and including any schedule or attachment thereto.

              "Term Loans" shall mean loans made to Borrower by the Syndicated
Lenders under the Syndicated Working Capital Facility pursuant to this
Agreement, as described in clause (c) of Section 2.1, subject to the exercise of
the Term-Out Option pursuant to Section 2.10(b).


                                       20
<PAGE>

              "Term Loan Commitment" shall mean, with respect to each Syndicated
Lender, (a) if, subject to the terms and conditions hereof, the Term-Out Option
shall have become effective, an amount equal to such Syndicated Lender's
Syndicated Working Capital Commitment, and (b) if the Term-Out Option shall not
have become effective for any reason, zero.

              "Term-Out Option" shall have the meaning set forth in Section
2.10(b).

              "Total Capitalized Interest Commitment" shall mean Fifteen Million
Dollars ($15,000,000), as such amount may be increased pursuant to Section
2.12(d).

              "Total Commitment" shall mean, as of the date of determination,
the aggregate amount of the Total Capitalized Interest Commitment plus the Total
Working Capital Commitment.

              "Total Syndicated Working Capital Commitment" shall mean (a) Sixty
Million Dollars ($60,000,000), or (b) to the extent, if any, increased pursuant
to Section 2.9(f), an amount up to One Hundred Million Dollars ($100,000,000),
as such amount, in each case, may be reduced pursuant to Section 2.9(g).

              "Total Term Loan Commitment" shall mean, as of the date of
determination, the aggregate amount of the Term Loan Commitments of all
Syndicated Lenders.

              "Total Vendor Working Capital Commitment" shall mean Forty Million
Dollars ($40,000,000), as such amount may be adjusted pursuant to Section
2.9(f).

              "Total Working Capital Commitment" shall mean the sum of the Total
Syndicated Working Capital Commitment and the Total Vendor Working Capital
Commitment, which shall be an aggregate amount equal to One Hundred Million
Dollars ($100,000,000); provided that after the Commitment Termination Date
applicable to Syndicated Working Capital Loans, if the Term-Out Option shall
have become effective, the "Total Working Capital Commitment" shall mean the sum
of the Total Term Loan Commitment and the Total Vendor Working Capital
Commitment.

              "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Eurodollar Rate or the Base Rate.

              "Underwriting Fee" shall mean the "Underwriting Fee" under and as
defined in the QUALCOMM Fee Letter.

              "United States" or "U.S." shall mean the United States of America.

              "U.S. GAAP" shall mean generally accepted accounting principles in
the United States.

              "Usury Permit" shall have the meaning set forth in Section 7.7.


                                       21
<PAGE>

              "Vendor Facilities" shall mean the credit facilities provided to
Borrower under the QUALCOMM Credit Agreement and the Alcatel Credit Agreement.

              "Vendor Post-Closing Agreement" shall mean the Agreement Regarding
Closing Conditions dated as of February 26, 1999, among each member of the
Borrower Group, Citibank, N.A., as Intercreditor Agent, Citibank Mexico, S.A.,
Grupo Financiero Citibank, as Collateral Agent, Citibank International Plc, as
Alcatel Administrative Agent, and ABN AMRO Bank N.V., as QUALCOMM Administrative
Agent.

              "Vendor Working Capital Commitment" shall mean, with respect to
each Vendor Working Capital Lender, the amount set forth on Schedule 2.2 as such
Vendor Working Capital Lender's "Vendor Working Capital Commitment", as such
amount may be adjusted from time to time pursuant to the terms of this
Agreement.

              "Vendor Working Capital Commitment Percentage" shall mean, with
respect to any Vendor Working Capital Lender, the percentage equivalent of such
Vendor Working Capital Lender's Vendor Working Capital Commitment divided by the
Total Vendor Working Capital Commitment.

              "Vendor Working Capital Facility" shall mean the extension of
credit to Borrower by the Vendor Working Capital Lenders as set forth in Section
2.2.

              "Vendor Working Capital Lender" shall mean QUALCOMM and, following
the Commitment Termination Date applicable to Syndicated Working Capital Loans,
any other Lender having a Vendor Working Capital Commitment.

              "Vendor Working Capital Loans" shall mean loans made to Borrower
by Vendor Working Capital Lenders under the Vendor Working Capital Facility
pursuant to this Agreement.

              "Working Capital Commitment" shall mean, with respect to each
Working Capital Lender, such Working Capital Lender's Syndicated Working Capital
Commitment or Vendor Working Capital Commitment, as the case may be.

              "Working Capital Facilities" shall mean the Syndicated Working
Capital Facility and the Vendor Working Capital Facility.

              "Working Capital Lender" shall mean any Lender having a Working
Capital Commitment.

              "Working Capital Loans" shall mean Syndicated Working Capital
Loans and Vendor Working Capital Loans.


                                       22
<PAGE>

       1.2 Other Interpretive Provisions.

              (a) All terms defined in this Agreement shall have their defined
meanings when used in the other Loan Documents and any certificate or other
document made or delivered pursuant hereto, unless the context clearly indicates
otherwise.

              (b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, recital, schedule and exhibit references are to this Agreement
unless otherwise specified.

              (c) References to the words "include" or "including" shall be
deemed to be followed by "without limitation" or "but not limited to", whether
or not they are followed by such phrases or words of similar import.

              (d) The word "or" is not exclusive.

              (e) All terms defined in this Agreement in the singular form shall
be equally applicable to both the singular and plural forms of the terms defined
and the masculine, feminine or neuter gender shall include all genders.

              (f) References in any Loan Document to any statute, decree,
regulation or other Applicable Law shall be construed as a reference to such
statute, law, decree, regulation or other Applicable Law as re-enacted,
redesignated, amended or extended from time to time, except as otherwise
provided in such Loan Document.

              (g) References in any Loan Document to any other document or
agreement shall (unless otherwise expressly indicated) be deemed to include
references to such other document or agreement as amended, varied, supplemented
or replaced from time to time in accordance with the terms of such document or
agreement and this Agreement and to include any appendices, schedules, exhibits,
clarification letters, side letters and disclosure letters executed in
connection therewith.

              (h) References to any Person or Persons shall be construed as a
reference to any successors or assigns of such Person or Persons to the extent
permitted under the Loan Documents and, in the case of any Governmental
Authority, any Person succeeding to its functions and capacities.

       1.3 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time. All financial statements
to be furnished to Administrative Agent, QUALCOMM or the other Lenders pursuant
to this Agreement shall be made and prepared in accordance with GAAP
consistently applied throughout the periods involved (except as set forth in the
notes thereto); provided that if at any time such computations utilize
accounting principles different from those utilized in the financial statements
furnished pursuant to Section 7.1(a), such financial statements shall be
accompanied by reconciliation worksheets.


                                       23
<PAGE>

SECTION 2. THE CREDITS.

       2.1 Syndicated Working Capital Facility.

              (a) Syndicated Working Capital Loan Commitments. Subject to the
terms and conditions set forth in this Agreement, each Syndicated Lender agrees
to make Syndicated Working Capital Loans to Borrower from time to time during
the Availability Period applicable to the Syndicated Working Capital Facility in
an aggregate principal amount that will not result in (i) such Lender's Exposure
under the Syndicated Working Capital Facility exceeding such Lender's Syndicated
Working Capital Commitment or (ii) the sum of all Syndicated Lenders' Exposures
under the Syndicated Working Capital Facility exceeding the Total Syndicated
Working Capital Commitment. The amount otherwise available for Borrowings of
Syndicated Working Capital Loans as of any time of determination (other than to
reimburse the Issuing Bank for an LC Disbursement as contemplated by Section
2.4(e)) shall be reduced by the LC Exposure as of such time of determination.
Within the foregoing limits and subject to the terms and conditions set forth
herein, Borrower may borrow, prepay and reborrow Syndicated Working Capital
Loans.

              (b) Permitted Uses of Syndicated Working Loan Proceeds and Letters
of Credit. Borrower shall use the proceeds of each Syndicated Working Capital
Loan and any Letter of Credit issued under Section 2.4 solely for Permitted Use
Category expenditures, and to support Permitted Use Category obligations, in
amounts as outlined in the Budget and, with respect to Syndicated Working
Capital Loans, to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.4(e), and for such other uses as may be approved by
QUALCOMM in its sole and absolute discretion.

              (c) Term Loan Commitments. Subject to the terms and conditions set
forth in this Agreement, each Syndicated Lender agrees to make Term Loans to
Borrower on the Commitment Termination Date applicable to the Syndicated Working
Capital Facility in an aggregate principal amount equal to the principal balance
of such Syndicated Lender's Syndicated Working Capital Loans then outstanding
plus such Syndicated Lender's unused Syndicated Working Capital Commitment on
such date, so long as (i) the making of such Term Loans will not result in (A)
such Lender's Exposure under the Syndicated Working Capital Facility exceeding
such Lender's Term Loan Commitment or (B) the sum of all Syndicated Lenders'
Exposures under the Syndicated Working Capital Facility exceeding the Total Term
Loan Commitment, and (ii) the terms and conditions of Section 2.10(b) are
satisfied upon the election of the Term-Out Option by Borrower. Within the
foregoing limits and subject to the terms and conditions set forth herein,
Borrower may borrow and prepay Term Loans. Once repaid, Term Loans may not be
reborrowed. Once repaid by the proceeds of Term Loans, amounts under the
Syndicated Working Capital Facility may not be re-borrowed.

              (d) Permitted Uses of Term Loan Proceeds. Borrower shall use the
proceeds of the Term Loans solely for (i) the payment in full of the principal
balance of all Syndicated Working Capital Loans outstanding on the Commitment
Termination Date applicable to Syndicated Working Capital Loans and (ii) to the
extent the aggregate principal balance of the


                                       24
<PAGE>

Term Loans exceeds the aggregate principal balance of such Syndicated Working
Capital Loans, for Permitted Use Category expenditures in amounts as outlined in
the Budget.

       2.2 Vendor Working Capital Facility.

              (a) Vendor Working Capital Loan Commitments. Subject to the terms
and conditions set forth in this Agreement, each Vendor Working Capital Lender
agrees to make Vendor Working Capital Loans to Borrower from time to time during
the Availability Period applicable to the Vendor Working Capital Facility in an
aggregate principal amount that will not result in (i) such Lender's Exposure
under the Vendor Working Capital Facility exceeding such Lender's Vendor Working
Capital Commitment or (ii) the sum of all Vendor Working Capital Lenders'
Exposures under the Vendor Working Capital Facility exceeding the Total Vendor
Working Capital Commitment. Within the foregoing limits and subject to the terms
and conditions set forth herein, Borrower may borrow, prepay and reborrow Vendor
Working Capital Loans.

              (b) Permitted Uses of Vendor Working Loan Proceeds. Borrower shall
use the proceeds of each Vendor Working Capital Loan solely for (i) Permitted
Use Category expenditures in amounts as outlined in the Budget and (ii) such
other uses as may be approved by QUALCOMM in its sole and absolute discretion.

       2.3 Capitalized Interest Facility.

              (a) Capitalized Interest Loan Commitments. Subject to the terms
and conditions set forth in this Agreement, each Capitalized Interest Lender
agrees to make Capitalized Interest Loans to Borrower from time to time during
the Availability Period applicable to the Capitalized Interest Facility in an
aggregate principal amount that will not result in (i) such Lender's Exposure
under the Capitalized Interest Facility exceeding such Lender's Capitalized
Interest Commitment or (ii) the sum of all Capitalized Interest Lenders'
Exposures under the Capitalized Interest Facility exceeding the Total
Capitalized Interest Commitment. Within the foregoing limits and subject to the
terms and conditions set forth herein, Borrower may borrow and prepay
Capitalized Interest Loans. Once repaid, amounts under the Capitalized Interest
Facility may not be re-borrowed.

              (b) Permitted Uses of Capitalized Interest Loan Proceeds. Borrower
shall use the proceeds of each Capitalized Interest Loan solely for (i) interest
payments to Working Capital Lenders on the Working Capital Loans, (ii) interest
payments to Syndicated Lenders on the Term Loans, (iii) payments to the Issuing
Bank for fees and costs related to the issuance of Letters of Credit, and (iv)
payment to QUALCOMM of the Underwriting Fee and the Guaranty Fee.

       2.4 Letters of Credit.

              (a) General. In addition to Borrower requesting Syndicated Working
Capital Loans pursuant to Section 2.1, subject to the terms and conditions set
forth herein, Borrower may request the issuance of Letters of Credit for its own
account, in a form reasonably acceptable to Administrative Agent and the Issuing
Bank, at any time and from time to time during the


                                       25
<PAGE>

Availability Period applicable to the Syndicated Working Capital Facility. In
the event of any inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by Borrower to, or entered into by
Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and
conditions of this Agreement shall control.

              (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), Borrower shall hand
deliver or facsimile (or transmit by electronic communication, if arrangements
for doing so have been approved by the Issuing Bank) to the Issuing Bank and
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice, approved and signed by QUALCOMM in
accordance with Section 2.6(b), requesting the issuance of a Letter of Credit,
or identifying the Letter of Credit to be amended, renewed or extended, the date
of issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit. If requested by the Issuing Bank, Borrower also
shall submit a letter of credit application on the Issuing Bank's standard form
in connection with any request for a Letter of Credit. A Letter of Credit shall
be issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the LC Exposure shall not exceed $10,000,000 and (ii)
the sum of the total Syndicated Lenders' LC Exposures plus the aggregate
principal amount of outstanding Syndicated Working Capital Loans shall not
exceed the Total Syndicated Working Capital Commitments.

              (c) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Scheduled Maturity Date.

              (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or Syndicated Lenders, the
Issuing Bank hereby grants to each Syndicated Lender, and each Syndicated Lender
hereby acquires from the Issuing Bank, a participation in such Letter of Credit
equal to such Syndicated Lender's Syndicated Working Capital Commitment
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Syndicated
Lender hereby absolutely and unconditionally agrees to pay to Administrative
Agent, for the account of the Issuing Bank, such Syndicated Lender's Syndicated
Working Capital Commitment Percentage of each LC Disbursement made by the
Issuing Bank and not reimbursed by Borrower on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment required to be
refunded to Borrower for any reason. Each Syndicated Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including


                                       26
<PAGE>

any amendment, renewal or extension of any Letter of Credit or the occurrence
and continuance of a Default or Event of Default or reduction or termination of
the Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.

              (e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, Borrower shall reimburse such LC
Disbursement by paying to Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 12:00 noon, New York City time, on (i) the Business Day that
Borrower receives such notice, if such notice is received prior to 10:00 a.m.,
New York City time, on the day of receipt, or (ii) the Business Day immediately
following the day that Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided that Borrower may,
subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.1 that such payment be financed with a Syndicated Working Capital
Loan in an equivalent amount and, to the extent so financed, Borrower's
obligation to make such payment shall be discharged and replaced by the
resulting Syndicated Working Capital Loan. If Borrower fails to make such
payment when due, Administrative Agent shall notify each Syndicated Lender of
the applicable LC Disbursement, the payment then due from Borrower in respect
thereof and such Syndicated Lender's Syndicated Working Capital Commitment
Percentage thereof. Promptly following receipt of such notice, each Syndicated
Lender shall pay to Administrative Agent its Syndicated Working Capital
Commitment Percentage of the payment then due from Borrower, in the same manner
as provided in Section 2.7 with respect to Loans made by such Syndicated Lender
(and Section 2.7 shall apply, mutatis mutandis, to the payment obligations of
Lenders), and Administrative Agent shall promptly pay to the Issuing Bank the
amounts so received by it from Syndicated Lenders. Promptly following receipt by
Administrative Agent of any payment from Borrower pursuant to this paragraph,
Administrative Agent shall distribute such payment to the Issuing Bank or, to
the extent that Syndicated Lenders have made payments pursuant to this paragraph
to reimburse the Issuing Bank, then to such Syndicated Lenders and the Issuing
Bank as their interests may appear. Any payment made by a Syndicated Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of Syndicated Working Capital Loan as contemplated
above) shall not constitute a Loan and shall not relieve Borrower of its
obligation to reimburse such LC Disbursement.

              (f) Obligations Absolute. Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of:

                     (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein;

                     (ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or this Agreement;


                                       27
<PAGE>

                     (iii) the existence of any claim, setoff, defense or other
right that Borrower, any other party guaranteeing, or otherwise obligated with,
Borrower, any Subsidiary or other Affiliate thereof or any other Person may at
any time have against the beneficiary under any Letter of Credit, the Issuing
Bank, Administrative Agent or any Lender or any other Person, whether in
connection with this Agreement or any other related or unrelated agreement or
transaction;

                     (iv) any draft or other document presented under a Letter
of Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect;

                     (v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not comply with the
terms of such Letter of Credit; and

                     (vi) any other act or omission to act or delay of any kind
of the Issuing Bank, Lenders, Administrative Agent or any other Person or any
other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of Borrower's obligations hereunder.

Neither Administrative Agent, the Syndicated Lenders nor the Issuing Bank, nor
any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to Borrower to the extent of
any direct damages (as opposed to consequential damages, claims in respect of
which are hereby waived by Borrower to the greatest extent permitted by
applicable law) suffered by Borrower that are caused by the Issuing Bank's gross
negligence or willful misconduct when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof. The
parties hereto expressly agree that (A) the Issuing Bank may accept documents
that appear on their face to be in substantial compliance with the terms of a
Letter of Credit without responsibility for further investigation, regardless of
any notice or information to the contrary, and may make payment upon
presentation of documents that appear on their face to be in substantial
compliance with the terms of such Letter of Credit, (B) the Issuing Bank shall
have the right, in its sole discretion, to decline to accept such documents and
to make such payment if such documents are not in strict compliance with the
terms of such Letter of Credit, (C) any action taken by the Issuing Bank in
accordance with either of the foregoing clauses shall be deemed not to
constitute gross negligence or willful misconduct and (D) this sentence shall
establish the standard of care to be exercised by the Issuing Bank when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof (and the parties hereto hereby waive, to
the extent permitted by applicable law, any standard of care inconsistent with
the foregoing).


                                       28
<PAGE>

              (g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify Administrative Agent and Borrower by telephone (confirmed by facsimile)
of such demand for payment and whether the Issuing Bank has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve Borrower of its obligation to reimburse the
Issuing Bank and the Syndicated Lenders with respect to any such LC
Disbursement.

              (h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless Borrower shall reimburse such LC Disbursement in full
on the date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that Borrower reimburses such LC Disbursement, at the
rate per annum then applicable to Syndicated Working Capital Loans that are Base
Rate Loans; provided that, if Borrower fails to reimburse such LC Disbursement
when due pursuant to paragraph (e) of this Section, then Section 2.12(b) shall
apply. Interest accrued pursuant to this paragraph shall be for the account of
the Issuing Bank, except that interest accrued on and after the date of payment
by any Syndicated Lender pursuant to paragraph (e) of this Section to reimburse
the Issuing Bank shall be for the account of such Syndicated Lender to the
extent of such payment.

              (i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time with respect to Letters of Credit to be issued thereafter
by written agreement among Borrower, Administrative Agent, the replaced Issuing
Bank and the successor Issuing Bank. Administrative Agent shall notify the
Syndicated Lenders of any such replacement of the Issuing Bank. At the time any
such replacement shall become effective, Borrower shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section 3.1(d).
From and after the effective date of any such replacement, (i) the successor
Issuing Bank shall have all the rights and obligations of the Issuing Bank under
this Agreement with respect to Letters of Credit to be issued thereafter and
(ii) references herein to the term "Issuing Bank" shall be deemed to refer to
such successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the replacement of
an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.

              (j) Cash Collateralization. If any Event of Default shall occur
and be continuing, on the Business Day that Borrower receives notice from
Administrative Agent or the Required Syndicated Lenders (or, if the maturity of
the Syndicated Working Capital Loans has been accelerated, Syndicated Lenders
with an LC Exposure representing at least 51% of the total LC Exposure)
demanding the deposit of cash collateral pursuant to this paragraph, Borrower
shall deposit in an account with Administrative Agent, in the name of
Administrative Agent and for the benefit of the Syndicated Lenders, an amount in
cash equal to the LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to Borrower described in clause (e), (f) or
(g) of Section 9.1; provided,


                                       29
<PAGE>

further, that the Required Syndicated Lenders shall not give any such notice nor
direct Administrative Agent to give any such notice in the case of any Event of
Default of the type described in clause (b), (c) except if resulting from a
breach of Section 8.1 or 8.4, (d), (k), (n) or (o) of Section 9.1 if, upon any
such Event of Default, QUALCOMM shall have delivered to Administrative Agent,
promptly upon request, a confirmation of the QUALCOMM Guaranty, and no other
type of Event of Default nor any QUALCOMM Event shall have occurred and be
continuing. Such deposit shall be held by Administrative Agent as collateral for
the payment and performance of the obligations of Borrower under this Agreement.
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of Administrative Agent in such investments as may be
usual and customary for collateral accounts of this type maintained by the
Administrative Agent and at Borrower's risk and expense, such deposits shall not
bear interest. Interest or profits, if any, on such investments shall accumulate
in such account. Moneys in such account shall be applied by Administrative
Agent, first, to reimburse the Issuing Bank for LC Disbursements for which it
has not been reimbursed and, second, to the extent not so applied, shall be
applied to satisfy other Obligations of Borrower then due and payable under this
Agreement and, third, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of Borrower for the LC Exposure at
such time. If Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to Borrower within three
Business Days after the date when no Default shall exist or all the Obligations
shall have been paid in full.

       2.5 Loans and Borrowings.

              (a) Each Syndicated Working Capital Loan shall be made as part of
a Borrowing consisting of Syndicated Working Capital Loans made by the
Syndicated Lenders ratably in accordance with their respective Syndicated
Working Capital Commitments; provided that if any Vendor Working Capital Loans
are outstanding when any Additional Lender acquires all or a portion of
QUALCOMM's Vendor Working Capital Commitment and Vendor Working Capital Loans as
provided in Section 2.9(f), concurrently with the assignment by QUALCOMM to such
Additional Lender of such Vendor Working Capital Loans and the deemed conversion
of such Vendor Working Capital Loans to Syndicated Working Capital Loans
pursuant to clause (B) of Section 2.9(f), such Additional Lender shall fund a
Syndicated Loan (the proceeds of which shall be paid directly to the other
Syndicated Lenders as a principal prepayment on their respective outstanding
Syndicated Loans) in such amount as shall be sufficient to cause the Syndicated
Loans outstanding by all Syndicated Lenders (after giving effect to such
assignment) to be held by the Syndicated Lenders ratably in accordance with
their respective Syndicated Working Capital Commitments, and, when such new
Syndicated Loan is applied to the payment of such outstanding Syndicated Loans,
Borrower shall pay any amounts due in respect thereof under Section 4.2. Each
Vendor Working Capital Loan shall be made as part of a Borrowing consisting of
Vendor Working Capital Loans made by the Vendor Working Capital Lenders ratably
in accordance with their respective Vendor Working Capital Commitments. Each
Capitalized Interest Loan shall be made as part of a Borrowing consisting of
Capitalized Interest Loans made by the Capitalized Interest Lenders ratably in
accordance with their respective


                                       30
<PAGE>

Capitalized Interest Commitments. Each Term Loan shall be made as part of a
Borrowing consisting of Term Loans made by the Syndicated Lenders ratably in
accordance with their respective Term Loan Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.

              (b) Subject to Section 2.13(c), each Borrowing shall be composed
entirely of Base Rate Loans or Eurodollar Loans as Borrower may request in
accordance with this Agreement. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of Borrower to repay such Loan in accordance with the
terms of this Agreement.

              (c) At the time that each Borrowing is made, such Borrowing shall
be in an aggregate amount that is an integral multiple of $100,000 and not less
than $2,500,000; provided that (i) a Base Rate Syndicated Working Capital
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the Total Syndicated Working Capital Commitment or that is required
to finance the reimbursement of an LC Disbursement as contemplated by Section
2.4(e), (ii) a Base Rate Vendor Working Capital Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the Total Vendor Working
Capital Commitment and (iii) a Base Rate Capitalized Interest Borrowing may be
in any amount. Borrowings of more than one Type and Class may be outstanding at
the same time; provided that there shall not at any time be more than a total of
ten (10) Borrowings outstanding.

              (d) There shall not be Eurodollar Loans outstanding at any one
time having more than six (6) different Interest Periods.

              (e) Notwithstanding any other provision of this Agreement,
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing of Eurodollar Loans if the Interest Period requested with respect
thereto would end after the relevant Commitment Termination Date.

              (f) No Borrowing of Vendor Working Capital Loans shall be
permitted unless the Total Syndicated Working Capital Commitment shall then have
been fully utilized, after giving effect to any concurrent Borrowing of
Syndicated Working Capital Loans.

       2.6 Requests for Borrowings.

              (a) Working Capital Borrowings and Term Loan Borrowings. To
request a Working Capital Borrowing or a Term Loan Borrowing for the purposes
described in Section 2.1(d)(ii), Borrower shall notify Administrative Agent of
such request by telephone (a) in the case of a Eurodollar Borrowing, not later
than 11:00 a.m., New York City time, three (3) Business Days before the date of
the proposed Borrowing, or (b) in the case of a Base Rate Borrowing, not later
than 11:00 a.m., New York City time, one (1) Business Day before the date of the
proposed Borrowing; provided that any such notice of a Base Rate Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.4(e) may be given not


                                       31
<PAGE>

later than 10:00 a.m., New York City time, on the date of the proposed
Borrowing; and provided, further, that the Syndicated Loan to be funded by the
Additional Lender described in the proviso to the first sentence of Section
2.5(a) shall not require any notice by Borrower, shall not be included as a
Borrowing for the purpose of the limitation in the number of Borrowings
outstanding under the proviso at the end of Section 2.5(c), and, subject to
Section 2.9(f), if not made on the last day of the Interest Period for the
Syndicated Loans prepaid by such new Syndicated Loan, if such Syndicated Loans
are Eurodollar Loans, shall have an initial Interest Period equal to the period
from the date of funding until the next occurring last day of an Interest Period
for an outstanding Syndicated Loan or, if such Interest Period is not available
hereunder, shall be a Base Rate Loan. To request a Term Loan Borrowing for the
purposes described in Section 2.1(d)(i), Borrower shall notify Administrative
Agent of such request as provided in Section 2.10(b). Each telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
facsimile to Administrative Agent of a written Borrowing Request in the form of
Exhibit B-1 approved by Administrative Agent and signed by Borrower and
QUALCOMM. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.5:

                     (i) the aggregate amount of the requested Borrowing;

                     (ii) the date of such Borrowing, which shall be a Business
Day;

                     (iii) whether such Borrowing is to be a Base Rate Borrowing
or a Eurodollar Borrowing; and

                     (iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period".

If no election as to the Type of Working Capital Borrowing or Term Loan
Borrowing is specified, then the requested Borrowing shall be a Base Rate
Borrowing. If no Interest Period is specified with respect to any requested
Eurodollar Borrowing, then Borrower shall be deemed to have selected an Interest
Period of one month's duration. Promptly following receipt of a Borrowing
Request in accordance with this Section, Administrative Agent shall advise each
Working Capital Lender, in the case of Borrowings of Working Capital Loans, or
each Syndicated Lender, in the case of Borrowings of Term Loans, of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.

              (b) Approval by QUALCOMM. QUALCOMM agrees to approve and sign any
Borrowing Request for any Working Capital Loan under Section 2.1(a) or Section
2.2(a) or in connection with the issuance, amendment, renewal or extension any
Letter of Credit under Section 2.4(b) so long as Borrower shall first have
delivered to QUALCOMM a certificate, substantially in the form of Exhibit B-2,
signed by an Authorized Officer of Borrower, stating that the requested
Borrowing or Letter of Credit will be used to pay or support Permitted Usage
Category expenses, which certificate shall include (i) a breakdown (the "Budget
Breakdown") by Permitted Usage Category of the amount of expenditures and Letter
of Credit support as of such date and (ii) the amount requested according to the
unexpended and unsupported portion of such


                                       32
<PAGE>

Permitted Usage Categories as set forth in the Budget. Each delivery of a
Borrowing Request signed by QUALCOMM in accordance with Section 2.6(a), and each
delivery of a request for the issuance, amendment, renewal or extension of a
Letter of Credit signed by QUALCOMM in accordance with Section 2.4(b), if made
in conjunction with any Borrowing under the Syndicated Working Capital Facility
(including any Borrowing of Syndicated Working Capital Loans and any Borrowing
of Term Loans) or any issuance, amendment, renewal or extension of any Letter of
Credit, shall be deemed to constitute (A) a confirmation on the date thereof by
QUALCOMM of the QUALCOMM Guaranty and QUALCOMM's obligations thereunder and (B)
a representation and warranty by QUALCOMM on the date thereof as to the matters
specified in paragraph (d) of Section 5.3 or in paragraph (a) of Section 5.5, as
the case may be.

              (c) Capitalized Interest Borrowings. To request a Capitalized
Interest Borrowing, Borrower shall notify Administrative Agent of such request
by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00
a.m., New York City time, three (3) Business Days before the date of the
proposed Borrowing, or (b) in the case of a Base Rate Borrowing, not later than
11:00 a.m., New York City time, one (1) Business Day before the date of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or facsimile to Administrative
Agent of a written Capitalized Interest Loan Request in the form of Exhibit C,
approved by Administrative Agent and signed by Borrower. Each such telephonic
and written Capitalized Interest Loan Request shall specify the following
information in compliance with Section 2.5:

                     (i) the aggregate amount of the requested Borrowing;

                     (ii) the date of such Borrowing, which shall be a Business
Day and (A) an Interest Payment Date, (B) a date on which fees are payable under
this Agreement in connection with any Letter of Credit or (C) a date on which
the Underwriting Fee is payable;

                     (iii) whether such Borrowing is to be a Base Rate Borrowing
or a Eurodollar Borrowing; and

                     (iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period".

If no election as to the Type of Capitalized Interest Borrowing is specified,
then the requested Capitalized Interest Borrowing shall be a Base Rate
Borrowing. If no Interest Period is specified with respect to any requested
Eurodollar Capitalized Interest Borrowing, then Borrower shall be deemed to have
selected an Interest Period of one month's duration. With respect to Capitalized
Interest Loans to be made for the payment of interest on the Working Capital
Loans, if Borrower has not delivered a Capitalized Interest Loan Request on or
before the Business Day prior to the next succeeding Interest Payment Date, a
Capitalized Interest Loan Request shall be deemed to have been made on such date
(a "Deemed Capitalized Interest Loan Request") for a Base Rate Loan in the
amount of the interest payment to become due and payable on such Interest
Payment Date. Promptly following receipt of a Capitalized Interest Loan Request
or a Deemed Capitalized Interest Loan Request in accordance with this Section,
Administrative Agent shall


                                       33
<PAGE>

advise each Capitalized Interest Lender of the details thereof and of the amount
of such Capitalized Lender's Capitalized Interest Loan to be made as part of the
requested Borrowing.

       2.7 Funding of Borrowings.

              (a) Each Lender shall make each Loan to be made by it hereunder on
the proposed date thereof by wire transfer of immediately available funds by
12:00 noon, New York City time, to the account of Administrative Agent most
recently designated by it for such purpose by notice to the Lenders.
Administrative Agent shall make such Loans available to Borrower by promptly
crediting the amounts so received, in like funds, to an account of Borrower
maintained with Administrative Agent in New York City and designated by Borrower
in the applicable Borrowing Request or Capitalized Interest Loan Request;
provided that Base Rate Syndicated Working Capital Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.4(e) shall be
remitted by Administrative Agent to the Issuing Bank; provided, further, that
Capitalized Interest Loans made to pay fronting fees in respect of Letters of
Credit or any other amounts due and payable by Borrower to the Issuing Bank
shall be remitted by Administrative Agent to the Issuing Bank; provided,
further, that Capitalized Interest Loans made to pay interest on Working Capital
Loans, interest due on Term Loans, or participation fees due in respect of
Letters of Credit shall be (i) disbursed on behalf of Borrower directly to
Administrative Agent for the ratable account of the Lenders (other than
QUALCOMM) entitled to receive such payment of interest or fees (net of any
amounts described in clause (ii) of this paragraph that are due and payable to
QUALCOMM from such payment in accordance with the QUALCOMM Guaranty) and (ii)
withheld by (or, to the extent QUALCOMM is not the sole Capitalized Interest
Lender, paid to) QUALCOMM, as the "Guarantor" under the QUALCOMM Guaranty, to
the extent QUALCOMM, as the "Guarantor" under the QUALCOMM Guaranty, is entitled
to receive from the proceeds of such Capitalized Interest Loan payment of
interest on Vendor Working Capital Loans or payment of the Guaranty Fee as and
when due in accordance with the QUALCOMM Guaranty; and provided, further, that
the new Syndicated Loan to be funded by the Additional Lender in accordance with
the proviso to the first sentence of Section 2.5(a) shall be paid directly to
the other Syndicated Lenders as contemplated in such sentence.

              (b) Unless Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to Administrative Agent such Lender's share of such Borrowing,
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to Administrative Agent, then the applicable
Lender and Borrower severally agree to pay to Administrative Agent forthwith on
demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to Borrower to but excluding
the date of payment to Administrative Agent, at (i) in the case of such Lender,
the greater of the Federal Funds Rate and a rate determined by Administrative
Agent in accordance with banking industry rules on interbank compensation or
(ii) in the case of Borrower, the interest rate applicable to Base Rate Loans.
If


                                       34
<PAGE>

such Lender pays such amount to Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.

       2.8 Interest Elections.

              (a) Each Borrowing initially shall be of the Type specified in the
applicable Borrowing Request or Capitalized Interest Loan Request, as the case
may be, and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request or Capitalized Interest
Loan Request. Thereafter, Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section.
Borrower may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably
among the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered separate Borrowings.

              (b) To make an election pursuant to this Section, Borrower shall
notify Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.6 if Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
facsimile to Administrative Agent of a written Interest Election Request in a
form approved by Administrative Agent and signed by Borrower.

              (c) Each telephonic and written Interest Election Request shall be
in the form of Exhibit D to this Agreement, shall evidence the joint and several
guarantee "avalado" by the Guarantors, shall be attached to the Pagare which
evidences such Loans by Administrative Agent (if it holds possession of the
Pagare) and otherwise by the relevant Lender, and shall specify the following
information in compliance with Section 2.5:

                     (i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to clauses
(iii) and (iv) below shall be specified for each resulting Borrowing);

                     (ii) the effective date of the election made pursuant to
such Interest Election Request, which shall be a Business Day;

                     (iii) whether the resulting Borrowing is to be a Base Rate
Borrowing or a Eurodollar Borrowing; and

                     (iv) if the resulting Borrowing is a Eurodollar Borrowing,
the Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the term
"Interest Period".


                                       35
<PAGE>

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then Borrower shall be deemed to have selected
an Interest Period of one month's duration.

              (d) Promptly following receipt of a Interest Election Request with
respect to a Borrowing of any Class, Administrative Agent shall advise each
Lender making or holding Loans of that Class of the details thereof and of such
Lender's portion of each resulting Borrowing.

              (e) If Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
a Base Rate Borrowing. Notwithstanding any contrary provision hereof, if an
Event of Default has occurred and is continuing and Administrative Agent, at the
request of the Required Syndicated Lenders or, if the Exposure of all Syndicated
Lenders is zero and the Syndicated Working Capital Commitments and the Term Loan
Commitments have been terminated or expired, at the request of the Required
Lenders, so notifies Borrower and QUALCOMM, then, so long as an Event of Default
is continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to a Base Rate Borrowing at the end of the Interest Period applicable
thereto.

       2.9 Termination and Reduction of, and Increases in, Commitments; Further
Syndication.

              (a) Unless previously terminated, the Commitments shall terminate
on the Scheduled Maturity Date.

              (b) Borrower may at any time terminate, or from time to time
reduce, the Commitments, without premium or penalty, as provided in this
Section; provided that (i) each reduction of the Commitments shall be in an
amount that is an integral multiple of $100,000, (ii) each reduction of the
Total Working Capital Commitment shall be in an amount that is not less than
$5,000,000, (iii) Borrower shall not terminate or reduce the Total Commitment
if, after giving effect to any concurrent prepayment of Loans, the sum of the
aggregate Exposures of all Lenders would exceed the Total Commitment; (iv)
Borrower shall not terminate or reduce the Commitments under any Facility if,
after giving effect to any concurrent prepayment of Loans under that Facility,
the sum of the aggregate Exposures of all Lenders under that Facility would
exceed the aggregate Commitments of all Lenders under that Facility; (v) unless
the Required Syndicated Lenders, in their sole discretion, shall consent,
Borrower shall not partially reduce the Syndicated Working Capital Commitment
unless the Vendor Working Capital Commitment shall first have been reduced to
zero.

              (c) Borrower shall notify Administrative Agent in writing (with a
copy to QUALCOMM) of any election to terminate or reduce the Commitments under
paragraph (b) of this Section at least five (5) Business Days (which notice
shall be deemed to be given on a certain day only if given before 12:00 noon New
York City time) prior to the effective date of


                                       36
<PAGE>

such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, Administrative Agent shall
advise Lenders of the contents thereof. Each notice delivered by Borrower
pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Total Commitment delivered by Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by Borrower (by notice to Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied.

              (d) The Commitments under any Facility shall be reduced, from time
to time, by the principal amounts of any Loans under such Facility that are
required to be prepaid pursuant to Section 2.15, and the amounts so prepaid may
not be reborrowed; provided that the Commitments shall not be reduced and such
amounts may be reborrowed (subject to the terms and conditions set forth in this
Agreement) to the extent, if any, set forth in a notice delivered by QUALCOMM
(with the consent and acknowledgement of Borrower) modifying the terms of clause
(a) of Section 2.15 as contemplated by the proviso thereto.

              (e) Any termination or reduction of the Commitments shall be
permanent. Each reduction of the Commitments under any Facility shall be made
ratably among the Lenders under such Facility in accordance with their
respective percentages of the total Commitments under such Facility.

              (f) Lenders who are Syndicated Lenders as of the Closing Date
shall each use reasonable efforts to syndicate the Vendor Working Capital
Facility to additional banks or financial institutions that would satisfy the
requirements of Eligible Assignees (each, an "Additional Lender"). If, as a
result of any such Syndication, Administrative Agent (at the direction of any
Syndicated Lender) notifies Borrower and QUALCOMM, at any time and from time to
time, that one or more Additional Lenders have agreed to underwrite all or a
portion (but not less than $5,000,000) of QUALCOMM's Vendor Working Capital
Commitment and Vendor Working Capital Loans hereunder, then (i) QUALCOMM shall
sell and assign to each such Additional Lender the portion to be so underwritten
of QUALCOMM's rights, and delegate the corresponding obligations, as a Vendor
Working Capital Lender under this Agreement (including the corresponding portion
of QUALCOMM's Vendor Working Capital Commitment and the Vendor Working Capital
Loans owing to it at that time), in accordance with the provisions of Section
11.4, and (ii) such Additional Lender and QUALCOMM shall execute and deliver to
Administrative Agent an Assignment Agreement and (if such Additional Lender is
not already a Lender) an Administrative Questionnaire and take such other
actions as required by Section 11.4. Immediately upon the effectiveness of any
such assignment to any Additional Lender, unless such assignment takes effect on
or after the Commitment Termination Date applicable to Syndicated Working
Capital Loans, and without any further action on any Person's part, (A) the
portion of the Vendor Working Capital Commitment so delegated shall be deemed to
constitute a Syndicated Working Capital Commitment of such Additional Lender,
(B) the Vendor Working Capital Loans so assigned shall be deemed to be
Syndicated Working Capital Loans of such Additional Lender, (C) such Additional
Lender shall become a Syndicated Lender and not a Vendor Working Capital Lender
for all purposes under this Agreement, and, as such, shall be subject to all the
duties (including with respect to Loans and Letters of Credit) of a Syndicated
Lender under this Agreement and shall be entitled to all the rights, benefits
and privileges of a


                                       37
<PAGE>

Syndicated Lender under this Agreement, the QUALCOMM Guaranty and the other Loan
Documents, (D) the Total Syndicated Working Capital Commitment shall be
increased, and the Total Vendor Working Capital Commitment shall be reduced,
each by the amount of such delegation, and (E) without duplication, QUALCOMM's
Vendor Working Capital Commitment shall be reduced by the amount of such
delegation. If, as a result of any assignment and delegation or series of
assignments and delegations pursuant to this Section 2.9(f), the Vendor Working
Capital Commitment shall be reduced to zero and all Vendor Working Capital Loans
(if any) shall be deemed to be converted to Syndicated Working Capital Loans,
then, subject to the subsequent application of Section 2.9(g), all references in
this Agreement to Vendor Working Capital Loans or Vendor Working Capital Lenders
(or similar words) shall be disregarded. In no event shall any assignment and
delegation under this Section 2.9(f) result in any increase or decrease in the
Total Working Capital Commitment. If any Vendor Working Capital Loans are
outstanding when any Additional Lender acquires all or a portion of QUALCOMM's
Vendor Working Capital Commitment and Vendor Working Capital Loans as provided
in this Section 2.9(f), QUALCOMM shall assign all or such portion of its Vendor
Working Capital Commitment and such Vendor Working Capital Loans to such
Additional Lender in accordance with this Section 2.9(f) only on the last day of
the Interest Period for such Vendor Working Capital Loans unless Borrower
otherwise consents; provided, in any event, that when such Additional Lender's
new Syndicated Loan is applied to the payment of the relevant outstanding
Syndicated Loans pursuant to Section 2.5(a), Borrower shall pay all amounts, if
any, due in respect thereof under Section 4.2, and such payment by Borrower
shall not be a condition to the effectiveness of any such assignment.

              (g) If QUALCOMM shall acquire some or all of the Syndicated
Lenders' Syndicated Working Capital Loans, LC Exposures (if any) and Syndicated
Working Capital Commitments (pursuant to the QUALCOMM Guaranty or, to the extent
permitted by this Agreement and the QUALCOMM Guaranty, otherwise), then
immediately upon the effectiveness of any such assignment and delegation to
QUALCOMM, and without any further action on any Person's part, (i) the portion
of each Syndicated Working Capital Commitment so delegated shall be deemed to
constitute an additional Vendor Working Capital Commitment of QUALCOMM, (ii) the
Syndicated Working Capital Loans so assigned shall be deemed to be Vendor
Working Capital Loans of QUALCOMM, (iii) QUALCOMM shall become or remain a
Vendor Working Capital Lender and not a Syndicated Lender for all purposes under
this Agreement, and, as such, shall be subject to all the duties (including with
respect to Loans) of a Vendor Working Capital Lender under this Agreement, shall
be entitled to all the rights, benefits and privileges of a Vendor Working
Capital Lender under this Agreement and the other Loan Documents, and shall not
be entitled to the benefit of the QUALCOMM Guaranty nor to exercise any rights
or powers (with respect to voting, consents, waivers or otherwise) of a
Syndicated Lender under this Agreement or the other Loan Documents, provided,
however, that QUALCOMM shall remain obligated as a Syndicated Lender under
Section 2.4 with respect to any LC Exposure acquired by it from a Syndicated
Lender (but not with respect to any additional Letter of Credit issued
thereafter), and the amount of its LC Exposure shall be included in the
aggregate LC Exposures of all Syndicated Lenders for purposes of determining the
availability of any additional Letters of Credit required to be issued, amended,
renewed or extended under Section 2.4(b), (iv) the Total Vendor Working Capital
Commitment shall be increased, and the Total Syndicated Working Capital
Commitment shall be reduced, each by the amount of such


                                       38
<PAGE>

delegation, and (v) without duplication, each assigning Syndicated Lender's
Syndicated Working Capital Commitment shall be reduced by the amount of such
delegation. In no event shall any assignment and delegation contemplated by this
Section 2.9(g) (A) result in any increase or decrease in the Total Working
Capital Commitment or (B) limit the right of the Issuing Bank under Section 11.4
to consent, in its sole and absolute discretion, to any assignment and
delegation of any Lender's LC Exposure under this Agreement.

       2.10 Repayment of Loans.

              (a) Borrower hereby irrevocably and unconditionally promises to
pay (i) to Administrative Agent for the account of each Syndicated Lender the
then unpaid principal amount of each Syndicated Working Capital Loan on the
Commitment Termination Date applicable to Syndicated Working Capital Loans,
provided that, if the Term-Out Option shall have become effective under clause
(b) of this Section, such Syndicated Working Capital Loan shall be converted to
a Term Loan on such Commitment Termination Date as provided herein, (ii) to
Administrative Agent for the account of each Syndicated Lender the then unpaid
principal amount of each Term Loan on the Scheduled Maturity Date, (iii) to
Administrative Agent for the account of each Vendor Working Capital Lender the
then unpaid principal amount of each Vendor Working Capital Loan on the
Scheduled Maturity Date, and (iv) to Administrative Agent for the account of
each Capitalized Interest Lender the then unpaid principal amount of each
Capitalized Interest Loan on the Scheduled Maturity Date.

              (b) Borrower shall have the option (the "Term-Out Option"), to
convert the principal balance of all Syndicated Working Capital Loans
outstanding on the Commitment Termination Date to Term Loans, subject to the
terms and conditions of this Section 2.10(b) and Section 2.1. To make an
election pursuant to this Section 2.10(b), Borrower shall notify Administrative
Agent of such election and request a Borrowing of Term Loans by not later than
11:00 a.m., New York City time, five (5) Business Days before the Commitment
Termination Date. Such telephonic election to exercise the Term-Out Option and
each Borrowing Request in connection with a Term Loan shall be irrevocable and
shall be confirmed promptly by hand delivery or facsimile to Administrative
Agent of a written notice of election and a Borrowing Request, signed by
Borrower, in accordance with Section 2.6. Any Borrowing of Term Loans for the
purposes set forth in Section 2.1(d)(i) upon the election of the Term-Out Option
shall be subject to the requirements applicable to Borrowing Requests under
Section 2.6(a) (other than the approval of QUALCOMM of such Borrowing), to the
conditions of Section 2.1(c) and (d), and to the conditions of Section 5.4. Any
Borrowing of Term Loans for the purposes set forth in Section 2.1(d)(ii) upon
the election of the Term-Out Option shall be subject to the requirements
applicable to Borrowing Requests under Section 2.6(a) and (b), to the conditions
of Section 2.1(c) and (d), and to the conditions of Section 5.3 or Section 5.5,
as the case may be. The effective date of such election and the only date on
which any Borrowing of Term Loans shall be made, subject to the terms and
conditions of this Agreement, shall be the Commitment Termination Date
applicable to Syndicated Working Capital Loans.

       2.11 Evidence Of Debt.


                                       39
<PAGE>

              (a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.

              (b) Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from Borrower to each
Lender hereunder and (iii) the amount of any sum received by Administrative
Agent hereunder for the account of Lenders and each Lender's share thereof.

              (c) The entries made in the accounts maintained pursuant to
paragraph (b) or (d) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or Administrative Agent to maintain such accounts or any
error therein shall not in any manner affect the obligation of Borrower to repay
the Loans in accordance with the terms of this Agreement.

              (d) Within five (5) Business Days of the making of any Loan,
Borrower shall execute and deliver to Administrative Agent to hold on behalf of
the Lender making such Loan a promissory note of Borrower payable to such Lender
substantially in the form of Exhibit A with appropriate insertions as to issue
date, principal repayment dates, principal amount, and Applicable Margin (each,
a "Pagare"), which promissory note shall be jointly and severally guaranteed
"avalado" by the Guarantors and shall be dated the date such Loan is made.
Notwithstanding anything to the contrary contained herein, upon the request of
Administrative Agent at any time, Borrower shall promptly execute and deliver to
Administrative Agent to hold on behalf of such Lender a replacement Pagare with
respect to any Pagare theretofore issued in order to conform the terms thereof
to the terms of this Agreement, which replacement Pagare shall be jointly and
severally guaranteed "avalado" by the Guarantors and shall be dated the date on
which the replacement is to be effective. Concurrently therewith, Administrative
Agent or Lender, as the case may be, shall return the replaced Pagare to
Borrower.

              (e) Upon the written request of any Lender, Administrative Agent
shall forward to such Lender (i) all Pagares payable to such Lender received by
Administrative Agent on or prior to such date (the "Request Date") within ten
(10) Business Days of receipt by Administrative Agent of such request, and (ii)
all Pagares payable to such Lender received by Administrative Agent after the
Request Date within ten (10) Business Days of the receipt by Administrative
Agent thereof; provided that any Lender requesting such delivery of its Pagares
shall reimburse Administrative Agent for all costs and expenses incurred by
Administrative Agent in the distribution thereof.

              (f) In the case of any conflict between the terms of this
Agreement and any Pagare, the terms of this Agreement shall control. Without
limiting the generality of the foregoing, all Loans made hereunder shall accrue
interest from the date such Loan is made and, to the extent not evidenced by a
Pagare, shall otherwise be treated as a Loan hereunder irrespective of
Borrower's execution or nonexecution of a Pagare evidencing such Loan.


                                       40
<PAGE>

              (g) Upon partial repayment of any principal amount evidenced by
any Pagares, Borrower may execute and deliver to Administrative Agent to hold on
behalf of each Lender a replacement Pagare taking into account such prepayment,
which replacement Pagare shall be jointly and severally guaranteed "avalado" by
the Guarantors and shall be dated the date on which the replacement is to be
effective. Concurrently therewith, Administrative Agent or Lender, as the case
may be, shall return the replaced Pagare to Borrower.

              (h) Upon the payment in full of all Obligations and the
termination of the Commitments, Administrative Agent and Lenders, as applicable,
shall return all Pagares in their possession to Borrower.

              (i) In addition to the Pagares, Borrower agrees to execute and
deliver to each Lender, promptly upon request by such Lender, a promissory note
evidencing Borrower's Indebtedness to such Lender under this Agreement in the
amount of such Lender's Commitment, which promissory note shall be satisfactory
in form and substance to such Lender and shall be consistent with the terms of
this Agreement.

       2.12 Interest.

              (a) The Loans constituting each Eurodollar Borrowing shall bear
interest at the Eurodollar Rate for the Interest Period in effect for such
Borrowing plus the relevant Applicable Margin. The Loans constituting each Base
Rate Borrowing shall bear interest at the Base Rate plus the relevant Applicable
Margin.

              (b) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, five
percent (5%) plus the rate otherwise applicable to such Loan as provided in the
preceding paragraph of this Section or (ii) in the case of any other amount,
five percent (5%) plus the rate applicable to Base Rate Loans as provided in
paragraph (a) of this Section. Upon the occurrence of any Event of Default other
than under Section 9.1(a), and (subject to the preceding sentence) for so long
as such Event of Default shall continue, Borrower shall, at the option of
QUALCOMM, pay interest on all Loans at a rate per annum equal to two percent
(2%) plus the rate otherwise applicable to such Loans. Notwithstanding anything
to the contrary herein, upon the Scheduled Maturity Date, if an Event of Default
shall exist, the interest rate on all Loans and other amounts outstanding
hereunder shall be a fixed rate of twenty-two and one-half percent (22.5%) per
annum and, if the Obligations shall not have been fully and finally satisfied
prior to that date three (3) months following the Scheduled Maturity Date, shall
increase to twenty-five (25%) per annum.

              (c) Interest on each Loan shall accrue from the date of the
Borrowing of such Loan to the date on which such Loan is paid in full. Accrued
Interest on each Loan shall be payable (i) in the case of Base Rate Loans, on
the last Business Day of each calendar quarter, and (ii) in the case of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three


                                       41
<PAGE>

month intervals after the first day of such Interest Period and (iii) in the
case of all Loans, on any prepayment (on the amount prepaid), at maturity
(whether by acceleration or otherwise) and, after such maturity, on demand;
provided that accrued and unpaid interest owing to any Syndicated Lender on the
portion of any Syndicated Loan prepaid pursuant to the proviso to the first
sentence of Section 2.5(a) (to the extent accruing prior to the date of such
partial prepayment) shall be payable to such Syndicated Lender on the earlier of
(y) the first date on which interest is payable to the relevant Additional
Lender in respect of the new Loan from the proceeds of which such Syndicated
Loan was partially prepaid and (z) the date on which such interest would have
been payable but for such prepayment.

              (d) Anything in this Section 2.12 to the contrary notwithstanding,
and unless Borrower shall notify Administrative Agent that this Section 2.12(d)
shall not be applicable to any of the interest payments on the Capitalized
Interest Loans otherwise covered hereby, the interest that accrues on
Capitalized Interest Loans shall not be required to be paid in cash on any
Interest Payment Date occurring prior to Maturity, but on each such Interest
Payment Date relating to a Capitalized Interest Loan such accrued interest on
such Capitalized Interest Loan shall be capitalized and added to the principal
of the Capitalized Interests Loans as a new Capitalized Interest Loan and the
Total Capitalized Interest Commitment (and each Capitalized Interest Lender's
Capitalized Interest Commitment as a proportionate share thereof) shall be
increased by the amount of such capitalized accrued interest. Each new
Capitalized Interest Loan made under this Section 2.12(d) shall be a Base Rate
Loan unless Borrower shall request otherwise in accordance with Section 2.6(c).

              (e) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Base Rate
(other than at times when the Base Rate is based on the Federal Funds Rate)
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Base Rate
or Eurodollar Rate shall be determined by Administrative Agent, and such
determination shall be conclusive absent manifest error.

              (f) Notwithstanding any provision of this Agreement to the
contrary, and irrespective of any Borrowing Notice or Interest Election Request
delivered by Borrower under this Agreement, each Capitalized Interest Loan and
each Vendor Working Capital Loan borrowed prior to the delivery of the Usury
Permit under Section 7.7 (each, a "Prior Loan") shall bear interest at the fixed
rate of ten percent (10%) per annum from the date made until the date repaid;
provided, however, that, upon the delivery of the Usury Permit in accordance
with Section 7.7, each Prior Loan shall be deemed to have been repaid in full
with the proceeds of a new Capitalized Interest Loan or Vendor Working Capital
Loan, as the case may be (each, a "New Loan"), the Borrowing of which shall not
be subject to the requirements of clause (a) or (c), as applicable, of Section
2.6 (other than, in each case, clauses (iii) and (iv) thereof and the first two
sentences thereafter) or Section 5.3 or 5.4, and such New Loan shall bear
interest (in lieu of the fixed rate stated above), accrued retroactively to the
date on which the corresponding Prior Loan was borrowed until the date on which
such New Loan is repaid, at the rate that would have applied under Section
2.12(a) to such Prior Loan pursuant to the Borrowing Request and


                                       42
<PAGE>

any subsequent Interest Election Request with respect to such Prior Loan but for
this Section 2.12(f).

       2.13 Additional Interest on Eurodollar Loans; Interest Rate
Determinations; Alternate Rate of Interest.

              (a) Borrower shall pay to each Lender, upon demand, additional
interest on the unpaid principal amount of each Eurodollar Loan of such Lender,
from the date of the Borrowing of such Eurodollar Loan until such principal
amount is paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting (i) the Eurodollar Rate for each Interest
Period for such Borrowing from (ii) the rate obtained by dividing such
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Lender for such Interest Period, payable on each date on
which interest is payable on such Loan. Such additional interest shall be
determined by such Lender and notified to Borrower through Administrative Agent.

              (b) Each Reference Bank agrees, upon the request of Administrative
Agent, to furnish to Administrative Agent timely information for the purpose of
determining each Eurodollar Rate. If any one or more of the Reference Banks
shall not furnish such timely information to Administrative Agent for the
purpose of determining any such interest rate, Administrative Agent shall
determine such interest rate on the basis of timely information furnished by the
remaining Reference Banks (subject to the provisions set forth in the definition
of "Eurodollar Rate" in Section 1.01 and to clause (c) below).

              (c) If prior to the commencement of any Interest Period for any
Eurodollar Borrowing either (i) Administrative Agent determines (which
determination shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period or (ii) Administrative Agent is advised by the Required
Syndicated Lenders (in the case of Syndicated Working Capital Loans and Term
Loans) or the Required Lenders (in the case of all other Loans) that the
Eurodollar Rate for such Interest Period will not adequately and fairly reflect
the cost to such Lenders (or Lender) of making or maintaining their Loans (or
its Loan) included in such Borrowing for such Interest Period, then
Administrative Agent shall give notice thereof to Borrower and Lenders by
telephone or facsimile as promptly as practicable thereafter and, until
Administrative Agent notifies Borrower and Lenders that the circumstances giving
rise to such notice no longer exist, (y) any Interest Election Request that
requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a Eurodollar Borrowing shall be ineffective, and (z) if any Borrowing
Request requests a Eurodollar Borrowing, such Borrowing shall be made as a Base
Rate Borrowing.

       2.14 Voluntary Prepayments.

              (a) Borrower shall have the right at any time and from time to
time to prepay any Borrowing in whole or in part, subject to prior notice in
accordance with paragraph (b) of this Section; provided that Borrower shall not
have the right to prepay any Borrowing comprising Vendor Working Capital Loans
or Capitalized Interest Loans without first repaying in full all Syndicated
Working Capital Loans and all Term Loans then outstanding, unless the


                                       43
<PAGE>

Required Syndicated Lenders shall otherwise consent; and provided, further, that
any voluntary prepayment by Borrower pursuant to this Section 2.14 shall be
permitted only if such prepayment shall not require any payment or prepayment,
pro rata or otherwise, of any Senior Indebtedness under the Vendor Facilities.

              (b) Borrower shall notify Administrative Agent by telephone
(confirmed by facsimile) of any prepayment hereunder not later than 11:00 a.m.,
New York City time, five (5) Business Days before the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional notice
of termination of the Commitments as contemplated by Section 2.9(c), then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.9(c). Promptly following receipt of any such notice
relating to a Borrowing, Administrative Agent shall advise the Lenders of the
contents thereof. Each partial prepayment of any Borrowing shall be in a minimum
principal amount of $2,500,000, and no partial prepayment of a Borrowing shall
reduce the aggregate principal amount of the Loans outstanding pursuant to such
Borrowing to an amount less than the minimum amount that would be permitted to
be requested in the case of a Borrowing of the same Type as provided in Section
2.5. Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.12. Notwithstanding the foregoing,
the provisions of this Section 2.14(b) shall not apply to any partial
prepayments of Syndicated Loans from the proceeds of a new Syndicated Loan by an
Additional Lender pursuant to the proviso to the first sentence of Section
2.5(a) and Section 2.9(f).

       2.15 Mandatory Prepayments.

       All net proceeds from (a)any issuance of Capital Stock by any member of
the Borrower Group, excluding the proceeds of the Existing Equity Commitments
and, with the consent of QUALCOMM, the proceeds of any other contributions to
the equity capital of any member of the Borrower Group, and (b) any Indebtedness
(other than Indebtedness to the extent permitted under subsections (a), (b),
(c), (e), (f), (i), (j) and (l) of Section 6.04 of the Common Agreement as in
effect on the date hereof and the GTE Deferred Fee) issued or incurred by any
member of the Borrower Group, shall be paid by such member of the Borrower Group
on behalf of Borrower to Administrative Agent promptly upon receipt by such
member of the Borrower Group; provided, however, that in the event QUALCOMM
(with the consent and acknowledgement of Borrower) delivers written notice to
Administrative Agent that repayment from the proceeds of any such issuance of
Capital Stock is not required or that such repayment is required but reborrowing
of the amount repaid will be permitted to the extent of such repayment, the
requirements of clause (a) of this Section shall be modified as set forth in
such written notice. Any amounts received by Administrative Agent in
satisfaction of Borrower's prepayment obligations under this Section shall be
applied first to the payment of any Base Rate Loans then outstanding and, next,
to the payment of any Eurodollar Loans then outstanding. Subject to the
immediately preceding sentence, such prepayments shall be applied in accordance
with Section 4.5(b).


                                       44
<PAGE>

       2.16 Syndication. QUALCOMM, Administrative Agent and each Syndicated
Lender shall have the right from time to time to arrange, or to attempt to
arrange, a syndication of the Commitments, Loans and LC Exposures under the
Facilities (a "Syndication"). Borrower and each other member of the Borrower
Group shall cooperate with QUALCOMM, Administrative Agent and each Syndicated
Lender to facilitate any Syndication, and Borrower agrees, at its expense, to
execute and deliver such documents (including amendments to this Agreement
reasonably requested by QUALCOMM or Administrative Agent relating to such
Syndication and which do not impose on Borrower additional financial
obligations, conditions precedent, negative covenants or events of default),
furnish such information, attend such meetings, assist QUALCOMM, Administrative
Agent and the Syndicated Lenders, and take any and all other actions as may be
reasonably requested by QUALCOMM, Administrative Agent, the Issuing Bank or any
Syndicated Lender in connection with any Syndication.

SECTION 3. FEES; CONSIDERATION FOR QUALCOMM GUARANTY.

       3.1 Fees.

              (a) Borrower agrees to pay to Administrative Agent, for its own
account, fees payable in the amounts and at the times provided in Administrative
Agent's Fee Letter.

              (b) Borrower agrees to pay (i) to Administrative Agent for the
account of each Syndicated Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at a rate per annum
equal to the Applicable Margin applicable to Eurodollar Loans multiplied by the
average daily amount of such Syndicated Lender's LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period
from the Closing Date to the later of the Commitment Termination Date and the
date on which such Syndicated Lender ceases to have any LC Exposure, and (ii) to
the Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per
annum on the average daily amount of the LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period from
the Effective Date to the later of the Commitment Termination Date and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
and fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
Closing Date; provided that all such fees shall be payable on the date on which
the Syndicated Working Capital Commitments terminate and any such fees accruing
after the date on which the Commitments terminate shall be payable on demand.
Any other fees payable to the Issuing Bank pursuant to this paragraph shall be
payable within five (5) Business Days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

              (c) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to Administrative Agent (or to the Issuing Bank, in
the case of fees payable to it)


                                       45
<PAGE>

for distribution, in the case of participation fees, to the Syndicated Lenders.
Fees paid shall not be refundable under any circumstances.

       3.2 Consideration for QUALCOMM Guaranty.

              QUALCOMM shall be entitled to be paid, from the proceeds of
Capitalized Interest Loans, a portion of the interest or fees payable from time
to time by Borrower under this Agreement as the Guaranty Fee in accordance with,
and subject to the terms and conditions of, the QUALCOMM Guaranty and Section
2.7(a) of this Agreement, and the terms of the Guaranty Fee may be modified by
QUALCOMM, Administrative Agent and the Syndicated Lenders in accordance with the
QUALCOMM Guaranty at any time and from time to time without any consent of or
disclosure to any member of the Borrower Group. On the Closing Date, Borrower
shall pay, from the proceeds of the initial Capitalized Interest Loans, the
Underwriting Fee to QUALCOMM in accordance with the QUALCOMM Fee Letter.

SECTION 4. YIELD PROTECTION; PAYMENTS; TAXES; ETC.

       4.1 Increased Costs.

              (a) If, due to either (i) the introduction of or any change in or
in the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender (other than by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage and compensated
under Section 2.13(a)) or the Issuing Bank of agreeing to make or making,
funding or maintaining, or otherwise related to, Eurodollar Loans or any Letter
of Credit or participation therein, then Borrower shall from time to time, upon
demand by such Lender or the Issuing Bank (with a copy of such demand to
Administrative Agent), pay to Administrative Agent for the account of such
Lender or the Issuing Bank, as the case may be, additional amounts sufficient to
compensate such Lender or the Issuing Bank for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower and
Administrative Agent by such Lender or the Issuing Bank, shall be conclusive and
binding for all purposes, absent manifest error.

              (b) If any Lender or the Issuing Bank determines that compliance
with any law or regulation or any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding
company and that the amount of such capital is increased by or based upon the
existence of such Lender's or the Issuing Bank's commitment to lend or extend
credit hereunder and other commitments of this type, or if any Lender or the
Issuing Bank determines that the introduction of or any change in or in the
interpretation of any law or regulation regarding capital requirements has or
would have the effect of reducing the rate of return on such Lender's or the
Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's
holding company, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender's or the Issuing Bank's


                                       46
<PAGE>

holding company could have achieved but for such introduction or change in or in
the interpretation of such law or regulation (taking into consideration such
Lender's or the Issuing Bank's policies and the policies of such Lender's or the
Issuing Bank's holding company with respect to capital adequacy), then, upon
demand by such Lender or the Issuing Bank (with a copy of such demand to
Administrative Agent), Borrower shall immediately pay to Administrative Agent
for the account of such Lender or the Issuing Bank, as the case may be, from
time to time as specified by such Lender or the Issuing Bank, such additional
amount or amounts as will compensate such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company for any such reduction suffered
and such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such holding company to the extent that such Lender or the
Issuing Bank reasonably determines such increase in capital to be allocable to
the existence of such Lender's or the Issuing Bank's commitment to lend or
extend credit hereunder. A certificate as to such amounts submitted to Borrower
and Administrative Agent by such Lender or the Issuing Bank shall be conclusive
and binding for all purposes, absent manifest error.

       4.2 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice may be revoked under Section 2.14(b) and is
revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by Borrower pursuant to Section 4.6, then, in any such event,
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Eurodollar Loan had such event not
occurred, at the Eurodollar Rate that would have been applicable to such
Eurodollar Loan, for the period from the date of such event to the last day of
the then current Interest Period therefor (or, in the case of a failure to
borrow, convert or continue, for the period that would have been the Interest
Period for such Eurodollar Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to Borrower and shall be conclusive absent manifest error. Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

       4.3 Illegality. Notwithstanding any other provision of this Agreement, if
any Lender shall notify Administrative Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other Governmental Authority asserts that it is unlawful,
for such Lender or its applicable lending office to perform its obligations
hereunder to make or continue Eurodollar Borrowings or to fund or otherwise
maintain Eurodollar Loans hereunder, (i) the obligation of such Lender to make
or


                                       47
<PAGE>

continue, or to convert Base Rate Loans into, Eurodollar Loans shall be
suspended until Administrative Agent shall notify Borrower and Lenders that the
circumstances causing such suspension no longer exist and (ii) each Eurodollar
Loan of such Lender shall convert into a Base Rate Loan at the end of the then
current Interest Period for such Eurodollar Loan.

       4.4 Taxes.

              (a) Any and all payments by or on account of any obligation of
Borrower hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if Borrower shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) Administrative Agent, any Lender or the Issuing Bank (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions and (iii)
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

              (b) In addition, Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

              (c) Borrower shall indemnify Administrative Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to Borrower by a Lender or the Issuing Bank, or
by Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Bank, shall be conclusive absent manifest error.

              (d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by Borrower to a Governmental Authority, Borrower shall deliver
to Administrative Agent, to the extent reasonably available, the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, or a copy of the return reporting such payment or other evidence
of such payment reasonably satisfactory to Administrative Agent.

              (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to Borrower (with a copy to
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by Borrower as will permit such payments to be made without
withholding or at a reduced rate; provided, however, that if any Foreign Lender
fails to deliver such documentation as necessary to permit such payments to be
made without withholding or at a


                                       48
<PAGE>

reduced rate, such Foreign Lender shall be entitled to reimbursement only to the
extent such additional amounts would have been payable notwithstanding such
failure to deliver such documentation, and such Foreign Lender shall incur no
additional liability to Borrower or any other Person as a result of such failure
to deliver such documentation.

              (f) If Borrower pays any additional amount under this Section 4.4
to a Lender and such Lender, in such Lender's sole and absolute determination,
subsequently determines that it has received or realized in connection with any
such additional amount paid by Borrower any refund or any reduction of, or
credit against, its tax liabilities in or with respect to the taxable year in
which such additional amount is paid by Borrower, such Lender shall return to
Borrower an amount equal to the net benefit, after tax, which was obtained by
Lender in such year as a consequence of such refund, reduction or credit. Such
amount shall be paid as soon as practicable after such Lender makes such
determination with respect to receipt or realization by such Lender of such
refund, reduction or credit.

              (g) Borrower shall have no obligation to make any payment pursuant
to this Section 4.4 to any Foreign Lender that is not a Registered Financial
Institution (other than QUALCOMM or any Affiliate of QUALCOMM) in respect of
Indemnified Taxes constituting withholding taxes or that are imposed by any
Governmental Authority on amounts payable to such Foreign Lender and arising
after the Closing Date in excess of such amounts as would be required to be
withheld or imposed on amounts payable to such Foreign Lender if such Foreign
Lender were a Registered Financial Institution.

       4.5 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

              (a) Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 4.1, 4.2. or 4.4, or
otherwise) prior to 11:00 a.m., New York City time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of Administrative
Agent, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made to
Administrative Agent at its address referred to in Section 11.1, except payments
to be made directly to the Issuing Bank as expressly provided herein and except
that payments pursuant to Sections 4.1, 4.2, 4.4, 10.7 and 11.3 shall be made
directly to the Persons entitled thereto. Administrative Agent shall distribute
any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in Dollars.

              (b) If at any time insufficient funds are received by and
available to Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment


                                       49
<PAGE>

of principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties; provided, however, that
all payments or (subject to Section 2.15) prepayments in respect of principal of
Loans at any time shall be applied first to the payment or prepayment of all
outstanding Syndicated Working Capital Loans or Term Loans, as the case may be,
second to the payment or prepayment of all outstanding Vendor Working Capital
Loans, and last to the payment or prepayment of all outstanding Capitalized
Interest Loans.

              (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
Disbursements; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by Borrower pursuant to and
in accordance with the express terms of this Agreement or any payment obtained
by a Lender as consideration for the assignment of or sale of a participation in
any of its Loans or participations in LC Disbursements to any assignee or
participant, other than to Borrower or any Subsidiary or Affiliate thereof (as
to which the provisions of this paragraph shall apply). Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against Borrower rights of set-off and counterclaim
with respect to such participation as fully as if such Lender were a direct
creditor of Borrower in the amount of such participation.

              (d) Unless Administrative Agent shall have received notice from
Borrower prior to the date on which any payment is due to Administrative Agent
for the account of Lenders or the Issuing Bank hereunder that Borrower will not
make such payment, Administrative Agent may assume that Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to Lenders or the Issuing Bank, as the case may be, the
amount due. In such event, if Borrower has not in fact made such payment, then
each of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to Administrative Agent forthwith on demand the amount so distributed to
such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to Administrative Agent, at the greater of the Federal Funds Rate and a
rate determined by Administrative Agent in accordance with banking industry
rules on interbank compensation.

              (e) If any Lender shall fail to make any payment required to be
made by it pursuant to Section 2.4(d) or (e), 2.7(b) or 4.5(d), then
Administrative Agent may, in its


                                       50
<PAGE>

discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by Administrative Agent for the account of such Lender to
satisfy such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.

       4.6 Mitigation Obligations; Replacement of Lenders.

              (a) If any Lender requests compensation under Section 4.1, or if
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 4.4,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 4.1 or 4.4, as the case may be, in
the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

              (b) If any Lender requests compensation under Section 2.13(a) or
Section 4.1, or if Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 4.4, or if any Lender defaults in its obligation to fund Loans
hereunder, then Borrower may, at its sole expense and effort, upon notice to
such Lender and Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 11.4), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i)
Borrower shall have received the prior written consent of Administrative Agent
(and, if a Syndicated Working Capital Commitment is being assigned, the Issuing
Bank), which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or Borrower
(in the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13(a) or Section 4.1 or
payments required to be made pursuant to Section 4.4, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling
Borrower to require such assignment and delegation cease to apply.


                                       51
<PAGE>

SECTION 5. CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT.

       5.1 Conditions Precedent to the Initial Syndicated Working Capital Loans
and the First Letter of Credit. The obligations of the Syndicated Lenders to
make the initial Syndicated Working Capital Loans and of the Issuing Bank to
issue the first Letter of Credit are subject to the satisfaction (or waiver by
Administrative Agent and each Syndicated Lender) of the following conditions:

              (a) Loan Agreement. Administrative Agent (or its counsel) shall
have received from each party hereto either (i) a counterpart of this Agreement
signed on behalf of such party or (ii) written evidence satisfactory to
Administrative Agent (which may include facsimile transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement.

              (b) Pagares. Administrative Agent shall have received each Pagare
evidencing the initial Loans, duly executed and delivered by Borrower.

              (c) QUALCOMM Guaranty Documents. Administrative Agent (or its
counsel) shall have received from QUALCOMM either (i) a counterpart of the
QUALCOMM Guaranty, duly signed on behalf of QUALCOMM or (ii) written evidence
satisfactory to Administrative Agent (which may include facsimile transmission
of signed signature pages of the QUALCOMM Guaranty) that QUALCOMM has signed
counterparts of the QUALCOMM Guaranty.

              (d) Pegaso Guaranty Agreement. Administrative Agent (or its
counsel) shall have received a counterpart of the Pegaso Guaranty Agreement,
duly executed by the Guarantors.

              (e) Administrative Agent's Fee Letter. Administrative Agent shall
have received Administrative Agent's Fee Letter, duly executed by the Borrower
Group and QUALCOMM and accepted by Administrative Agent.

              (f) Satisfaction of QUALCOMM Conditions Precedent Letter. There
shall have been delivered to Administrative Agent the Satisfaction of QUALCOMM
Conditions Precedent Letter, in form and substance satisfactory to
Administrative Agent, duly signed by on behalf of QUALCOMM, confirming that the
conditions set forth in Section 5.2 have been satisfied (or waived by QUALCOMM
on such terms as QUALCOMM may agree).

              (g) Opinions of Counsel. (i) Administrative Agent shall have
received a favorable written opinion (addressed to Administrative Agent,
QUALCOMM and the other Lenders and dated the Closing Date) of White & Case LLP,
special New York counsel to the Borrower Group and Mijares, Angoitia, Cortes y
Fuentes, S.C., Mexican counsel to the Borrower Group, covering such matters
relating to Borrower, the other members of the Borrower Group, this Agreement or
the transactions contemplated by the Loan Documents as Administrative Agent,
QUALCOMM or the other Lenders shall reasonably request, and (ii) Administrative
Agent shall have received a favorable written opinion (addressed to
Administrative Agent and the Syndicated Lenders and dated the Closing Date) of
Cooley Godward LLP, California counsel


                                       52
<PAGE>

to QUALCOMM, covering such matters relating to QUALCOMM, this Agreement, the
QUALCOMM Guaranty or the transactions contemplated by the Loan Documents as
Administrative Agent or the Syndicated Lenders shall reasonably request and a
favorable written opinion of special New York counsel, covering such matters
related to the QUALCOMM Guaranty as Administrative Agent for the Syndicated
Lenders shall reasonably request. Borrower, each other member of the Borrower
Group and QUALCOMM hereby requests such counsel to deliver such opinions.

              (h) Incumbency Certificates. Administrative Agent and the
Syndicated Lenders shall have received signature and incumbency certificates of
the officers of QUALCOMM and of each member of the Borrower Group executing this
Agreement or the other Loan Documents to which it is or is to be a party.

              (i) Other Documents. Administrative Agent shall have received such
documents and certificates as Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of the members
of the Borrower Group and QUALCOMM, the authorization of the transactions
contemplated by the Loan Documents, and any other legal matters relating to the
members of the Borrower Group, QUALCOMM, this Agreement, the QUALCOMM Guaranty,
or the transactions contemplated by the Loan Documents and Administrative Agent
and each Syndicated Lender shall have received such other documents,
information, instruments, legal opinions and other materials in respect of any
aspect or consequence of the transactions contemplated hereby, all in form and
substance satisfactory to Administrative Agent and its counsel.

              (j) Officers' Certificates. Administrative Agent shall have
received certificates dated as of the Closing Date, signed by (i) the president
and chief financial officer (or the equivalent) of each member of the Borrower
Group, confirming compliance with the conditions set forth in clauses (a), (b)
and (c) of Section 5.3, and (ii) signed by a duly authorized officer of
QUALCOMM, confirming compliance with the condition set forth in clause (d) of
Section 5.3 (each such certificate and all other certificates delivered under
this Agreement to be in such Person's corporate, not individual, capacity).

              (k) Fees, Costs and Expenses. Administrative Agent (for its own
account or for the account of the other Syndicated Lenders or the Issuing Bank,
as the case may be) shall have received all fees and other amounts due and
payable on or prior to the Closing Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by Borrower under or in connection with this Agreement (or arrangements
satisfactory to Administrative Agent, in its sole discretion, have been made for
the payment of such amounts from the proceeds of the initial Borrowing of
Working Capital Loans on the Closing Date).

              (l) Stamp Duties; Taxes; Etc. Administrative Agent and Lenders
shall have received evidence satisfactory to them that all required stamp
duties, registration fees, filing costs and other charges in connection with the
execution, delivery, filing and/or perfection of any Loan Document required to
be stamped, registered or filed have been paid in full or an appropriate
exemption therefrom shall have been obtained, except to the extent that Borrower


                                       53
<PAGE>

has provided Administrative Agent and Lenders with assurances satisfactory to
them that such duties, fees, costs and charges will be paid in full with the
proceeds of the Loans.

Administrative Agent shall notify Borrower, QUALCOMM and the other Lenders of
the Closing Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Syndicated Lenders to make
Syndicated Working Capital Loans and of the Issuing Bank to issue Letters of
Credit hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 11.2) at or prior to 2:00
p.m., New York City time, on June 30, 1999 (and, in the event such conditions
are not so satisfied or waived, the Commitments shall terminate at such time).

       5.2 Conditions Precedent to the Initial Vendor Working Capital Loans, the
Initial Capitalized Interest Loans, and the QUALCOMM Satisfaction of Conditions
Precedent Letter. The obligations of the Vendor Working Capital Lenders to make
the initial Vendor Working Capital Loans, of the Capitalized Interest Lenders to
make the initial Capitalized Interest Loans, and of QUALCOMM to deliver the
Satisfaction of QUALCOMM Conditions Precedent Letter are subject to the
satisfaction (or waiver by QUALCOMM) of the following conditions:

              (a) Conditions Precedent to Initial Syndicated Working Capital
Facility Loans. Each of the conditions precedent set forth in Section 5.1 shall
have been satisfied (or waived by Administrative Agent and the Syndicated
Lenders).

              (b) Amendment No. 1 to Common Agreement. There shall have been
delivered to QUALCOMM an Amendment No. 1 to Common Agreement duly executed by
each member of the Borrower Group, Citibank, N.A., as Intercreditor Agent,
Citibank Mexico, S.A., Grupo Financiero Citibank, as Collateral Agent, Citibank
International Plc, as Alcatel Administrative Agent, and ABN AMRO Bank N.V., as
QUALCOMM Administrative Agent, in the form attached as Exhibit F hereto with
such changes as shall be satisfactory to QUALCOMM.

              (c) Amendment No. 1 to QUALCOMM Credit Agreement. There shall have
been delivered to QUALCOMM an Amendment No. 1 to Amended and Restated Credit
Agreement duly executed by Borrower, the lenders and ABN AMRO Bank N.V., as
QUALCOMM Administrative Agent, in the form attached as Exhibit G hereto with
such changes as shall be satisfactory to QUALCOMM.

              (d) Budget and Cash Flow Forecast. QUALCOMM shall have received
the Initial Budget and the Initial Cash Flow Forecast, each in form and
substance satisfactory to QUALCOMM.

              (e) Officers' Certificates. QUALCOMM shall have received
certificates dated as of the Closing Date, signed by the president and chief
financial officer (or the equivalent) of each member of the Borrower Group,
confirming compliance with the conditions set forth in clauses (a), (b) and (c)
of Section 5.3 (each such certificate and all other certificates delivered under
this Agreement to be in such Person's corporate, not individual, capacity).


                                       54
<PAGE>

              (f) Corporate Proceedings. All corporate, shareholder and legal
proceedings (including the cancellation and reissuance of existing treasury
shares and treasury shares relating to the Stock Options) and all instruments
and agreements in connection with the transactions contemplated by this
Agreement, the other Loan Documents and the Guaranty Trust Agreement shall be
reasonably satisfactory in form and substance to QUALCOMM, and QUALCOMM shall
have received all information and copies of all certificates, documents and
papers, including records of corporate and shareholder proceedings and
governmental approvals, if any, which QUALCOMM may have reasonably requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate officers or governmental authorities.

              (g) Evidence of Insurance. QUALCOMM shall have received
certificates or other evidence of the existence of the insurance required by the
Common Agreement.

              (h) QUALCOMM Fee Letter. QUALCOMM shall have received the QUALCOMM
Fee Letter, duly executed and delivered by each member of the Borrower Group and
accepted by QUALCOMM, and Borrower shall have paid to QUALCOMM the Underwriting
Fee as required by the QUALCOMM Fee Letter, or arrangements satisfactory to
QUALCOMM, the Administrative Agent and the Required Lenders shall have been made
for the payment of the Underwriting Fee on the Closing Date from the proceeds of
the initial Capitalized Interest Loans.

              (i) Vendor Post-Closing Agreement. QUALCOMM shall have received a
certificate from an Authorized Officer of QUALCOMM certifying that all of the
items to be completed and delivered under the Vendor Post-Closing Agreement
shall have been completed or delivered in accordance therewith, including (i)
the resolution of the amount of the loans outstanding under the QUALCOMM Credit
Agreement and the issuance of the Pagares in connection therewith and (ii) the
execution and delivery of certain amendments to the QUALCOMM Procurement
Agreements, in form and substance satisfactory to QUALCOMM.

              (j) Business Plan. QUALCOMM shall have received a copy of the
Business Plan, certified by an Authorized Officer of the Company as having been
approved by the Board of Directors of Holdings.

              (k) Additional Matters, Documents or Information. QUALCOMM shall
have received each additional document, instrument, legal opinion or item of
information reasonably requested by QUALCOMM, including a copy of any debt
instrument, security agreement or other material contract to which Borrower or
any other member of the Borrower Group may be a party, and all corporate and
other proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance to
QUALCOMM, and QUALCOMM shall have received such other documents, legal opinions
and other opinions in respect of any aspect or consequence of the transactions
contemplated hereby.

              (l) System Compliance. The System shall be in compliance in all
respects with all Applicable Laws as in effect upon the Closing Date and
Administrative Agent and


                                       55
<PAGE>

QUALCOMM shall have received a certificate to such effect from an Authorized
Officer of Borrower.

              (m) Financial Statements. QUALCOMM shall have received the most
recent financial statements of the Borrower Group (on a consolidated basis),
together with a certificate from the Chief Financial Officer of Holdings,
stating that no material adverse change in the consolidated assets, liabilities,
operations or financial condition of the Borrower Group has occurred from those
set forth in the financial statements provided pursuant to this clause (m),
except as otherwise provided (which exceptions shall also be in form and
substance satisfactory to Administrative Agent) in any such certificate with
respect to such financial statements.

              (n) Authorization to Independent Accountant. The Chief Financial
Officer of Holdings shall have authorized the Independent Accountant in writing
to communicate directly with Administrative Agent and QUALCOMM (provided that
such authorization shall provide that no such communications shall occur with
the Independent Accountant unless and until Administrative Agent or QUALCOMM
has, prior thereto, notified such Chief Financial Officer of Holdings that it
intends to so communicate with the Independent Accountant, and requests that
such officer so notify such Independent Accountant) and shall have furnished
Administrative Agent and QUALCOMM with a copy of such authorization, which
authorization shall be irrevocable until all Obligations have been fully and
finally paid.

              (o) Licenses and License Fee. The Licenses shall be in full force
and effect; such Licenses shall provide all of the Permits required to operate
the System in accordance with the Business Plan, and in those geographical areas
referred to in the Business Plan; and all fees, costs and expenses payable in
connection with the granting or maintaining of such Licenses shall have been
paid in full.

              (p) Fees, Costs and Expenses. QUALCOMM shall have received all
fees and other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by Borrower under this Agreement or
the other Loan Documents (or arrangements satisfactory to QUALCOMM, in its sole
discretion, have been made for the payment of such amounts from the proceeds of
the initial Borrowing of Capitalized Interest Loans on the Closing Date).

              (q) Stamp Duties; Taxes; Etc. QUALCOMM shall have received
evidence satisfactory to it that all required stamp duties, registration fees,
filing costs and other charges in connection with the execution, delivery,
filing and/or perfection of any Loan Document required to be stamped, registered
or filed have been paid in full or an appropriate exemption therefrom shall have
been obtained, except to the extent that Borrower has provided QUALCOMM with
assurances satisfactory to it that such duties, fees, costs and charges will be
paid in full with the proceeds of the Loans.

              (r) Consent to Ericsson Assignments. QUALCOMM shall have received
the written consent of each member of the Borrower Group to the assignment by
QUALCOMM to Telefonaktiebolaget Im Ericsson (publ) and its affiliates of certain
rights and obligations under


                                       56
<PAGE>

various agreements by and among the members of the Borrower Group and QUALCOMM,
in form and substance satisfactory to QUALCOMM.

Notwithstanding the foregoing, the obligations of the Vendor Working Capital
Lenders to make Vendor Working Capital Loans and of the Capitalized Interest
Lenders to make Capitalized Interest Loans shall not become effective unless
each of the foregoing conditions is satisfied (or waived pursuant to Section
11.2) at or prior to 2:00 p.m., New York City time, on June 30, 1999 (and, in
the event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time)

       5.3 Further Conditions Precedent to Certain Loans and Letters of Credit.

              Subject to Section 5.5, the obligations of each Lender to make a
Loan (other than a Capitalized Interest Loan or a Term Loan subject to Section
5.4) on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, are subject to the satisfaction of the
following conditions:

              (a) Representations and Warranties. The representations and
warranties of Borrower and each other member of the Borrower Group set forth in
this Agreement shall be true and correct on and as of the date of such Borrowing
or the date of issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, or as of any earlier date as to which such representation
and warranty is expressly limited.

              (b) No Default or Event of Default. At the time of and immediately
after giving effect to such Borrowing or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, no Default or Event of
Default shall have occurred and be continuing.

              (c) Material Adverse Effect. Since the date of the audited
financial statements pursuant to Section 5.2(m), no event, circumstance or
condition shall have occurred which constitutes a Material Adverse Effect.

              (d) No QUALCOMM Event. No QUALCOMM Event shall have occurred and
be continuing; provided that the condition set forth in this clause (d) shall
not be a condition to any Borrowing for which QUALCOMM is the sole Lender.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute (i) a representation and warranty on the
date thereof by Borrower and each other member of the Borrower Group as to the
matters specified in paragraphs (a), (b) and (c) of this Section and by QUALCOMM
as to the matters specified in paragraph (d) of this Section and (ii) a
confirmation by QUALCOMM of the QUALCOMM Guaranty.

       5.4 Conditions Precedent to Capitalized Interest Loans and to Certain
Term Loans. The obligation of each Capitalized Interest Lender to make a
Capitalized Interest Loan on the occasion of any Borrowing of Capitalized
Interest Loans and the obligation of each Syndicated Lender to make a Term Loan
on the occasion of any Borrowing of Term Loans for the purposes described in
Section 2.1(d)(i) are subject to the satisfaction of the following conditions:


                                       57
<PAGE>

              (a) No Bankruptcy or Insolvency Proceedings. No Event of Default
under Section 9.1(e), (f) or (g) shall have occurred.

              (b) No Acceleration of the Loans. Lenders shall not have
accelerated the Loans pursuant to Section 9.2.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty on the date
thereof by Borrower and each member of the Borrower Group as to the matters
specified in paragraphs (a) and (b) of this Section.

       5.5 Further Conditions Precedent to Syndicated Working Capital Loans and
Letters of Credit. If, at any time on or before the Commitment Termination Date,
(i) Borrower delivers a Borrowing Request for a Borrowing of Syndicated Working
Capital Loans approved by QUALCOMM in accordance with Section 2.6(a), a
Borrowing of Term Loans (other than Term Loans subject to Section 5.4), or a
request for the issuance, amendment, renewal or extension of a Letter of Credit
approved by QUALCOMM in accordance with Section 2.4(b), and (ii) QUALCOMM
delivers to Administrative Agent a written acknowledgement that that the
conditions set forth in clauses (a), (b) or (c) (or any combination thereof) of
Section 5.3 have not been satisfied as of the date of such Borrowing or request,
then the obligations of each Syndicated Lender to make a Syndicated Working
Capital Loan or such Term Loan, as the case may be, on the occasion of any
Borrowing under the Syndicated Working Capital Facility, and of the Issuing Bank
to issue, amend, renew or extend any Letter of Credit, are subject to the
satisfaction of the following conditions in lieu of the conditions set forth in
Section 5.3:

              (a) No QUALCOMM Event. No QUALCOMM Event shall have occurred and
be continuing.

              (b) No Bankruptcy or Insolvency Proceedings. No Event of Default
under Section 9.1(e), (f) or (g) shall have occurred.

              (c) No Acceleration of the Loans. Lenders shall not have
accelerated the Loans pursuant to Section 9.2.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute (i) a representation and warranty on the
date thereof by Borrower and each other member of the Borrower Group as to the
matters specified in paragraphs (b) and (c) of this Section and by QUALCOMM as
to the matters specified in paragraph (a) of this Section and (ii) a
confirmation by QUALCOMM of the QUALCOMM Guaranty.

SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

              The representations and warranties contained herein shall survive
the execution and delivery of this Agreement. To the extent that any schedule
referred to in this Section 6 shall need to be updated after the Closing Date in
order to permit such representation to be true and correct when made or deemed
made, Borrower or other member of the Borrower Group shall provide
Administrative Agent with such updated schedule in writing prior to the date
such


                                       58
<PAGE>

representation is made or deemed made and shall request approval of such updated
schedule from the Required Lenders. Unless any such schedule is updated and
approved by the Required Lenders, no change to any existing schedule shall be
deemed to have been made. Borrower and each other member of the Borrower Group
signatory hereto, jointly and severally, represents and warrants to the Lenders
as follows:

       6.1 Senior Debt; Non-Vendor Financing. Except as to the collateral
securing the Vendor Facilities, the Loans rank pari passu with the Indebtedness
of Borrower under the Vendor Agreements. The Loans constitute Non-Vendor
Financing under and as defined in the Common Agreement as in effect on the date
hereof.

       6.2 Approvals. No authorizations, consents, approvals, licenses, filings
or registrations by or with any Governmental Authority, and no notarization or
other formalities in Mexico, are required to be obtained or accomplished for the
execution, delivery or performance by Borrower or any other member of the
Borrower Group of this Agreement or any other Loan Document to which it is a
party or for the validity and enforceability of this Agreement or the other Loan
Documents in accordance with their respective terms.

       6.3 Corporate Status. Each member of the Borrower Group (i) is a sociedad
anonima de capital variable duly organized, validly existing and in good
standing under the laws of Mexico, (ii) is duly authorized to do business in
Mexico and in each other jurisdiction where the character of its properties or
the nature of its activities makes such qualification necessary (except for any
authorization the absence of which does not constitute a Material Adverse
Effect) and (iii) has the requisite power and authority to (a) own or possess
all of its property and assets, (b) transact the business in which it is engaged
or proposes to be engaged (including the Business), (c) incur and guarantee
Indebtedness and create Liens, (d) execute, deliver and perform its obligations
under the Loan Documents to which it is a party and (e) do all things to be done
by it in respect of the construction, maintenance and operation of the System
and to consummate the transactions contemplated by this Agreement and the other
Loan Documents.

       6.4 Corporate Power and Authority. The execution, delivery and
performance by Borrower of this Agreement and the Pagares, the borrowing of
Loans, the use of the proceeds thereof, and the issuance of Letters of Credit
hereunder have been duly authorized by all necessary corporate and, if required,
stockholder action. Each member of the Borrower Group has taken all corporate
action necessary to authorize the execution, delivery and performance by it of
each of such Loan Documents as have been executed and delivered by such member
as of each date this representation and warranty is made or deemed made. Each
member of the Borrower Group has, or in the case of the Loan Documents other
than this Agreement by the Closing Date will have, duly executed and delivered
each of the Loan Documents to which it is a party.

       6.5 Valid and Binding Obligation. This Agreement, when executed and
delivered by the members of the Borrower Group on or before the date this
representation is made or deemed made, constitutes, or, in the case of each
other Loan Document to which it is a party, when executed and delivered by it,
will constitute, the legal, valid and binding obligation of such Person
enforceable in accordance with its terms, except as the enforceability thereof
may be


                                       59
<PAGE>

limited by (i) applicable bankruptcy, insolvency and other similar laws
affecting creditors' rights generally and (ii) general equitable principles
regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law.

       6.6 No Violation. None of the execution and delivery by any member of the
Borrower Group of this Agreement and the other Loan Documents to which it is
party, the consummation of the transactions contemplated hereby and thereby or
compliance with the terms and provisions hereof and thereof does or will (i)
contravene or violate its Charter Documents or any Applicable Law, (ii)
contravene or result in any breach or constitute any default under any order,
writ, injunction, judgment or decree of any court or other tribunal or
Governmental Authority or (iii) contravene or result in any breach or constitute
any default under, or result in or require the creation of any Lien upon any of
its revenues, properties or assets under any agreement or instrument to which it
is a party or by which it or any of its revenues, properties or assets may be
bound, except for Permitted Liens or (iv) require any permit, consent or
approval of any Person other than any such permits, consents or approvals which
have been obtained and are in full force and effect.

       6.7 Permits. All authorizations, consents and permits necessary under
Applicable Law in connection with (i) the due execution and delivery of, and
performance by each member of the Borrower Group of its obligations under each
Loan Document to which it is a party in effect or required to be in effect as of
each date this representation is made or deemed made, and (ii) the care,
custody, control, construction, development and operation of the System as
contemplated by the Business Plan which are required to be obtained on or prior
to the date this representation is made or deemed made (other than, in the case
of this clause (ii), such consents, authorizations and permits the absence of
which would not constitute a Material Adverse Effect), in each case have been
obtained by such members (hereinafter, collectively the "Permits"). Each of the
Permits has been duly obtained or made, is validly issued, is in full force and
effect, and is held in the name of the Person identified in such Permit, and is
free from any condition or requirement compliance with which would constitute a
Material Adverse Effect or which the applicable member of the Borrower Group
does not reasonably expect to be able to satisfy in a timely manner.

       6.8 Financial Statements; Financial Condition; Undisclosed Liabilities;
Etc.

              (a) Each of the financial statements of the Borrower Group
delivered pursuant to Sections 5.2(m) and 7.1(a) is true, complete and correct
in all material respects as of the date of such statements and fairly presents
the financial condition, results of operations and cash flows as of the date
thereof. Such financial statements have been prepared in accordance with GAAP on
a consistent basis except as may otherwise be noted therein.

              (b) Except as fully reflected in (i) the financial statements
referred to in Section 5.2(m), (ii) the contingent liabilities set forth on
Schedule 6.34 and (iii) the obligations set forth in the Loan Documents, there
is, as of the Closing Date, no liability or obligation with respect to any
member of the Borrower Group of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) for the period to which
such respective financial statements relate which, either individually or in the
aggregate, constitutes a Material


                                       60
<PAGE>

Adverse Effect. As of the Closing Date, no member of the Borrower Group knows of
any reasonable basis for the assertion against any such member of any liability
or obligation of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) for such relevant period that is not (x) fully
reflected in the financial statements referred to in Section 5.2(m), (y) set
forth in Schedule 6.34 or (z) an obligation set forth in or contemplated by the
Loan Documents, which either individually or in the aggregate, constitutes a
Material Adverse Effect.

              (c) Since the date of the last financial statements of the
Borrower Group submitted in accordance with Section 7.1(a), there has been no
material adverse change in the condition (financial or otherwise) or operations
of the Borrower Group (taken as a whole), except for the operating losses
contemplated by the most recent Business Plan submitted pursuant to Section
7.1(d).

       6.9 Litigation; Labor Disputes.

              (a) No member of the Borrower Group is in default with respect to
any order of any court, arbitrator, administrative agency or other Governmental
Authority, other than any order that is the subject of a Good Faith Contest or
other order the default under which, or the non-compliance with which, would not
result in a Material Adverse Effect. There is no injunction, writ, or
preliminary restraining order of any nature issued by an arbitrator, court or
other Governmental Authority directing that any of the transactions provided for
in any of the Loan Documents not be consummated as herein or therein provided.
There is no action, suit, investigation or proceeding (including any appeal by
any Person of a Permit) by or before any court, arbitrator, administrative
agency or other Governmental Authority pending or, to the best knowledge of each
member of the Borrower Group, threatened against or affecting any member of the
Borrower Group (or any of such party's properties, revenues or assets) which
constitutes a Material Adverse Effect.

              (b) There are no strikes, slowdowns or work stoppages by the
employees of any member of the Borrower Group or any Vendor, on-going, or, to
the best knowledge of each such member, currently threatened, which constitute a
Material Adverse Effect.

       6.10 Tax Returns and Payments.

              (a) Each member of the Borrower Group has filed all income tax and
other material tax returns required by Applicable Law to be filed by it and has
paid all Taxes and assessments payable by it which have become due other than
those subject to a Good Faith Contest. Each member of the Borrower Group has
paid or has provided reserves adequate in the reasonable judgement of the
management of Holdings and consistent with GAAP for the payment of all income or
other Taxes imposed on it by the Government of Mexico for all prior Fiscal Years
and accrued for the current Fiscal Year to the date on which this representation
is made or deemed made.

              (b) Except for those items set forth in Schedule 6.10, as of the
date hereof no withholding Taxes are or will be payable by Borrower or any other
member of the Borrower Group under Applicable Law to any Governmental Authority
in connection with any amounts


                                       61
<PAGE>

payable or to be payable by Borrower or any other such member under or in
respect of this Agreement or the other Loan Documents.

       6.11 Capitalization.

              (a) Schedule 6.11 sets forth the capitalization of Holdings and
each other member of the Borrower Group as of the date hereof, including (i)
authorized capital, (ii) the number of shares issued and outstanding and (iii)
the shareholders and number of shares and advances held by each such
shareholder. All of the issued and outstanding shares of Holdings (other than
treasury stock held by Holdings) and each other member of the Borrower Group are
duly and validly issued and non-assessable and fully paid. On the Closing Date,
neither Holdings nor any other member of the Borrower Group has outstanding (y)
any securities convertible into or exchangeable for its share capital or (z)
except as set forth in Section 6.11(b) below or the Stock Options, any rights to
subscribe for or to purchase, or any option for the purchase of, or any
agreement, arrangement or understanding providing for the issuance (contingent
or otherwise) of, or any call, commitment or claims of any character relating
to, or any rights or claims that restrict the transfer of, its share capital.

              (b) The Existing Equity, as of March 31, 1999, was
Ps.2,947,290,074. No Existing Shareholder or New Shareholder has any right
(contingent or otherwise) for the repayment or reimbursement of any of the
Existing Equity, nor any rights, contractual or otherwise, against Holdings (or
any other member of the Borrower Group) in respect of such Existing Equity,
other than rights to the shares of Capital Stock which have previously been
issued to the providers of such Existing Equity. Each of the Existing Equity
Commitments (other than any obligation of Alcatel) constitutes the valid and
enforceable obligation of the Original Mexican Shareholders to subscribe for the
Capital Stock of Holdings in the amounts and on the date or dates specified in
such Existing Equity Commitments, and each such obligation is (i) absolute and
irrevocable, and (ii) not subject (directly or indirectly) to any precondition
or condition precedent except as set forth in the Joint Venture Agreement. As of
the date this representation is made (i) there has been no amendment, supplement
or modification of such Existing Equity Commitment, and (ii) there has been no
waiver granted by Holdings under any such Existing Equity Commitment. Set forth
in Schedule 6.11 is a true and complete listing of each Original Mexican
Shareholder and the amount of each Existing Equity Commitment required to be
contributed by each such Original Mexican Shareholder as of the Closing Date.

       6.12 Subsidiaries.

              (a) Holdings is the legal and beneficial owner of 100% of the
Capital Stock of each of (i) Borrower, (ii) Pegaso PCS and (iii) Personnel Co.
(the "Applicable Shares"). As of the Closing Date, Holdings does not own any
Capital Stock in any Person other than as set forth in the preceding sentence.
There are no Liens of any kind on any of the Applicable Shares other than
Permitted Liens, nor are there any restrictions on transfers of such Applicable
Shares, nor are there any agreements of any kind relating to the voting of, or
disposition of, such Applicable Shares (except as described in the proviso to
Section 4.04(iv) of the Common Agreement as in effect on the date hereof). As of
the Closing Date, each of Borrower, Pegaso PCS and Personnel Co. has no
Subsidiaries and does not otherwise control any voting stock or any ownership


                                       62
<PAGE>

interest in any other Person. Notwithstanding the other provisions of this
Section 6.12(a), it is recognized that a single share of each of Pegaso PCS,
Personnel Co. and Borrower is not owned by Holdings, but is owned by another
member of the Borrower Group.

              (b) As of the Closing Date, the Sponsors, collectively, own 100%
of the Capital Stock of Holdings (the "Holdings Shares"). On the Closing Date,
there are no liens of any kind on the Holdings Shares other than Permitted
Liens, nor (except for such agreements or restrictions as are set forth in the
Joint Venture Agreement, in the form in existence on the Closing Date, and in
the Registration Rights Agreements, and as otherwise described in the proviso to
Section 4.04 (iv) of the Common Agreement as in effect on the date hereof) are
there any restrictions on transfer of the Holdings Shares, nor are there any
agreements of any kind relating to the voting of, or disposition of, such
Holdings Shares, other than as set forth in the Joint Venture Agreement, the
Registration Rights Agreements and the Sponsors Negative Pledge Agreement.

       6.13 Compliance with Applicable Law. Each member of the Borrower Group is
in compliance in all respects with all Applicable Law (including Environmental
Law), except to the extent that such failure to be in compliance would not
constitute a Material Adverse Effect.

       6.14 Property Rights. Each member of the Borrower Group owns, has a
license to use or otherwise has the right to use, free and clear of any pending
or threatened Liens (other than Permitted Liens), all property rights (real,
personal, mixed, tangible or intangible) including all patents, patent
applications, trademarks, permits, service marks, names, trade secrets,
proprietary information and knowledge, technology, computer programs, databases,
copyrights, licenses, franchises and formulas, or rights with respect thereto,
and has obtained assignments of all leases and other rights of whatever nature,
in each case, that are material to the care, custody, control, construction,
development, operation and maintenance of the System or the conduct of the
Business by the Borrower Group as contemplated by the Business Plan, without any
conflict with the rights of others as of the date such property rights are
necessary to operate and maintain the System and the Business.

       6.15 Single-Purpose. The Borrower Group (taken as a whole) has not
engaged in any business other than the care, custody, control, development,
construction, operation, maintenance and financing of the System and the conduct
of the Business; provided that it is recognized that Personnel Co. is authorized
to provide human resource and similar services, and may provide such services,
to unrelated third parties to the extent consistent with the Business Plan.

       6.16 Fees and Enforcement.

              (a) Except for the fees and Taxes set forth on Schedule 6.16 that
have been paid in full or will have been paid in full by the date of any
Borrowing requested hereunder or with the proceeds of any Loan made pursuant to
such Borrowing, no fees or Taxes are required to be paid for the legality,
validity or enforceability of the Loan Documents.

              (b) This Agreement and each of such Loan Documents executed and
delivered as of the date this representation is made or deemed made are each in
proper legal form under


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(i) the Applicable Law of Mexico and (ii) the respective governing laws
specified in such Loan Documents, for the enforcement thereof in such
jurisdiction.

       6.17 Foreign Exchange Approvals. All requisite foreign exchange control
approvals and other similar authorizations, if any, required under Applicable
Law to be issued by any Governmental Authority to assure (i) the ability of each
member of the Borrower Group to receive, and the ability of any other party to
make to the Borrower Group, any and all payments in the currency or currencies
contemplated by the Loan Documents, (ii) the ability of each member of the
Borrower Group to maintain Dollar accounts outside Mexico and to transfer
amounts from and into Mexico as necessary to meet its obligations under the Loan
Documents, in accordance with their respective terms, and (iii) the ability of
each member of the Borrower Group to use Dollars as necessary to perform all of
its obligations under the Loan Documents, in accordance with their respective
terms, including the making of all payments required by or contemplated in the
Loan Documents, have been duly and validly obtained and are in full force and
effect. Other than those restrictions or requirements for which appropriate
waivers, authorizations and/or approvals have been received, there are no
further restrictions or requirements under Applicable Law that limit the
availability or transfer of foreign currency, or the conversion to a foreign
currency, for the purpose of (a) the performance by each member of the Borrower
Group of its obligations under this Agreement or any other Loan Document to
which it is a party or (b) repatriating the proceeds of enforcement of the
Obligations.

       6.18 Liens. Except for Permitted Liens, there are no Liens securing any
Indebtedness or other obligations of any Person covering any present or future
revenues, properties or assets or share capital of any member of the Borrower
Group other than on the Capital Stock of Holdings. No Liens securing any
Indebtedness or other obligations of any Person cover the Capital Stock of
Holdings held by any Sponsor except as permitted under the Sponsor Negative
Pledge Agreement and as may exist under that Irrevocable Guaranty Trust
Agreement dated as of May 27, 1999 by and among Alejandro Burillo Azcarraga,
Leap, QUALCOMM, Banco Invex, Institucion de Banca Multiple, Grupo Financiero
Invex, Trust Department and Holdings. No member of the Borrower Group has
outstanding any Lien or obligation to create any Lien on or with respect to any
of its properties, revenues or assets, other than Permitted Liens.

       6.19 Title. Except for Permitted Liens, Borrower and its Subsidiaries own
and have good and marketable title in fee simple absolute to, or valid leasehold
interests in, all of their respective properties and assets, real and personal,
including the properties and assets and leasehold interests reflected in the
Financial Statements (other than any properties or assets disposed of in the
ordinary course of business or otherwise in compliance with the Common
Agreement) and all assets and properties acquired by Borrower and its
Subsidiaries since the date of the Financial Statements referred to in Section
5.2(m) (except those disposed of in the ordinary course of business or otherwise
in compliance with the Common Agreement).

       6.20 Loan Documents. Administrative Agent and Lenders have received a
true, complete and correct copy of each of the Loan Documents in effect as of
the date this representation is made or deemed made. Each such Loan Document is
in full force and effect and has not been amended, modified or terminated,
except as previously disclosed in writing to Administrative Agent and in
accordance with the terms hereof and thereof.


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<PAGE>

       6.21 Certain Ancillary Services. Except where the failure to obtain the
services referred to below would not constitute a Material Adverse Effect, all
utility services, facilities and other services that can reasonably be expected
to be necessary for the care, custody, control, construction, operation and
maintenance of the System, are, or will be when needed, available to the
Borrower Group to the extent necessary or desirable.

       6.22 Environmental Matters.

              (a) Except as set forth on Schedule 6.22 (i) no member of the
Borrower Group is now in violation of any Environmental Law which violation
constitutes a Material Adverse Effect, (ii) no member of the Borrower Group, nor
to the best knowledge of any member of the Borrower Group, any third party, has
used, released, discharged, generated, manufactured, produced, stored, or
disposed of in, on, under, or about the System or any real property owned or
leased by an member of the Borrower Group or transported thereto or therefrom
any Hazardous Material in a manner that could reasonably be expected to subject
any member of the Borrower Group to any Environmental Claim that would
constitute a Material Adverse Effect, or subject QUALCOMM, Administrative Agent
or any Lender to any liability or regulation under any Environmental Law or to
any Environmental Claim, and (iii) to the best knowledge of each member of the
Borrower Group, there are no Hazardous Materials used, stored, or present at, on
or near the System or any real property owned or leased by any member of the
Borrower Group in violation of Applicable Law or which would constitute a
Material Adverse Effect.

              (b) Except as set forth in Schedule 6.22, there is no proceeding
and, to the best knowledge of each member of the Borrower Group, no
investigation or inquiry by any Governmental Authority or any other Person with
respect to the presence or release of Hazardous Materials in, on, from or to the
System or any real property owned or leased by any member of the Borrower Group
which would constitute a Material Adverse Effect, nor, as of the Closing Date,
has any member of the Borrower Group received notice of any pending or
threatened Environmental Claim, and, as of the Closing Date, no member of the
Borrower Group knows of any basis for any Environmental Claim.

       6.23 Investment Company Act. Borrower is not an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940.

       6.24 True and Complete Disclosure. (a) All factual information (taken as
a whole), including the Business Plan, furnished by or on behalf of any member
of the Borrower Group in writing to or for the benefit of any particular Lender
(referred to herein as a "Relevant Lender," which term includes Administrative
Agent) was true and accurate in all material respects (i) in the case of the
Business Plan, as of the Closing Date, and (ii) with respect to all other
factual information (including updates of the Business Plan), on the dates as of
which such information was furnished, and was not incomplete by omitting to
state any material fact necessary to make such information (taken as a whole)
not misleading in any material respect at such time in light of the
circumstances under which such information was furnished; provided, however,
that, except as otherwise expressly set forth in this Agreement, the sole
representation of each member of the Borrower Group with respect to projections,
estimates or other expressions of


                                       65
<PAGE>

view as to future circumstances shall be that such projections, estimates or
other expressions of view as to future circumstances (i) were prepared in good
faith, (ii) fairly present in all material respects the Borrower Group's
expectations as to the matters covered thereby as of their respective date(s) of
delivery (it being understood that assumptions utilized therein were believed by
the Borrower Group in good faith to be reasonable in light of conditions
existing at the time of preparation thereof, but that actual results may vary
from the projected results contained therein), (iii) were based on reasonable
assumptions as to all factual and legal matters material to the estimates
therein (including interest rates and costs) as of their respective date(s) of
delivery, and (iv) were in all material respects consistent with the provisions
of the Loan Documents as of their respective date(s) of delivery. There are no
statements, assumptions or conclusions in the Business Plan, as of the date of
delivery thereof, which are based upon or include information known as of such
delivery date to any member of the Borrower Group to be misleading or which fail
to take into account material information regarding the matters reported
therein. As of the Closing Date there are in existence no documents, agreements
or other information which have not been disclosed to the Relevant Lender in
writing which are material in the context of the Loan Documents or which have
the effect of varying any of the Loan Documents.

       6.25 No Additional Fees. Other than as set forth in Schedule 6.25, as of
the Closing Date, no member of the Borrower Group has paid nor become obligated
to pay any fee or commission to any broker, finder or intermediary for or on
account of arranging the financing of the transactions contemplated by the Loan
Documents.

       6.26 Use of Proceeds. The proceeds of the Syndicated Working Capital
Loans, the Term Loans, the Vendor Working Capital Loans and the Capitalized
Interest Loans shall be used solely as described in Sections 2.1(b), 2.1(d),
2.2(b) and 2.3(b), respectively. No part of the proceeds of any Loan or Letter
of Credit will be used for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" (as defined in Regulation U)
or to extend credit to others for such purpose. No part of the proceeds of any
Loan or Letter of Credit will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, for any purpose which entails a
violation of, or which is inconsistent with Regulations T, U or X promulgated by
the Board of Governors of the Federal Reserve System (12 C.F.R. Sections 220,
221 and 224, respectively).

       6.27 Insurance. All insurance policies required to be maintained pursuant
to the terms of the Common Agreement are in full force and effect, and all
premiums due and payable have been paid.

       6.28 Private Activities; Immunity. The transactions contemplated by the
Loan Documents constitute private commercial activities (rather than
governmental or public activities). To the extent that any member of the
Borrower Group or any of its properties or assets has or hereafter may acquire
any rights to immunity from setoff, legal proceedings, attachment prior to
judgment, other attachment or execution of judgment on any grounds of
sovereignty or otherwise (whether under the laws of Mexico or any other
jurisdiction), to the extent permitted by Applicable Law such Person hereby
irrevocably waives such right to immunity and its properties and assets in
respect of its obligations arising under or relating to this Agreement or any
other Loan Document.


                                       66
<PAGE>

       6.29 No Subordination. The obligations of each Guarantor under the
Guaranties and Borrower under this Agreement or under any other contracts or
instruments executed by Guarantors or Borrower in connection therewith and
herewith (i) are not subordinated in right of payment to any other obligation of
Borrower or such Guarantors and (ii) will at all times rank prior to or pari
passu in right of payment with all present and future unsecured Indebtedness of
any Guarantor or Borrower, as applicable, except in either case, to the extent
provided by law or as may otherwise be expressly provided in the Loan Documents.

       6.30 Licenses. The Licenses are in full force and effect and Borrower
holds legal, valid, binding and enforceable title to the Licenses free and clear
of any Liens other than Permitted Liens and free and clear of any conditions
other than those set forth in the Licenses. The Licenses are sufficient
(together with other authorizations, consents and permits which have been
received, or are reasonably anticipated to be received on a timely basis, by one
or more members of the Borrower Group) to grant to Borrower the legal power and
authority to operate and maintain the System and conduct the Business in
accordance with the Business Plan. Other than as may be set forth in Schedule
6.30, there has been no notice given by any Governmental Authority that brings
into question the validity or effectiveness of the Licenses, nor is there any
litigation (or to the best knowledge of each member of the Borrower Group,
threatened litigation) relating in any way to the Licenses which, in either
case, if decided adversely, would have the effect of causing an Event of Default
under Section 9.1(l).

       6.31 Operator Agreements. Subject to Section 5.17 of the Common
Agreement, the GTE Operator Agreement and the Operator Agreement are in full
force and effect.

       6.32 Employee Benefit Plans; Employment Matters.

              (a) Employee Benefits.

                     (i) Each employee benefit plan of any member of the
Borrower Group, if any, has been maintained, operated and administered in
accordance with its terms and with Applicable Law, and all notices, filing and
disclosures required by such terms or law have been timely made, except when the
failure to maintain, operate, or administer, or to notify, file or disclose,
would not have a Material Adverse Effect. No proceeding with respect to the
administration or the investment of the assets of any employee benefit plan
(other than routine claims for benefits) that would have a Material Adverse
Effect or create Liens (other than Permitted Liens) is pending or threatened.

                     (ii) All obligations of the Borrower Group for payments
with respect to any and all mandatory and additional employee benefit plans
including all Instituto Mexicano del Seguro Social (Mexican Social Security
Institute), Instituto del Fondo Nacional para la Vivienda de los Trabajadores
(National Worker's Housing Fund Institute), and accrued payroll taxes payments
for their respective employees have been timely paid and properly reported in
the financial statements required to be delivered under Section 7.1(a) in
accordance with GAAP except where the failure to make such payments would not
have a Material Adverse Effect or result in any Lien (other than Permitted
Liens).


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<PAGE>

                     (iii) As of the Closing Date, no member of the Borrower
Group has any liability for retiree benefits.

              (b) Employment Practices. Each member of the Borrower Group has
complied in all material respects with all Applicable Laws with respect to
employment practices, including applicable health and safety regulations, and
there is no investigation, charge or complaint alleging any material violation
of such laws, rules or regulations against any member of the Borrower Group
pending or threatened, or before any federal or local labor board, tribunal or
Comision Nacional del Sistema de Ahorro para el Retiro (National Savings and
Retirement System Commission).

              (c) Labor Matters. There is no labor strike, request for
representation, slowdown or stoppage actually pending or, to the knowledge of
any member of the Borrower Group, threatened against or affecting it which would
have a Material Adverse Effect.

              (d) Filings. Each member of the Borrower Group has filed all
forms, reports, statements, provider agreements benefit plan descriptions, payor
agreements, beneficiary materials and other documents (including those related
to employee benefit plans) required to be filed by it with any Governmental
Authority, including state and federal insurance and health regulatory
authorities except where the failure to file would have a Material Adverse
Effect or result in a Lien.

       6.33 Year 2000. Each member of the Borrower Group reasonably believes
that all computer applications that are material to its business and operations
will on a timely basis be able to perform properly date-sensitive functions for
all dates before, on and after January 1, 2000, except to the extent that a
failure to do so is would not have Material Adverse Effect (that is, be "Year
2000 compliant").

       6.34 Indebtedness. As of the date hereof and as of the Closing Date,
Schedule 6.34 is a complete and correct list of all Indebtedness, credit
agreements, indentures, purchase agreements, guaranties, capital leases and
other investments, agreements and arrangements presently in effect providing for
or relating to extensions of credit (including agreements and arrangements for
the issuance of letters of credit or for acceptance financing, but not including
nondelinquent trade credit providing for payment within ninety (90) days of
invoice) involving $1,000,000 or more in respect of which any member of the
Borrower Group is in any manner directly or contingently obligated. The maximum
principal or face amounts of the credits in question, which are outstanding and
which can be outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefor are correctly described or
indicated in such Schedule.

       6.35 Budget. As of the date hereof, the Initial Budget is consistent with
the Business Plan.

SECTION 7. AFFIRMATIVE COVENANTS.

              Each member of the Borrower Group covenants and agrees, jointly
and severally, that until the Commitments have been terminated and all
Obligations are paid in full:


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<PAGE>

       7.1 Information Covenants. Borrower shall furnish to Administrative Agent
and QUALCOMM:

              (a) Financial Statements.

                     (i) Annual Financial Statements Of The Borrower Group. As
soon as available, but in any event within 120 days after the close of each
Fiscal Year, a consolidated balance sheet of the Borrower Group as at the end of
such Fiscal Year with the related audited statements of income and retained
earnings and statements of cash flows for such Fiscal Year, in each case setting
forth comparative combined figures for the prior Fiscal Year and certified by
the Independent Accountant, which certification shall state that all such
statements are in agreement with the Borrower Group's books of account and are
prepared in accordance with GAAP on a consistent basis and reconciled to U.S.
GAAP.

                     (ii) Quarterly Financial Statements. As soon as available
and in any event within 45 days after the close of each of the first three
quarterly accounting periods in each Fiscal Year, the combined balance sheet of
the Borrower Group, as at the end of such quarterly period and the related
unaudited combined statements of income and of cash flows for such quarterly
period and for the portion of the Fiscal Year ended at the end of such quarterly
period, and in each case setting forth comparative combined figures for the
related quarterly period in the prior Fiscal Year and the figures for such
portion of the Fiscal Year ended at the end of such quarterly period, all of
which shall be certified by the chief financial officer or controller of
Holdings as fairly presenting the financial condition and results of operations
of the Borrower Group and as having been prepared in accordance with GAAP on a
consistent basis and reconciled to U.S. GAAP, subject to changes resulting from
audit and normal year-end audit adjustments.

              (b) Independent Accountant's Report. At the time of delivery of
the financial statements provided for in Section 7.1(a), a report of the
Independent Accountant (x) stating that in the course of its regular audit
conducted in accordance with GAAP of the financial statements of the Borrower
Group as described under this Section 7.1, the Independent Accountant obtained
no knowledge of a Default or Event of Default which has occurred, or if in the
opinion of the Independent Accountant such Default or Event of Default has
occurred, a statement as to the nature thereof and (y) certifying that, based on
such financial statements and its review of the terms hereof, the Borrower Group
was in compliance with Sections 5.02(a), 6.03, 6.04, 6.06, 6.09 and 6.10 of the
Common Agreement as of the end of the relevant Fiscal Year or, as the case may
be, detailing any non-compliance therewith.

              (c) Management Letters. Promptly after receipt thereof, by any
member of the Borrower Group, a copy of any management letter or other similar
communication received by any such member from the Independent Accountant in
relation to the financial, accounting and other systems, management or accounts
of any such member.

              (d) Business Plan. Not less frequently than annually, commencing
not later than December 15, 1999, an updated Business Plan in the form approved
by the Board of Directors of Holdings, which shall be based on (i) facts and
circumstances existing as of the date


                                       69
<PAGE>

of submission, and (ii) with respect to future events and performance,
assumptions believed by the Borrower Group to be reasonable under the
circumstances as of such date of submission. Each updated Business Plan shall
contain, at a minimum, (i) a description of the Borrower Group's plans in
connection with the roll-out of the System, (ii) the number of subscribers to
the System as of the date of such updated Business Plan for each year thereafter
through the final maturity date of any Senior Indebtedness then outstanding,
(iii) a pro-forma income statement (including EBITDA) for the year in which the
up-dated Business Plan is submitted and each year thereafter through the final
maturity date of any Senior Indebtedness then outstanding, (iv) a projected debt
service coverage table for the then current year and each year thereafter
through the final maturity date of any Senior Indebtedness then outstanding, (v)
at least the same amount of information as was contained in the original
Business Plan, and (vi) a description of all major assumptions which were used
in connection with the preparation of such up-dated Business Plan. During the
30-day period following the submission of the updated Business Plan, the
Borrower Group will make available the Chief Financial Officer of Holdings and
any other officer of the Borrower Group reasonably requested by any
Administrative Agent to report on, and answer questions with respect to, such
updated Business Plan at such times as such Administrative Agent(s) may
reasonably request.

              (e) Cash Flow Forecast. On or prior to the first day of each
fiscal quarter, an updated Cash Flow Forecast, certified by the Chief Financial
Officer of Holdings that the same has been prepared in good faith and is based
upon reasonable assumptions.

              (f) Officers' Certificates. At the time of the delivery of the
financial statements provided for in Section 7.1(a), a certificate of an
Authorized Officer of each member of the Borrower Group to the effect that,
based upon such Authorized Officer's review of the terms hereof and the other
Loan Documents and the financial condition of each member of the Borrower Group
during the relevant accounting period and, to the best of such officer's
knowledge, (i) such member of the Borrower Group is in compliance with all of
its obligations under the terms of the Loan Documents the non-performance of
which would constitute a Material Adverse Effect, and (ii) no Default or Event
of Default has occurred and is continuing, or, if any Default or Event of
Default has occurred and is continuing, specifying the nature and extent thereof
and what action the Borrower Group is taking or proposes to take in response
thereto.

              (g) Notice of Certain Occurrences, Etc. (i) Promptly, but in all
cases within five Business Days after any Responsible Officer of any member of
the Borrower Group obtains knowledge thereof, written notice of any event which
constitutes a Default or Event of Default, specifying the nature of such Default
or Event of Default and any steps the Borrower Group is taking and proposes to
take to remedy the same and (ii) promptly, and in any event within five Business
Days, after any senior officer of any member of the Borrower Group obtains
knowledge thereof, notice of:

                     (i) any litigation, arbitration or governmental proceeding
pending or threatened in writing (1) against any member of the Borrower Group
(x) involving a claim or claims in excess of $1,000,000 individually or
$2,000,000 in the aggregate or (y) which, if


                                       70
<PAGE>

decided adversely to such member or members, would constitute a Material Adverse
Effect, or (2) with respect to any Loan Document;

                     (ii) any proceeding or legislation by any Governmental
Authority to acquire compulsorily all or any portion of the business or assets
of any member of the Borrower Group (whether or not constituting an "Event of
Default" hereunder);

                     (iii) any change in the Authorized Officers of Borrower or
other member of the Borrower Group, giving certified specimen signatures of any
new officer so appointed and, if requested by an Administrative Agent,
reasonably satisfactory evidence of the authority of such new officer;

                     (iv) any notice relating to a material dispute received or
initiated by any member of the Borrower Group under any of the Licenses;

                     (v) any Lien (other than a Permitted Lien) being granted or
established or becoming enforceable over any assets of the Borrower Group;

                     (vi) any one or more events, conditions or circumstances
(including any event of force majeure or any on going or threatened strike,
slowdown or work stoppage by the employees of any member of the Borrower Group
or of any Vendor) known by a senior officer of any member of the Borrower Group
to exist or to have occurred or in the reasonable judgment of such officer are
expected or imminent that, in any case, constitute a Material Adverse Effect;

                     (vii) any notice received by any member of the Borrower
Group purporting to cancel or materially alter in an adverse manner the terms of
any insurance contract (including any notification of any premium increase in
excess of 20% over the prior premium payable for such insurance contract);

                     (viii) any (i) fact, circumstance, condition or occurrence
that results in noncompliance with any Environmental Law and constitutes a
Material Adverse Effect and (ii) pending or, to the best knowledge of any member
of the Borrower Group, threatened (in writing) Environmental Claim against any
such member which would result in a Material Adverse Effect; and

                     (ix) any change in the capitalization of Holdings or any
other member of the Borrower Group to the extent that, as a result of such
change, any of the representations and warranties made in Section 6.11(a) as of
the Closing Date would not be true if made as of any subsequent date.

              (h) Governmental Reports. Within 30 days after the date on which
any such report is submitted, a copy of any material report required to be filed
by any member of the Borrower Group with any Governmental Authority with respect
to an environmental aspect of the System.


                                       71
<PAGE>

              (i) Information with Respect to Amendment, Waiver or Consent. In
connection with any proposed amendment, waiver or consent in respect of any of
the provisions hereof or of any other Loan Document for which the consent or
approval of Administrative Agent, QUALCOMM, the Issuing Bank or any Lender is
required, sufficient information (including a narrative description of the
effect thereof), sufficiently far in advance of the date a decision is required,
to enable Administrative Agent, QUALCOMM, the Issuing Bank or Lenders to make an
informed and considered decision with respect thereto; provided that such
information shall be required to be delivered only to those parties
(Administrative Agent, QUALCOMM, the Issuing Bank and Lenders, as applicable)
the consent or approval of which is required.

              (j) Notice of Default, Litigation or Environmental Claim.
Promptly, and in any event within three Business Days after any Responsible
Officer of any member of the Borrower Group obtains knowledge thereof, notice of
(x) the termination of either of the Alcatel Procurement Agreement or the
QUALCOMM Procurement Agreements and (y) any change in the ownership of Holdings
of which it has knowledge and (z) any Environmental Claim against Borrower or
any other member of the Borrower Group. Each notice pursuant to this subsection
shall specify the nature thereof, the period of existence thereof and what
action, if any, the Borrower Group proposes to take with respect thereto.

              (k) Year 2000 Compliance. Promptly in the event the Borrower Group
discovers or determines that any computer application (including those of its
material suppliers and vendors) that is material to the Business will not be
Year 2000 compliant (as defined in Section 6.33) on a timely basis.

              (l) Other Information. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the United States
Securities and Exchange Commission or any comparable Governmental Authority by
Holdings, (ii) copies of all financial statements, proxy statements, notices and
reports as Holdings shall send generally to public shareholders and (iii) with
reasonable promptness, such other information or documents (financial or
otherwise) as Administrative Agent or any Lender may reasonably request from
time to time (provided that such information shall be required to be delivered
only to Administrative Agent or the Lenders requesting such information).

              (m) Books and Records. Each member of the Borrower Group shall
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities and shall permit (at such member's own expense, except for travel
costs) any representatives designated by the Administrative Agent, QUALCOMM or
any other Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.

       7.2 Permits; Enforcement of Transaction Documents. The Borrower Group
will:


                                       72
<PAGE>

              (a) take, or cause to be taken, all actions necessary to obtain in
a timely manner all authorizations, consents and permits which are the
responsibility of the Borrower Group, and will promptly make, or cause to be
made, all required filings with governmental or similar authorities in Mexico,
in each case, to preserve, renew and keep in full force and effect its material
rights, franchises, licenses, contracts, powers, privileges and patents
necessary for the performance of its obligations under the Loan Documents;

              (b) obtain and maintain, or cause to be obtained and maintained in
full force and effect (or where appropriate, renew) all consents, authorizations
and permits necessary for the conversion to Dollars of all Peso amounts which
are required to be converted by the Loan Documents and for the remittance to the
United States in Dollars of any amounts paid or payable in Dollars, as
applicable, to Administrative Agent, the Issuing Bank or any Lender in
connection with any other Loan Document or the transactions contemplated hereby
or thereby;

       7.3 Proper Legal Form. Each member of the Borrower Group shall take all
such further action within its control required to ensure that each of the Loan
Documents is in proper legal form, under the laws of Mexico and under the
respective governing laws specified in such Loan Documents, for the enforcement
thereof in such jurisdictions without any further action on the part of
Administrative Agent or any other Person.

       7.4 Translations. If any Loan Document, notice, certificate, instrument,
communication or other document required to be delivered to any Person pursuant
to this Agreement is not originally executed, delivered or given in English
(regardless of whether such requirement arises before or after the Closing
Date), the Borrower Group shall, upon written request of Administrative Agent or
QUALCOMM or any other Lender entitled to receive the same, concurrently with the
delivery of such Loan Document, notice, certificate, instrument or other
document, additionally and at Borrower's expense, provide to such Person a
certified English translation thereof. Subject to Section 11.16, if any Loan
Document, notice, certificate, instrument, communication or other document
required to be delivered to any Person pursuant to this Agreement is not
originally delivered in Spanish, and a Spanish translation thereof shall be
necessary or appropriate, in the reasonable judgment of Administrative Agent or
any Lender, under Mexican law or in connection with the administration or
enforcement of any of the Loan Documents, then Administrative Agent or any
Lender may, and upon the request of Administrative Agent or any Lender, Borrower
shall, obtain a certified Spanish translation thereof at Borrower's expense for
the benefit of Administrative Agent and Lenders.

       7.5 New Subsidiaries. In the event that Holdings or any other member of
the Borrower Group (or any New Subsidiary, as defined below) forms, purchases or
acquires (whether for consideration or otherwise) any Subsidiary other than
those Persons which are, as of the Closing Date, members of the Borrower Group
(a "New Subsidiary"), then the member of the Borrower Group which has so formed,
acquired or purchased such New Subsidiary shall (at its own expense), within 30
days of the date of such formation, acquisition or purchase, deliver to
Administrative Agent and QUALCOMM the following documents (which shall be in
form and substance reasonably acceptable to Administrative Agent): (A) a
guaranty by the New Subsidiary of all of the Obligations, substantially in the
form of the Pegaso Guaranty Agreement delivered by the Guarantors on the Closing
Date, (B) an instrument in writing, executed and


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delivered by the New Subsidiary, pursuant to which such New Subsidiary becomes a
member of the Borrower Group and subject to this Agreement and (to the extent
appropriate) the other Loan Documents, and (C) opinions of counsel, reasonably
acceptable to Administrative Agent, as to the validity and enforceability of
such agreements.

       7.6 Consents, Approvals. The Borrower Group shall, from time to time,
obtain all material governmental and third party consents, approvals and Permits
required to be obtained in accordance with the Loan Documents and such consents,
approvals and Permits shall be kept in effect so long as required.

       7.7 Usury Permit. Borrower shall obtain and deliver to QUALCOMM, no later
than thirty (30) days after the Closing Date, evidence (the "Usury Permit")
satisfactory to QUALCOMM that the transactions contemplated by this Agreement
and the other Loan Documents comply with applicable usury law and that a
qualification permit or exemption from the California Corporations Commissioner
has been obtained.

SECTION 8. NEGATIVE COVENANTS.

              Each member of the Borrower Group covenants and agrees, jointly
and severally, that until the Commitments have been terminated and all
Obligations are paid in full:

       8.1 No Prepayments. The Borrower shall not (a) prepay any principal of
High Yield Debt (as defined in the Common Agreement), (b) pay or prepay any
principal or interest in respect of Subordinated Loans (as defined in the Common
Agreement) or (c) prepay any other Indebtedness except (x) principal and
interest in respect of Indebtedness under Section 6.04(c), (g), (j) and (m) of
the Common Agreement in an amount not to exceed $5,000,000, in the aggregate,
(y) Senior Indebtedness as required under the Common Agreement or (z)
Indebtedness under this Agreement and the Pagares in accordance with this
Agreement.

       8.2 Fundamental Changes. No member of the Borrower Group will merge into
or consolidate with any other Person, or permit any other Person to merge into
or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets, or all or substantially all of the stock of any of its Subsidiaries (in
each case, whether now owned or hereafter acquired), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect thereto
no Default or Event of Default shall have occurred and be continuing, (i) any
Person may merge into such member of the Borrower Group in a transaction in
which such member is the surviving entity, and (ii) any member may sell,
transfer, lease or otherwise dispose of its assets to another member of the
Borrower Group. No member of the Borrower Group will establish, create or
acquire any Subsidiary except wholly-owned Subsidiaries that are established,
created or acquired in accordance with the terms and conditions of Section 7.5.
The Borrower Group will not engage to any material extent in any business other
than the Business as contemplated in the Business Plan and businesses reasonably
incidental thereto.

       8.3 Immunity. In any proceedings in Mexico or elsewhere in connection
with any of the Loan Documents to which a member of the Borrower Group is a
party, no such member shall


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claim for itself or any of its assets immunity from suit, execution, attachment
or other legal process.

       8.4 Asset Sales. No member of the Borrower Group shall sell, assign,
pledge or otherwise transfer or dispose of any Licenses or any other portion of
its assets if such sale, assignment, pledge or other transfer or disposal would
result in any Event of Default under, or any required prepayment of Senior
Indebtedness pursuant to, the Common Agreement.

       8.5 Restricted Payments. No member of the Borrower Group will declare or
pay any dividends (other than dividends payable solely in Capital Stock of such
Person) or return any capital to, its stockholders or authorize or make any
other distribution, payment or delivery of property or cash to its stockholders
as such, or redeem, retire, purchase, or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its Capital Stock now
or hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), or set aside any funds for any of the
foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the Capital Stock of any
other member of the Borrower Group or any other Subsidiary, as the case may be,
now or hereafter outstanding (or any options or warrants or stock appreciation
rights issued by such Person with respect to its capital stock) (all of the
foregoing "Dividends"), except that (A) any Subsidiary of the Borrower, Pegaso
PCS or Personnel Co. may pay Dividends to the Borrower, Pegaso PCS or Personnel
Co., as applicable, (B) each of the Borrower, Pegaso PCS or Personnel Co. may
pay cash Dividends to Holdings to the extent, but only to the extent, that
Holdings needs all of such Dividends within five Business Days following the
payment of such Dividend to pay normal, reasonable and customary administrative
costs incurred in the ordinary course of its business.

SECTION 9. EVENTS OF DEFAULT.

       9.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an Event of Default:

              (a) Payments. A failure by one or more members of the Borrower
Group to pay (whether by scheduled maturity, required prepayment, by
acceleration or otherwise) the following amounts:

                     (i) any principal of any Loan when due;

                     (ii) any interest on any Loan, any other amounts owing
       hereunder or under any other Loan Document or any other amounts
       constituting Obligations within three (3) Business Days after such
       interest or other amount first becomes due; or

                     (iii) any required deposits to the cash collateral account
       described in Section 2.4(j).

              (b) Representations. Other than with respect to the
Counter-Guaranties, any representation or warranty made by any Sponsor,
Guarantor, or any member of the Borrower Group herein or in any other Loan
Document or any representation, warranty or statement in any


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certificate, financial statement or other document furnished to any
Administrative Agent or any Lender by or on behalf of the Borrower Group
hereunder or under any other Loan Document shall prove to have been false or
misleading in any material respect as of the time made, deemed made, confirmed
or furnished.

              (c) Covenants.

                     (i) A member of the Borrower Group shall default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 7.5 or Section 8.

                     (ii) Any member of the Borrower Group shall default in the
due performance or observance by it of any term, covenant or agreement contained
herein or in any other Loan Document (except as otherwise provided in Section
9.1(a) and clause (i) of this Section 9.1(c)), and such default shall continue
unremedied for a period of 30 days after the date on which written notice
thereof shall have been received by a member of the Borrower Group from
Administrative Agent.

              (d) Default Under Other Agreements.

                     (i) Any member of the Borrower Group defaults for a period
beyond the applicable grace period in the payment of any principal, interest or
other amount due under any agreement evidencing, securing or creating any
Indebtedness of such member (including swap or similar derivative agreements) in
excess (individually or in the aggregate) of $15,000,000.

                     (ii) Any member of the Borrower Group shall default in the
observance or performance of any agreement or condition relating to any
Indebtedness the principal amount of which (individually or in the aggregate)
exceeds $25,000,000, or any other event or condition shall have occurred
thereunder, the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness (or a trustee acting on
behalf of such holders) to cause any such Indebtedness to become due prior to
its stated maturity; or any such Indebtedness of any member of the Borrower
Group shall be declared due and payable prior to the stated maturity thereof.

              (e) Involuntary Bankruptcy, Etc. An involuntary proceeding shall
have been commenced against any member of the Borrower Group or seeking that
such Person be wound up or liquidated, adjudging such Person bankrupt or
insolvent or seeking reorganization, arrangement, adjustment or composition of
or in respect of such Person under any Applicable Law or seeking the appointment
of a receiver, liquidator, sindico, interventor, assignee, trustee, sequestrator
(or other similar official) of such Person or of any substantial part of its
property or other assets, or the winding up or liquidation of its affairs and
such proceeding continues undismissed for 60 days.

              (f) Voluntary Bankruptcy, Etc. The institution by any member of
the Borrower Group of proceedings to be adjudicated bankrupt or insolvent, or
the consent by it to the institution of bankruptcy or insolvency proceedings
against it; or the filing by it of a petition


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or answer or consent seeking reorganization or debt relief under any Applicable
Law or to the appointment of a receiver, liquidator, sindico, interventor,
assignee, trustee, sequestrator (or other similar official) of any such Person
or of any substantial part of its property; or the making by it of an assignment
for the benefit of creditors generally; or the admission by it in writing of its
inability to pay its debts generally as they become due; or any other event
shall have occurred which under any Applicable Law would have an effect
analogous to any of those events listed above in this Section 9.1(f) with
respect to any such Person; or any action is taken by any such Person for the
purpose of effecting any of the foregoing.

              (g) Analogous Proceedings. There occurs, in relation to any member
of the Borrower Group, in any country or territory in which any of them carries
on business or to the jurisdiction of whose courts any part of their assets is
subject, any event which in that country or territory corresponds with, or has
an effect equivalent or similar to, any of those mentioned in Section 9.1(e) or
9.1(f).

              (h) Attachment of Assets. Any Person attaches or institutes
proceedings to attach all or any part of the assets of the Borrower Group, and
any attachment or any judgment Lien against any such assets (i) remains
unlifted, unstayed or undischarged for a period of 30 days or (ii) is upheld in
a final nonappealable judgment of a court of competent jurisdiction.

              (i) Loan Documents. This Agreement or any of the Loan Documents or
any material provision hereof or thereof is or becomes invalid, illegal or
unenforceable or Borrower or any Guarantor shall have repudiated or disavowed or
taken any action to challenge the validity or enforceability of such agreement.

              (j) Expropriation. There shall have occurred any act or series of
acts attributable to a Governmental Authority which (i) in the reasonable
judgment of the Required Syndicated Lenders has the effect of depriving Lenders
of their rights as creditors in respect of this Agreement or any other Loan
Document, or (ii) confiscates, expropriates or nationalizes the ownership or
control of all or any substantial part of the System or other assets of a member
of the Borrower Group and such act or series of acts continues uncured for 120
days or more.

              (k) Monetary Restrictions. Any law, order, decree or regulation
shall impose any restriction on (i) the lawful transfer of Dollars by the
Borrower Group from Mexico to Administrative Agent (and from Administrative
Agent to any other Person or locale whether within or outside of Mexico), or
(ii) the conversion of (a) Dollars to Pesos or (b) Pesos to Dollars and which
restriction constitutes a Material Adverse Effect.

              (l) Judgments. One or more judgments or decrees shall be entered
against one or more members of the Borrower Group and such judgments or decrees
shall not be vacated, discharged or stayed or bonded (to the reasonable
satisfaction of the Required Lenders) pending appeal for any period of 60
consecutive days, and the aggregate amount of all such judgments and decrees
outstanding at any time (except to the extent any applicable insurer(s) shall
have acknowledged liability therefor) exceeds $5,000,000.

              (m) Licenses and Permits. The Borrower Group shall fail to obtain,
renew, maintain or comply in all material respects with the Licenses (or any
portion thereof); or any


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License (or any portion thereof) shall be rescinded, terminated, suspended,
modified or withheld or shall be determined to be invalid or shall cease to be
in full force and effect; or any proceedings shall be commenced by or before any
Governmental Authority for the purpose of rescinding, terminating, suspending,
modifying or withholding any such License (or any portion thereof) and such
proceeding is not dismissed within 60 days; and as a result of such failure,
rescission, determination of invalidity, termination, suspension, modification,
withholding, cessation or commencement the valid, enforceable and effective
Licenses then owned by Borrower (a) fail to cover all of Region 9, and either
all of Region 4 or all of Region 6 (as such Regions are defined in Exhibit A to
the Joint Venture Agreement) or (b) result in Covered Pops being less than
40,000,000 Pops.

              (n) Change of Control. A Change of Control shall have occurred and
be continuing.

              (o) Vendor Facilities and Senior Indebtedness. An "Event of
Default" shall have occurred and be continuing under (and as defined in the
documentation relating to) the Common Agreement or any other document or
agreement relating to the Vendor Facilities or other Senior Indebtedness,
including any Senior Indebtedness which is described in Section 2.04 of the
Common Agreement as in effect on the date hereof.

       9.2 Remedies. Upon the occurrence and during the continuation of an Event
of Default, Administrative Agent may, and if directed by the Lenders in
accordance with Section 9.3 shall, exercise any or all rights and remedies at
law or in equity (in any combination or order that Administrative Agent may
elect) and, without limitation or prejudice to the foregoing, at any time
thereafter during the continuance of such event, Administrative Agent may, and
if directed (except for any Event of Default with respect to Borrower as
described in clause (e), (f) or (g) of Section 9.1) by the Lenders in accordance
with Section 9.3 shall, by notice to Borrower, take either or both of the
following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of Borrower accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by Borrower and each member of the Borrower
Group; and in case of any event with respect to Borrower described in clause
(e), (f) or (g) of Section 9.1, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by Borrower and each
member of the Borrower Group.

       9.3 Exercise of Remedies. In taking or omitting to take any action, or
exercising any right or remedy under Section 9.2 upon an Event of Default,
Administrative Agent may take such actions or exercise such rights or remedies
as it deems prudent under the circumstances and, in any event, shall comply with
the directions of (a) the Required Syndicated Lenders, in the case


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of any Event of Default under clause (a), (c) to the extent resulting from a
breach of Sections 8.1 or 8.4, (h), (i), (j), (l) or (m) of Section 9.1,
(irrespective of the occurrence of any other Event of Default other than under
clause (e), (f) or (g) of Section 9.1), (b) the Required Lenders, in the case of
any Event of Default under clause (e), (f) or (g) of Section 9.1, without
limiting the terms of Section 9.2, and (c) QUALCOMM, in the case of any other
Event of Default (unless an Event of Default of the type described in the
immediately foregoing clause (a) or (b) shall have occurred). In no event shall
any Vendor Working Capital Loans or any Capitalized Interest Loans be
accelerated unless, either prior to or concurrently with such acceleration, all
Syndicated Working Capital Loans and all Term Loans shall have been accelerated.

SECTION 10. ADMINISTRATIVE AGENT.

       10.1 Appointment of Administrative Agent. Each of the Lenders and the
Issuing Bank hereby irrevocably appoints Administrative Agent as its agent and
authorizes Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to Administrative Agent by the terms
hereof, together with such actions and powers as are reasonably incidental
thereto

       10.2 Rights and Powers as Lender. The bank serving as Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not
Administrative Agent, and such bank and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, Borrower or any member of the Borrower Group or any
Subsidiary or other Affiliate of any such Person and any Person who may do
business with or own securities of Borrower, any member of the Borrower Group,
or any such Subsidiary or Affiliate, all as if such bank were not Administrative
Agent and without any duty to account therefor to the Lenders or any other
Person.

       10.3 Delegation of Duties by Administrative Agent. Administrative Agent
may perform any and all its duties and exercise its rights and powers by or
through any one or more sub-agents appointed by Administrative Agent.
Administrative Agent and any such sub-agent may perform any and all its duties
and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of this Section 10 shall apply to any such sub-agent and
to the Related Parties of Administrative Agent and any such sub-agent, and shall
apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative
Agent.

       10.4 Liability of Administrative Agent. Administrative Agent shall not
have any duties or obligations except those expressly set forth herein. Without
limiting the generality of the foregoing (a) Administrative Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default or Event of Default has occurred and is continuing, (b) Administrative
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that Administrative Agent is required to exercise in writing
by the Required Lenders or the Required Syndicated Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 11.2), as the case may be, and (c) except as


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expressly set forth herein, Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to Borrower or any member of the Borrower Group or any of its or their
Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. Administrative
Agent shall not be liable for any action taken or not taken by it with the
consent or at the request of the Required Lenders or the Required Syndicated
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 11.2), as the case may be, or in
the absence of its own gross negligence or willful misconduct. Administrative
Agent shall be deemed not to have knowledge of any Default or Event of Default
unless and until written notice thereof is given to Administrative Agent by
Borrower or a Lender, and Administrative Agent shall not be responsible for or
have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents
of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Section 5 or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to Administrative Agent.

       10.5 Reliance by Administrative Agent. Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the
proper Person. Administrative Agent also may rely upon any statement made to it
orally or by telephone and believed by it to be made by the proper Person, and
shall not incur any liability for relying thereon. Administrative Agent may
consult with legal counsel (who may be counsel for Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

       10.6 Non-Reliance by Lenders. Each Lender acknowledges that it has,
independently and without reliance upon Administrative Agent or any other Lender
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.

       10.7 Indemnification. The Lenders agree to indemnify Administrative Agent
(to the extent not reimbursed by or on behalf of Borrower), ratably according to
the respective principal amounts of the Exposures then held by them (or if no
Exposures are at the time outstanding, ratably according to the respective
amounts of their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against Administrative Agent in any way relating to
or arising out of this Agreement or any action taken or omitted by
Administrative Agent under this Agreement, provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties,


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actions, judgments, suits, costs, expenses or disbursements resulting from
Administrative Agent's gross negligence or willful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse Administrative Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
counsel fees) incurred by Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that Administrative Agent is not reimbursed for such expenses by
or on behalf of Borrower.

       10.8 Successor Administrative Agent. Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this paragraph,
Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Bank and Borrower. Upon any such resignation, the Required Lenders shall
have the right, in consultation with Borrower, to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may, on
behalf of the Lenders and the Issuing Bank, appoint a successor Administrative
Agent which shall be a bank with an office in New York, New York, or an
Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between Borrower and such successor.
After Administrative Agent's resignation hereunder, the provisions of this
Section 10 and Section 11.3 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent.

SECTION 11. MISCELLANEOUS.

       11.1 Notices.

               (a) Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by facsimile, (i) if to Borrower, any other member of the Borrower Group,
Administrative Agent, QUALCOMM, or any other Lender, at the address specified
for such Person on the signature pages to this Agreement (or in any Assignment
Agreement pursuant to which a Person becomes party to this Agreement), or (ii)
at such other address as shall be designated by any party or the Issuing Bank in
a written notice to the other parties to this Agreement.

              (b) All notices and other communications given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.


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       11.2 Waivers; Amendments.

              (a) No failure or delay by Administrative Agent, the Issuing Bank
or any Lender in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of Administrative Agent, the
Issuing Bank and the Lenders hereunder are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provision of this Agreement or consent to any departure by Borrower therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) of this Section, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default or Event of Default,
regardless of whether Administrative Agent, QUALCOMM, any other Lender or the
Issuing Bank may have had notice or knowledge of such Default or Event of
Default at the time.

              (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by Borrower and the Required Lenders or by Borrower and
Administrative Agent with the consent of the Required Lenders; provided that the
provisions of Section 6, Section 7, or Sections 8.2 or 8.3 may be waived,
amended or modified, and clauses (b), (c), (d), (k), (n) or (o) of Section 9.1
may be waived, in each case pursuant to an agreement in writing entered into by
Borrower and QUALCOMM, or by Borrower and Administrative Agent with the consent
of QUALCOMM, so long as (i) such agreement (other than any such waiver) does not
impose any additional burdens, duties, liabilities (contingent or otherwise) or
obligations on, or limit, diminish or otherwise adversely affect the rights or
remedies of, the Lenders (other than QUALCOMM in its capacity as a Vendor
Working Capital Lender or a Capitalized Interest Lender) under or in connection
with this Agreement, (ii) concurrently with such agreement, QUALCOMM shall
deliver to Administrative Agent (for the benefit of the Guaranteed Parties under
the QUALCOMM Guaranty) a confirmation of the QUALCOMM Guaranty and a
certificate, signed by an Authorized Officer of QUALCOMM, confirming that no
QUALCOMM Event shall have occurred and be continuing and (iii) no Event of
Default shall have occurred and be continuing under clause (a), (e), (f), (g),
(h), (i), (j), (l) or (m) of Section 9.1; provided, further, that no agreement
waiving, amending or modifying this Agreement or any provision hereof shall (v)
increase the Commitment of any Lender without the written consent of such
Lender, (w) reduce the principal amount of any Loan or LC Disbursement or reduce
the rate of interest thereon, or reduce any fees payable hereunder, without the
written consent of each Lender affected thereby, (x) postpone the scheduled date
of payment of the principal amount of any Loan or LC Disbursement, or any
interest thereon, or any fees payable hereunder, or reduce the amount of, waive
or excuse any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (y)
change Section 4.5(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, or (z)
change any of the provisions of this Section or the definition of "Required
Lenders" or "Required Syndicated Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any


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rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of
Administrative Agent or the Issuing Bank without the prior written consent of
Administrative Agent or the Issuing Bank, as the case may be.

       11.3 Expenses, Indemnity, Damage Waiver.

              (a) Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by Administrative Agent and its Affiliates, including the reasonable
fees, charges and disbursements of counsel for Administrative Agent, in
connection with the syndication of the credit facilities provided for herein,
the preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for Administrative Agent, the Issuing
Bank or any Lender, in connection with the enforcement or protection of its
rights in connection with this Agreement, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations (whether or not consummated) in respect
of such Loans or Letters of Credit.

              (b) Borrower shall indemnify Administrative Agent, the Issuing
Bank and each Lender, and each Related Party of any of the foregoing Persons
(each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the transactions contemplated by the Loan Documents or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way to Borrower or
any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses have resulted from the gross negligence or willful misconduct
of such Indemnitee.

              (c) To the extent permitted by applicable law, Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect,


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consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the transactions contemplated by
any Loan Document, any Loan or Letter of Credit or the use of the proceeds
thereof.

              (d) All amounts due under this Section shall be payable promptly
after written demand therefor.

       11.4 Successors and Assigns; Participations.

              (a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit), except that Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of QUALCOMM and each other Lender (and any attempted assignment or
transfer by Borrower without such consent shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of Administrative Agent, the Issuing Bank and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.

              (b) Any Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment, its LC Exposure (if any) and the Loans at the time
owing to it) and the Pagares; provided that (i) except in the case of an
assignment to a Lender or an Affiliate of a Lender, each of QUALCOMM (if
QUALCOMM is not the assigning Lender) and Administrative Agent must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of (A) an assignment to a Lender
or an Affiliate of a Lender, (B) an assignment of the entire remaining amount of
the assigning Lender's Commitment, or (C) an assignment that is one of a series
of assignments between the same assignor and assignee aggregating not less than
$5,000,000, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment Agreement with respect
to such assignment is delivered to Administrative Agent) shall not be less than
$5,000,000, unless each of Borrower, QUALCOMM and Administrative Agent otherwise
consent, (iii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement, (iv) the parties to each assignment shall execute and deliver to
Administrative Agent an Assignment Agreement, together with a processing and
recordation fee of $3,500, except that no assignment fee shall be payable for
any assignment by or to QUALCOMM or in respect of any assignment in a series of
assignments between the same assignor and assignee if the assignment fee was
paid for the first assignment in such series, (v) the assignee, if it is not a
Lender, shall deliver to Administrative Agent an Administrative Questionnaire,
(vi) except as Borrower and QUALCOMM may otherwise agree, any assignment by
QUALCOMM prior to the Commitment Termination Date applicable to Syndicated
Working Capital Loans shall be to a Syndicated Lender or to an Additional Lender
that, from the effective date of such assignment, shall have the full benefit of


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the QUALCOMM Guaranty, and any assignment by QUALCOMM after the Commitment
Termination Date applicable to Syndicated Working Capital Loans but prior to the
Scheduled Maturity Date shall be to an Additional Lender that, from the
effective date of such assignment, shall have the full benefit of a guaranty
from QUALCOMM substantially similar to the QUALCOMM Guaranty, (vii) in
connection with each assignment by QUALCOMM, QUALCOMM shall use all commercially
reasonable efforts to seek Eligible Assignees that are Registered Financial
Institutions, (viii) in the case of an assignment of all or a portion of a
Syndicated Working Capital Commitment or any Lender's obligations in respect of
its LC Exposure, the Issuing Bank must give its prior written consent to such
assignment in its sole and absolute discretion and (ix) all assignments to
QUALCOMM shall be effected regardless of whether QUALCOMM shall (A) be
registered as a "Foreign Financial Institution" with the Secretaria de Hacienda
y Credito Publico (Ministry of Finance and Public Credit) of Mexico for purposes
of Article 154--I of the Mexican Income Tax Laws or (B) be a resident of a
jurisdiction that is a party to a treaty for the avoidance of double taxation
with Mexico; provided, further, that any consent of Borrower otherwise required
under this paragraph shall not be required if an Event of Default under
paragraph (e), (f) or (g) of Section 9.1 has occurred and is continuing. Subject
to acceptance and recording thereof pursuant to paragraph (d) of this Section,
from and after the effective date specified in each Assignment Agreement the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment Agreement, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment Agreement, be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 4.1, 4.2, 4.4 and 11.3). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.

              (c) Administrative Agent, acting for this purpose as an agent of
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment Agreement delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive, and Borrower, Administrative Agent, the Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by Borrower, the Issuing Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.

              (d) Upon its receipt of a duly completed Assignment Agreement
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, Administrative Agent shall accept such Assignment Agreement
and record the information contained therein in the Register. No assignment
shall be effective for


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<PAGE>

purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

              (e) Any Lender may, without the consent of Borrower,
Administrative Agent, the Issuing Bank or QUALCOMM, sell participations to one
or more banks or other entities (a "Participant") in all or a portion of such
Lender's rights and obligations under this Agreement and the Pagares (including
all or a portion of its Commitment and the Loans owing to it); provided that (i)
such Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) Borrower, Administrative Agent, the
Issuing Bank and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such agreement or instrument
may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver described in the first proviso to
Section 11.2(b) that affects such Participant. Subject to paragraph (f) of this
Section, Borrower agrees that each Participant shall be entitled to the benefits
of Sections 4.1, 4.2. and 4.4 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 11.3 as though it were a Lender, provided such Participant
agrees to be subject to Section 4.5(c) as though it were a Lender.

              (f) A Participant shall not be entitled to receive any greater
payment under Section 4.1 or 4.4 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with Borrower's
and QUALCOMM's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 4.4
unless Borrower is notified of the participation sold to such Participant and
such Participant agrees, for the benefit of Borrower, to comply with Section
4.4(e) as though it were a Lender.

              (g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

       11.5 Survival. All covenants, agreements, representations and warranties
made by Borrower and each other member of the Borrower Group herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement and the other Loan Documents shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that Administrative Agent, the Issuing Bank
or any Lender may have


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<PAGE>

had notice or knowledge of any Default, Event of Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 4.1, 4.2, 4.4 and 11.3 and Section 10 shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement or any
provision hereof.

       11.6 Counterparts; Integration; Effectiveness.

              (a) This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement and any separate letter agreements with respect
to fees payable to Administrative Agent constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.

              (b) Except as provided in Sections 5.1 and 5.2, this Agreement
shall become effective when it shall have been executed by Administrative Agent
and when Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

       11.7 Right of Set-off. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of Borrower against any
of and all the obligations of Borrower now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which such Lender may
have.

       11.8 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

       11.9 Governing Law; Jurisdiction; Consent to Service of Process.


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<PAGE>

              (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York, provided, however, that, if
QUALCOMM shall be the sole Lender hereunder and all Obligations owing to any
Syndicated Lender shall have been paid full, in connection with any legal action
or proceeding (other than an action to enforce a judgment obtained in another
jurisdiction) brought by QUALCOMM in respect to this Agreement in the courts of
Mexico or any political subdivision thereof, this Agreement (other than Section
10) shall be deemed to be an instrument made under the laws of Mexico and for
such purposes shall be governed by, and construed in accordance with, the laws
of the Federal District of Mexico.

              (b) Each party hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any Pagare, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions (including Mexico) by suit on the judgment or in
any other manner provided by law. Nothing in this Agreement shall affect any
right that Administrative Agent, the Issuing Bank or any Lender may otherwise
have to bring any action or proceeding relating to this Agreement against
Borrower or its properties in the courts of any jurisdiction.

              (c) Without limiting clause (b) of this Section 11.9, if QUALCOMM
shall be the sole Lender hereunder and all Obligations owing to any Syndicated
Lender shall have been paid in full and all the Commitments of the Syndicated
Lenders shall have been reduced to zero and terminated, QUALCOMM, Borrower and
each other member of the Borrower Group hereby irrevocably and unconditionally
submit, for itself and its property, to the nonexclusive jurisdiction of the
competent courts of the Federal District of Mexico, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or any Pagare, or for recognition or enforcement of any judgment, and
QUALCOMM and each member of the Borrower Group hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard and determined in any such courts. QUALCOMM, Borrower
and each other member of the Borrower Group hereby waive any rights to a
specific jurisdiction it may have by virtue of its present or any future
domicile, or otherwise.

              (d) Borrower and each other member of the Borrower Group hereby
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any court referred to in paragraph (b) or (c) of this Section.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

              (e) Borrower and each other member of the Borrower Group hereby
agrees that service of all writs, process and summonses in any such suit, action
or proceeding brought in


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<PAGE>

the State of New York may be made upon CT Corporation System, presently located
at 1633 Broadway, New York, New York 10019, U.S.A. (the "Process Agent"), and
Borrower and each other member of the Borrower Group hereby confirms and agrees
that the Process Agent has been duly and irrevocably appointed as its agent and
true and lawful attorney-in-fact in its name, place and stead to accept such
service of any and all such writs, process and summonses, and agrees that the
failure of the Process Agent to give any notice of any such service of process
to Borrower or any member of the Borrower Group shall not impair or affect the
validity of such service or of any judgment based thereon. Each party to this
Agreement further irrevocably consents to service of process in the manner
provided for written notices in Section 11.1. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

       11.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE PAGARES OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

       11.11 Headings. The headings of the several sections and subsections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.

       11.12 Confidentiality. Subject to Sections 2.9(f), 2.16 and 11.4, Lenders
shall hold all nonpublic information obtained pursuant to the requirements of
this Agreement which has been identified as such by Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure to its Affiliates, employees, auditors, advisors, or counsel or as
reasonably required by any bona fide transferee or participant in connection
with the contemplated transfer of any Loans or participation therein (so long as
such transferee or participant agrees to be bound by the provisions of this
Section 11.12) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Lender shall
notify Borrower of any request by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such nonpublic information prior to disclosure of such information, and
provided further that in no event shall any Lender be obligated or required to
return any materials furnished by any member of the Borrower Group.


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<PAGE>

       11.13 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Rate to the date of repayment, shall
have been received by such Lender.

       11.14 Currency of Payment. The obligation of Borrower and the other
members of the Borrower Group to pay in Dollars those amounts of the sums
specified to be due in Dollars, under this Agreement or the respective Loan
Documents (the "Loan Document Currency") shall not be deemed to have been
novated, discharged or satisfied by any tender of (or recovery under judgment
expressed in) any currency other than the Loan Document Currency, except to the
extent to which such tender (or recovery) shall result in the effective payment
of such aggregate amount in the applicable Loan Document Currency at the place
where such payment is due and, accordingly, the amount (if any) by which any
such tender (or recovery) shall fall short of such amount shall be and remain
due to Administrative Agent, Lenders or QUALCOMM, as the case may be, as a
separate Obligation, unaffected by judgment having been obtained (if such is the
case) for any other amounts due in respect of this Agreement or the Loan
Documents.

       11.15 Judgment Currency. Borrower agrees to indemnify each Lender against
any loss incurred by it as a result of any judgment or order being given or made
for the payment of any amount due under any Pagare which is expressed and paid
in a currency (the "Judgment Currency") other than the currency in which such
amount was payable under this Agreement (the "Obligation Currency") and as a
result of any variation between (i) the rate of exchange at which the Obligation
Currency amount is converted into the Judgment Currency for the purposes of
satisfying such judgment or order, and (ii) the rate of exchange at which such
Lender is able to purchase the Obligation Currency with the amount of Judgment
Currency actually received by such Lender. The foregoing indemnity shall
constitute a separate and independent obligation of Borrower and shall continue
in full force and effect notwithstanding any such judgment or order as
aforesaid. The term "rate of exchange" shall include any premiums and costs of
exchange payable in connection with the purchase of, or conversions into, the
relevant currency.

       11.16 English Language. This Agreement is made in the English language.
One Spanish language translation of this Agreement prepared (if requested by
Administrative Agent (at the direction of the Required Syndicated Lenders or
QUALCOMM)) at Borrower's expense by an official public interpreter and approved
by Mexican counsel to Borrower and Mexican counsel to Lenders under this
Agreement shall be the agreed Spanish language translation hereof for all
purposes. Such translation and no other may be filed in one or more public
registries in


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<PAGE>

Mexico or used in any proceeding in Mexico. For all purposes, the English
language version hereof shall be the original instrument and in all cases of
conflict between the English and the Spanish versions, the English version shall
control.

       11.17 Reinstatement. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
obligations of Borrower or the Borrower Group hereunder, or any part thereof,
is, pursuant to Applicable Law, rescinded or reduced in amount, or must
otherwise be restored or returned by Administrative Agent, any Lender or
QUALCOMM. In the event that any payment or any part thereof is so rescinded,
reduced, restored or returned, such obligations shall be reinstated and deemed
reduced only by such amount paid and not so rescinded, restored or returned.

       11.18 QUALCOMM Right of Subrogation. It is understood and agreed that
QUALCOMM has, on the date hereof, executed and delivered the QUALCOMM Guaranty
in favor of Administrative Agent, acting for and on behalf of the Syndicated
Lenders, and Borrower acknowledges receipt of an executed copy of such QUALCOMM
Guaranty. Borrower agrees and acknowledges that, if and to the extent that
QUALCOMM makes any payment under the QUALCOMM Guaranty (but subject to the
terms, conditions, limitations and waivers provided in the QUALCOMM Guaranty),
QUALCOMM will succeed to the rights (by means of subrogation) of the Syndicated
Lenders in respect of any interest, principal or other amounts so paid by
QUALCOMM. In no event shall (i) the obligation of QUALCOMM under the QUALCOMM
Guaranty, or (ii) any payment made by QUALCOMM under the QUALCOMM Guaranty in
either case relieve or absolve Borrower in any way from its Obligations under
this Agreement or the other Loan Documents, and all Obligations (including
principal and interest on the Loans) shall be deemed and considered for all
purposes to remain outstanding under all of the Loan Documents until satisfied
in full by Borrower. QUALCOMM and Administrative Agent, with the consent of each
Syndicated Lender, may from time to time amend, supplement or otherwise modify
or terminate the QUALCOMM Guaranty, and any such amendment, supplement,
modification or termination may be effected without any consent of or notice to
Borrower or any other member of the Borrower Group.

       11.19 No Third-Party Beneficiaries. The covenants contained herein are
made solely for the benefit of the parties hereto, and Related Parties,
successors and permitted assigns of such parties as specified herein, and shall
not be construed as having been intended to benefit any other Person not a party
to this Agreement.


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              IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.

BORROWER GROUP:                PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.


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                               Title:
                                     -------------------------------------------


                               PEGASO TELECOMUNICACIONES, S.A. DE C.V.


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               PEGASO PCS, S.A. DE C.V.


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                                       92
<PAGE>

                               PEGASO RECURSOS HUMANOS, S.A. DE C.V.


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               Notice Address for the Borrower Group:

                               Pegaso Comunicaciones y Sistemas, S.A. de C.V.
                               Paseo de los Tamarindos 400-A, 4th floor
                               Col. Bosques de las Lomas
                               Mexico, D.F. 05120
                               Facsimile No.:  011-525-261-6290
                               Telephone No.:  011-525-261-6243


                                       93
<PAGE>

ADMINISTRATIVE AGENT:          CITIBANK, N. A.,
                               as Administrative Agent

                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------

                               Notice Address:

                               Citibank, N.A.
                               2 Penns Way
                               Suite 200
                               New Castle, DE 19720
                               Attention:  Timothy Cassidy
                               Facsimile No.: 302-894-6120
                               Telephone No.:  302-894-6032


                                       94
<PAGE>

DOCUMENTATION AGENT:           ABN AMRO BANK N.V.,
                               as Documentation Agent


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               Notice Address:

                               ABN AMRO Bank N.V.
                               208 South LaSalle, Suite 1500
                               Chicago, IL 60604-1003
                               Attention:  Credit Administration
                               Facsimile No.:  312-992-5111
                               Telephone No.:  312-992-5110

                               With a copy to:

                               ABN AMRO Bank N.V.
                               300 South Grand Avenue, Suite 2650
                               Los Angeles, CA 90071-7519
                               Attention:    John A. Miller
                               Facsimile No.:213-687-2390
                               Telephone No.:213-687-2072


                                       95
<PAGE>

SYNDICATION AGENT:             SOCIETE GENERALE,
                               as Syndication Agent


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               Notice Address:

                               Societe Generale
                               1221 Avenue of the Americas
                               New York, NY 10020
                               Attention: Tom Fuller
                               Facsimile No.: 212-278-6136
                               Telephone No.: 212-278-5703


                                       96
<PAGE>

SYNDICATED LENDERS:            CITIBANK, N. A.


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               Notice Address:

                               Citibank, N.A.
                               399 Park Avenue, 8th Floor
                               New York, NY 10043
                               Attention: Terence Berry
                               Facsimile No.: 212-793-6873
                               Telephone No.: 212-559-3009


                                       97
<PAGE>

                               ABN AMRO BANK N.V.


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               Notice Address:

                               ABN AMRO Bank N.V.
                               208 South LaSalle, Suite 1500
                               Chicago, IL 60604-1003
                               Attention:  Credit Administration
                               Facsimile No.:  312-992-5111
                               Telephone No.:  312-992-5110

                               With a copy to:

                               ABN AMRO Bank N.V.
                               300 South Grand Avenue, Suite 2650
                               Los Angeles, CA 90071-7519
                               Attention:    John A. Miller
                               Facsimile No.: 213-687-2390
                               Telephone No.: 213-687-2072


                                       98
<PAGE>

                               SOCIETE GENERALE


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               Notice Address:

                               Societe Generale

                               2029 Century Park East -- Suite 2900
                               Los Angeles, California 90067
                               Attention: Blaine Shaum, Managing Director
                               Facsimile No.: 310-551-1537
                               Telephone No.: 310-788-7102


                               Societe Generale

                               1221 Avenue of the Americas -- 11th Floor
                               New York, NY 10020
                               Attention: Bruce Spector, Vice President
                               Facsimile No.:  212-278-6136
                               Telephone No. :212-278-6149


                                       99
<PAGE>

VENDOR WORKING
CAPITAL LENDER:                QUALCOMM INCORPORATED

                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               Notice Address:

                               QUALCOMM Incorporated
                               6455 Lusk Boulevard
                               San Diego, CA 92121
                               Attention: Vice President, Project Finance
                               Facsimile No.:619-658-4203
                               Telephone No.: 619-658-4846


                                      100
<PAGE>

CAPITALIZED INTEREST LENDER:   QUALCOMM INCORPORATED


                               By:
                                  ----------------------------------------------
                               Printed Name:
                                            ------------------------------------
                               Title:
                                     -------------------------------------------


                               Notice Address:

                               QUALCOMM Incorporated
                               6455 Lusk Boulevard
                               San Diego, CA 92121
                               Attention: Vice President, Project Finance
                               Facsimile No.:619-658-4203
                               Telephone No.: 619-658-4846


                                      101
<PAGE>
                    FIRST AMENDMENT TO BRIDGE LOAN AGREEMENT

     This FIRST AMENDMENT TO BRIDGE LOAN AGREEMENT (this "Amendment"), dated as
of February 8, 2000, is entered into by PEGASO COMUNICACIONES Y SISTEMAS, S.A.
DE C.V., a sociedad anonima de capital variable organized under the laws of
Mexico ("Borrower"), PEGASO TELECOMUNICACIONES, S.A. DE C.V., a sociedad
anonima de capital variable organized under the laws of Mexico, PEGASO PCS,
S.A. DE C.V., a sociedad anonima de capital variable organized under the laws
of Mexico, PEGASO RECURSOS HUMANOS, S.A. DE C.V.,  a sociedad anonima de
capital variable organized under the laws of Mexico, QUALCOMM INCORPORATED, a
corporation organized under the laws of Delaware, ("QUALCOMM") and the
Syndicated Lenders referred to in the below referenced Bridge Loan Agreement
(each Syndicated Lender, together with QUALCOMM, a "Lender" and, collectively,
"Lenders"), CITIBANK, N.A., a national banking association, in its capacity as
administrative agent for Lenders ("Administrative Agent"), SOCIETE GENERALE, as
Syndication Agent, ABN AMRO BANK N.V., as Documentation Agent and BANKBOSTON,
N.A., as Co-Documentation Agent, under the Bridge Loan Agreement dated as of
May 27, 1999 (as modified, amended, supplemented or restated from time to time,
the "Bridge Loan Agreement"). Capitalized terms used and not otherwise defined
in this Amendment shall have the same meanings in this Amendment as set forth
in the Bridge Loan Agreement, and the rules of interpretation set forth in
Section 1.2 of the Bridge Loan Agreement shall be applicable to this Amendment,
mutatis mutandis, as if set forth in this Amendment.

                                   RECITALS:

     A.   Borrower has requested that the Bridge Loan Agreement be amended to
(i) change the definitions of "Total Syndicated Working Capital Commitment" and
"Total Working Capital Commitment" and (ii) increase the amount of the
Syndicated Working Capital Commitment for each Syndicated Lender from
Twenty-Five Million Dollars ($25,000,000) to Forty-Three Million Seven Hundred
Fifty Thousand Dollars ($43,750,000).

     B.   QUALCOMM, the Lenders, the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Co-Documentation Agent have agreed to
amend the Bridge Loan Agreement upon the terms and conditions set forth in this
Amendment.

     NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth below and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

     Section 1. Amendment. Subject to the satisfaction of the conditions
precedent set forth in Section 2, the Bridge Loan Agreement is hereby amended
as follows:

     (a)  Section 1.1 of the Bridge Loan Agreement is amended by substituting
for the definition of "Total Syndicated Working Capital Commitment", the
following new definition of "Total Syndicated Working Capital Commitment":


<PAGE>
            "Total Syndicated Working Capital Commitment" shall mean One
Hundred Seventy-Five Million Dollars ($175,000,000), as such amount may be
reduced pursuant to Section 2.9(g).

            (b)   Section 1.1 of the Bridge Loan Agreement is amended by
substituting for the definition of "Total Working Capital Commitment", the
following new definition of "Total Working Capital Commitment":

            "Total Working Capital Commitment" shall mean the sum of the Total
Syndicated Working Capital Commitment and the Total Vendor Working Capital
Commitment, which shall be an aggregate amount equal to One Hundred Seventy-Five
Million Dollars ($175,000,000); provided that after the Commitment Termination
Date applicable to Syndicated Working Capital Loans, if the Term-Out Option
shall have become effective, the "Total Working Capital Commitment" shall mean
the sum of the Total Term Loan Commitment and the Total Vendor Working Capital
Commitment.

            (c)  Schedule 2.1 to the Bridge Loan Agreement is hereby replaced in
its entirety by Amended Schedule 2.1 as set forth in Appendix 1 to this
Amendment.

            Section 2.  Conditions to Effectiveness.  This Amendment shall
become effective upon the satisfaction of all of the following conditions
precedent (the date of satisfaction of all such conditions being referred to
as the "Amendment Effective Date").

            (a)  On or before the Amendment Effective Date, each member of the
Borrower Group shall deliver to the Administrative Agent, by facsimile, copies
of (with sufficient originally executed copies for each Lender to be delivered
by overnight courier service) the following described documents (each of which
shall be reasonably satisfactory in form and substance to the Administrative
Agent, acting on behalf of the Lenders, and its counsel):

                  (i)   this Amendment, duly executed and delivered by the
parties and

                  (ii)  such other documents, instruments, approvals or
opinions as the Administrative Agent may reasonably request;

            (b)   On or before the Amendment Effective Date, QUALCOMM shall
deliver to the Administrative Agent, by facsimile, copies of (with sufficient
originally executed copies for each Lender to be delivered by overnight courier
service) the following described documents (each of which shall be reasonably
satisfactory in form and substance to the Administrative Agent, acting on behalf
of the Lenders, and its counsel):

                  (i)   a confirmation of the QUALCOMM Guaranty, duly executed
and delivered by QUALCOMM, as guarantor under the QUALCOMM Guaranty, in favor
of Administrative Agent for the benefit of itself and the other Syndicated
Lender and

                  (ii)  such other documents instruments, approvals or opinions
as the Administrative Agent may reasonably request;




                                       2
<PAGE>
          (c)  Administrative Agent (for its own account or for the account of
the other Syndicated Lenders, as the case may be) shall have received all fees
and other amounts due and payable on or prior to the Amendment Effective Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by Borrower under or
in connection with this Amendment;

          (d)  On or before the Amendment Effective Date, all corporate,
partnership and other proceedings taken by each member of the Borrower Group or
to be taken in connection with the transactions contemplated by this Amendment,
and all documents incidental to such transactions, shall be reasonably
satisfactory in form and substance to the Administrative Agent and its counsel,
and the Administrative Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents, opinions,
certificates, and evidence as they may reasonably request;

          (e)  The representations and warranties set forth in Section 3 of
this Amendment shall be true and correct as of the Amendment Effective Date;
and

          (f)  All approvals, authorizations, filings or Permits necessary for
the execution, delivery and performance of this Amendment shall have been made,
taken or obtained from or with any Governmental Authority, and no order,
statutory rule, regulation, executive order, decree, judgment or injunction
shall have been enacted, entered, issued, promulgated or enforced by any
Governmental Authority which prohibits or restricts the transactions
contemplated by this Amendment, nor shall any action have been commenced or
threatened seeking any injunction or any restraining or other order to
prohibit, restrain, invalidate or set aside the transactions contemplated by
this Amendment.

          Section 3.  Borrower's Representations and Warranties. In order to
induce the Lenders to enter into this Amendment and to amend the Bridge Loan
Agreement in the manner provided in this Amendment, Borrower represents and
warrants to each Lender, the Administrative Agent, the Syndication Agent, the
Documentation Agent and the Co-Documentation Agent as follows:

          (a)  Corporate Power and Authority. Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Bridge Loan
Agreement as amended by this Amendment (the "Amended Agreement").

          (b)  Authorization of Agreements. The execution and delivery of this
Amendment, the borrowing of Loans pursuant to the increased Commitments as set
forth in Amended Schedule 2.1 to the Bridge Loan Agreement, and the performance
of the Amended Agreement have been duly authorized by all necessary corporate
and, if required, stockholder action of Borrower, and this Amendment has been
duly executed and delivered by Borrower.

          (c)  Enforceability. The Amended Agreement constitutes the legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights in general.
The enforceability of Borrower's obligations

                                       3
<PAGE>
thereunder is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

     (d) No Conflict. The execution and delivery by Borrower of this Amendment
and the performance by Borrower of the Amended Agreement do not and will not (i)
contravene, in any material respect, any provision of any law, regulation,
decree, ruling, judgment or order that is (A) applicable to Borrower or any of
its properties or other assets and (B) in effect when this representation and
warranty is made, (ii) result in a breach of or constitute a default under its
charter documents or any other material agreement, indenture, lease or
instrument binding upon Borrower or any of its properties or other assets and
(iii) result in the creation or imposition of any Liens on any property (other
than Permitted Liens) of Borrower.

     (e) Permits. The execution, delivery and performance by Borrower of this
Amendment do not and will not require any Permit and do not result in the loss
or impairment of any Permit previously obtained in connection with the
execution, delivery and performance of the Loan Documents or the acquisition,
construction, ownership, maintenance or operation of the System.

     (f) Representations and Warranties in the Bridge Loan Agreement; Defaults.
Borrower confirms that as of the Amendment Effective Date the representations
and warranties contained in Section 6 of the Bridge Loan Agreement are (before
and after giving effect to this Amendment) true and correct and that no Default
or Event of Default has occurred.

     Section 4. Miscellaneous.

     (a) Reference to and Effect on the Bridge Loan Agreement and the other Loan
Documents.

          (i) The Bridge Loan Agreement and the other Loan Documents as
specifically amended by this Amendment shall remain in full force and effect and
are hereby ratified and confirmed.

          (ii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided in this Amendment, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of QUALCOMM,
the Lenders, the Administrative Agent, the Syndication Agent, the Documentation
Agent and the Co-Documentation Agent under, the Bridge Loan Agreement or any of
the other Loan Documents.

          (iii) Upon the conditions precedent set forth in this Amendment being
satisfied, this Amendment shall be construed as one with the Bridge Loan
Agreement, and the Bridge Loan Agreement shall, where the context requires, be
read and construed throughout so as to incorporate this Amendment.

     (b) Fees and Expenses. Borrower acknowledges that all costs, fees and
expenses as described in Section 11.3(a) of the Bridge Loan Agreement incurred
by QUALCOMM, the Lenders, the Administrative Agent, the Syndication Agent, the


                                       4
<PAGE>
Documentation Agent and the Co-Documentation Agent, and in each case its
counsel, with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Borrower.

     (c) Execution in Counterparts; Effectiveness. This Amendment may be
executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts taken together shall constitute
but one and the same instrument.

     (d) Headings. Section and subsection headings in this Amendment are
included for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose or be given any substantive effect.

     (e) Severability. If any provision contained in or obligation under this
Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

     (f) GOVERNING LAW; JURISDICTION. THIS AMENDMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT
OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS
IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH
OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
(INCLUDING MEXICO) BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS AMENDMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT
OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AMENDMENT AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.


                                       5
<PAGE>

                                   Appendix 1

                                                            Amended Schedule 2.1
                                                                       to Bridge
                                                                  Loan Agreement


                     SYNDICATED WORKING CAPITAL COMMITMENTS

<Table>
<Caption>
               SYNDICATED LENDER                        COMMITMENT
               -----------------                        ----------
               <S>                                      <C>
               Citibank, N.A.                           $43,750,000

               Societe Generale                         $43,750,000

               ABN AMRO Bank N.V.                       $43,750,000

               BankBoston, N.A.                         $43,750,000
</Table>
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as
of the date first above written.

THE BORROWER GROUP:

PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.


By:
    ----------------------------------
Printed Name:
             -------------------------
Title:
      --------------------------------


PEGASO TELECOMUNICACIONES, S.A. DE C.V.


By:
    ----------------------------------
Printed Name:
             -------------------------
Title:
      --------------------------------


PEGASO PCS, S.A. DE C.V.


By:
    ----------------------------------
Printed Name:
             -------------------------
Title:
      --------------------------------


PEGASO RECURSOS HUMANOS, S.A. DE C.V.


By:
    ----------------------------------
Printed Name:
             -------------------------
Title:
      --------------------------------


<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent


By: /s/ TERENCE BERRY
    ------------------------------

Printed Name:
              --------------------

Title: AVP
       ---------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------

<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent


By: /s/ J. BLAINE SHAUM
    ------------------------------

Printed Name: J. Blaine Shaum
              --------------------

Title: Managing Director
       ---------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------

<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent


By: /s/ JOHN A. MILLER
    ------------------------------

Printed Name: JOHN A. MILLER
              --------------------

Title: GROUP VICE PRESIDENT
       ---------------------------


By: /s/ PAUL K. STIMPFL
    ------------------------------

Printed Name: PAUL K. STIMPFL
              --------------------

Title: GROUP VICE PRESIDENT
       ---------------------------

<PAGE>
CO-DOCUMENTATION AGENT:

BANKBOSTON, N.A.,
as Co-Documentation Agent


By:       /s/ MICHAEL S. BARCLAY
    ------------------------------------

Printed Name: Michael S. Barclay
              --------------------------

Title:        Vice President
       ---------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


ABN AMRO BANK N.V.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SOCIETE GENERALE


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------
<PAGE>
CO-DOCUMENTATION AGENT:

BANKBOSTON, N.A.,
as Co-Documentation Agent


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:       /s/ [ILLEGIBLE]
    ------------------------------------

Printed Name:
              --------------------------

Title:        [ILLEGIBLE]
       ---------------------------------


ABN AMRO BANK N.V.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SOCIETE GENERALE


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------

<PAGE>
CO-DOCUMENTATION AGENT:

BANKBOSTON, N.A.,
as Co-Documentation Agent


By:
    -------------------------------------

Printed Name:
              ---------------------------

Title:
       ----------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:
    -------------------------------------

Printed Name:
              ---------------------------

Title:
       ----------------------------------


ABN AMRO BANK N.V.


By:       /s/ JOHN A. MILLER
    -------------------------------------

Printed Name: John A. Miller
              ---------------------------

Title:        Group Vice President
       ----------------------------------



By:       /s/ PAUL K. STIMPFL
    -------------------------------------

Printed Name: Paul K. STIMPFL
              ---------------------------

Title:        Group Vice President
       ----------------------------------


SOCIETE GENERALE


By:
    -------------------------------------

Printed Name:
              ---------------------------

Title:
       ----------------------------------

<PAGE>
CO-DOCUMENTATION AGENT:

BANKBOSTON, N.A.,
as Co-Documentation Agent


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


ABN AMRO BANK N.V.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SOCIETE GENERALE


By:       /s/ J. BLAINE SHAUM
    ------------------------------------

Printed Name: J. Blaine Shaum
              --------------------------

Title:        Managing Director
       ---------------------------------

<PAGE>
BANKBOSTON, N.A.


By:       /s/ MICHAEL S. BARCLAY
    -----------------------------------
Printed Name: Michael S. Barclay
              -------------------------
Title:        Vice President
       --------------------------------


CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATED


By:
    -----------------------------------
Printed Name:
             --------------------------
Title:
      ---------------------------------


<PAGE>
BANKBOSTON, N.A.


By:
    -----------------------------------
Printed Name:
             --------------------------
Title:
      ---------------------------------



CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATED


By: /s/ [SIGNATURE ILLEGIBLE]
    -----------------------------------
Printed Name:
             --------------------------
Title:
      ---------------------------------


<PAGE>
                   SECOND AMENDMENT TO BRIDGE LOAN AGREEMENT

        This SECOND AMENDMENT TO BRIDGE LOAN AGREEMENT (this "Amendment"), dated
as of August 22, 2000, is entered into by PEGASO COMUNICACIONES Y SISTEMAS, S.A.
DE C.V., a sociedad anonima de capital variable organized under the laws of
Mexico ("Borrower"), PEGASO TELECOMUNICACIONES, S.A. DE C.V., a sociedad anonima
de capital variable organized under the laws of Mexico ("Pegaso"), PEGASO PCS,
S.A. DE C.V., a sociedad anonima de capital variable organized under the laws of
Mexico ("Pegaso PCS"), PEGASO RECURSOS HUMANOS, S.A. DE C.V., a sociedad anonima
de capital variable organized under the laws of Mexico ("Pegaso RH"), QUALCOMM
INCORPORATED, a corporation organized under the laws of Delaware, ("QUALCOMM")
and the Syndicated Lenders referred to in the below referenced Bridge Loan
Agreement (each Syndicated Lender, together with QUALCOMM, a "Lender" and,
collectively, "Lenders"). CITIBANK, N.A., a national banking association, in its
capacity as administrative agent for Lenders ("Administrative Agent"), SOCIETE
GENERALE, as Syndication Agent, ABN AMRO BANK N.V., as Documentation Agent and
FLEET NATIONAL BANK, as Co-Documentation Agent, under the Bridge Loan Agreement
dated as of May 27, 1999 (as modified, amended, supplemented or restated from
time to time, the "Bridge Loan Agreement"). Capitalized terms used and not
otherwise defined in this Amendment shall have the same meanings in this
Amendment as set forth in the Bridge Loan Agreement, and the rules of
interpretation set forth in Section 1.2 of the Bridge Loan Agreement shall be
applicable to this Amendment, mutatis mutandis, as if set forth in this
Amendment.

                                   RECITALS:

        A.   Borrower previously elected to exercise its Term-Out Option
pursuant to Section 2.10(b) of the Bridge Loan Agreement and selected August 25,
2000 as the Scheduled Maturity Date.

        B.   Borrower has requested that the Bridge Loan Agreement be amended to
extend the Scheduled Maturity Date until November 24, 2000.

        C.   QUALCOMM, the Lenders, the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Co-Documentation Agent have agreed to
amend the Bridge Loan Agreement upon the terms and conditions set forth in this
Amendment.

        NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth below and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

        Section 1. Amendment. Subject to the satisfaction of the conditions
precedent set forth in Section 2, Section 1.1 of the Bridge Loan Agreement is
amended by substituting for the definition of "Scheduled Maturity Date", the
following new definition of "Scheduled Maturity Date":


<PAGE>
     "Scheduled Maturity Date" shall mean November 24, 2000.

     Section 2. Conditions to Effectiveness. This Amendment shall become
effective upon the satisfaction of all of the following conditions precedent
(the date of satisfaction of all such conditions being referred to as the
"Amendment Effective Date"):

     (a)  On or before the Amendment Effective Date, each member of the Borrower
Group shall deliver to the Administrative Agent, by facsimile, copies of (with
sufficient originally executed copies for each Lender to be delivered by
overnight courier service) the following described documents (each of which
shall be reasonably satisfactory in form and substance to the Administrative
Agent, acting on behalf of the Lenders, and its counsel):

          (i)   this Amendment, duly executed and delivered by the parties and

          (ii)  such other documents, instruments, approvals or opinions as the
Administrative Agent may reasonably request;

     (b)  On or before the Amendment Effective Date, QUALCOMM shall deliver to
the Administrative Agent, by facsimile, copies of (with sufficient originally
executed copies for each Lender to be delivered by overnight courier service)
the following described documents (each of which shall be reasonably
satisfactory in form and substance to the Administrative Agent, acting on
behalf of the Lenders, and its counsel):

          (i)   a confirmation of the QUALCOMM Guaranty, duly executed and
delivered by QUALCOMM, as guarantor under the QUALCOMM Guaranty, in favor of
Administrative Agent for the benefit of itself and the other Syndicated Lenders;

          (ii)  a confirmation of the Pegaso Guaranty Agreement, duly executed
and delivered by each of Pegaso, Pegaso PCS and Pegaso RH, as guarantors under
the Pegaso Guaranty Agreement, in favor of Administrative Agent for the benefit
of itself and the other Syndicated Lenders; and

          (iii) such other documents, instruments, approvals or opinions as the
Administrative Agent may reasonably request;

     (c)  Administrative Agent (for its own account or for the account of the
other Syndicated Lenders, as the case may be) shall have received all fees and
other amounts due and payable on or prior to the Amendment Effective Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by Borrower under or
in connection with this Amendment;

     (d)  On or before the Amendment Effective Date, all corporate, partnership
and other proceedings taken by each member of the Borrower Group or to be taken
in connection with the transactions contemplated by this Amendment, and all
documents incidental to such transactions, shall be reasonably satisfactory in
form and substance to the Administrative Agent and its counsel, and the
Administrative Agent and such counsel shall have received all such


                                       2

<PAGE>
counterpart originals or certified copies of such documents, opinions,
certificates, and evidence as they may reasonably request;

          (e) The representations and warranties set forth in Section 3 of this
Amendment shall be true and correct as of the Amendment Effective Date; and

          (f) All approvals, authorizations, filings or Permits necessary for
the execution, delivery and performance of this Amendment shall have been made,
taken or obtained from or with any Governmental Authority, and no order,
statutory rule, regulation, executive order, decree, judgment or injunction
shall have been enacted, entered, issued, promulgated or enforced by any
Governmental Authority which prohibits or restricts the transactions
contemplated by this Amendment nor shall any action have been commenced or
threatened seeking any injunction or any restraining or other order to prohibit,
restrain, invalidate or set aside the transactions contemplated by this
Amendment.

          Section 3. Borrower's Representations and Warranties. In order to
induce the Lenders to enter into this Amendment and to amend the Bridge Loan
Agreement in the manner provided in this Amendment, Borrower represents and
warrants to each Lender, the Administrative Agent, the Syndication Agent, the
Documentation Agent and the Co-Documentation Agent as follows:

          (a) Corporate Power and Authority. Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Bridge Loan
Agreement as amended by this Amendment (the "Amended Agreement").

          (b) Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate and, if required, stockholder action of Borrower, and
this Amendment has been duly executed and delivered by Borrower.

          (c) Enforceability. The Amended Agreement constitutes the legal, valid
and binding obligation of Borrower, enforceable against Borrower in accordance
with its terms, except as may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights in general. The
enforceability of Borrower's obligations thereunder is subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

          (d) No Conflict. The execution and delivery by Borrower of this
Amendment and the performance by Borrower of the Amended Agreement do not and
will not (i) contravene, in any material respect, any provision of any law,
regulation, decree, ruling, judgment or order that is (A) applicable to Borrower
or any of its properties or other assets and (B) in effect when this
representation and warranty is made, (ii) result in a breach of or constitute a
default under its charter documents or any other material agreement, indenture,
lease or instrument binding upon Borrower or any of its properties or other
assets and (iii) result in the creation or imposition of any Liens on any
property (other than Permitted Liens) of Borrower.


                                       3
<PAGE>
          (e)  Permits. The execution, delivery and performance by Borrower of
this Amendment do not and will not require any Permit and do not result in the
loss or impairment of any Permit previously obtained in connection with the
execution, delivery and performance of the Loan Documents or the acquisition,
construction, ownership, maintenance or operation of the System.

          (f)  Representations and Warranties in the Bridge Loan Agreement;
Defaults. Borrower confirms that as of the Amendment Effective Date the
representations and warranties contained in Section 6 of the Bridge Loan
Agreement are (before and after giving effect to this Amendment) true and
correct and that no Default or Event of Default has occurred.

          Section 4.  Miscellaneous.

          (a)  Reference to and Effect on the Bridge Loan Agreement and the
other Loan Documents.

               (i)   The Bridge Loan Agreement and the other Loan Documents as
specifically amended by this Amendment shall remain in full force and effect
and are hereby ratified and confirmed.

               (ii)  The execution, delivery and performance of this Amendment
shall not, except as expressly provided in this Amendment, constitute a waiver
of any provision of, or operate as a waiver of any right, power or remedy of
QUALCOMM, the Lenders, the Administrative Agent, the Syndication Agent, the
Documentation Agent and the Co-Documentation Agent under, the Bridge Loan
Agreement or any of the other Loan Documents.

               (iii) Upon the conditions precedent set forth in this Amendment
being satisfied, this Amendment shall be construed as one with the Bridge Loan
Agreement, and the Bridge Loan Agreement shall, where the context requires, be
read and construed throughout so as to incorporate this Amendment.

          (b)  Fees and Expenses. Borrower acknowledges that all costs, fees
and expenses as described in Section 11.3(a) of the Bridge Loan Agreement
incurred by QUALCOMM, the Lenders, the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Co-Documentation Agent, and in each case
its counsel, with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Borrower.

          (c)  Execution Counterparts; Effectiveness. This Amendment may be
executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts taken together shall constitute
but one and the same instrument.

          (d)  Headings. Section and subsection headings in this Amendment are
included for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose or be given any substantive effect.

                                       4

<PAGE>
        (e)  Severability. If any provision contained in or obligation under
this Amendment shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

        (f)  GOVERNING LAW: JURISDICTION. THIS AMENDMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT
OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS
IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH
OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
(INCLUDING MEXICO) BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS AMENDMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT
OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AMENDMENT AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.


                                       5
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
as of the date first above written.

THE BORROWER GROUP:

PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.

By:
    -----------------------------------

Printed Name:
              -------------------------

Title:
       --------------------------------


PEGASO TELECOMUNICACIONES, S.A. DE C.V.

By:
    -----------------------------------

Printed Name:
              -------------------------

Title:
       --------------------------------


PEGASO PCS, S.A. DE C.V.

By:
    -----------------------------------

Printed Name:
              -------------------------

Title:
       --------------------------------


PEGASO RECURSOS HUMANOS, S.A. DE C.V.

By:
    -----------------------------------

Printed Name:
              -------------------------

Title:
       --------------------------------
<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent


By: /s/ SUNEET GUPTA
    ------------------------------

Printed Name: SUNEET GUPTA
              --------------------

Title: VICE PRESIDENT
       ---------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------

<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent


By: /s/ HILLARY GOYAL
    ------------------------------

Printed Name: Hillary Goyal
              --------------------

Title: VP
       ---------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------

<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent


By:
    ------------------------------

Printed Name:
              --------------------

Title:
       ---------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent


By: /s/ PAUL K. STIMPFL
    ------------------------------

Printed Name: PAUL K. STIMPFL
              --------------------

Title: GROUP VICE PRESIDENT
       ---------------------------


By: /s/ [Signature Illegible]
    ------------------------------

Printed Name: [Illegible]
              --------------------

Title: ASSISTANT VICE PRESIDENT
       ---------------------------

<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK
as Co-Documentation Agent


By:      /s/  SUZANNE M. MACKAY
    ------------------------------------

Printed Name: Suzanne M. MacKay
              --------------------------

Title:        Vice President
       ---------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


ABN AMRO BANK N.V.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------



By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SOCIETE GENERALE


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------

<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK
as Co-Documentation Agent


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:       /s/ SUNEET GUPTA
    ------------------------------------

Printed Name: Suneet Gupta
              --------------------------

Title:        Vice President
       ---------------------------------


ABN AMRO BANK N.V.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------



By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SOCIETE GENERALE


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------

<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK
as Co-Documentation Agent


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


ABN AMRO BANK N.V.


By:       /s/ PAUL K. STIMPFL
    ------------------------------------

Printed Name: Paul K. STIMPFL
              --------------------------

Title:        Group Vice President
       ---------------------------------


By:       /s/ [SIGNATURE ILLEGIBLE]
    ------------------------------------

Printed Name: [ILLEGIBLE]
              --------------------------

Title:        Assistant Vice President
       ---------------------------------


SOCIETE GENERALE


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------

<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK,
as Co-Documentation Agent


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


ABN AMRO BANK N.V.


By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------



By:
    ------------------------------------

Printed Name:
              --------------------------

Title:
       ---------------------------------


SOCIETE GENERALE


By:       /s/ HILLARY GOYAL
    ------------------------------------

Printed Name: Hillary Goyal
              --------------------------

Title:        VP
       ---------------------------------

<PAGE>
FLEET NATIONAL BANK


By: /s/ SUZANNE M. MacKAY
    ----------------------------------
Printed Name: Suzanne M. MacKay
              ------------------------
Title: Vice President
       -------------------------------


CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATED

By:
    ----------------------------------
Printed Name:
              ------------------------
Title:
       -------------------------------

<PAGE>
FLEET NATIONAL BANK


By:
   ---------------------------------
Printed Name:
             -----------------------
Title:
      ------------------------------


CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATION


By: QUENTIN E. LYLE
    --------------------------------
Printed Name: Quentin E. Lyle
              ----------------------
Title: Director, Finance
       -----------------------------

<PAGE>
                    THIRD AMENDMENT TO BRIDGE LOAN AGREEMENT

     This THIRD AMENDMENT TO BRIDGE LOAN AGREEMENT (this "Amendment"), dated as
of November 17, 2000, is entered into by PEGASO COMUNICACIONES Y SISTEMAS, S.A.
DE C.V., a sociedad anonima de capital variable organized under the laws of
Mexico ("Borrower"), PEGASO TELECOMUNICACIONES, S.A. DE  C.V., a sociedad
anonima de capital variable organized under the laws of Mexico ("Pegaso"),
PEGASO PCS, S.A. DE C.V., a sociedad anonima de capital variable organized under
the laws of Mexico ("Pegaso PCS"), PEGASO RECURSOS HUMANOS, S.A., DE C.V., a
sociedad anonima de capital variable organized under the laws of Mexico ("Pegaso
RH"), QUALCOMM INCORPORATED, a corporation organized under the laws of Delaware
("QUALCOMM"), and the Syndicated Lenders referred to in the below referenced
Bridge Loan Agreement (each Syndicated Lender, together with QUALCOMM, a
"Lender" and, collectively, "Lenders"), CITIBANK, N.A., a national banking
association, in its capacity as administrative agent for Lenders
("Administrative Agent"), SOCIETE GENERALE, as Syndication Agent, ABN AMRO BANK
N.V., as Documentation Agent and FLEET NATIONAL BANK, as Co-Documentation Agent,
under the Bridge Loan Agreement dated as of May 27, 1999 (as modified, amended,
supplemented or restated from time to time, the "Bridge Loan Agreement").
Capitalized terms used and not otherwise defined in this Amendment shall have
the same meanings in this Amendment as set forth in the Bridge Loan Agreement,
and the rules of interpretation set forth in Section 1.2 of the Bridge Loan
Agreement shall be applicable to this Amendment, mutatis mutandis, as if set
forth in this Amendment.

                                   RECITALS:

     A.   Borrower has requested that the Bridge Loan Agreement be amended to
(i) change the definitions of "Applicable Margin", "Availability Period",
"Required Syndicated Lenders", "Scheduled Maturity Date", "Total Vendor Working
Capital Commitment" and "Total Working Capital Commitment"; and (ii) increase
the amount of the Vendor Working Capital Commitment.

     B.   QUALCOMM, the Lenders, the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Co-Documentation Agent have agreed to
amend the Bridge Loan Agreement upon the terms and conditions set forth in this
Amendment.

     NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth below and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

     Section 1. Amendment. Subject to the satisfaction of the conditions
precedent set forth in Section 2, the Bridge Loan Agreement is amended as
follows:

     (a) Section 1.1 of the Bridge Loan Agreement is amended by substituting
for the definition of "Applicable Margin", the following new definition of
"Applicable Margin":



<PAGE>
     "Applicable Margin" shall mean (i) for Eurodollar Loans, six percent (6%);
and (ii) for Base Rate Loans, five percent (5%); provided that in each case,
the Applicable Margin shall increase by one-half of one percent (0.5%) on each
Interest Adjustment Date; provided further that for Vendor Working Capital
Loans which are Eurodollar Loans, the Applicable Margin shall remain at six
percent (6%) without adjustment for an increase by one-half of one percent
(0.5%) on each Interest Adjustment Date.

     (b)  Section 1.1 of the Bridge Loan Agreement is amended by substituting
for the definition of "Availability Period", the following new definition of
"Availability Period":

     "Availability Period" shall mean, for any Lender, (i) with respect to such
Lender's Syndicated Working Capital Commitment, the period from the Closing
Date until the Commitment Termination Date applicable to the Syndicated Working
Capital Facility, (ii) with respect to such Lender's Vendor Working Capital
Commitment, the period from the Closing Date until the Commitment Termination
Date applicable to the Vendor Working Capital Facility, (iii) with respect to
such Lender's Term Loan Commitment, the period from the Closing Date until the
Commitment Termination Date applicable to the Syndicated Working Capital
Facility, and (iv) with respect to such Lender's Capitalized Interest
Commitment,the period from the Closing Date until the Commitment Termination
Date applicable to the Capitalized Interest Facility.

     (c)  Section 1.1 of the Bridge Loan Agreement is amended by substituting
for the definition of "Required Syndicated Lenders", the following new
definition of "Required Syndicated Lenders":

     "Required Syndicated Lenders" shall mean, at any time, the Syndicated
Lenders having Exposures under the Syndicated Working Capital Facility and
unused Working Capital Commitments (or, following the Commitment Termination
Date, Term Loans) representing at least 51% of the sum of the total Exposures
under the Syndicated Working Capital Facility and unused Working Capital
Commitments (or, following the Commitment Termination Date, Term Loans) of all
Syndicated Lenders at such time; provided, however, that references to
"Required Syndicated Lenders" shall be deemed to be references to "Required
Lenders" (and clause (a) of the definition of "Required Lenders" shall be
disregarded) if (i) the Exposures of all Syndicated Lenders shall have been
reduced to zero, (ii) all Syndicated Working Capital Commitments, all Term Loan
Commitments and all LC Exposures shall have been terminated, (iii) all
Syndicated Working Capital Loans and all Term Loans shall have been repaid,
(iv) no Letters of Credit shall be outstanding, and (v) all other Obligations
payable to any Syndicated Lender or to the Administrative Agent shall have been
paid in full.

     (d)  Section 1.1 of the Bridge Loan Agreement is amended by substituting
for the definition of "Scheduled Maturity Date", the following new definition of
"Scheduled Maturity Date":

     "Scheduled Maturity Date" shall mean June 15, 2001.

                                       2
<PAGE>
                (e) Section 1.1 of the Bridge Loan Agreement is amended by
substituting for the definition of "Total Vendor Working Capital Commitment",
the following new definition of "Total Vendor Working Capital Commitment":

                "Total Vendor Working Capital Commitment" shall mean One Hundred
Twenty-Five Million Dollars ($125,000,000), as such amount may be reduced
pursuant to Section 2.9(f).

                (f) Section 1.1 of the Bridge Loan Agreement is amended by
substituting for the definition of "Total Working Capital Commitment", the
following new definition of "Total Working Capital Commitment":

                "Total Working Capital Commitment" shall mean the sum of the
Total Syndicated Working Capital Commitment and the total Vendor Working Capital
Commitment, which shall be an aggregate amount equal to Three Hundred Million
Dollars ($300,000,000).

                (g) Section 2.6(a) of the Bridge Loan Agreement is amended by
replacing the words prior to the first "; provided" with the following:

                To request a Syndicated Working Capital Loan Borrowing or a Term
Loan Borrowing for the purposes described in Section 2.1(d)(ii), Borrower shall
notify Administrative Agent of such request by telephone (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three (3)
Business Days before the date of the proposed Borrowing, or (b) in the case of a
Base Rate Borrowing, not later than 11:00 a.m., New York City time, one (1)
Business Day before the date of the proposed Borrowing.

                (h) Section 2.6(a) of the Bridge Loan Agreement is amended by
the addition of the following sentence after the first sentence thereof:

                To request a Vendor Working Capital Loan Borrowing, Borrower
shall, regardless of whether such Borrowing is to be a Eurodollar Borrowing of a
Base Rate Borrowing, notify Administrative Agent of such request by telephone,
(x) in the case of a Vendor Working Capital Loan Borrowing in an amount less
than $20,000,000, not later than 11:00 a.m., New York City time, five (5)
Business Days before the date of the proposed Borrowing, or (y) in the case of a
Vendor Working Capital Loan Borrowing in an amount equal to or greater than
$20,000,000, not later than 11:00 a.m. New York City time, ten (10) Business
Days before the date of the proposed Borrowing, subject to Section 2.7; provided
that Borrower may not request more than one Vendor Working Capital Loan
Borrowing in any calendar month.

                (i) Section 2.7 of the Bridge Loan Agreement is amended by
inserting the words "; provided that with respect to any Vendor Working Capital
Loan to be made by a Vendor Working Capital Lender in excess of $40,000,000,
such Vendor Working Capital Loan shall be made subject to the availability of
such funds to such Vendor Working Capital Lender" at the end of the first
sentence thereof.

                (j) Schedule 2.2 of the Bridge Loan is hereby replaced in its
entirety by Amended Schedule 2.2 as set forth in Appendix 1 to this Agreement.


                                       3
<PAGE>
     Section 2. Conditions to Effectiveness. This Amendment shall become
effective upon the satisfaction of all of the following conditions precedent
(the date of satisfaction of all such conditions being referred to as the
"Amendment Effective Date"):

     (a)  On or before the Amendment Effective Date, each member of the
Borrower Group shall deliver to the Administrative Agent, by facsimile, copies
of (with sufficient originally executed copies for each Lender to be delivered
by overnight courier service) the following described documents (each of which
shall be reasonably satisfactory in form and substance to the Administrative
Agent, acting on behalf of the Lenders, and its counsel):

          (i)   this Amendment, duly executed and delivered by the parties;

          (ii)  a confirmation of the Pegaso Guaranty Agreement, duly executed
and delivered by each of Pegaso, Pegaso PCS and Pegaso RH, as guarantors under
the Pegaso Guaranty Agreement, in favor of Administrative Agent for the benefit
of itself and the other Syndicated Lenders;

          (iii) new Pegares to reflect the new Scheduled Maturity Date; and

          (iv)  such other documents, instruments, approvals or opinions as the
Administrative Agent may reasonably request;

     (b)  On or before the Amendment Effective Date, QUALCOMM shall deliver to
the Administrative Agent, by facsimile, copies of (with sufficient originally
executed copies for each Lender to be delivered by overnight courier service)
the following described documents (each of which shall be reasonably
satisfactory in form and substance to the Administrative Agent, acting on behalf
of the Lenders, and its counsel):

          (i)   a confirmation of the QUALCOMM Guaranty, duly executed and
delivered by QUALCOMM, as guarantor under the QUALCOMM Guaranty, in favor of
Administrative Agent for the benefit of itself and the other Syndicated
Lenders; and

          (ii)  such other documents, instruments, approvals or opinions as the
Administrative Agent may reasonably request;

     (c)  Administrative Agent (for its own account or for the account of the
other Syndicated Lenders, as the case may be) shall have received all fees and
other amounts due and payable on or prior to the Amendment Effective Date,
including: (i) to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by Borrower under or
in connection with this Amendment and (ii) the extension fees in the amount of
$54,687.50 payable to each Syndicated Lender;

     (d)  On or before the Amendment Effective Date, all corporate, partnership
and other proceedings taken by each member of the Borrower Group or to be taken
in connection with the transactions contemplated by this Amendment, and all
documents incidental to such transactions, shall be reasonably satisfactory in
form and substance to the Administrative Agent and its counsel, and the
Administrative Agent and such counsel shall have received all such

                                       4
<PAGE>
counterpart originals or certified copies of such documents, opinions,
certificates, and evidence as they may reasonably request;

                (e) The representations and warranties set forth in Section 3 of
this Amendment shall be true and correct as of the Amendment Effective Date; and

                (f) All approvals, authorizations, filings or Permits necessary
for the execution, delivery and performance of this Amendment shall have been
made, taken or obtained from or with any Governmental Authority, and no order,
statutory rule, regulation, executive order, decree, judgment or injunction
shall have been enacted, entered, issued, promulgated or enforced by any
Governmental Authority which prohibits or restricts the transactions
contemplated by this Amendment, nor shall any action have been commenced or
threatened seeking any injunction or any restraining or other order to prohibit,
restrain, invalidate or set aside the transactions contemplated by this
Amendment.

                Section 3. Borrower's Representations and Warranties. In order
to induce the Lenders to enter into this Amendment and to amend the Bridge Loan
Agreement in the manner provided in this Amendment, Borrower represents and
warrants to each Lender, the Administrative Agent, the Syndication Agent, the
Documentation Agent and the Co-Documentation Agent as follows:

                (a) Corporate Power and Authority. Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Bridge Loan
Agreement as amended by this Amendment (the "Amended Agreement").

                (b) Authorization of Agreements. The execution and delivery of
this Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate and, if required, stockholder action of
Borrower, and this Amendment has been duly executed and delivered by Borrower.

                (c) Enforceability. The Amended Agreement constitutes the legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights in general.
The enforceability of Borrower's obligations thereunder is subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

                (d) No Conflict. The execution and delivery by Borrower of this
Amendment and the performance by Borrower of the Amended Agreement do not and
will not (i) contravene, in any material respect, any provision of any law,
regulation, decree, ruling, judgment or order that is (A) applicable to Borrower
or any of its properties or other assets and (B) in effect when this
representation and warranty is made, (ii) result in a breach of or constitute a
default under its charter documents or any other material agreement, indenture,
lease or instrument binding upon Borrower or any of its properties or other
assets and (iii) result in the creation or imposition of any Liens on any
property (other than Permitted Liens) of Borrower.


                                       5
<PAGE>
            (e)   Permits. The execution, delivery and performance by Borrower
of this Amendment do not and will not require any Permit and do not result in
the loss or impairment of any Permit previously obtained in connection with the
execution, delivery and performance of the Loan Documents or the acquisition,
construction, ownership, maintenance or operation of the System.

            (f)   Representations and Warranties in the Bridge Loan Agreement;
Defaults. Borrower confirms that as of the Amendment Effective Date the
representations and warranties contained in Section 6 of the Bridge Loan
Agreement are (before and after giving effect to this Amendment) true and
correct and that no Default or Event of Default has occurred.

            Section 4.  Miscellaneous.

            (a)   Reference to and Effect on the Bridge Loan Agreement and the
other Loan Documents.

                  (i)  The Bridge Loan Agreement and the other Loan Documents
as specifically amended by this Amendment shall remain in full force and effect
and are hereby ratified and confirmed.

                  (ii)  The execution, delivery and performance of this
Amendment shall not, except as expressly provided in this Amendment, constitute
a waiver of any provision of, or operate as a waiver of any right, power or
remedy of QUALCOMM, the Lenders, the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Co-Documentation Agent under, the Bridge
Loan Agreement or any of the other Loan Documents.

                  (iii) Upon the conditions precedent set forth in this
Amendment being satisfied, this Amendment shall be construed as one with the
Bridge Loan Agreement, and the Bridge Loan Agreement shall, where the context
requires, be read and construed throughout so as to incorporate this Amendment.

            (b)   Fees and Expenses. Borrower acknowledges that all costs, fees
and expenses described in Section 11.3(a) of the Bridge Loan Agreement incurred
by QUALCOMM, the Lenders, the Administrative Agent, the Syndication Agent, the
Documentation Agent and the Co-Documentation Agent, and in each case its
counsel, with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Borrower.

            (c)   Execution in Counterparts; Effectiveness. This Amendment may
be executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts taken together shall constitute
but one and the same instrument.

            (d)   Headings. Section and subsection headings in this Amendment
are included for convenience of reference only and shall not constitute a part
of this Amendment for any other purpose or be given any substantive effect.

                                       6
<PAGE>
            (e)   Severability. If any provision contained in or obligation
under this Amendment shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

            (f)   GOVERNING LAW; JURISDICTION. THIS AMENDMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN
SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS (INCLUDING MEXICO) BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AMENDMENT SHALL AFFECT ANY RIGHT THAT
ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AMENDMENT AGAINST BORROWER OR ITS PROPERTIES IN THE
COURTS OF ANY JURISDICTION. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.

                                       7
<PAGE>
                                   Appendix 1

                                                            Amended Schedule 2.2
                                                                       to Bridge
                                                                  Loan Agreement

                       VENDOR WORKING CAPITAL COMMITMENTS

VENDOR LENDER                                          COMMITMENT

QUALCOMM Incorporated                                $125,000,000

<PAGE>
     IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
as of the date first above written.

THE BORROWER GROUP:

PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------

PEGASO TELECOMUNICACIONES, S.A. DE C.V.

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------

PEGASO PCS, S.A. DE C.V.

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------

PEGASO RECURSOS HUMANOS, S.A. DE C.V.

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------
<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK,
as Co-Documentation Agent

By: /s/ SUZANNE M. MACKAY
   --------------------------------------
Printed Name:  Suzanne M. MacKay
             ----------------------------
Title:  Vice President
      -----------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------


ABN AMRO BANK N.V.

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------


By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------


SOCIETE GENERALE

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------
<PAGE>
FLEET NATIONAL BANK


By:  /s/ SUZANNE M. MACKAY
   -------------------------------------
Printed Name:  Suzanne M. MacKay
             ---------------------------
Title:  Vice President
      ----------------------------------


VENDOR WORKING CAPITAL LENDER AND
CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATED


By:
   -------------------------------------
Printed Name:
             ---------------------------
Title:
      ----------------------------------
<PAGE>
FLEET NATIONAL BANK


By:
   -------------------------------------
Printed Name:
             ---------------------------
Title:
      ----------------------------------


VENDOR WORKING CAPITAL LENDER AND
CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATED


By:  /s/ PAUL FISKNESS
   -------------------------------------
Printed Name:  Paul Fiskness
             ---------------------------
Title:  Vice President, Project Finance
      ----------------------------------
          and Direct Investments
<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent


By:
   -------------------------------------
Printed Name:
             ---------------------------
Title:
      ----------------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent


By:
   -------------------------------------
Printed Name:
             ---------------------------
Title:
      ----------------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent


By:  /s/ MITSOO IRAVANI
   -------------------------------------
Printed Name:  MITSOO IRAVANI
             ---------------------------
Title:  ASSISTANT VICE PRESIDENT
      ----------------------------------


By:  /s/ ELLEN M. COLEMAN
   -------------------------------------
Printed Name:  ELLEN M. COLEMAN
             ---------------------------
Title:  GROUP VICE PRESIDENT
      ----------------------------------
<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK,
as Co-Documentation Agent


By:
    -----------------------------------
Printed Name:
              -------------------------
Title:
       --------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:
    -----------------------------------
Printed Name:
              -------------------------
Title:
       --------------------------------


ABN AMRO BANK N.V.


By: /s/ MITSOO IRAVANI
    -----------------------------------
Printed Name: MITSOO IRAVANI
              -------------------------
Title: ASSISTANT VICE PRESIDENT
       --------------------------------



By: /s/ ELLEN M. COLEMAN
    -----------------------------------
Printed Name: ELLEN M. COLEMAN
              -------------------------
Title: GROUP VICE PRESIDENT
       --------------------------------


SOCIETE GENERALE


By:
    -----------------------------------
Printed Name:
              -------------------------
Title:
       --------------------------------

<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK,
as Co-Documentation Agent


By:
    -----------------------------------
Printed Name:
              -------------------------
Title:
       --------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.


By:
    -----------------------------------
Printed Name:
              -------------------------
Title:
       --------------------------------


ABN AMRO BANK N.V.


By:
    -----------------------------------
Printed Name:
              -------------------------
Title:
       --------------------------------


By:
    -----------------------------------
Printed Name:
              -------------------------
Title:
       --------------------------------


SOCIETE GENERALE


By: /s/ RICHARD KNOWLTON
    -----------------------------------
Printed Name: Richard Knowlton
              -------------------------
Title: Director
       --------------------------------

<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent

By:  /s/ RICHARD KNOWLTON
   --------------------------------------
Printed Name: Richard Knowlton, Director
             ----------------------------
Title:
      -----------------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------


By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------

<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK,
as Co-Documentation Agent

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.

By: /s/ TERENCE P. BERRY                                TERENCE BERRY
   --------------------------------------           Relationship Manager
Printed Name: Terence Berry                      GCB Media & Communications
             ----------------------------                 399P/8/5
Title:        AVP                                      (212) 559-3009
      -----------------------------------


ABN AMRO BANK N.V.

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------

SOCIETE GENERALE

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------


<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent

By:  /s/ TERENCE P. BERRY                                TERENCE BERRY
   --------------------------------------            Relationship Manager
Printed Name:  Terence Berry                      GCB Media & Communications
             ----------------------------                  399P/8/5
Title:         AVP                                      (212) 559-3009
      -----------------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent

By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------


By:
   --------------------------------------
Printed Name:
             ----------------------------
Title:
      -----------------------------------

<PAGE>

                   FOURTH AMENDMENT TO BRIDGE LOAN AGREEMENT


     This FOURTH AMENDMENT TO BRIDGE LOAN AGREEMENT (this "Amendment"), dated
as of March 22, 2001, is entered into by PEGASO COMUNICACIONES Y SISTEMAS,
S.A. DE C.V., a sociedad anonima de capital variable organized under the laws
of Mexico ("Borrower"), PEGASO TELECOMUNICACIONES, S.A., DE C.V., a sociedad
anonima de capital variable organized under the laws of Mexico ("Pegaso"),
PEGASO PCS, S.A. DE C.V., a sociedad anonima de capital variable organized
under the laws of Mexico ("Pegaso PCS"), PEGASO RECURSOS HUMANOS, S.A., DE
C.V., a sociedad anonima de capital variable organized under the laws of Mexico
("Pegaso RH"), QUALCOMM INCORPORATED, a corporation organized under the laws of
Delaware ("QUALCOMM"), and the Syndicated Lenders referred to in the below
referenced Bridge Loan Agreement (each Syndicated Lender, together with
QUALCOMM, a "Lender" and, collectively, "Lenders"), CITIBANK, N.A., a national
banking association, in its capacity as administrative agent for Lenders
("Administrative Agent"), SOCIETE GENERALE, as Syndication Agent, ABN AMRO BANK
N.V., as Documentation Agent and FLEET NATIONAL BANK, as Co-Documentation
Agent, under the Bridge Loan Agreement dated as of May 27, 1999 (as modified,
amended, supplemented or restated from time to time, the "Bridge Loan
Agreement"). Capitalized terms used and not otherwise defined in this Amendment
shall have the same meanings in this Amendment as set forth in the Bridge Loan
Agreement, and the rules of interpretation set forth in Section 1.2 of the
Bridge Loan Agreement shall be applicable to this Amendment, mutatis mutandis,
as if set forth in this amendment.

                                   RECITALS:

     A.   The Bridge Loan Agreement has been amended pursuant to (i) the First
Amendment to the Bridge Loan Agreement, dated as of February 8, 2000 (ii) the
Second Amendment to the Bridge Loan Agreement, dated as of August 22, 2000, and
(iii) the Third Amendment to the Bridge Loan Agreement, dated as of November
17, 2000.

     B.   Borrower has requested that the Bridge Loan Agreement be amended to
(i) change the definitions of "Total Capitalized Interest Commitment", "Total
Vendor Working Capital Commitment" and "Total Working Capital Commitment"; and
(ii) increase the amount of the Capitalized Interest Commitment and the Vendor
Working Capital Commitment.

     C.   QUALCOMM, the Lenders, the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Co-Documentation Agent have agreed to
amend the Bridge Loan Agreement upon the terms and conditions set forth in this
Agreement.

     NOW THEREFORE, in consideration of the foregoing, the mutual covenants and
agreement set forth below and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

<PAGE>
        Section 1. Amendment. Subject to the satisfaction of the conditions
precedent set forth in Section 2, the Bridge Loan Agreement is amended as
follows:

        (a)  Section 1.1 of the Bridge Loan Agreement is amended by substituting
for the definition of "Total Capitalized Interest Commitment", the following new
definition of "Total Capitalized Interest Commitment":

        "Total Capitalized Interest Commitment" shall mean Forty-Nine Million
Dollars ($49,000,000), as such amount may be increased pursuant to Section
2.12(d).

        (b)  Section 1.1 of the Bridge Loan Agreement is amended by substituting
for the definition of "Total Vendor Working Capital Commitment", the following
new definition of "Total Vendor Working Capital Commitment":

        "Total Vendor Working Capital Commitment" shall mean One Hundred
Eighty-Five Million Dollars ($185,000,000), as such amount may be reduced
pursuant to Section 2.9(f).

        (c)  Section 1.1 of the Bridge Loan Agreement is amended by substituting
for the definition of "Total Working Capital Commitment", the following new
definition of "Total Working Capital Commitment":

        "Total Working Capital Commitment" shall mean the sum of the Total
Syndicated Working Capital Commitment and the Total Vendor Working Capital
Commitment, which shall be an aggregate amount equal to Three Hundred Sixty
Million Dollars ($360,000,000).

        (d)  Schedule 2.2 of the Bridge Loan Agreement is hereby replaced in its
entirety by Amended Schedule 2.2 as set forth in Appendix 1 to this Agreement.

        (e)  Schedule 2.3 of the Bridge Loan Agreement is hereby replaced in its
entirety by Amended Schedule 2.3 as set forth in Appendix 2 to this Agreement.

        Section 2. Conditions to Effectiveness. This Amendment shall become
effective upon the satisfaction of all of the following conditions precedent
(the date of satisfaction of all such conditions being referred to as the
"Amendment Effective Date"):

        (a)  On or before the Amendment Effective Date, each member of the
Borrower Group shall deliver to the Administrative Agent, by facsimile, copies
of (with sufficient originally executed copies for each Lender to be delivered
by overnight courier service) the following described documents (each of which
shall be reasonably satisfactory in form and substance to the Administrative
Agent, acting on behalf of the Lenders, and its counsel):

             (i)  this Amendment, duly executed and delivered by the parties;

             (ii) a confirmation of the Pegaso Guaranty Agreement, duly executed
        and delivered by each of Pegaso, Pegaso PCS and Pegaso RH, as guarantors
        under the Pegaso Guaranty Agreement, in favor of Administrative Agent
        for the benefit of itself and the other Syndicated Lenders; and

                                       2


<PAGE>
                (iii) such other documents, instruments, approvals or opinions
as the Administrative Agent may reasonably request;

        (b) On or before the Amendment Effective Date, QUALCOMM shall deliver to
the Administrative Agent, by facsimile, copies of (with sufficient originally
executed copies for each Lender to be delivered by overnight courier service)
the following described documents (each of which shall be reasonably
satisfactory in form and substance to the Administrative Agent, acing on behalf
of the Lenders, and its counsel):

                (i) a confirmation of the QUALCOMM Guaranty, duly executed and
delivered by QUALCOMM, as guarantor under the QUALCOMM Guaranty, in favor of
Administrative Agent for the benefit of itself and the other Syndicated Lenders;
and

                (ii) such other documents, instruments, approvals or opinions as
the Administrative Agent may reasonably request;

        (c) Administrative Agent (for its own account or for the account of the
other Syndicated Lenders, as the case may be) shall have received all fees and
other amounts due and payable on or prior to the Amendment Effective Date,
including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by Borrower under or in connection
with this Amendment;

        (d) On or before the Amendment Effective Date, all corporate,
partnership and other proceedings taken by each member of the Borrower Group or
to be taken in connection with the transactions contemplated by this Amendment,
and all documents incidental to such transactions, shall be reasonably
satisfactory in form and substance to the Administrative Agent and its counsel,
and the Administrative Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents, opinions,
certificates, and evidence as they may reasonably request;

        (e) The representations and warranties set forth in Section 3 of this
Amendment shall be true and correct as of the Amendment Effective Date; and

        (f) All approvals, authorizations, filings or Permits necessary for the
execution, delivery and performance of this Amendment shall have been made,
taken or obtained from or with any Governmental Authority, and no order,
statutory rule, regulation, executive order, decree, judgment or injunction
shall have been enacted, entered, issued, promulgated or enforced by an
Governmental Authority which prohibits or restricts the transactions
contemplated by this Amendment, nor shall any action have been commenced or
threatened seeking any injunction or any restraining or other order to prohibit,
restrain, invalidate or set aside the transactions contemplated by this
Amendment.

        Section 3. Borrower Group Representations and Warranties. In order to
induce the Lenders to enter into this Amendment and to amend the Bridge Loan
Agreement in the manner provided in this Amendment, each member of the Borrower
Group represents and



                                       3
<PAGE>

warrants, as to itself, to each Lender, the Administrative Agent, the
Syndication Agent, the Documentation Agent and the Co-Documentation Agent as
follows:

     (a)  Corporate Power and Authority. Such member of the Borrower Group has
all requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Bridge Loan Agreement as amended by this Amendment (the "Amended
Agreement").

     (b)  Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate and, if required, stockholder action of
the Borrower Group, and this Amendment has been duly executed and delivered by
the Borrower Group.

     (c)  Enforceability. The Amended Agreement constitutes the legal, valid
and binding obligation of each member of the Borrower Group, enforceable
against such member of the Borrower Group in accordance with its terms, except
as may be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general. The enforceability of the Borrower
Group's obligations thereunder is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

     (d)  No Conflict. The execution and delivery by each member of the
Borrower Group of this Amendment and the performance by such member of the
Borrower Group of the Amended Agreement do not and will not (i) contravene, in
any material respect, any provision of any law, regulation, decree, ruling,
judgment or order that is (A) applicable to such member of the Borrower Group
or any of its properties or other assets and (B) in effect when this
representation and warranty is made, (ii) result in a breach of or constitute a
default under its charter documents or any other material agreement, indenture,
lease or instrument binding upon such member of the Borrower Group or any of
its properties or other assets and (iii) result in the creation or imposition
of any Liens on any property (other than Permitted Liens) of the Borrower Group.

     (e)  Permits. The execution, delivery and performance by each member of
the Borrower Group of this Amendment do not and will not require any Permit and
do not result in the loss or impairment of any Permit previously obtained in
connection with the execution, delivery and performance of the Loan Documents
or the acquisition, construction, ownership, maintenance or operation of the
System.

     (f)  Representations and Warranties in the Bridge Loan Agreement;
Defaults. Each member of the Borrower Group confirms that as of the Amendment
Effective Date the representations and warranties contained in Section 6 of the
Bridge Loan Agreement are (before and after giving effect to this Amendment)
true and correct and that no Default or Event of Default has occurred.

                                       4
<PAGE>
     Section 4. Miscellaneous.

     (a) Reference to and Effect on the Bridge Loan Agreement and the other
Loan Documents.

         (i)    The Bridge Loan Agreement and the Other Loan Documents as
specifically amended by this Amendment shall remain in full force and effect and
are hereby ratified and confirmed.

         (ii)   The execution, delivery and performance of this Amendment shall
not, except as expressly provided in this Amendment, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of QUALCOMM,
the Lenders, the Administrative Agent, the Syndication Agent, the Documentation
Agent and the Co-Documentation Agent under, the Bridge Loan Agreement or any of
the other Loan Documents.

          (iii) Upon the conditions precedent set forth in this Amendment being
satisfied, this Amendment shall be construed as one with the Bridge Loan
Agreement, and the Bridge Loan Agreement shall, where the context requires, be
read and construed throughout so as to incorporate this Amendment.

     (b)  Fees and Expenses. Borrower acknowledges that all costs, fees and
expenses as described in Section 11.3(a) of the Bridge Loan Agreement incurred
by QUALCOMM, the Lenders, the Administrative Agent, the Syndication Agent, the
Documentation Agent and the Co-Documentation Agent, and in each case its
counsel, with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Borrower.

     (c)  Execution in Counterparts; Effectiveness. This Amendment may be
executed in any number of counterparts, and by different parties hereto in
separate counterparts; each of which when so executed and delivered shall be
deemed an original, but all such counterparts taken together shall constitute
but one and the same instrument.

     (d)  Headings. Section and subsection headings in this Amendment are
included for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose or be given any substantive effect.

     (e)  Severability. If any provision contained in or obligation under this
Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any jurisdiction, shall not
in any way be affected or impaired thereby.

     (f)  GOVERNING LAW; JURISDICTION. THIS AMENDMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND

                                       5



<PAGE>
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE
OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF,
FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS (INCLUDING
MEXICO) BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING
IN THIS AMENDMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT OR ANY LENDER
MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AMENDMENT
AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.








                                       6
<PAGE>

                                   Appendix 1

                                                            Amended Schedule 2.2
                                                                       to Bridge
                                                                  Loan Agreement

                       VENDOR WORKING CAPITAL COMMITMENTS

<Table>
<Caption>
VENDOR LENDER                    COMMITMENT
-------------                   ------------
<S>                             <C>
QUALCOMM Incorporated           $185,000,000
</Table>

<PAGE>

                                   Appendix 2

                                                            Amended Schedule 2.3
                                                                       to Bridge
                                                                  Loan Agreement

                        CAPITALIZED INTEREST COMMITMENTS

<Table>
<Caption>
VENDOR LENDER                    COMMITMENT
-------------                   ------------
<S>                             <C>
QUALCOMM Incorporated           $49,000,000
</Table>

<PAGE>
        IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first above written.


THE BORROWER GROUP:


PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.

By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------


PEGASO TELECOMUNICACIONES, S.A. DE C.V.

By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------


PEGASO PCS, S.A. DE C.V.

By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------


PEGASO RECURSOS HUMANOS, S.A. DE C.V.

By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------



<PAGE>
ADMINISTRATIVE AGENT:

CITIBANK, N.A.
as Administrative Agent


By: /s/ MARJORIE FUTORNICK
   ---------------------------------------
Printed Name: MARJORIE FUTORNICK
             -----------------------------
Title: Vice President
      ------------------------------------


SYNDICATION AGENT:

SOCIETE GENERALE,
As Syndication Agent


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------


DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------
<PAGE>

ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent

By:__________________________
Printed Name:________________
Title:_______________________



SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent

By: /s/ RICHARD KNOWLTON
   ---------------------------
Printed Name: Richard Knowlton
Title: Director



DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent

By:__________________________
Printed Name:________________
Title:_______________________


By:__________________________
Printed Name:________________
Title:_______________________
<PAGE>

ADMINISTRATIVE AGENT:

CITIBANK, N.A.,
as Administrative Agent

By:__________________________
Printed Name:________________
Title:_______________________



SYNDICATION AGENT:

SOCIETE GENERALE,
as Syndication Agent

By:__________________________
Printed Name:________________
Title:_______________________



DOCUMENTATION AGENT:

ABN AMRO BANK N.V.,
as Documentation Agent

By: /s/ DAVID CARRINGTON
   ------------------------------
Printed Name: David C. Carrington
Title: Group Vice President


By: /s/ SHILPA PARANDEKAR
    ---------------------------
Printed Name: Shilpa Parandekar
Title: AVP
<PAGE>

CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK,
as Co-Documentation Agent


By:  /s/ SUZANNE M. MACKAY
---------------------------------------
Printed Name:  Suzanne M. MacKay
Title:  Vice President


SYNDICATED LENDERS:

CITIBANK, N.A.


By:____________________________________

Printed Name:__________________________

Title:_________________________________


ABN AMRO BANK N.V.


By:____________________________________

Printed Name:__________________________

Title:_________________________________


By:____________________________________

Printed Name:__________________________

Title:_________________________________


SOCIETE GENERALE

By:____________________________________

Printed Name:__________________________

Title:_________________________________
<PAGE>

CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK,
as Co-Documentation Agent


By:____________________________________

Printed Name:__________________________

Title:_________________________________


SYNDICATED LENDERS:

CITIBANK, N.A.


By: [SIGNATURE ILLEGIBLE]
---------------------------------------
Printed Name: [ILLEGIBLE]
Title: Vice President


ABN AMRO BANK N.V.


By:____________________________________

Printed Name:__________________________

Title:_________________________________


By:____________________________________

Printed Name:__________________________

Title:_________________________________


SOCIETE GENERALE

By:____________________________________

Printed Name:__________________________

Title:_________________________________
<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK,
as Co-Documentation Agent

By:
   ---------------------------------
Printed Name:
             -----------------------
Title:
      ------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.

By:
   ---------------------------------
Printed Name:
             -----------------------
Title:
      ------------------------------


ABN AMRO BANK N.V.

By: /s/ DAVID C. CARRINGTON
   ---------------------------------
Printed Name: DAVID C. CARRINGTON
             -----------------------
Title:        GROUP VICE PRESIDENT
      ------------------------------


By: /s/ SHILPA PARANDEKAR
   ---------------------------------
Printed Name: SHILPA PARANDEKAR
             -----------------------
Title:        AVP
      ------------------------------


SOCIETE GENERALE

By:
   ---------------------------------
Printed Name:
             -----------------------
Title:
      ------------------------------


<PAGE>
CO-DOCUMENTATION AGENT:

FLEET NATIONAL BANK,
as Co-Documentation Agent

By:
   ---------------------------------
Printed Name:
             -----------------------
Title:
      ------------------------------


SYNDICATED LENDERS:

CITIBANK, N.A.

By:
   ---------------------------------
Printed Name:
             -----------------------
Title:
      ------------------------------


ABN AMRO BANK N.V.

By:
   ---------------------------------
Printed Name:
             -----------------------
Title:
      ------------------------------


By:
   ---------------------------------
Printed Name:
             -----------------------
Title:
      ------------------------------


SOCIETE GENERALE

By: /s/ RICHARD KNOWLTON
   ---------------------------------
Printed Name: Richard Knowlton
             -----------------------
Title:        Director
      ------------------------------
<PAGE>
FLEET NATIONAL BANK


By: /s/ SUZANNE M. MACKAY
   ---------------------------------------
Printed Name: Suzanne M. MacKay
             -----------------------------
Title: Vice President
      ------------------------------------


VENDOR WORKING CAPITAL LENDER AND
CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATED


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------

<PAGE>
FLEET NATIONAL BANK


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------


VENDOR WORKING CAPITAL LENDER AND
CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATED


By: /s/ [SIGNATURE ILLEGIBLE]
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------

<PAGE>

              FIFTH AMENDMENT AND WAIVER TO BRIDGE LOAN AGREEMENT

              This FIFTH AMENDMENT AND WAIVER TO BRIDGE LOAN AGREEMENT (this
"Amendment"), dated as of June 29, 2001, is entered into by PEGASO
COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a sociedad anonima de capital variable
organized under the laws of Mexico ("Borrower"), PEGASO TELECOMUNICACIONES, S.A.
DE C.V., a sociedad anonima de capital variable organized under the laws of
Mexico ("Pegaso"), PEGASO PCS, S.A. DE C.V., a sociedad anonima de capital
variable organized under the laws of Mexico ("Pegaso PCS"), PEGASO RECURSOS
HUMANOS, S.A. DE C.V., a sociedad anonima de capital variable organized under
the laws of Mexico ("Pegaso RH"), QUALCOMM INCORPORATED, a corporation organized
under the laws of Delaware ("QUALCOMM" and also the "Lender"), and CITIBANK,
N.A., a national banking association, in its capacity as administrative agent
for Lenders ("Administrative Agent"), under the Bridge Loan Agreement dated as
of May 27, 1999 (as modified, amended, supplemented or restated from time to
time, the "Bridge Loan Agreement"). Unless otherwise indicated, capitalized
terms used and not otherwise defined in this Amendment shall have the same
meanings in this Amendment as set forth in the Bridge Loan Agreement, and the
rules of interpretation set forth in Section 1.2 of the Bridge Loan Agreement
shall be applicable to this Amendment, mutatis mutandis, as if set forth in this
Amendment.

                                    RECITALS:

              A. The Bridge Loan Agreement has been amended pursuant to (i) the
First Amendment to the Bridge Loan Agreement, dated as of February 8, 2000, (ii)
the Second Amendment to the Bridge Loan Agreement, dated as of August 22, 2000,
(iii) the Third Amendment to the Bridge Loan Agreement, dated as of November 17,
2000, and (iv) the Fourth Amendment to the Bridge Loan Agreement, dated as of
March 22, 2001.

              B. Each Syndicated Lender assigned to QUALCOMM its respective
rights and obligations under the Bridge Loan Agreement pursuant to an Assignment
and Assumption Agreement, each dated as of May 25, 2001.

              C. Pursuant to the terms and conditions set forth in the letter
agreements, dated June 15, 2001 and June 22, 2001, respectively, among Borrower,
QUALCOMM and Administrative Agent, QUALCOMM waived Borrower's obligations to pay
the Obligations in full through the date hereof.

              D. The shareholders of Pegaso (the "Shareholders"), QUALCOMM,
Telefonica S.A. and Telefonica Moviles S.A. entered into a letter of intent,
dated June 21, 2001 (the "LOI"), in which Telefonica S.A. or an affiliate
thereof ("Telefonica") proposed to purchase certain of the Shareholders' and
QUALCOMM's interests in Pegaso pursuant to the terms and conditions set forth in
the LOI (the "Telefonica Transaction").


<PAGE>

              E. Borrower has requested that (i) the Bridge Loan Agreement be
amended to change the definition of "Scheduled Maturity Date" and "Total
Capitalized Interest Commitment", (ii) QUALCOMM waive the mandatory prepayment
requirement under Section 2.15 of the Bridge Loan Agreement with respect to the
up to $150,000,000 or more in cash equity (or subordinated convertible debt)
(the "Equity Contributions") to be contributed by the Shareholders pursuant to a
letter agreement, dated June 26, 2001 (as amended as of the date hereof, the
"Funding Agreement"), by and among Pegaso, the Shareholders, Sprint Corporation
and Leap Wireless International, Inc., and (iii) if necessary, QUALCOMM
conditionally waive Borrower's obligation to pay the Obligations in full on the
date hereof until the conditions precedent set forth in Section 2 of this
Amendment are satisfied to amend the Bridge Loan Agreement, each subject to the
conditions set forth in this Amendment.

              F. QUALCOMM and the Administrative Agent have agreed to amend the
Bridge Loan Agreement and QUALCOMM has agreed to grant the waivers requested
herein, each upon the terms and conditions set forth in this Amendment.

              NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth below and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

              Section 1. Amendment and Waiver.

              (a) Amendments. Subject to the satisfaction of the conditions
precedent set forth in Section 2 of this Amendment, the Bridge Loan Agreement is
amended as follows:

                     (i) Section 1.1 of the Bridge Loan Agreement is amended by
       substituting for the definition of "Scheduled Maturity Date", the
       following new definition of "Scheduled Maturity Date":

                     "Scheduled Maturity Date" shall mean the earlier of (1)
       September 19, 2001 or (2) if the LOI is terminated prior to September 19,
       2001, the date that is five (5) Business Days after the date the LOI is
       terminated; provided that if definitive agreements relating to the
       Telefonica Transaction on terms and conditions reasonably acceptable to
       QUALCOMM are entered into prior to September 19, 2001, "Scheduled
       Maturity Date" shall mean December 31, 2001, and provided further if the
       conditions precedent set forth in Section 6(b) of the LOI have been
       satisfied (other than the conditions in subsection 6(b)(iv) and (vi)
       which are to be satisfied on the financial closing of the Telefonica
       Transaction), "Scheduled Maturity Date" shall mean the earlier of (w) the
       date sixty (60) days after the financial closing of the Telefonica
       Transaction, (x) if the definitive agreements relating to the Telefonica
       Transaction are terminated prior to financial closing, the date five (5)
       Business Days after such termination, (y) the date sixty (60) days after
       the date of the annual shareholders meeting of Telefonica in 2002 or (z)
       August 29, 2001.


                                       2
<PAGE>

                     (ii) Section 1.1 of the Bridge Loan Agreement is amended by
       substituting for the definition of "Total Capitalized Interest
       Commitment", the following new definition of "Total Capitalized Interest
       Commitment":

                     "Total Capitalized Interest Commitment" shall mean Seventy
       Three Million Dollars ($73,000,000), as such amount may be increased
       pursuant to Section 2.12(d).

                     (iii) Schedule 2.2 of the Bridge Loan Agreement is hereby
       replaced in its entirety by the new Schedule 2.2 as set forth in Appendix
       1 to this Agreement.

                     (iv) Schedule 2.3 of the Bridge Loan Agreement is hereby
       replaced in its entirety by the new Schedule 2.3 as set forth in Appendix
       2 to this Agreement.

              (b) Waiver. Subject to the satisfaction of the conditions
precedent set forth in Section 2 of this Amendment, QUALCOMM:

                     (i) waives the requirement of Borrower under Section 2.15
              of the Bridge Loan Agreement to prepay the Obligations with the
              net proceeds from the Equity Contributions; and

                     (ii) waives Section 9.1(n) of the Bridge Loan Agreement in
              connection with the Telefonica Transaction:

                            (A) until December 31, 2001, if definitive
                     agreements relating to the Telefonica Transaction, on terms
                     and conditions reasonably acceptable to QUALCOMM, are
                     entered into prior to the Scheduled Maturity Date; and

                            (B) until the earlier of (1) the date sixty (60)
                     days after the financial closing of the Telefonica
                     Transaction, (2) if the definitive agreements relating to
                     the Telefonica Transaction are terminated prior to
                     financial closing, the date five (5) Business Days after
                     such termination, (3) the date sixty (60) days after the
                     date of the annual shareholders meeting of Telefonica in
                     2002 or (4) August 29, 2001, if the conditions precedent
                     set forth in Section 6(b) of the LOI are satisfied (other
                     than the conditions in subsections 6(b)(iv) and (vi) which
                     are to be satisfied at the financial closing of the
                     Telefonica Transaction).

              (c) Conditional Waiver. In the event that the Amendment Effective
Date (as defined below) is not the date hereof, QUALCOMM waives, and Borrower
agrees to the following conditions for QUALCOMM's grant of the waiver,
Borrower's obligation to pay QUALCOMM in full the Obligations on the date
hereof, provided that:

                     (i) The waiver granted by QUALCOMM under this Section 1(c)
       shall expire unless Borrower (x) shall have satisfied the conditions
       precedent set forth in


                                       3
<PAGE>

       Section 2 of this Amendment by July 6, 2001 and (y) shall have delivered
       the executed Waiver Letter by August 15, 2001;

                     (ii) The interest applicable to all Loans outstanding from
       June 29, 2001, until the Amendment Effective Date, shall be a fixed rate
       of twenty-two and one-half percent (22.5%) per annum; and

                     (iii) Borrower (x) shall have delivered the documents
       described in Section 2(a)(iii) through 2(a)(v) and Section 2(c) of this
       Amendment (each of which shall be dated as of the date hereof and shall
       be reasonably satisfactory in form and substance to QUALCOMM and its
       counsel) and (y) as necessary, shall continue to deliver such documents
       (each of which shall be reasonably satisfactory in form and substance to
       QUALCOMM and its counsel) on or prior to the dates requested by QUALCOMM.

              Section 2. Conditions to Effectiveness. The amendments set forth
in Section 1(a) of this Amendment and the waiver granted by QUALCOMM under
Section 1(b) of this Amendment shall become effective upon the satisfaction of
all of the following conditions precedent (the date of satisfaction of all such
conditions being referred to as the "Amendment Effective Date") and such
amendments and waiver shall continue to be effective provided that the
Shareholders make the Equity Contributions to Pegaso in the amounts, and on the
dates, set forth in Section 1(a) of the Funding Agreement:

                     (a) On or before the Amendment Effective Date, each member
       of the Borrower Group, as applicable, shall deliver to QUALCOMM, by
       facsimile, copies of (with sufficient originally executed copies for each
       Lender to be delivered by overnight courier service) the following
       described documents (each of which shall be reasonably satisfactory in
       form and substance to QUALCOMM and its counsel):

                            (i) this Amendment, duly executed and delivered by
              the parties;

                            (ii) a confirmation of the Leap Counter-Guaranty
              Agreement, duly executed and delivered by Leap Wireless Inc., as
              guarantor under the Leap Counter-Guaranty Agreement, in favor of
              QUALCOMM;

                            (iii) a confirmation of the Pegaso Guaranty
              Agreement (in Spanish and English), dated as of the Amendment
              Effective Date, duly executed and delivered by each of Pegaso,
              Pegaso PCS and Pegaso RH, as guarantors under the Pegaso Guaranty
              Agreement, in favor of Administrative Agent for the benefit of the
              Lenders;

                            (iv) a confirmation of the Burillo Counter-Guaranty
              Agreement (in Spanish and English), dated as of the Amendment
              Effective Date, duly executed and delivered by Alejandro Burillo
              Azcarraga, as guarantor under the Burillo Counter-Guaranty
              Agreement, in favor of QUALCOMM;


                                       4
<PAGE>

                            (v) the Pagares, dated as of the Amendment Effective
              Date, that evidence the outstanding Obligations owed by Borrower
              to QUALCOMM as of the Amendment Effective Date;

                            (vi) evidence that the Shareholders have contributed
              at least $50,000,000 to Borrower in cash equity (or in
              subordinated convertible debt on the terms set forth in the
              Funding Agreement or on terms reasonably satisfactory to
              QUALCOMM);

                            (vii) the Shareholders' firm commitments to
              contribute an additional $50,000,000 to Borrower in cash equity
              (or in subordinated convertible debt on the terms set forth in the
              Funding Agreement or on terms reasonably satisfactory to
              QUALCOMM), remain in full force and effect;

                            (viii) an executed (x) waiver letter in the form of
              Exhibit A (the "Waiver Letter"), from the QUALCOMM Administrative
              Agent (as defined in the Common Agreement) and the Borrower Group
              with respect to (A) the waiver of any financial covenant default
              during the period from the date hereof through the Scheduled
              Maturity Date and (B) the waiver of any other default (if any) as
              reasonably requested by Borrower and (y) letter signed by Alcatel,
              addressed to the Alcatel Lenders (as defined in the Common
              Agreement) instructing such Alcatel Lenders to agree to the Waiver
              Letter and to forward correspondence to the Alcatel Administrative
              Agent (as defined in the Common Agreement) instructing same to
              execute the Waiver Letter; and

                            (ix) such other documents, instruments, approvals or
              opinions as QUALCOMM may reasonably request;

                     (b) Administrative Agent shall have received all fees and
       other amounts due and payable on or prior to the Amendment Effective
       Date, including, to the extent invoiced, reimbursement or payment of all
       out-of-pocket expenses required to be reimbursed or paid by Borrower
       under or in connection with this Amendment;

                     (c) On or before the Amendment Effective Date, all
       corporate, partnership and other proceedings taken by each member of the
       Borrower Group or to be taken in connection with the transactions
       contemplated by this Amendment, and all documents incidental to such
       transactions, shall be reasonably satisfactory in form and substance to
       the Administrative Agent and its counsel, and the Administrative Agent
       and such counsel shall have received all such counterpart originals or
       certified copies of such documents, opinions, certificates, and evidence
       as they may reasonably request;

                     (d) The representations and warranties set forth in Section
       3 of this Amendment shall be true and correct as of the Amendment
       Effective Date; and

                     (e) All approvals, authorizations, filings or Permits
       necessary for the execution, delivery and performance of this Amendment
       shall have been made, taken or


                                       5
<PAGE>

       obtained from or with any Governmental Authority, and no order, statutory
       rule, regulation, executive order, decree, judgment or injunction shall
       have been enacted, entered, issued, promulgated or enforced by any
       Governmental Authority which prohibits or restricts the transactions
       contemplated by this Amendment, nor shall any action have been commenced
       or threatened seeking any injunction or any restraining or other order to
       prohibit, restrain, invalidate or set aside the transactions contemplated
       by this Amendment.

              Section 3. Borrower Group Representations and Warranties. In order
to induce the Lenders to enter into this Amendment and to amend the Bridge Loan
Agreement in the manner provided in this Amendment, each member of the Borrower
Group represents and warrants, as to itself, to each Lender and the
Administrative Agent as follows:

                     (a) Corporate Power and Authority. Such member of the
       Borrower Group has all requisite corporate power and authority to enter
       into this Amendment and to carry out the transactions contemplated by,
       and perform its obligations under, the Bridge Loan Agreement as amended
       by this Amendment (the "Amended Agreement").

                     (b) Authorization of Agreements. The execution and delivery
       of this Amendment and the performance of the Amended Agreement have been
       duly authorized by all necessary corporate and, if required, stockholder
       action of the Borrower Group, and this Amendment has been duly executed
       and delivered by the Borrower Group.

                     (c) Enforceability. The Amended Agreement constitutes the
       legal, valid and binding obligation of each member of the Borrower Group,
       enforceable against such member of the Borrower Group in accordance with
       its terms, except as may be limited by bankruptcy, insolvency or other
       similar laws affecting the enforcement of creditors' rights in general.
       The enforceability of the Borrower Group's obligations thereunder is
       subject to general principles of equity (regardless of whether such
       enforceability is considered in a proceeding in equity or at law).

                     (d) No Conflict. The execution and delivery by each member
       of the Borrower Group of this Amendment and the performance by such
       member of the Borrower Group of the Amended Agreement do not and will not
       (i) contravene, in any material respect, any provision of any law,
       regulation, decree, ruling, judgment or order that is (A) applicable to
       such member of the Borrower Group or any of its properties or other
       assets and (B) in effect when this representation and warranty is made,
       (ii) result in a breach of or constitute a default under its charter
       documents or any other material agreement, indenture, lease or instrument
       binding upon such member of the Borrower Group or any of its properties
       or other assets and (iii) result in the creation or imposition of any
       Liens on any property (other than Permitted Liens) of the Borrower Group.

                     (e) Permits. The execution, delivery and performance by
       each member of the Borrower Group of this Amendment do not and will not
       require any Permit and do not result in the loss or impairment of any
       Permit previously obtained in


                                       6
<PAGE>

       connection with the execution, delivery and performance of the Loan
       Documents or the acquisition, construction, ownership, maintenance or
       operation of the System.

                     (f) Representations and Warranties in the Bridge Loan
       Agreement; Defaults. Each member of the Borrower Group confirms that as
       of the Amendment Effective Date the representations and warranties
       contained in Section 6 of the Bridge Loan Agreement are (before and after
       giving effect to this Amendment) true and correct and that no Default or
       Event of Default has occurred.

              Section 4. Miscellaneous.

              (a) Reference to and Effect on the Bridge Loan Agreement and the
other Loan Documents.

                     (i) The Bridge Loan Agreement and the other Loan Documents
       as specifically amended by this Amendment shall remain in full force and
       effect and are hereby ratified and confirmed.

                     (ii) The execution, delivery and performance of this
       Amendment shall not, except as expressly provided in this Amendment,
       constitute a waiver of any provision of, or operate as a waiver of any
       right, power or remedy of QUALCOMM and the Administrative Agent under,
       the Bridge Loan Agreement or any of the other Loan Documents.
       Furthermore, Borrower acknowledges that QUALCOMM's conditional waiver set
       forth in Section 1(c) of this Amendment is subject to Section 11.2(a) of
       the Bridge Loan Agreement.

                     (iii) Upon the conditions precedent set forth in this
       Amendment being satisfied, this Amendment shall be construed as one with
       the Bridge Loan Agreement, and the Bridge Loan Agreement shall, where the
       context requires, be read and construed throughout so as to incorporate
       this Amendment.

              (b) Fees and Expenses. Borrower acknowledges that all reasonable
costs, fees and expenses as described in Section 11.3(a) of the Bridge Loan
Agreement incurred by QUALCOMM and the Administrative Agent and in each case its
counsel, with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Borrower.

              (c) Execution in Counterparts; Effectiveness. This Amendment may
be executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts taken together shall constitute
but one and the same instrument.

              (d) Headings. Section and subsection headings in this Amendment
are included for convenience of reference only and shall not constitute a part
of this Amendment for any other purpose or be given any substantive effect.


                                       7
<PAGE>

              (e) Severability. If any provision contained in or obligation
under this Amendment shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

              (f) GOVERNING LAW; JURISDICTION. THIS AMENDMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN
SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS (INCLUDING MEXICO) BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AMENDMENT SHALL AFFECT ANY RIGHT THAT
ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AMENDMENT AGAINST BORROWER OR ITS PROPERTIES IN THE
COURTS OF ANY JURISDICTION. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.


                                       8
<PAGE>

              IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first above written.

THE BORROWER GROUP:

PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.


By:
   ----------------------------------------
Printed Name:
             ------------------------------
Title:
      -------------------------------------



PEGASO TELECOMUNICACIONES, S.A. DE C.V.


By:
   ----------------------------------------
Printed Name:
             ------------------------------
Title:
      -------------------------------------



PEGASO PCS, S.A. DE C.V.


By:
   ----------------------------------------
Printed Name:
             ------------------------------
Title:
      -------------------------------------



PEGASO RECURSOS HUMANOS, S.A. DE C.V.


By:
   ----------------------------------------
Printed Name:
             ------------------------------
Title:
      -------------------------------------


<PAGE>

VENDOR WORKING CAPITAL LENDER AND
CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATED


By:
   ----------------------------------------
Printed Name:
             ------------------------------
Title:
      -------------------------------------


<PAGE>

ADMINISTRATIVE AGENT:

CITIBANK, N. A.,
as Administrative Agent


By:
   ----------------------------------------
Printed Name:
             ------------------------------
Title:
      -------------------------------------


<PAGE>

                                   Appendix 1

                                                                    Schedule 2.2
                                                                       to Bridge
                                                                  Loan Agreement

                       VENDOR WORKING CAPITAL COMMITMENTS

VENDOR WORKING CAPITAL LENDER                  COMMITMENT

QUALCOMM Incorporated                        $360,000,000


<PAGE>

                                   Appendix 2

                                                                    Schedule 2.3
                                                                       to Bridge
                                                                  Loan Agreement

                        CAPITALIZED INTEREST COMMITMENTS

CAPITALIZED INTEREST LENDER                    COMMITMENT

QUALCOMM Incorporated                         $73,000,000


<PAGE>

                                    EXHIBIT A

                              Form of Waiver Letter
                                 (see attached)
<PAGE>

                                                                  EXECUTION COPY

              SIXTH AMENDMENT AND WAIVER TO BRIDGE LOAN AGREEMENT

              This SIXTH AMENDMENT AND WAIVER TO BRIDGE LOAN AGREEMENT (this
"Amendment"), dated as of October 10, 2001, is entered into by PEGASO
COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a sociedad anonima de capital variable
organized under the laws of Mexico ("Borrower"), PEGASO TELECOMUNICACIONES, S.A.
DE C.V., a sociedad anonima de capital variable organized under the laws of
Mexico ("Pegaso"), PEGASO PCS, S.A. DE C.V., a sociedad anonima de capital
variable organized under the laws of Mexico ("Pegaso PCS"), PEGASO RECURSOS
HUMANOS, S.A. DE C.V., a sociedad anonima de capital variable organized under
the laws of Mexico ("Pegaso RH"), QUALCOMM INCORPORATED, a corporation organized
under the laws of Delaware ("QUALCOMM" and also the "Lender"), and CITIBANK,
N.A., a national banking association, in its capacity as administrative agent
for Lenders ("Administrative Agent"), under the Bridge Loan Agreement dated as
of May 27, 1999 (as modified, amended, supplemented or restated from time to
time, the "Bridge Loan Agreement"). Unless otherwise indicated, capitalized
terms used and not otherwise defined in this Amendment shall have the same
meanings in this Amendment as set forth in the Bridge Loan Agreement, and the
rules of interpretation set forth in Section 1.2 of the Bridge Loan Agreement
shall be applicable to this Amendment, mutatis mutandis, as if set forth in this
Amendment.

                                    RECITALS:

              A. The Bridge Loan Agreement has been amended pursuant to (i) the
First Amendment to the Bridge Loan Agreement, dated as of February 8, 2000, (ii)
the Second Amendment to the Bridge Loan Agreement, dated as of August 22, 2000,
(iii) the Third Amendment to the Bridge Loan Agreement, dated as of November 17,
2000, (iv) the Fourth Amendment to the Bridge Loan Agreement, dated as of March
22, 2001 and (v) the Fifth Amendment and Waiver to Bridge Loan Agreement, dated
as of June 29, 2001.

              B. QUALCOMM and the members of the Borrower Group entered into
that certain letter agreement, dated June 22, 2001 (the "June 22, 2001 Letter
Agreement"), pursuant to which the parties agreed, inter alia, to set the
interest rate applicable to all Loans then outstanding at twenty percent (20%)
and to capitalize the outstanding interest on all Loans on the last Business Day
of each month.

              C. The shareholders of Pegaso (the "Shareholders"), Telefonica
S.A. and Telefonica Moviles S.A. have entered negotiations regarding the
possible acquisition by Telefonica S.A. or an affiliate thereof ("Telefonica")
of a majority of the outstanding capital stock of Pegaso or substantially all of
the assets of Pegaso, a possible business combination involving Telefonica and
Pegaso or a possible strategic investment by Telefonica in Pegaso (any of the
foregoing, the "Telefonica Transaction").

              D. The Shareholders of Pegaso, Pegaso, Sprint Corporation and Leap
Wireless International, Inc. have entered into a Funding Agreement, dated as of
June 26, 2001 (as


<PAGE>

amended or modified from time to time, the "Funding Agreement"), pursuant to
which certain of the Shareholders are obligated to subscribe to and purchase
notes from Pegaso in a minimum amount of $100,000,000 and up to $150,00,000 in
the form of subordinated convertible debt (the "Shareholder Contributions")
pursuant to the terms and conditions of the Funding Agreement.

              E. Borrower has requested that (i) the Bridge Loan Agreement be
amended to change the definition of "Scheduled Maturity Date", (ii) QUALCOMM
lower the interest rate applicable on all Loans outstanding, (iii) QUALCOMM
waive Section 9.1(n) of the Bridge Loan Agreement in connection with the
Telefonica Transaction and (iv) QUALCOMM waive the mandatory prepayment
requirement under Section 2.15 of the Bridge Loan Agreement with respect to the
Shareholder Contributions.

              F. QUALCOMM and the Administrative Agent have agreed to amend the
Bridge Loan Agreement and QUALCOMM has agreed to (i) lower the interest rate
applicable on all Loans and (ii) grant the waivers requested herein, each upon
the terms and conditions set forth in this Amendment.

              NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth below and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

              Section 1. Amendment, Agreement, Waiver and Acknowledgement.

              (a) Amendment. Subject to the satisfaction of the conditions
precedent set forth in Section 2 of this Amendment, Section 1.1 of the Bridge
Loan Agreement is amended as follows:

                     (i) Section 1.1 of the Bridge Loan Agreement is amended by
substituting for the definition of "Capitalized Interest Commitment", the
following new definition of "Capitalized Interest Commitment";

                     "Capitalized Interest Commitment" shall mean, with respect
to each Capitalized Interest Lender, the amount set forth on Schedule 2.3 as
such Lender's "Capitalized Interest Commitment," as such amount shall be
increased, as necessary, by the amount, and without any action on the part of
any party, required to fund a Deemed Capitalized Interest Loan Request.

                     (ii) Section 1.1 of the Bridge Loan Agreement is amended by
substituting for the definition of "Scheduled Maturity Date", the following new
definition of "Scheduled Maturity Date";

                     "Scheduled Maturity Date" shall mean the earlier of (1)
August 29, 2002 or (2) if definitive agreements relating to the Telefonica
Transaction are terminated prior to financial closing of the Telefonica
Transaction, the date five (5) Business Days after such termination.


                                       2
<PAGE>

              (b) Agreement. The interest rate applicable to all Loans
outstanding as of, and after, September 18, 2001 shall be nineteen percent
(19%). Interest outstanding on all Loans shall continue to be capitalized on the
last Business Day of each month pursuant to the June 22, 2001 Letter Agreement.

              (c) Waiver and Acknowledgement. Subject to the satisfaction of the
conditions precedent set forth in Section 2 of this Amendment, QUALCOMM:

                     (i) waives the requirement of Borrower under Section 2.15
of the Bridge Loan Agreement to prepay the Obligations with the net proceeds
from the Shareholder Contributions;

                     (ii) if definitive agreements relating to the Telefonica
Transaction, on terms and conditions reasonably acceptable to QUALCOMM, are
entered into on or prior to October 31, 2001, waives Section 9.1(n) of the
Bridge Loan Agreement in connection with the Telefonica Transaction until the
earlier of (1) the date sixty (60) days after the financial closing of the
Telefonica Transaction, (2) if the definitive agreements relating to the
Telefonica Transaction are terminated prior to financial closing, the date five
(5) Business Days after such termination, (3) the date sixty (60) days after the
date of the annual shareholders meeting of Telefonica in 2002 or (4) August 29,
2002; and

                     (iii) acknowledges that from and after the Closing Date, as
a result of the amendment to the definition of Scheduled Maturity Date pursuant
to this Amendment, the Event of Default under Section 9.1(a) of the Bridge Loan
Agreement that existed prior to the Closing Date shall no longer exist.

              Section 2. Conditions to Effectiveness. Subject to the
satisfaction of all of the following conditions precedent (the date of
satisfaction of all such conditions being referred to as the "Closing Date"),
the amendment set forth in Section 1(a) of this Amendment, the agreement set
forth in Section 1(b) of this Amendment and the waivers and acknowledgement
granted by QUALCOMM under Section 1(c) of this Amendment shall be effective as
of the Closing Date:

              (a) Each member of the Borrower Group, as applicable, shall
deliver or shall cause to be delivered to QUALCOMM, by facsimile, copies of
(with sufficient originally executed copies for each Lender to be delivered by
overnight courier service) the following described documents (each of which
shall be reasonably satisfactory in form and substance to QUALCOMM and its
counsel):

                     (i) this Amendment, duly executed and delivered by the
parties;

                     (ii) a confirmation of the Counter-Guaranty, dated as of
the date hereof, duly executed and delivered by Leap Wireless Inc., as
Counter-Guarantor under such Counter-Guaranty, in favor of QUALCOMM;

                     (iii) a confirmation of the Pegaso Guaranty Agreement (in
Spanish and English), dated as of the date hereof, duly executed and delivered
by each of Pegaso, Pegaso PCS


                                       3
<PAGE>

and Pegaso RH, as guarantors under the Pegaso Guaranty Agreement, in favor of
Administrative Agent for the benefit of the Lenders;

                     (iv) a Guaranty Agreement (in Spanish and English), dated
as of the date hereof, duly executed and delivered by each of Pegaso Finanzas,
S.A. de C.V. and Pegaso Finco I, S.A. de C.V., as guarantors, in favor of
Administrative Agent for the benefit of the Lenders, in form and substance
satisfactory to QUALCOMM and the Administrative Agent.

                     (v) a confirmation of the Counter-Guaranty (in Spanish and
English), dated as of the date hereof, duly executed and delivered by Alejandro
Burillo Azcarraga, as Counter-Guarantor under such Counter-Guaranty, in favor of
QUALCOMM;

                     (vi) the Pagare, dated as of the date hereof, that
evidences the outstanding Obligations owed by Borrower to QUALCOMM as of the
date hereof;

                     (vii) an executed letter in the form of Exhibit A (the
"Notice Letter"), among the Agents (as defined in the Common Agreement) and the
Borrower Group with respect to (A) the amendments contemplated in the Common
Agreement, (B) the waiver of any financial covenant default during the period
from the date hereof through the Scheduled Maturity Date and (C) the waiver of
any other default (if any) as reasonably requested by Borrower;

                     (viii) security documents as set forth in Exhibit B,
evidencing Liens in certain of the Collateral (as defined in the Common
Agreement);

                     (ix) a legal opinion from each of (a) Borrower's Mexican
corporate counsel, and (b) Borrower's Mexican litigation counsel, in form and
substance satisfactory to QUALCOMM.

                     (x) such other documents, instruments, approvals or
opinions as QUALCOMM may reasonably request;

              (b) Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Closing Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by Borrower under or in connection with this Amendment;

              (c) On or before the Closing Date, all corporate, partnership and
other proceedings taken by each member of the Borrower Group or to be taken in
connection with the transactions contemplated by this Amendment, and all
documents incidental to such transactions, shall be reasonably satisfactory in
form and substance to the Administrative Agent and its counsel, and the
Administrative Agent and such counsel shall have received all such counterpart
originals or certified copies of such documents, opinions, certificates, and
evidence as they may reasonably request;

              (d) The representations and warranties set forth in Section 3 of
this Amendment shall be true and correct as of the Closing Date; and


                                       4
<PAGE>

              (e) All approvals, authorizations, filings or Permits necessary
for the execution, delivery and performance of this Amendment shall have been
made, taken or obtained from or with any Governmental Authority, and no order,
statutory rule, regulation, executive order, decree, judgment or injunction
shall have been enacted, entered, issued, promulgated or enforced by any
Governmental Authority which prohibits or restricts the transactions
contemplated by this Amendment, nor shall any action have been commenced or
threatened seeking any injunction or any restraining or other order to prohibit,
restrain, invalidate or set aside the transactions contemplated by this
Amendment.

              Section 3. Borrower Group Representations and Warranties. In order
to induce the Lenders to enter into this Amendment and to amend the Bridge Loan
Agreement in the manner provided in this Amendment, each member of the Borrower
Group represents and warrants, as to itself, as applicable, to each Lender and
the Administrative Agent as follows:

              (a) Corporate Power and Authority. Such member of the Borrower
Group has all requisite corporate power and authority to enter into this
Amendment and to carry out the transactions contemplated by, and perform its
obligations under, the Bridge Loan Agreement as amended by this Amendment (the
"Amended Agreement").

              (b) Authorization of Agreements. The execution and delivery of
this Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate and, if required, stockholder action of
the Borrower Group, and this Amendment has been duly executed and delivered by
the Borrower Group.

              (c) Enforceability. The Amended Agreement constitutes the legal,
valid and binding obligation of each member of the Borrower Group, enforceable
against such member of the Borrower Group in accordance with its terms, except
as may be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general. The enforceability of the Borrower
Group's obligations thereunder is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

              (d) No Conflict. The execution and delivery by each member of the
Borrower Group of this Amendment and the performance by such member of the
Borrower Group of the Amended Agreement do not and will not (i) contravene, in
any material respect, any provision of any law, regulation, decree, ruling,
judgment or order that is (A) applicable to such member of the Borrower Group or
any of its properties or other assets and (B) in effect when this representation
and warranty is made, (ii) result in a breach of or constitute a default under
its charter documents or any other material agreement, indenture, lease or
instrument binding upon such member of the Borrower Group or any of its
properties or other assets and (iii) result in the creation or imposition of any
Liens on any property (other than Permitted Liens) of the Borrower Group.

              (e) Permits. The execution, delivery and performance by each
member of the Borrower Group of this Amendment do not and will not require any
Permit and do not result in the loss or impairment of any Permit previously
obtained in connection with the execution,


                                       5
<PAGE>

delivery and performance of the Loan Documents or the acquisition, construction,
ownership, maintenance or operation of the System.

              (f) Representations and Warranties in the Bridge Loan Agreement;
Defaults. The representations and warranties contained in Section 6 of the
Bridge Loan Agreement are (before and after giving effect to this Amendment)
true and correct and that, after giving effect to this Amendment no Default or
Event of Default has occurred and is continuing.

              (g) Shareholder Contributions. Shareholder Contributions have been
made pursuant to the Funding Agreement in an amount equal to or greater than
$100,000,000 and such amount has been contributed by Pegaso to Borrower as
equity capital contributions.

              Section 4. Conditions Subsequent and Events of Default. The
failure of any of the following conditions subsequent to occur by the date
applicable to such condition subsequent, shall constitute an Event of Default
under the Bridge Loan Agreement and upon the occurrence of such Event of Default
the Lenders shall be entitled to exercise the remedies as set forth in Section
9.2 of the Bridge Loan Agreement and the security documents set forth in Exhibit
B:

              (a) Execution and Delivery of Definitive Agreements. On or before
October 31, 2001, definitive agreements relating to the Telefonica Transaction
(the "Definitive Agreements") shall have been delivered in form and substance
reasonably satisfactory to QUALCOMM.

              (b) Satisfaction of All Conditions Relating to the Telefonica
Transaction. On or before the earlier to occur of (i) January 31, 2002 and (ii)
the date ninety (90) days after the execution of the Definitive Agreements, all
of the conditions required for the financial closing under the Definitive
Agreements shall have been satisfied.

              Section 5. Miscellaneous.

              (a) Reference to and Effect on the Bridge Loan Agreement and the
other Loan Documents.

                     (i) The Bridge Loan Agreement and the other Loan Documents
as specifically amended by this Amendment shall remain in full force and effect
and are hereby ratified and confirmed.

                     (ii) The execution, delivery and performance of this
Amendment shall not, except as expressly provided in this Amendment, constitute
a waiver of any provision of, or operate as a waiver of any right, power or
remedy of QUALCOMM and the Administrative Agent under, the Bridge Loan Agreement
or any of the other Loan Documents.

                     (iii) Upon the conditions precedent set forth in this
Amendment being satisfied, this Amendment shall be construed as one with the
Bridge Loan Agreement, and the


                                       6
<PAGE>

Bridge Loan Agreement shall, where the context requires, be read and construed
throughout so as to incorporate this Amendment.

              (b) Fees and Expenses. Borrower acknowledges that all reasonable
costs, fees and expenses as described in Section 11.3(a) of the Bridge Loan
Agreement incurred by QUALCOMM and the Administrative Agent and in each case its
counsel, with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Borrower.

              (c) Execution in Counterparts; Effectiveness. This Amendment may
be executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts taken together shall constitute
but one and the same instrument.

              (d) Headings. Section and subsection headings in this Amendment
are included for convenience of reference only and shall not constitute a part
of this Amendment for any other purpose or be given any substantive effect.

              (e) Severability. If any provision contained in or obligation
under this Amendment shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

              (f) GOVERNING LAW; JURISDICTION. THIS AMENDMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN
SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS (INCLUDING MEXICO) BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AMENDMENT SHALL AFFECT ANY RIGHT THAT
ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AMENDMENT AGAINST BORROWER OR ITS PROPERTIES IN THE
COURTS OF ANY JURISDICTION. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY


                                       7
<PAGE>

LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.


                                       8
<PAGE>

              IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first above written.

THE BORROWER GROUP:

PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------



PEGASO TELECOMUNICACIONES, S.A. DE C.V.


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------



PEGASO PCS, S.A. DE C.V.


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------



PEGASO RECURSOS HUMANOS, S.A. DE C.V.


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------


<PAGE>

VENDOR WORKING CAPITAL LENDER AND
CAPITALIZED INTEREST LENDER:

QUALCOMM INCORPORATED


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------


<PAGE>

ADMINISTRATIVE AGENT:

CITIBANK, N. A.,
as Administrative Agent


By:
   ---------------------------------------
Printed Name:
             -----------------------------
Title:
      ------------------------------------


<PAGE>

                                    EXHIBIT A

                              Form of Notice Letter
                                 (see attached)


<PAGE>

                                    EXHIBIT B

                               Security Documents

1. Second Priority Voluntary Mortgage granted by Borrower in favor of QUALCOMM.

2. Second Priority Pledge Agreement upon the Fideicomitente rights of Borrower
pursuant to the Vendor Guaranty Trust Agreement (as defined in the Common
Agreement).

3. Second Priority Pledge upon the PCS/Recursos Pledge Agreement (as defined in
the Common Agreement).

4. Second Priority Pledge upon the Sistemas Pledge Agreement (as defined in the
Common Agreement).

5. Second Priority Pledge upon the shares of Pegaso Finanzas, S.A. de C.V.

6. Second Priority Pledge upon the shares of Pegaso Finco I, S.A. de C.V.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.45
<SEQUENCE>4
<FILENAME>a76829ex10-45.txt
<DESCRIPTION>EXHIBIT 10.45
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.45

                                COMMON AGREEMENT

                                      AMONG

                 PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.

                            PEGASO PCS, S.A. DE C.V.

                     PEGASO TELECOMUNICACIONES, S.A. DE C.V.

                      PEGASO RECURSOS HUMANOS. S.A. DE C.V.

                                       AND

                CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK

                             AS COLLATERAL AGENT AND

                                 CITIBANK, N.A.

                             AS INTERCREDITOR AGENT

                                       AND

                           CITIBANK INTERNATIONAL PLC,

                         AS ALCATEL ADMINISTRATIVE AGENT

                                       AND

                               ABN AMRO BANK N.V.,

                        AS QUALCOMM ADMINISTRATIVE AGENT

                          DATED AS OF DECEMBER 15, 1998

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>                                                                                     <C>
ARTICLE 1 DEFINITIONS AND PRINCIPLES OF CONSTRUCTION...................................     2
        1.01  Definitions..............................................................     2
        1.02  Principles of Construction...............................................     2
        1.03  Conflicts................................................................     3

ARTICLE 2 CREDIT FACILITIES............................................................     3
        2.01  Indebtedness Subject to this Agreement...................................     3
        2.02  Senior Indebtedness Pari Passu...........................................     3
        2.03  Pro Rata Payment of Obligations..........................................     4
        2.04  Additional Senior Indebtedness...........................................     4
        2.05  Prepayments..............................................................     6
        2.06  Payments.................................................................     7
        2.07  Swap Agreements as Senior Indebtedness...................................     7

ARTICLE 3 CONDITIONS PRECEDENT.........................................................     8
        3.01  Conditions Precedent to Initial Disbursement.............................     8
        3.02  Conditions Precedent to All Disbursements................................    15
        3.03  No Waiver................................................................    16
        3.04  Delivery of Certificates, Etc............................................    16
        3.05  Beneficiaries of Conditions to Disbursements.............................    16

ARTICLE 4 REPRESENTATIONS AND WARRANTIES...............................................    17
        4.01  Corporate Status.........................................................    17
        4.02  Corporate Power and Authority............................................    17
        4.03  Valid and Binding Obligation.............................................    17
        4.04  No Violation.............................................................    18
        4.05  Permits..................................................................    18
        4.06  Financial Statements; Financial Condition; Undisclosed Liabilities; Etc..    19
        4.07  Litigation; Labor Disputes...............................................    19
        4.08  Tax Returns and Payments.................................................    20
        4.09  Capitalization...........................................................    20
        4.10  Subsidiaries, Mortgage and Minimum Assets................................    21
        4.11  Compliance with Applicable Law...........................................    22
        4.12  Property Rights..........................................................    22
        4.13  Single-Purpose...........................................................    22
        4.14  Fees and Enforcement.....................................................    22
        4.15  Foreign Exchange Approvals...............................................    23
        4.16  Liens....................................................................    23
        4.17  Title; Security Documents................................................    23
        4.18  Transaction Documents....................................................    24
        4.19  Certain Ancillary Services...............................................    24
        4.20  Environmental Matters....................................................    24
        4.21  Investment Company Act...................................................    24
</TABLE>


                                       i
<PAGE>

<TABLE>
<S>                                                                                     <C>
        4.22  True and Complete Disclosure.............................................    25
        4.23  No Additional Fees.......................................................    25
        4.24  Use of Proceeds..........................................................    25
        4.25  Insurance................................................................    26
        4.26  Private Activities; Immunity.............................................    26
        4.27  No Subordination.........................................................    26
        4.28  Licenses.................................................................    26
        4.29  Operator Agreements......................................................    27
        4.30  Employee Benefit Plans; Employment Matters...............................    27
        4.31  Year 2000................................................................    28
        4.32  Indebtedness.............................................................    28

ARTICLE 5 AFFIRMATIVE COVENANTS........................................................    28
        5.01  Information Covenants....................................................    28
        5.02  Books, Records and Inspections; Accounting and Audit Matters.............    32
        5.03  Maintenance of Property and Insurance....................................    33
        5.04  Corporate Franchises and System Permits; Enforcement of Transaction
               Documents...............................................................    33
        5.05  Compliance with Applicable Law...........................................    34
        5.06  Use of Proceeds..........................................................    34
        5.07  Taxes; Proper Legal Form.................................................    34
        5.08  Credit Agreements........................................................    34
        5.09  Additional Documents; Filings and Recordings.............................    34
        5.10  Condemnation Event; Casualty Event.......................................    35
        5.11  Application of Equity Contributions......................................    36
        5.12  Translations.............................................................    37
        5.13  New Subsidiaries.........................................................    37
        5.14  Other Properties Subject to Liens; After-Acquired Property...............    37
        5.15  Equity Commitments.......................................................    38
        5.16  Year 2000 Compliance.....................................................    38
        5.17  Operator Agreements......................................................    39
        5.18  Payment of Certain Fees..................................................    39
        5.19  Consents, Approvals......................................................    39
        5.20  Maintenance of Licenses..................................................    40
        5.21  Site Acquisition.........................................................    40
        5.22  Minimum Assets...........................................................    41

ARTICLE 6 NEGATIVE COVENANTS...........................................................    41
        6.01  Liens....................................................................    41
        6.02  Consolidation; Merger; Sale of Assets....................................    43
        6.03  Restricted Payments......................................................    44
        6.04  Indebtedness.............................................................    46
        6.05  Subsidiaries.............................................................    47
        6.06  Advances, Investments and Loans..........................................    48
        6.07  Affiliate Transactions...................................................    48
        6.08  No Other Business........................................................    49
        6.09  EBITDA Test..............................................................    49
        6.10  Leverage Ratio...........................................................    49
</TABLE>


                                       ii
<PAGE>

<TABLE>
<S>                                                                                     <C>
        6.11  Limitation on Issuance of Stock..........................................    50
        6.12  Prepayments..............................................................    50
        6.13  Modifications of Certain Documents and Agreements........................    50
        6.14  Abandonment of The System................................................    50
        6.15  Hazardous Substances.....................................................    50
        6.16  Immunity.................................................................    50
        6.17  Regulations..............................................................    51
        6.18  Investment Company Act...................................................    51
        6.19  Disputes.................................................................    51

ARTICLE 7 EVENTS OF DEFAULT............................................................    51
        7.01  Payments.................................................................    51
        7.02  Representations..........................................................    51
        7.03  Covenants................................................................    52
        7.04  Default Under Other Agreements...........................................    52
        7.05  Involuntary Bankruptcy, Etc..............................................    52
        7.06  Voluntary Bankruptcy, Etc................................................    53
        7.07  Analogous Proceedings....................................................    53
        7.08  Attachment of Collateral.................................................    53
        7.09  Financing Agreements.....................................................    53
        7.10  Expropriation............................................................    54
        7.11  Monetary Restrictions....................................................    54
        7.12  Judgments................................................................    54
        7.13  Licenses and Permits.....................................................    54
        7.14  Change of Control........................................................    54
        7.15  Other Senior Indebtedness................................................    54
        7.16  Mortgage.................................................................    55
        7.17  Remedies.................................................................    55

ARTICLE 8 MISCELLANEOUS................................................................    56
        8.01  Payment of Expenses, Etc.................................................    56
        8.02  Right of Setoff..........................................................    57
        8.03  Notices..................................................................    58
        8.04  Benefit of Agreement.....................................................    58
        8.05  No Waiver; Remedies Cumulative...........................................    58
        8.06  Severability.............................................................    59
        8.07  Counterparts.............................................................    59
        8.08  Effectiveness............................................................    59
        8.09  Survival.................................................................    59
        8.10  Currency of Payment......................................................    59
        8.11  Judgment Currency........................................................    60
        8.12  Evidence of Debt.........................................................    60
        8.13  English Language.........................................................    61
        8.14  Entire Agreement.........................................................    61
        8.15  Waiver of Sovereign Immunity.............................................    61
        8.16  Reinstatement............................................................    61
        8.17  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL...    62
</TABLE>


                                      iii
<PAGE>

<TABLE>
<S>                                                                                     <C>
        8.18  Calculations; Computations..............................................    63
        8.19  No Third-Party Beneficiaries............................................    63
        8.20  Amendments..............................................................    63
        8.21  Confidentiality.........................................................    64
</TABLE>


                                       iv
<PAGE>

        THIS COMMON AGREEMENT, dated as of December 15, 1998 (this "Agreement"),
among PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico (the "Company" or the
"Borrower"), PEGASO TELECOMUNICACIONES, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico ("Holdings"), PEGASO PCS,
S.A. DE C.V., a sociedad anonima de capital variable organized under the laws of
Mexico ("Pegaso PCS"), PEGASO RECURSOS HUMANOS, S.A. DE C.V., a sociedad anonima
de capital variable organized under the laws of Mexico ("Personnel Co."),
CITIBANK, NA., a national banking organization under the laws of the United
States of America, acting through its branch located in New York, New York, in
its capacity as Intercreditor Agent (the "Intercreditor Agent"), on behalf of
the Senior Lenders, CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, a national
banking organization under the laws of the United Mexican States, in its
capacity as Collateral Agent (the "Collateral Agent"), CITIBANK INTERNATIONAL
PLC, a corporation organized under the laws of England, in its capacity as
Alcatel Administrative Agent (the "Alcatel Administrative Agent"), on behalf of
the Alcatel Lenders, and ABN AMRO BANK N.V., a Netherlands banking organization
in its capacity as QUALCOMM ADMINISTRATIVE AGENT (the "Qualcomm Administrative
Agent") on behalf of the Qualcomm Lenders, and the other Senior Lenders
executing this Agreement from time to time as contemplated by Article 2 hereof.

                                   WITNESSETH:

        WHEREAS, the Company was awarded the Licenses; and

        WHEREAS, the Company by itself (and, in some cases, through other
members of the Borrower Group) will engage in the Business; and

        WHEREAS, the Company is a Wholly-owned subsidiary of Holdings the shares
of which are, on the date hereof, owned by the Sponsors in accordance with the
terms of the Joint Venture Agreement; and

        WHEREAS, the Company has entered into the Alcatel Procurement Agreement
with Alcatel Indetel pursuant to which the Company has agreed to acquire from
Alcatel Indetel, and Alcatel Indetel has agreed to supply to the Company,
certain equipment and services required for the System and the Business; and

        WHEREAS, the Company has entered into the Qualcomm Procurement
Agreements for the purpose of acquiring from the respective vendors thereunder
certain equipment and services required for the System and the Business; and

        WHEREAS, to finance the cost of constructing, developing and equipping
the System and starting-up the Business, the Company is entering into various
senior indebtedness agreements, including the Alcatel Credit Agreement and the
Qualcomm Credit Agreement, and shall be entering into various other senior
indebtedness agreements, in each case setting out the terms upon which financing
is to be provided for such development; and

<PAGE>
        WHEREAS, the execution of this Agreement, which provides for, among
other things, (i) certain common representations, warranties and covenants of
the Company, (ii) certain uniform conditions to the making of Senior Loans and
(iii) certain common events of default, is a condition precedent to the
obligation of the Senior Lenders to extend credit to the Company; and

        WHEREAS, the Intercreditor Agent, the Collateral Agent and the
Administrative Agents are simultaneously with the execution hereof entering into
the Collateral Agency Agreement and the Intercreditor Agreement; and

        WHEREAS, the Company may incur Additional Senior Indebtedness and other
Indebtedness from time to time subject to the terms and conditions set forth in
this Agreement.

        NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements contained herein and in the other Financing Agreements,
the parties hereto agree as follows:

                                    ARTICLE 1

                   DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

        1.01 DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires,
capitalized terms used in this Agreement, its appendices, schedules and exhibits
have the meanings given to such terms in Appendix A.

        1.02 PRINCIPLES OF CONSTRUCTION. In this Agreement and the other
Financing Agreements and the appendices, exhibits and schedules hereto or
thereto (unless otherwise provided therein):

             (a) The meanings set forth for defined terms in Appendix A or in
any Financing Agreement shall be equally applicable to both the singular and
plural forms of the terms defined and the masculine, feminine or neuter gender
shall include all genders.

             (b) All references in any Financing Agreement to clauses, sections,
appendices, schedules and exhibits are to clauses, sections, appendices,
schedules and exhibits in or to such Financing Agreement unless otherwise
specified therein.

             (c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in a Financing Agreement shall refer to such Financing
Agreement as a whole and not to any particular provision of such Financing
Agreement.

             (d) References in any Financing Agreement to any statute, decree,
regulation or other Applicable Law shall be construed as a reference to such
statute, law, decree, regulation or other Applicable Law as re-enacted,
redesignated, amended or extended from time to time, except as otherwise
provided in such Financing Agreement.

             (e) References in any Financing Agreement to any Transaction
Document or any other document or agreement shall be deemed to include
references to such


                                       2
<PAGE>
Transaction Document or such other document or agreement as amended, varied,
supplemented or replaced from time to time in accordance with the terms of such
Transaction Document, document or agreement and this Agreement and to include
any appendices, schedules, exhibits, clarification letters, side letters and
disclosure letters executed in connection therewith.

             (f) References to any Person or Persons shall be construed as a
reference to any successors or assigns of such Person or Persons to the extent
permitted under the Financing Agreements and, in the case of any Governmental
Authority, any Person succeeding to its functions and capacities.

             (g) The table of contents and the headings of the several sections
and subsections of this Agreement or any Financing Agreement are intended for
convenience only and shall not in any way affect the meaning or construction of
any provision therein.

             (h) References to the words "include" or "including" shall be
deemed to be followed by "without limitation" or "but not limited to," whether
or not they are followed by such phrases or words of similar import.

             (i) References to a number of days shall refer to calendar days
unless Business Days are otherwise specified.

             (j) References to "the Borrower Group," to a "member of the
Borrower Group" or to "members of the Borrower Group" shall mean each member of
the Borrower Group agreeing, representing or otherwise acting on a joint and
several basis.

        1.03 CONFLICTS. In the case of any conflict between the terms of this
Agreement and the terms of any Credit Agreement, the terms of such Credit
Agreement, as between the Company and the Senior Lenders party thereto, shall
control.

                                    ARTICLE 2

                                CREDIT FACILITIES

        2.01 INDEBTEDNESS SUBJECT TO THIS AGREEMENT. All Senior Indebtedness
shall be entitled to the benefits of and subject to the obligations set forth in
this Agreement and shall be entitled to the liens, charges, collateral
assignments and security interests granted by or pursuant to the Security
Documents.

        2.02 SENIOR INDEBTEDNESS PARI PASSU. All Senior Indebtedness shall rank
pari passu without any preference among Senior Indebtedness by reason of date of
incurrence or otherwise.

        2.03 PRO RATA PAYMENT OF OBLIGATIONS. Except as specifically set forth
in Section 2.05, (a) each prepayment to a Senior Lender in respect of the Senior
Indebtedness, and (b) on and after the occurrence of an Event of Default and the
delivery of a Remedies Instruction as described in the Intercreditor Agreement,
each payment to a Senior Lender in respect of the Senior Indebtedness, shall be
on a Pro Rata Payment basis in accordance with the respective


                                       3
<PAGE>
interest, fees, commissions, indemnities, principal and other amounts due to all
of the Senior Lenders on the date of such payment or prepayment.

        2.04 ADDITIONAL SENIOR INDEBTEDNESS. From time to time the Company may,
subject to the terms hereof, designate additional indebtedness of and
commitments to lend to the Company as Senior Indebtedness, and upon satisfaction
of each of the following conditions precedent such designated indebtedness and
commitments, for all purposes of this Agreement, shall be Senior Indebtedness
secured by the collateral subject to the Security Documents and entitled to the
benefits of this Agreement ("Additional Senior Indebtedness"):

             (a) Subject to the terms and conditions of this Section 2.04, the
lenders of such Additional Senior Indebtedness (or an agent or fiduciary
representing such lenders) (the "Additional Senior Indebtedness Lender") shall
have executed and delivered to the Collateral Agent an agreement in which each
such lender agrees to be bound as a Senior Lender by all of the terms and
conditions of this Agreement, the Collateral Agency Agreement and the
Intercreditor Agreement as if it were a party hereto and thereto.

             (b) The Company shall have furnished to the Collateral Agent and to
each of the Alcatel Administrative Agent and the Qualcomm Administrative Agent a
term sheet describing the terms and conditions of the proposed Additional Senior
Indebtedness, a summary describing any and all representations, warranties,
affirmative covenants, negative covenants, events of default and other
non-financial terms which are to be imposed in connection with the making of
such Additional Senior Indebtedness and which are potentially more restrictive
on the Borrower Group than the provisions of this Agreement (the "Further
Provisions"), and as soon as practicable, drafts of the proposed Credit
Agreement and each of the other documents related thereto. Within 10 Business
Days after the receipt of such term sheet and drafts of the Further Provisions,
the Alcatel Administrative Agent and the Qualcomm Administrative Agent shall
notify the Company, the Additional Senior Indebtedness Lender, the Collateral
Agent and each other such Administrative Agent whether they (acting on behalf
of, and at the instructions of, the Senior Lenders under their respective Credit
Agreements) agree to amend or supplement the provisions of this Agreement to
allow such Further Provisions to be incorporated herein; and, if either of them
(on behalf of the Senior Lenders under their respective Credit Agreements) so
agree, pursuant to the sole and absolute discretion of such Senior Lenders, this
Agreement shall be amended to include such Further Provisions and each party
hereto shall execute and deliver an amendment implementing such Further
Provisions, which amendment shall be in form reasonably satisfactory to each
such party; provided, that in no event shall any Administrative Agent or the
Collateral Agent be obligated to waive or modify any provision of the Financing
Agreements relating to the Collateral. If neither of such Administrative Agents
agrees to include such Further Provisions in this Agreement, such Further
Provisions may be included in the Credit Agreement under which such Additional
Senior Indebtedness is to be incurred and an "event of default" thereunder shall
constitute an Event of Default hereunder as set forth in Section 7.15. Any and
all Further Provisions related to any Additional Senior Indebtedness, which
Further Provisions were included in this Agreement pursuant to this Section
2.04(b), shall terminate, and this Agreement shall be amended to delete such
Further Provisions, upon the full refinancing of all of the obligations under
such related Additional Senior Indebtedness; provided, that if at the time of
any such refinancing, the Senior Indebtedness under either of the Alcatel Credit
Agreement or the Qualcomm Credit Agreement have been syndicated or participated
such


                                       4
<PAGE>
that any of the commitments or outstanding obligations thereunder have been sold
without credit support from Alcatel or its Affiliates or QUALCOMM or its
Affiliates, as applicable, such Further Provisions shall remain in this
Agreement for the term hereof; provided further, that no Further Provisions
shall terminate as described above to the extent such Further Provisions are
included within the instruments or agreements pursuant to which such related
Additional Senior Indebtedness is refinanced. Each of QUALCOMM and Alcatel shall
be permitted to exercise their rights under this Section 2.04(b) any number of
times of so long as QUALCOMM or Alcatel, as the case may be, shall be a Senior
Lender or shall be providing credit support to any Senior Lender with respect to
the Senior Indebtedness of such Senior Lender.

             (c) Any and all liens, collateral assignments, security interests
and charges which are to be given by the Borrower Group or their shareholders in
connection with such Additional Senior Indebtedness ("Additional Collateral")
shall be granted to the Collateral Agent (and the Security Documents shall be
amended or supplemented accordingly, or further security documents shall be
executed and delivered by the Borrower Group to grant such Additional Collateral
to the Collateral Agent), so that, following the issuance of such Additional
Senior Indebtedness, all of the Senior Indebtedness will be secured on a pari
passu basis.

             (d) Each member of the Borrower Group shall execute and deliver a
Guaranty Agreement in favor of the Additional Senior Indebtedness Lender in such
a manner that the Additional Senior Indebtedness is guaranteed thereunder to the
same extent as the other Senior Indebtedness at the time outstanding is
guaranteed; provided, however, that, the Company may arrange for a guaranty or
guarantees of such Additional Senior Indebtedness from a third party or parties,
other than other members of the Borrower Group (a "Third Party Guarantor")
without providing for a similar guaranty or guarantees of other Senior
Indebtedness, so long as (i) any representations, warranties, covenants or
defaults included in any reimbursement or similar agreement between any member
of the Borrower Group and the Third Party Guarantor shall constitute Further
Provisions for purposes of clause (b) of this Section 2.04, and (ii) no
collateral or other security may be given to such Third Party Guarantor by any
member of the Borrower Group other than in respect of subrogation rights, if
any, which such Third Party Guarantor may have in the Collateral and the
Security Documents, if and to the extent that it makes payments under such
guaranty.

             (e) At least five days prior to the issuance of the Additional
Senior Indebtedness, the Borrower Group shall have delivered to each
Administrative Agent a certificate (i) describing such Additional Senior
Indebtedness, (ii) stating that no Default or Event of Default has occurred and
is then continuing hereunder after giving full effect to the incurrence of such
Additional Senior Indebtedness, and (iii) stating that, following such issuance,
the Borrower Group will be in compliance with the provisions of this Section
2.04 and with the provisions of Section 6.04(d).

             (f) All of the conditions precedent to the Initial Disbursement
under the applicable Credit Agreement for such proposed Additional Senior
Indebtedness shall have been satisfied or waived pursuant to the terms of such
Credit Agreement.


                                       5
<PAGE>
        2.05 PREPAYMENTS.

             (a) Prepayments of Senior Indebtedness shall be permitted to the
extent provided in the applicable Credit Agreement and to the extent provided
below.

             (b) Any prepayment of the principal amounts of any Senior
Indebtedness (other than (i) a prepayment of Non-Vendor Financing, (ii) a
prepayment of vendor financing from financing provided or supported by an export
credit agency or (iii) a prepayment made under a revolving credit or similar
facility, including a voluntary prepayment of a Loan the proceeds of which were
used for the payment of VAT, provided that the lender's commitment thereunder is
not permanently reduced at the time of such prepayment) shall be accompanied by
a prepayment, on a Pro Rata Payment basis, of the principal amounts of all other
Senior Indebtedness then outstanding, (which prepayments shall be made
simultaneously unless any such Senior Indebtedness does not permit such
prepayment at such time or would otherwise require a prepayment or break-funding
penalty, in which case such prepayment amounts, at the option of the Company,
may be deposited with the applicable Administrative Agent, invested in Permitted
Investments, and applied to the prepayment of such Senior Indebtedness on the
first date permitted or as to which no prepayment or break-funding penalty would
be imposed) which prepayment (unless the option described in the foregoing
parenthetical shall be exercised) shall be accompanied by the full payment of
any prepayment premium, break-funding amounts or other amounts due and payable
under the applicable Credit Agreement in connection with such prepayment;
provided, that (x) no such prepayment of any other Senior Indebtedness shall be
required if the Senior Lenders holding such Senior Indebtedness agree to waive
such prepayment or if the Credit Agreement governing such Senior Indebtedness
does not permit such prepayment and (y) the amount of the Senior Indebtedness
which would be so prepaid (but for the foregoing clause (x)) shall not be
applied to the other Senior Indebtedness then outstanding.

             (c) Any prepayment of principal on any Senior Indebtedness as
described in Section 2.05(b) shall be accompanied in each case with the full
payment of all accrued and unpaid interest on such Senior Indebtedness to the
extent required under the applicable Credit Agreement.

             (d) Subject to SECTION 2.05(b), any prepayment of any Senior
Indebtedness which is made from the proceeds of other Indebtedness ("Refinancing
Indebtedness") may be made on a non-Pro Rata Payment basis between or among
Senior Indebtedness; provided, however, that the documentation under which such
Refinancing Indebtedness (other than Refinancing Indebtedness provided or
supported by an export credit agency) is issued shall provide that Senior
Indebtedness may be prepaid by the Company on a non-Pro-Rata Payment basis to
the same extent as is set forth in this Section 2.05.

        2.06 PAYMENTS.

             (a) On each Payment Date, the Company shall make the scheduled
principal repayments of Senior Indebtedness due on such Payment Date except to
the extent that such repayments have been prepaid. Principal of the Senior
Indebtedness shall be payable in accordance with the applicable Credit Agreement
on the terms and conditions set forth therein. If two or more Credit Agreements
set forth the same Payment Date at any one time, and the


                                       6
<PAGE>
Company shall not have sufficient funds on such date to make full payment of the
Senior Indebtedness amounts due on such date under the applicable Credit
Agreements, then the Company shall make payments to the Senior Lenders under
such Credit Agreements on a Pro Rata Payment basis (determined without regard to
clause (z) of the proviso of the definition of "Pro Rata Payment") in respect of
the amounts due on such date.

             (b) On each Payment Date, the Company shall pay accrued and unpaid
interest on the unpaid principal amount of the Senior Indebtedness outstanding
under each Credit Agreement in accordance with the terms of the applicable
Credit Agreement.

             (c) All payments due under any Credit Agreement shall be made by
the Company pursuant to the terms of the applicable Credit Agreement, in
Dollars, as required under the applicable Credit Agreement, and in immediately
available funds. Subject to the provisions of the Collateral Agency Agreement
and Intercreditor Agreement, the relevant Administrative Agent shall apply each
payment with respect thereto received by it in accordance with such Credit
Agreement.

             (d) If at any time at which any Obligations are payable to a Senior
Lender such Senior Lender receives insufficient funds pursuant to the applicable
Credit Agreement to pay in full all Obligations payable to such Senior Lender at
such time, the funds so received by such Senior Lender at such time shall be
deemed to be applied as follows:

                 (i) FIRST, to interest (including post-default interest) on
the Senior Indebtedness held by such Senior Lender;

                 (ii) SECOND, to principal of the Senior Indebtedness held by
such Senior Lender; and

                 (iii) THIRD, to fees, commissions, indemnities, expenses and
all amounts (other than principal of and interest on the Senior Indebtedness)
payable to such Senior Lender.

        2.07 SWAP AGREEMENTS AS SENIOR INDEBTEDNESS. Subject to any other
restrictions otherwise contained in this Common Agreement, the Company may enter
into interest rate and Peso-Dollar currency swap agreements (including collars,
caps and similar derivative arrangements) through the execution of an agreement,
(a "Swap Agreement") with an Eligible Swap Counterparty; provided, however, that
all interest rate swap agreements shall be bona fide hedges of floating rate
exposure for a fixed rate obligation, shall have at any time a notional amount
not greater than the Company's floating rate Indebtedness outstanding at such
time, and cover a period not exceeding four years from any date of
determination; provided, further, that all currency swap agreements shall be
forward contracts, for a term not exceeding one year, for the purchase of
Dollars or Pesos with notional amounts in aggregate not exceeding the Company's
projected operating expenses coming due over the three month period following
the date upon which such currency swap agreement is entered. The Company may
incur obligations under the Swap Agreement without regard to any limitations
imposed under Section 2.04 or Section 6.04. The obligations of the Company under
any such Swap Agreement may, upon notice by the Company to the Collateral Agent,
be secured by the Collateral on a pro-


                                       7
<PAGE>
rata basis to the same extent as would be the case if such obligations of the
Company under such Swap Agreement were deemed to be Additional Senior
Indebtedness hereunder, in which event the Security Documents shall be amended
to the extent necessary to provide for such pro-rata treatment of the swap
counterparty in respect of such Collateral; provided, however, that in such
event (i) no member of the Borrower Group shall, if the swap counterparty is
secured as aforesaid, grant to such swap counterparty any other Lien upon the
property or assets of the Borrower Group, (ii) the amount secured by the
Collateral, as described in the preceding sentence, shall be the amount owed
from time to time by the Company under the Swap Agreement, and (iii) the swap
counterparty, in its capacity as such, shall not otherwise be, or be deemed to
be, a Senior Lender hereunder and shall have no voting rights with respect to
any matter described herein or in the other Financing Agreements. Upon delivery
of the notice to the Collateral Agent as aforesaid, accompanied by a certificate
of the Chief Financial Officer of the Company stating that no Default or Event
of Default has occurred and is then continuing, the Collateral Agent shall amend
or supplement the Security Documents to implement the provisions of this Section
2.07.

                                    ARTICLE 3

                              CONDITIONS PRECEDENT

        3.01 CONDITIONS PRECEDENT TO INITIAL DISBURSEMENT. Subject to Section
3.05, the obligation of a group of Senior Lenders under a particular Credit
Agreement to make an Initial Disbursement shall be subject to the satisfaction
or waiver by each such Senior Lender of the conditions set forth below:

             (a) SYSTEM AGREEMENTS. The Administrative Agents and the Relevant
Parties shall have received a true and complete copy of each System Agreement
(other than the Vendor Agreements) and all supplements, clarifications or
amendments thereto, all of which shall be in form and substance satisfactory to
such Administrative Agents (acting on behalf of, and at the instructions of, the
Senior Lenders under their respective Credit Agreements) and Relevant Parties
and certified as of the Initial Disbursement Date by an Authorized Officer of
the Company (or, in the case of the Joint Venture Agreement, by an Authorized
Officer of Holdings) with respect to the following matters: (A) such System
Agreement is a true, complete and correct copy of such System Agreement, (B)
such System Agreement is in full force and effect, (C) since the date of
execution thereof, such System Agreement has not been amended, modified,
clarified or supplemented, nor has any waiver been granted thereunder, except
for those amendments, modifications, clarifications, supplements or waivers,
certified copies of which have been delivered to the Administrative Agents
pursuant to (A) above, and (D) no party to any System Agreement is or, but for
the passage of time, giving of notice, fulfillment of any condition or any
combination thereof would be, in breach of any obligation thereunder (provided
that the certification of the Company's Authorized Officer as to the matters set
forth in this clause (D) may be made to the best knowledge of such Authorized
Officer with respect to Persons that are not members of the Borrower Group).

             (b) FINANCING AGREEMENTS. Each Financing Agreement required to be
executed and delivered on or prior to the Initial Disbursement Date (i) shall
have been executed and delivered, and (ii) shall be in full force and effect.


                                       8
<PAGE>
             (c) SECURITY INTERESTS. (i) All security interests intended to be
created pursuant to the Security Documents shall have been created and, where
appropriate, registered or other action taken to create a security interest and
Lien over the relevant asset or property in favor of the Collateral Agent, for
the benefit of the Senior Lenders, (ii) all fees and duties shall have been paid
in connection with such registration and (iii) all such security interests shall
(except as otherwise provided in any opinion of counsel accepted pursuant to
paragraph (f) below) be valid and enforceable and constitute first priority
perfected security interests, and be enforceable against the members of the
Borrower Group and any subsequent lien or (including a judgment lien or), holder
of a fixed or floating charge, or transferee for or not for value, in bulk, by
operation of law, for the benefit of creditors, or otherwise, subject in any
such case only to Permitted Liens described in Section 6.01. In addition to the
above, the Collateral Agent shall have received (w) evidence issued by the
Public Registry of Commerce of the Federal District of Mexico that the Original
Mortgage has been recorded in its books and records, (x) if then available,
evidence issued by the Telecommunications Registry of Mexico that the Original
Mortgage has been recorded in its books and records, (y) a copy of the second
testimony of the public deed evidencing the execution and delivery of Amendment
No. 1 to the Mortgage, together with a certificate of the relevant Public Notary
that the first testimony of such public deed has been presented for, and
accepted for, registration at the Public Registry of Commerce of the Federal
District of Mexico and the Telecommunications Registry of Mexico, and (z) if
then available, evidence issued by each such Registry that Amendment No. 1 to
the Mortgage has been recorded in its books and records.

             (d) PROCESS AGENTS. The Administrative Agents and the Relevant
Parties shall have received evidence that (i) each of the Company, Holdings and
each other Guarantor shall have duly and irrevocably appointed an agent for
service of process in New York, (ii) such agent shall have accepted such
appointment and (iii) all fees scheduled to accrue to each such agent for
service of process through and including the date following seven years after
the Initial Disbursement Date shall have been paid in full.

             (e) INSURANCE.

                 (i) The Borrower Group shall have obtained the insurance
described in Schedule 5.03 on the terms and conditions set forth therein and
from financially sound and reputable insurers and reinsurers and meeting the
criteria set forth in Schedule 5.03, and shall have provided to the
Administrative Agents and the Relevant Parties a certificate of an Authorized
Officer of the Company to that effect. The evidence required to be delivered by
the Company pursuant to this clause (i) or clause (ii) below shall confirm that
all premiums due and payable as of the Initial Disbursement Date have been paid
and no insurance premiums are overdue. The Administrative Agents and the
Relevant Parties shall have received evidence that each insurance policy
referred to in Schedule 5.03 has named the Collateral Agent; for the benefit of
the Secured Parties, as a co-beneficiary or co-payee under such policy together
with the Company (or other member of the Borrower Group), as their respective
interests may appear.

                 (ii) The Insurance Consultant shall have provided the
Administrative Agents and the Relevant Parties with a report in form and
substance acceptable to the Administrative Agents and the Relevant Parties which
shall confirm the matters set forth in clause (i) above, indicate that such
insurance and reinsurance is effective and provides adequate


                                       9
<PAGE>


coverage for the System and the Business and cover such other matters as any
Administrative Agent may have reasonably requested.

             (f) OPINIONS OF COUNSEL. The Administrative Agents and the Relevant
Parties shall have received the following legal opinions in the English language
addressed to each Senior Lender, each Agent and each Relevant Party:

                 (i) the opinion of White & Case LLP, special New York counsel
to the Borrower Group, substantially to the effect set forth in Appendix B-1;

                 (ii) the opinion of White & Case, S.C., Mexican counsel to the
Borrower Group, substantially to the effect set forth in Appendix B-2.

             (g) CORPORATE DOCUMENTS. The Administrative Agents and the Relevant
Parties shall have received for each member of the Borrower Group, Charter
Documents, good standing certificates (to the extent applicable to such Person
and available in such Person's jurisdiction of formation), incumbency
certificates and resolutions in each case certified by the appropriate officers
of such Person. Such resolutions shall, in each case, approve such Person's
participation in the transactions contemplated by this Agreement and the
applicable Credit Agreement, and the granting of Liens in connection therewith,
and shall authorize the execution, delivery and performance by such Person of
the Financing Agreements to which such Person is a party.

             (h) PLEDGES OF STOCK.

                      (A) (i) The Pledge Agreement executed on October 31, 1998
by and among Holdings, the Company, Pegaso PCS and Qualcomm in order to create a
pledge on the shares issued by Pegaso PCS and Personnel Co. (the "PCS/Recursos
Pledge Agreement") shall have been amended in form satisfactory to the
Administrative Agents and the Relevant Parties to include the Collateral Agent,
acting on behalf of and for the benefit of the Secured Parties, as beneficiary
of such agreement and (ii) the Pledge Agreement executed on October 31, 1998 by
and among Holdings, Pegaso PCS and Qualcomm in order to create a pledge on the
shares issued by the Company (the "Sistemas Pledge Agreement") shall have been
amended in form satisfactory to the Administrative Agents and the Relevant
Parties to include the Collateral Agent, acting on behalf of and for the benefit
of the Secured Parties, as beneficiary of such agreement.

                      (B) Each of the Sponsors shall have executed and delivered
the Sponsors Negative Pledge Agreement which shall effectively prohibit the
granting of any Lien over any such Capital Stock by any such Sponsor.

             (i) BUSINESS PLAN. The Administrative Agents and the Relevant
Parties shall have received (1) a copy of the Original Business Plan; and (2) a
copy of the Final Business Plan, certified by an Authorized Officer of the
Company as having been approved by the Board of Directors of Holdings.

             (j) STAMP DUTIES; TAXES; ETC. The Administrative Agents and the
Relevant Parties shall have received evidence satisfactory to them that all
required stamp duties,


                                       10
<PAGE>


registration fees, filing costs and other charges in connection with the
execution, delivery, filing and/or perfection of any Transaction Document
required to be stamped, registered or filed have been paid in full or an
appropriate exemption therefrom shall have been obtained, except to the extent
that the Company has provided the Administrative Agents and the Relevant Parties
with assurances satisfactory to them that such duties, fees, costs and charges
will be paid in full with the proceeds of the Initial Disbursement.

             (k) CONSENTS, AMENDMENTS, ASSIGNMENTS AND ACKNOWLEDGMENTS. All
consents, amendments, assignments, acknowledgments, documents or other evidence
or information (including the Consents) necessary or desirable in connection
with the System, the Collateral and the assignment as security of the System
Agreements to the Collateral Agent (including all approvals of any Governmental
Authority or any third party) shall have been duly: obtained, executed and
delivered, including, without limitation, consents relating to the Vendor
Agreements, the Operator Agreement, the GTE Operator Agreement and the
Interconnection Agreements.

             (l) SYSTEM COMPLIANCE. The System shall be in compliance in all
respect with all Applicable Laws as in effect upon the Closing Date and the
Administrative Agents arc the Relevant Parties shall have received a certificate
to such effect from an Authorized Officer of the Company.

             (m) FINANCIAL STATEMENTS. The Administrative Agents and the
Relevant Parties shall have received the most recent financial statements of the
Borrower Group (on consolidated basis), together with a certificate from the
Chief Financial Officer of Holdings stating that no material adverse change in
the consolidated assets, liabilities, operations or financial condition of the
Borrower Group has occurred from those set forth in the financial statements
provided pursuant to this clause (m), except as otherwise provided (which
exceptions shall also be in form and substance satisfactory to each
Administrative Agent) in any such certificate with respect to such financial
statements.

             (n) AUTHORIZATION TO INDEPENDENT ACCOUNTANT. The Chief Financial
Office of Holdings shall have authorized the Independent Accountant in writing
to communicate directly with the Relevant Parties, the Alcatel Administrative
Agent and the Qualcomm Administrative Agent (provided that such authorization
shall provide that no such communications shall occur with the Independent
Accountant unless and until such Relevant Party or such Agent has, prior
thereto, notified such Chief Financial Officer of Holdings that it intends to so
communicate with the Independent Accountant, and requests that such officer so
notify such Independent Accountant) and shall have furnished such Administrative
Agents and the Relevant Parties with a copy of such authorization, which
authorization shall be irrevocable until all Obligations have been fully and
finally paid.

             (o) FEES AND EXPENSES. The Company (or other members of the
Borrower Group) shall have paid all fees and expenses due to any Secured Party
(including all reasonable fees and expenses of legal counsel for any of the
foregoing to the extent the Company (o~ another member of the Borrower Group) is
obligated to pay such expenses), on or before the Closing Date, or arrangements
satisfactory to such Secured Party, shall have been made for the payment of such
fees and expenses from the proceeds of the Initial Disbursement.


                                       11
<PAGE>


             (p) INITIAL CREDIT FACILITY CONDITIONS PRECEDENT. All of the
conditions set forth in each of Article 6 of the Alcatel Credit Agreement and
Section 4 of the Qualcomm Credit Agreement, shall have been satisfied or waived
in accordance with the terms of each such agreement.

             (q) EXISTING EQUITY. The Administrative Agents shall have received
evidence that not later than the Closing Date that (i) the paid-in equity (in
the form of equity cash contributions made by the Existing Shareholders and the
New Shareholders of Holdings in consideration for Capital Stock issued by
Holdings to such shareholders) was not less than the aggregate amount of
$300,000,000 as of the date or dates contributed, (ii) not less than 99% of such
cash has been contributed by Holdings to the Company as equity, and (iii) the
remainder of such cash, if any, has been contributed by Holdings to either or
both of Pegaso PCS and/or Personnel Co. as equity.

             (r) EQUITY COMMITMENTS. The Administrative Agents and the Relevant
Parties shall have received evidence of irrevocable cash Equity Commitments by
the Original Mexican Shareholders in the aggregate amount of (i) $50,000,000 to
be contributed, delivered and paid not later than July 31, 1999 and (ii)
$50,000,000 to be contributed, delivered and paid not later than August 30,
2000; there shall have been no default under any such Equity Commitments; there
shall have been no bankruptcy, insolvency or similar proceedings commenced or
initiated by or against any Original Mexican Shareholder making such Equity
Commitment; and each Sponsor, Holdings and the Company shall have executed an
Assignment Agreement with respect to such Equity Commitments in form and
substance satisfactory to the Required Voting Parties.

             (s) LICENSES AND LICENSE FEE. The Licenses shall be in full force
and effect; such Licenses shall provide all of the Permits required to operate
the System in accordance with the Original Business Plan, and in those
geographical areas referred to in the Original Business Plan; and all fees,
costs and expenses payable in connection with the granting or maintaining of
such Licenses (including any VAT taxes or charges relating thereto) shall have
been paid in full from Existing Equity.

             (t) MINIMUM ASSETS; MORTGAGED PROPERTY. The Administrative Agents
and the Relevant Parties shall have received (i) a certificate of an Authorized
Officer of the Company to the effect that (A) the Company owns, both legally and
beneficially, title to the Minimum Assets, and (B) all such Minimum Assets are
subject to the Lien created by the Security Documents, and (ii) an undertaking
by Holdings, and Holdings hereby undertakes, that Holdings holds and will
continue to hold as its only assets the Capital Stock of the Company, Pegaso PCS
and Personnel Co, the rights to receive equity as provided in the Equity
Commitments (and with all debt or other obligations owing from any such entity
to Holdings having been contributed to such entity as additional capital) and
the assets referred to in the parenthetical in Section 6.04(h)(C).

             (u) VARIOUS CONSENTS AND APPROVALS. The Administrative Agents and
the Relevant Parties shall have received all Permits, material consents,
approvals and releases of all appropriate Governmental Authorities and all other
third parties in connection with the transactions contemplated by the
Transaction Documents, including (without limitation)


                                       12
<PAGE>


all required consents, authorizations, approvals or releases from contractual
counterparties of members of the Borrower Group required to be obtained to
permit the Lien of the Collateral Agent, acting for the benefit of the Secured
Parties, in the Collateral.

             (v) SUPPLEMENT TO ALCATEL COMMITMENT LETTER. The Company shall have
received a supplemental letter updating and confirming the terms of the Alcatel
Commitment Letter and the conditions of for effectiveness. Such supplemental
letter shall be dated no earlier than five Business Days prior to the date
hereof and accurately reflect the terms and conditions of the commitment under
the Alcatel Commitment Letter as of such date, and the Administrative Agents
shall have received a fully-executed copy thereof, the substance of which shall
be reasonably satisfactory to the Qualcomm Administrative Agent.

             (w) GUARANTY TRUST AGREEMENT AND RELATED DOCUMENTS AND APPROVALS.
Holdings shall deliver to the Administrative Agents and the Relevant Parties the
Guaranty Trust Agreement duly executed and delivered by each of the parties
thereto, together with evidence in writing that the Secretaria de Comunicaciones
y Transportes have approved the Guaranty Trust Agreement and all appropriate
documentation and instruments, which documentation and instruments shall have
been duly executed, in order to effectively transfer title to the trustee
thereunder, for the benefit of the Collateral Agent, to all of the Capital Stock
in the Company, Pegaso PCS and Personnel Co. as held by Holdings on the Closing
Date, which Capital Stock shall (except to the extent described in the last
sentence of this Section 3.01(w)) constitute 100% of the issued and outstanding
Capital Stock of each of the Company, Pegaso PCS and Personnel Co. The transfer
by Holdings of its title to the Capital Stock of the Company, Pegaso PCS and
Personnel Co., as applicable, to the trustee under such Guaranty Trust Agreement
shall have been registered in the shareholders' registry book of the Company,
Pegaso PCS and Personnel Co., respectively. Concurrently therewith, the parties
to the PCS/Recursos Pledge Agreement and the Sistemas Pledge Agreement will
amend said agreements to provide that said agreements only create a pledge on
the single share of each of Pegaso PCS, Personnel Co. and the Company not owned
by Holdings but which is owned by another member of the Borrower Group.

             (x) CONSENTS FROM TELMEX AND TELNOR. The Company will deliver to
the Administrative Agents and the Relevant Parties a Consent duly executed and
delivered by each of TelMex and TelNor with respect to their respective
Interconnection Agreements.

             (y) CLARIFICATION WRIT. The Company shall have filed or have caused
to be filed with the Ministry of Telecommunications of Mexico a clarification
writ with respect to the writ filed on November 30, 1998, and the said Ministry
shall have issued an order, to the effect that (i) Pegaso PCS is authorized to
act on behalf of the Company under the Pegaso PCS Services Agreement as a
"comisionista," not as a "comercializadora" and (ii) all accounts receivable
derived from the exploitation and use of the Licenses are the property of the
Company, not Pegaso PCS.

             (z) POST-CLOSING AGREEMENT. The Company and each other member of
the Borrower Group shall have executed and delivered a post-closing agreement
(the "Post-Closing Agreement") dated as of the date hereof in form and substance
satisfactory to the Administrative Agents and the Relevant Parties with respect
to the satisfaction of certain of the


                                       13
<PAGE>


closing conditions contained herein or in the Credit Agreements within a
specified period of time after the Closing Date.

        3.02 CONDITIONS PRECEDENT TO ALL DISBURSEMENTS. Subject to Section 3.05
the obligation of any Senior Lender to make any Disbursement (including the
Initial Disbursement) shall be subject to the satisfaction or waiver in
accordance with the terms of the relevant Credit Agreement, prior to and
concurrently with each such Disbursement, of each of the conditions set forth
below:

             (a) NOTICE OF BORROWING. The Company shall have delivered to the
applicable Administrative Agent and the Relevant Parties a notice of borrowing
from an Authorized Officer of the Company if and to the extent required as a
precondition to the Disbursement of a Loan in the applicable Credit Agreement.

             (b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. Immediately before
and after giving effect to such Disbursement:

                 (i) no Default or Event of Default shall have occurred and be
continuing; and

                 (ii) all representations and warranties made by each member of
the Borrower Group, each Guarantor and each Sponsor in each of the Financing
Agreements to which such Person is a party (except, as to any Agent or Senior
Lender, any Credit Agreement other than the Credit Agreement by and among such
Person, such Agent and such Senior Lender), shall be true, complete and correct
in all material respects with the same force and effect as though such
representations and warranties had been made on and as of the date of such
Disbursement, except for any representations and warranties herein or in any
Financing Agreement which expressly relate only to an earlier date.

             (c) CREDIT AGREEMENT CONDITIONS PRECEDENT. In the case of a
Disbursement under any Credit Agreement, the additional conditions precedent (if
any) to such Disbursement set forth in such Credit Agreement shall have been
satisfied or waived by the applicable Senior Lenders on or before the date of
such Disbursement.

             (d) FEES AND EXPENSES. The Borrower Group shall have paid or made
arrangements for payment (including, to the extent permitted, arrangement for
payment out of Disbursements) of all fees, expenses and other charges then
payable by it hereunder or under any other Financing Agreement in a manner
satisfactory to the relevant payee.

        3.03 NO WAIVER.

             (a) Subject to Section 3.05, no course of dealing or waiver by any
Senior Lender or any Agent in connection with any condition of Disbursement
under this Agreement or any Credit Agreement shall impair any right, power or
remedy of any such Senior Lender or Agent with respect to any other condition of
Disbursement, or be construed to be a waiver of any such other condition; nor
shall the action of any Senior Lender or any Agent in respect of any
Disbursement affect or impair any right, power or remedy of any Senior Lender or
the Collateral Agent in respect of any other Disbursement.


                                       14
<PAGE>


             (b) Subject to Section 3.05, unless otherwise notified to the
Company by a Senior Lender or the Collateral Agent and without prejudice to the
generality of Section 3.03(a), the right of any Senior Lender or any Agent to
require compliance with any condition under this Agreement or relevant Credit
Agreement which may be waived in accordance with the provisions of such
applicable Credit Agreement is expressly preserved for the purpose of any
subsequent Disbursement.

        3.04 DELIVERY OF CERTIFICATES, ETC. All of the certificates, legal
opinions, communications, notices and other documents and papers referred to in
Sections 3.01 or 3.02 to be delivered thereunder, unless otherwise specified,
shall be delivered in sufficient counterparts for distribution to each of the
Senior Lenders and, unless otherwise specified, shall be in form and substance
reasonably satisfactory to the Agent receiving the same. Notwithstanding the
foregoing, all of the certificates, legal opinions, communications, notices and
other documents and papers referred to in Sections 3.01 and 3.02 shall be
addressed to each Senior Lender.

        3.05 BENEFICIARIES OF CONDITIONS TO DISBURSEMENTS. Notwithstanding any
other provision of this Article 3, any waiver of the conditions precedent (i) to
the Initial Disbursement or any subsequent Disbursement under the Alcatel Credit
Agreement must be waived by each Senior Lender under the Alcatel Credit
Agreement, but no Senior Lender under any other Credit Agreement shall have any
right or benefits thereto or any such waiver rights thereunder, (ii) to the
Initial Disbursement or any subsequent Disbursement under the Qualcomm Credit
Agreement must be waived by each Senior Lender under the Qualcomm Credit
Agreement, but no Senior Lender under any other Credit Agreement shall have any
right or benefit thereto or any such waiver rights thereunder, and (iii) to the
Initial Disbursement and any subsequent Disbursement under any Credit Facility
relating to Additional Senior Indebtedness must be waived by the Senior Lender
(or all or such percentage of the Senior Lenders) as provided in such Credit
Agreement, but no Senior Lender under the Alcatel Credit Facility, no Senior
Lender under the Qualcomm Credit Agreement and no Senior Lender under any other
Additional Senior Indebtedness then outstanding shall have any right or benefits
thereto or any such waiver rights thereunder.


                                    ARTICLE 4

                         REPRESENTATIONS AND WARRANTIES

        Each member of the Borrower Group, jointly and severally, makes the
representations and warranties contained in this Article 4 for the benefit of
each Senior Lender, each Agent and each Relevant Party. Each such representation
and warranty shall be deemed made for the benefit of any Senior Lender at the
times (and only the times) and to the extent (and only to the extent) specified
in the Credit Agreement to which such Senior Lender is party. The
representations and warranties contained herein shall survive the execution and
delivery of this Agreement. To the extent that any schedule referred to in this
Article 4 shall need to be updated in order to permit such representation to be
true and correct when made or deemed made, the Company or other member of the
Borrower Group shall provide the Agents with such updated schedule in writing
prior to the date such representation is made or deemed made and shall request
approval of such updated schedule in accordance with the provisions of the
Intercreditor Agreement. Unless any such schedule is updated and approved in
accordance with the


                                       15
<PAGE>


provisions of the Intercreditor Agreement, no change to any existing schedule
shall be deemed to have been made.

        4.01 CORPORATE STATUS. Each member of the Borrower Group (i) is a
sociedad anonima de capital variable duly organized, validly existing and in
good standing under the laws of Mexico, (ii) is duly authorized to do business
in Mexico and in each other jurisdiction where the character of its properties
or the nature of its activities makes such qualification necessary (except for
any authorization the absence of which does not constitute a Material Adverse
Effect) and (iii) has the requisite power and authority to (a) own or possess
all of its property and assets, (b) transact the business in which it is engaged
or proposes to be engaged (including the Business), (c) incur and guarantee
Indebtedness and create Liens, (d) execute, deliver and perform its obligations
under the Transaction Documents to which it is a party and (e) do all things to
be done by it in respect of the construction, maintenance and operation of the
System and to consummate the transactions contemplated by this Agreement and the
other Transaction Documents.

        4.02 CORPORATE POWER AND AUTHORITY. Each member of the Borrower Group
has taken all corporate action necessary to authorize the execution, delivery
and performance by it of each of such Transaction Documents as have been
executed and delivered by such member as of each date this representation and
warranty is made or deemed made. Each member of the Borrower Group has, or in
the case of the Transaction Documents other than this Agreement and future
Credit Agreements by the Initial Disbursement Date will have, duly executed and
delivered each of the Transaction Documents to which it is a party.

        4.03 VALID AND BINDING OBLIGATION. This Agreement, when executed and
delivered by the members of the Borrower Group on or before the date this
representation is made or deemed made constitutes or, in the case of each other
Transaction Document to which it is a party, when executed and delivered by it,
will constitute, the legal, valid and binding obligation of such member
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by (i) applicable bankruptcy, insolvency and other similar laws
affecting creditors' rights generally and (ii) general equitable principles
regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law.

        4.04 NO VIOLATION. None of the execution and delivery by any member of
the Borrower Group of this Agreement and the other Transaction Documents to
which it is party, the consummation of the transactions contemplated hereby and
thereby or compliance with the terms and provisions hereof and thereof does or
will (i) contravene or violate its Charter Documents or any Applicable Law, (ii)
contravene or result in any breach or constitute any default under any order,
writ, injunction, judgment or decree of any court or other tribunal or
Governmental Authority or (iii) contravene or result in any breach or constitute
any default under, or result in or require the creation of any Lien upon any of
its revenues, properties or assets under any agreement or instrument to which it
is a party or by which it or any of its revenues, properties or assets may be
bound, except for Permitted Liens or (iv) require any permit, consent or
approval of any Person other than any such permits, consents or approvals which
have been obtained and are in full force and effect; provided, however, that (a)
with respect to the System Agreements, the above representation shall apply only
to the extent that any such contravention, violation or breach would result in a
Material Adverse Effect, and (b) it is understood that any remedial


                                       16
<PAGE>


action taken under the Security Documents, (y) to the extent that it results or
would result, directly or indirectly, in a transfer of the Licenses to a party
other than the Company, may require certain authorizations, consents or
approvals by Governmental Authorities under the Mexican Telecommunications Law,
and (z) to the extent that it results in Capital Stock of the Company being
transferred to a non-Mexican entity, may violate Applicable Law and/or require
Permits relating to restrictions on foreign ownership of Mexican companies.
Solely for purposes of this Section 4.04, the term "Applicable Law" shall be
deemed to be limited to those Applicable Laws in effect on the date such
representation is made.

        4.05 PERMITS. All authorizations, consents and permits necessary under
Applicable Law in connection with (i) the clue execution and delivery of, and
performance by each member of the Borrower Group of its obligations under each
Transaction Document to which it is a party in effect or required to be in
effect as of each date this representation is made or deemed made, (ii) the
grant by the members of the Borrower Group of the Liens pursuant to the Security
Documents and the validity, enforceability and perfection thereof and the
exercise by the Collateral Agent of rights and remedies thereunder, and (iii)
the care, custody, control, construction, development and operation of the
System as contemplated by the Business Plan which are required to be obtained on
or prior to the date this representation is made or deemed made (other than, in
the case of this clause (iv), such consents, authorizations and permits the
absence of which would not constitute a Material Adverse Effect), in each case
have been obtained by such members (hereinafter, collectively the "Permits").
Each of such Permits has been duly obtained or made, is validly issued, is in
full force and effect, and is held in the name of the Person identified in such
Permit and is free from any condition or requirement compliance with which would
constitute a Material Adverse Effect or which the applicable member of the
Borrower Group does not reasonably expect to be able to satisfy.

        4.06 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED LIABILITIES;
ETC.

             (a) Each of the financial statements of the Borrower Group
delivered pursuant to Sections 3.01 (m) and 5.01(a) is true, complete and
correct in all material respects as of the date of such statements and fairly
presents the financial condition, results of operations and cash flows as of the
date thereof. Such financial statements have been prepared in accordance with
GAAP on a consistent basis except as may otherwise be noted therein.

             (b) Except as fully reflected in (i) the financial statements
referred to in Section 3.01(m), (ii) the contingent liabilities set forth on
Schedule 4.06 and (iii) the obligations set forth in the Transaction Documents,
there was, as of the Closing Date, no liability or obligation with respect to
any member of the Borrower Group of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) for the period to which
such respective financial statements relate which, either individually or in the
aggregate, constitutes a Material Adverse Effect. As of the Closing Date, no
member of the Borrower Group knows of any reasonable basis for the assertion
against any such member of any liability or obligation of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due) for
such relevant period that is not (x) fully reflected in the financial statements
referred to in Section 3.01(m), (y) set forth in Schedule 4.06 or (z) an
obligation set


                                       17
<PAGE>


forth in or contemplated by the Transaction Documents, which either individually
or in the aggregate, constitutes a Material Adverse Effect.

             (c) Since the date of the last financial statements of the Borrower
Group submitted in accordance with Section 5.01(a), there has been no material
adverse change in the condition (financial or otherwise) or operations of the
Borrower Group (taken as a whole), except for the operating losses contemplated
by the most recent Business Plan submitted pursuant to Section 5.01 (d).

        4.07 LITIGATION; LABOR DISPUTES.

             (a) No member of the Borrower Group is in default with respect to
any order of any court, arbitrator, administrative agency or other Governmental
Authority, other than any order that is the subject of a Good Faith Contest or
other order the default under which, or the non-compliance with which, would not
result in a Material Adverse Effect. There is no injunction, writ, or
preliminary restraining order of any nature issued by an arbitrator, court or
other Governmental Authority directing that any of the transactions provided for
in any of the Financing Agreements not be consummated as herein or therein
provided. There is no action, suit, investigation or proceeding (including any
appeal by any Person of a Permit) by or before any court, arbitrator,
administrative agency or other Governmental Authority pending or, to the best
knowledge of each member of the Borrower Group, threatened against or affecting
any member of the Borrower Group (or any of such party's properties, revenues or
assets) which constitutes a Material Adverse Effect.

             (b) There are no strikes, slowdowns or work stoppages by the
employees of any member of the Borrower Group or any Vendor, on-going, or, to
the best knowledge of each such member, currently threatened, which constitute a
Material Adverse Effect.

        4.08 TAX RETURNS AND PAYMENTS.

             (a) Each member of the Borrower Group has filed all income tax and
other material tax returns required by Applicable Law to be filed by it and has
paid all Taxes and assessments payable by it which have become due other than
those subject to a Good Faith Contest. Each member of the Borrower Group has
paid or has provided reserves adequate in the reasonable judgement of the
management of Holdings and consistent with GAAP for the payment of all income or
other Taxes imposed on it by the Government of Mexico for all prior Fiscal Years
and accrued for the current Fiscal Year to the date hereof.

             (b) Except for those items set forth in Schedule 4.08, no
withholding Taxes are payable by the Company or any other member of the Borrower
Group, (under Applicable Law in existence as of the Closing Date), to any
Mexican Governmental Authority in connection with any amounts payable by the
Company or any other such member under or in respect of the Financing Agreements
as in effect on the Closing Date.


                                       18
<PAGE>


        4.09 CAPITALIZATION.

             (a) Schedule 4.09 sets forth the capitalization of Holdings and
each other member of the Borrower Group as of the date hereof, including (i)
authorized capital, (ii) the number of shares issued and outstanding and (iii)
the shareholders and number of shares and advances held by each such
shareholder. All of the issued and outstanding shares of Holdings (other than
treasury stock held by Holdings) and each other member of the Borrower Group are
duly and validly issued and non-assessable and fully paid. Neither Holdings nor
any other member of the Borrower Group has outstanding (a) any securities
convertible into or exchangeable for its share capital or (b) except as set
forth in Section 4.09(b) below, any rights to subscribe for or to purchase, or
any option for the purchase of, or any agreement, arrangement or understanding
providing for the issuance (contingent or otherwise) of, or any call, commitment
or claims of any character relating to, or any rights or claims that restrict
the transfer of, its share capital.

             (b) The Existing Equity, as of September 29, 1998, was $300,000,000
(or the Peso Equivalent thereof, determined as of the date or dates of
contribution). No Existing Shareholder or New Shareholder has any right
(contingent or otherwise) for the repayment or reimbursement of any of the
Existing Equity, nor any rights, contractual or otherwise, against Holdings (or
any other member of the Borrower Group) in respect of such Existing Equity,
other than rights to the shares of Capital Stock which have previously been
issued to the providers of such Existing Equity. Each of the Equity Commitments
constitutes the valid and enforceable obligation of the Original Mexican
Shareholders to subscribe for the Capital Stock of Holdings in the amounts and
on the date or dates specified in such Equity Commitments, and each such
obligation is (i) absolute and irrevocable, and (ii) not subject (directly or
indirectly) to any precondition or condition precedent except as set forth in
the Joint Venture Agreement. As of the date this representation is made (i)
there has been no amendment, supplement or modification of such Equity
Commitment, and (ii) there has been no waiver granted by Holdings under any such
Equity Commitment. Set forth in Schedule 4.09 is a true and complete listing of
each Original Mexican Shareholder and the amount of each Equity Commitment
required to be contributed by each such Original Mexican Shareholder as of the
Closing Date. The collateral assignments of the rights in respect of the Equity
Commitments by Holdings, the Company and the Sponsors to the Collateral Agent,
acting for the benefit of the Secured Parties, pursuant to the Assignment
Agreements are effective to allow the Collateral Agent to make demands
thereunder and to allow the Collateral Agent the right to enforce the
obligations of the Original Mexican Shareholders and Holdings, as applicable,
thereunder without any further action other than notice to the Original Mexican
Shareholders and Holdings, as applicable, and to commence appropriate legal
action on behalf of the Secured Parties against the Original Mexican
Shareholders and Holdings, as applicable.

        4.10 SUBSIDIARIES, MORTGAGE AND MINIMUM ASSETS.

             (a) Holdings is the legal and beneficial owner of 100% of the
Capital Stock of each of (i) the Company, (ii) Pegaso PCS and (iii) Personnel
Co. (the "Applicable Shares"). As of the Closing Date, Holdings does not own any
Capital Stock in any Person other than as set forth in the preceding sentence.
There are no Liens of any kind on any of the Applicable Shares other than
Permitted Liens, nor are there any restrictions on transfers of such


                                       19
<PAGE>

Applicable Shares, nor are there any agreements of any kind relating to the
voting of, or disposition of, such Applicable Shares (except as described in the
proviso to Section 4.04(iv)). As of the Closing Date, each of the Company,
Pegaso PCS and Personnel Co. has no Subsidiaries and does not otherwise control
any voting stock or any ownership interest in any other Person. All of the
Capital Stock of each Subsidiary of Holdings or of any other member of the
Borrower Group acquired after the date of this Agreement has been pledged by the
relevant party to the Collateral Agent for the benefit of the Secured Parties as
required by Section 5.14. Notwithstanding the other provisions of this Section
4.10(a), it is recognized that a single share of each of Pegaso PCS, Personnel
Co. and the Company is not owned by Holdings, but is owned by another member of
the Borrower Group.

             (b) As of the Closing Date, the Sponsors, collectively, own 100% of
the Capital Stock of Holdings (the "Holdings Shares"). There are no liens of any
kind on the Holdings Shares other than Permitted Liens, nor (except for such
agreements or restrictions as are set forth in the Joint Venture Agreement, in
the form in existence on the Closing Date, and in the Registration Rights
Agreement referred to therein, and as otherwise described in the proviso to
Section 4.04 (iv)) are there any restrictions on transfer of the Holdings
Shares, nor are there any agreements of any kind relating to the voting of, or
disposition of, such Holdings Shares, other than as set forth in the Joint
Venture Agreement and the Registration Rights Agreement.

             (c) The Company is the legal and beneficial owner of all of the
properties, assets and contract rights which are specifically described in the
Mortgage as being the subject of the Lien created by the Mortgage. The Mortgage
has the effect of creating, in favor of the Collateral Agent, for the benefit of
the Senior Lenders, a perfected and first priority Lien on all property, assets
and contract rights owned from time to time by the Company (including property
acquired by the Company after the date of execution, delivery and recording of
the Mortgage). Such properties, assets and contract rights, at the time this
representation is made or deemed made, constitute Minimum Assets.

        4.11 COMPLIANCE WITH APPLICABLE LAW. Each member of the Borrower Group
is in compliance in all respects with all Applicable Law (including
Environmental Law), except to the extent that such failure to be in compliance
would not constitute a Material Adverse Effect.

        4.12 PROPERTY RIGHTS. Each member of the Borrower Group owns, has a
license to use or otherwise has the right to use, free and clear of any pending
or threatened Liens (other than Permitted Liens), all property rights (real,
personal and mixed, tangible and intangible) including all patents, patent
applications, trademarks, permits, service marks, names, trade secrets,
proprietary information and knowledge, technology, computer programs, databases,
copyrights, licenses, franchises and formulas, or rights with respect thereto,
and has obtained assignments of all leases and other rights of whatever nature,
in each case, that are material to the care, custody, control, construction,
development, operation and maintenance of the System or the conduct of the
Business by the Borrower Group as contemplated by the Business Plan, without any
conflict with the rights of others as of the date such property rights are
necessary to operate and maintain the System and the Business.


                                       20
<PAGE>


        4.13 SINGLE-PURPOSE. The Borrower Group (taken as a whole) has not
engaged in any business other than the care, custody, control, development,
construction, operation, maintenance and financing of the System and the conduct
of the Business; provided, that it is recognized that Personnel Co. is
authorized to provide human resource and similar services, and may provide such
services, to unrelated third parties to the extent consistent with the Original
Business Plan.

        4.14 FEES AND ENFORCEMENT.

             (a) Except for the fees and Taxes set forth on Schedule 4.14 that
have been paid in full or will have been paid in full by the date of any
Disbursement requested hereunder or with the proceeds of such Disbursement, no
fees or Taxes are required to be paid for the legality, validity or
enforceability of the Financing Agreements.

             (b) This Agreement and each of such Financing Agreements executed
and delivered as of the date this representation is made or deemed made are each
in proper legal form under (i) the Applicable Law of Mexico and (ii) the
respective governing laws selected in such Transaction Documents, for the
enforcement thereof in such jurisdiction.

        4.15 FOREIGN EXCHANGE APPROVALS. All requisite foreign exchange control
approvals and other similar authorizations, if any, required under Applicable
Law to be issued by any Mexican Governmental Authority to assure (i) the ability
of the Borrower Group to receive, and the ability of any other party to make to
the Borrower Group, any and all payments in the currency or currencies
contemplated by the Financing Agreements, (ii) the ability of the Borrower Group
to maintain Dollar accounts outside Mexico and to transfer amounts from and into
Mexico as necessary to meet its obligations under the Financing Agreements, in
accordance with their respective terms, and (iii) the ability of the Borrower
Group to use Dollars as necessary to perform all of its obligations under the
Financing Agreements, in accordance with their respective terms, including the
making of all payments contemplated in the Financing Agreements, have been duly
and validly obtained and are in full force and effect. Other than those
restrictions or requirements for which appropriate waivers, authorizations
and/or approvals have been received, there are no further restrictions or
requirements under Applicable Law which limit the availability or transfer of
foreign exchange, or the conversion to a foreign exchange, for the purpose of
(a) the performance by the Borrower Group of their obligations under this
Agreement or any other Financing Agreement or (b) repatriating the proceeds of
enforcement of the Obligations or the Collateral to the Collateral Agent.

        4.16 LIENS. Except for Permitted Liens, there are no Liens securing any
Indebtedness or other obligations of any Person covering any present or future
revenues, properties or assets or share capital of any member of the Borrower
Group. No member of the Borrower Group has outstanding any Lien or obligation to
create any Lien on or with respect to any of its properties, revenues or assets,
other than Permitted Liens.

        4.17 TITLE; SECURITY DOCUMENTS.

             (a) Each member of the Borrower Group holds good and legal title to
all property, assets and revenues on which it purports to grant Liens pursuant
to the Security


                                       21
<PAGE>


Documents (including, with respect to the Mortgage, any
and all property, assets and revenues specifically identified therein), in all
cases free and clear of all Liens other than Permitted Liens.

             (b) The provisions of the Security Documents are effective to
create in favor of the Secured Parties a legal, valid and enforceable first
priority Lien on all of the property, assets and revenues described therein
(including, with respect to the Mortgage, any and all property, assets and
revenues specifically identified therein) to the extent a security interest may
be created therein under Applicable Law and all necessary and appropriate
recordings, registrations and filings have been made in all appropriate public
offices, and all other necessary and appropriate action has been taken so that
each such Security Document creates an effective Lien with respect to the
property, assets, contract rights and revenues covered thereby to the extent a
security interest may be created therein under Applicable Law, prior and
superior to all other Liens except for Permitted Liens, and consents to the
creation, effectiveness, priority and enforcement of such Liens have been
obtained from each of the parties to the Transaction Documents and the relevant
Governmental Authorities, other than as described in the proviso to Section
4.04(iv).

        4.18 TRANSACTION DOCUMENTS. The Collateral Agent and each Administrative
Agent have received a true, complete and correct copy of each of the Transaction
Documents in effect as of the date this representation is made or deemed made.
Each such Transaction Document is in full force and effect and has not been
amended, modified or terminated, except as previously disclosed in writing to
the Collateral Agent and each Administrative Agent and in accordance with the
terms hereof.

        4.19 CERTAIN ANCILLARY SERVICES. Except where the failure to obtain the
services referred to below would not constitute a Material Adverse Effect, all
utility services, facilities and other services that can reasonably be expected
to be necessary for the care, custody, control, construction, operation and
maintenance of the System, are, or will be when needed, available to the
Borrower Group to the extent necessary or desirable, and arrangements in respect
thereof have been made.

        4.20 ENVIRONMENTAL MATTERS.

             (a) Except as set forth on Schedule 4.20 (i) no member of the
Borrower Group is now in violation of any Environmental Law which violation
constitutes a Material Adverse Effect, (ii) no member of the Borrower Group, nor
to the best knowledge of any member of the Borrower Group, any third party, has
used, released, discharged, generated, manufactured, produced, stored, or
disposed of in, on, under, or about the System or any real property owned or
leased by an member of the Borrower Group or transported thereto or therefrom,
any Hazardous Material in a manner that could reasonably be expected to subject
any member of the Borrower Group to any material liability which would
constitute a Material Adverse Effect, or subject any Senior Lender or any Agent
to any liability, under any Environmental Law, and (iii) to the best knowledge
of each member of the Borrower Group, there are no Hazardous Materials used,
stored, or present at, on or near the System or any real property owned or
leased by any member of the Borrower Group in violation of Applicable Law which
would constitute a Material Adverse Effect.


                                       22
<PAGE>


             (b) Except as set forth in Schedule 4.07, there is no proceeding,
and to the best knowledge of each member of the Borrower Group, no investigation
or inquiry, by any Governmental Authority or any non-governmental third party
with respect to the presence or release of Hazardous Materials in, on, from or
to the System or any real property owned or leased by any member of the Borrower
Group which would constitute a Material Adverse Effect.

        4.21 INVESTMENT COMPANY ACT. The Company is not an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940.

        4.22 TRUE AND COMPLETE DISCLOSURE. (a) All factual information (taken as
a whole), including the Business Plan, furnished by or on behalf of any member
of the Borrower Group in writing to or for the benefit of any particular Senior
Lender (referred to herein as a "Relevant Lender," which term includes the
Collateral Agent or the applicable Administrative Agent under the Credit
Agreement to which such Relevant Lender is a party) was true and accurate in all
material respects (i) in the case of the Original Business Plan, as of the
Closing Date, and (ii) with respect to all other factual information (including
updates of the Business Plan), on the dates as of which such information was
furnished, and was not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was furnished; provided, however, that, except as otherwise
expressly set forth in this Agreement, the sole representation of each member of
the Borrower Group with respect to projections, estimates or other expressions
of view as to future circumstances shall be that such projections, estimates or
other expressions of view as to future circumstances (i) were prepared in good
faith, (ii) fairly present in all material respects the Borrower Group's
expectations as to the matters covered thereby as of their respective date(s) of
delivery (or, in the case of the Original Business Plan, as of the Closing Date)
(it being understood that assumptions utilized therein were believed by the
Borrower Group in good faith to be reasonable in light of conditions existing at
the time of preparation thereof, but that actual results may vary from the
projected results contained therein), (iii) were based on reasonable assumptions
as to all factual and legal matters material to the estimates therein (including
interest rates and costs) as of their respective date(s) of delivery (or, in the
case of the Original Business Plan, as of the Closing Date), and (iv) were in
all material respects consistent with the provisions of the Transaction
Documents as of their respective date(s) of delivery (or, in the case of the
Original Business Plan, as of the Closing Date). There are no statements,
assumptions or conclusions in the Business Plan, as of the date of delivery
thereof, which are based upon or include information known as such delivery date
to any member of the Borrower Group to be misleading or which fail to take into
account material information regarding the matters reported therein. As of the
Closing Date there are in existence no documents, agreements or other
information which have not been disclosed to the Relevant Lender in writing
which are material in the context of the Transaction Documents or which have the
effect of varying any of the Transaction Documents.

        4.23 NO ADDITIONAL FEES. Other than as set forth in Schedule 4.23, as of
the Closing Date, no member of the Borrower Group has paid nor become obligated
to pay any fee or commission to any broker, finder or intermediary for or on
account of arranging the financing of the transactions contemplated by the
Transaction Documents.



                                       23
<PAGE>


        4.24 USE OF PROCEEDS. No part of the proceeds of any Senior Indebtedness
will be used for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" (as defined in Regulation U) or to extend
credit to others for such purpose. No part of the proceeds of any Senior
Indebtedness will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose which entails a
violation of, of which is inconsistent with Regulations T, U or X promulgated by
the Board of Governors of the Federal Reserve System (12 C.F.R. Sections 220,
221 and 224, respectively). The Company has used and shall continue to use the
proceeds of all Disbursements in accordance with the term and conditions of all
applicable Financing Agreements.

        4.25 INSURANCE. All insurance policies required to be maintained
pursuant to the terms of this Agreement are in full force and effect, and all
premiums due and payable have been paid.

        4.26 PRIVATE ACTIVITIES; IMMUNITY. The transactions contemplated by the
Transaction Documents constitute private commercial activities (rather than
governmental or public activities). To the extent that any member of the
Borrower Group or any of its properties or assets has or hereafter may acquire
any rights to immunity from setoff, legal proceedings, attachment prior to
judgment, other attachment or execution of judgment on any grounds of
sovereignty or otherwise (whether under the laws of Mexico or any other
jurisdiction), to the extent permitted by Applicable Law such member hereby
irrevocably waives such right to immunity and its properties and assets in
respect of its obligations arising under or relating to this Agreement or any
other Financing Agreement.

        4.27 NO SUBORDINATION. The obligations of each Guarantor under the
Guaranty and the Company under the Credit Agreements or under any other
contracts or instruments executed by Guarantors or the Company in connection
therewith and herewith (i) are not subordinated in right of payment to any other
obligation of the Company or such Guarantors and (ii) will at all times rank
prior to or pari passu in right of payment with all present and future unsecured
Indebtedness of any Guarantor or the Company, as applicable, except in either
case, to the extent provided by law.

        4.28 LICENSES. The Licenses are in full force and effect; and the
Company holds legal, valid, binding and enforceable title to the Licenses free
of any Liens other than Permitted Liens and free of any conditions other than
those set forth in the Licenses. The Licenses are sufficient (together with
other authorizations, consents and permits which have been received, or are
reasonably anticipated to be received on a timely basis, by one or more members
of the Borrower Group) to grant to the Company the legal power and authority to
operate and maintain the System and conduct the Business in accordance with the
Business Plan. Other than as may be set forth in Schedule 4.28, on the Closing
Date there has been no notice given by any Governmental Authority that brings
into question the validity or effectiveness of the Licenses, nor is there any
litigation (or to the best knowledge of each member of the Borrower Group,
threatened litigation) relating in any way to the Licenses which, in either
case, if decided adversely, would have the effect of causing an Event of Default
under Section 7.13.

        4.29 OPERATOR AGREEMENTS. Subject to Section 5.17 and after January 29,
1999, the GTE Operator Agreement and the Operator Agreement are in full force
and effect.


                                       24
<PAGE>


        4.30 EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS.

             (a) EMPLOYEE BENEFITS.

                 (i) Each employee benefit plan of any member of the Borrower
Group, if any, has been maintained, operated and administered in accordance with
its terms and with Applicable Law, and all notices, filing and disclosures
required by such terms or law have been timely made, except when the failure to
maintain, operate, or administer, or to notify, file or disclose, would not have
a Material Adverse Effect. No proceeding with respect to the administration or
the investment of the assets of any employee benefit plan (other than routine
claims for benefits) that would have a Material Adverse Effect or create Liens
(other than Permitted Liens) is pending or threatened.

                 (ii) All obligations of the Borrower Group for payments with
respect to any and all mandatory and additional employee benefit plans
including, but not limited to, all Instituto Mexicano del Seguro Social (Mexican
Social Security Institute), Instituto del Fondo Nacional Para la Vivienda de los
Trabajadores (National Worker's Housing Fund Institute), and accrued payroll
taxes payments for their respective employees have been timely paid and properly
reported in the financial statements required to be delivered under Section 5.01
(a) in accordance with GAAP except where the failure to make such payments would
not have a Material Adverse Effect or create any Lien (other than Permitted
Liens).

                  (iii) The Borrower Group has no liability for retiree
benefits.

             (b) EMPLOYMENT PRACTICES. The Borrower Group has complied in all
material respects with all Applicable Laws, rules and regulations with respect
to employment practices including, but not limited to, applicable health and
safety regulations and there is no charge or complaint alleging any material
violation of such laws, rules or regulations against any member of the" Borrow
Group pending or threatened, or before any federal or local labor board,
tribunal or Comision Nacional del Sistema de Ahorro Para el Retiro (National
Savings and Retirement System Commission).

             (c) LABOR MATTERS. There is no labor strike, request for
representation, slowdown or stoppage actually pending or, to the knowledge of
any member of the Borrower Group, threatened against or affecting it which would
have a Material Adverse Effect.

             (d) FILINGS. Each member of the Borrower Group has filed all forms,
reports, statements, provider agreements benefit plan descriptions, payor
agreements, beneficiary materials and other documents (including, without
limitation, those related to employee benefit plans) required to be filed by it
with any Governmental Authority, including without limitation state and federal
insurance and health regulatory authorities except where the failure to file
would have a Material Adverse Effect or create a Lien.

        4.31 YEAR 2000. Each member of the Borrower Group reasonably believes
that all computer applications that are material to its business and operations
will on a timely basis be able to perform properly date-sensitive functions for
all dates before, on and after January 1,


                                       25
<PAGE>

2000 (that is, be "Year 2000 compliant"), except to the extent that a failure to
do so is would not have Material Adverse Effect.

        4.32 INDEBTEDNESS. As of the date hereof, Schedule 4.32 is a complete
and correct list of all Indebtedness, credit agreements, indentures, purchase
agreements, guaranties, capital leases and other investments, agreements and
arrangements presently in effect providing for or relating to extensions of
credit (including agreements and arrangements for the issuance of letters of
credit or for acceptance financing, but not including nondelinquent trade credit
providing for payment within ninety (90) days of invoice) involving $1,000,000
or more in respect of which each member of the Borrower Group is in any manner
directly or contingently obligated. The maximum principal or face amounts of the
credits in question, which are outstanding and which can be outstanding, are
correctly stated, and all Liens of any nature given or agreed to be given as
security therefor are correctly described or indicated in such Schedule.

                                    ARTICLE 5

                              AFFIRMATIVE COVENANTS

        Each member of the Borrower Group covenants and agrees, jointly and
severally, that until the Commitments have been terminated and all Obligations
in connection with the Senior Indebtedness are paid in full (unless waived in
writing in accordance with the Intercreditor Agreement):

        5.01 INFORMATION COVENANTS. The Company shall furnish to each
Administrative Agent and to each Relevant Party:

             (a) FINANCIAL STATEMENTS.

                 (i) ANNUAL FINANCIAL STATEMENTS OF THE BORROWER GROUP. As soon
as available, taut in any event within 120 days after the close of each Fiscal
Year, a consolidated balance sheet of the Borrower Group as at the end of such
Fiscal Year with the related audited statements of income and retained earnings
and statements of cash flows for such Fiscal Year, in each case setting forth
comparative combined figures for the prior Fiscal Year and certified by the
Independent Accountant, which certification shall state that all such statements
are in agreement with the Borrower Group's books of account and are prepared in
accordance with GAAP on a consistent basis and reconciled to U.S. GAAP.

                 (ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available and
in any event within 45 days after the close of each of the first three quarterly
accounting periods in each Fiscal Year, the combined balance sheet of the
Borrower Group, as at the end of such quarterly period and the related unaudited
combined statements of income and of cash flows for such quarterly period and
for the portion of the Fiscal Year ended at the end of such quarterly period,
and in each case setting forth comparative combined figures for the related
quarterly period in the prior Fiscal Year and the figures for such portion of
the Fiscal Year ended at the end of such quarterly period, all of which shall be
certified by the chief financial officer or controller of Holdings as fairly
presenting the financial condition and results of operations of the Borrower
Group and as having been prepared in accordance with GAAP on a consistent basis


                                       26
<PAGE>


and reconciled to U.S. GAAP, subject to changes resulting from audit and normal
year-end audit adjustments.

             (b) INDEPENDENT ACCOUNTANT'S REPORT. At the time of delivery of the
financial statements provided for in Section 5.01(x), a report of the
Independent Accountant (x) stating that in the course of its regular audit
conducted in accordance with GAAP of the financial statements of the Borrower
Group as described under this Section 5.01, the Independent Accountant obtained
no knowledge of a Default or Event of Default which has occurred, or if in the
opinion of the Independent Accountant such Default or Event of Default has
occurred, a statement as to the nature thereof and (y) certifying that, based on
such financial statements and its review of the terms hereof, the Borrower Group
was in compliance with Sections 5.02(a), 6.03, 6.04, 6.06, 6.09 and 6.10 as of
the end of the relevant Fiscal Year or, as the case may be, detailing any
non-compliance therewith.

             (c) MANAGEMENT LETTERS. Promptly after receipt thereof, by any
member of the Borrower Group, a copy of any management letter or other similar
communication received by any such member from the Independent Accountant in
relation to the financial, accounting and other systems, management or accounts
of any such member.

             (d) BUSINESS PLAN. Not less frequently than annually, commencing
not later than December 15, 1999, an updated Business Plan in the form approved
by the Board of Directors of Holdings, which shall be based on (i) facts and
circumstances existing as of the date of submission, and (ii) with respect to
future events and performance, assumptions believed by the Borrower Group to be
reasonable under the circumstances as of such date of submission. Each updated
Business Plan shall contain, at a minimum, (i) a description of the Borrower
Group's plans in connection with the roll-out of the System, (ii) the number of
subscribers to the System as of the date of such updated Business Plan for each
year thereafter through the final maturity date of any Senior Indebtedness then
outstanding, (iii) a pro-forma income statement (including EBITDA) for the year
in which the up-dated Business Plan is submitted and each year thereafter
through the final maturity date of any Senior Indebtedness then outstanding,
(iv) a debt service coverage table for the then current year and each year
thereafter through the final maturity date of any Senior Indebtedness then
outstanding, (v) at least the same amount of information as was contained in the
Original Business Plan, and (vi) a description of all major assumptions which
were used in connection with the preparation of such up-dated Business Plan.
During the 30-day period following the submission of the updated Business Plan,
the Borrower Group will make available the Chief Financial Officer of Holdings
and any other officer of the Borrower Group reasonably requested by any
Administrative Agent to report on, and answer questions with respect to, such
updated Business Plan at such times as such Agent(s) may reasonably request.

             (e) OFFICERS' CERTIFICATES. At the time of the delivery of the
financial statements provided for in Section 5.01(a), a certificate of an
Authorized Officer of each member of the Borrower Group to the effect that,
based upon such Authorized Officer's review of the terms hereof and the other
Financing Agreements and the financial condition of each member of the Borrower
Group during the relevant accounting period and, to the best of such officer's
knowledge, (i) such member of the Borrower Group is in compliance with all of
its obligations under the terms of the Financing Agreements the non-performance
of which would constitute a


                                       27
<PAGE>

Material Adverse Effect (such certificate to set forth in reasonable detail the
calculations necessary to demonstrate compliance with the financial covenants
contained in Section 6.09 and 6.10 (as applicable)), and (ii) no Default or
Event of Default has occurred and is continuing, or, if any Default or Event of
Default has occurred and is continuing, specifying the nature and extent thereof
and what action the Borrower Group is taking or proposes to take in response
thereto.

             (f) NOTICE OF CERTAIN OCCURRENCES, ETC. (i) Promptly, but in all
cases within five Business Days after any Responsible Officer of any member of
the Borrower Group obtains knowledge thereof, written notice of any event which
constitutes a Default or Event of Default, specifying the nature of such Default
or Event of Default and any steps the Borrower Group is taking and proposes to
take to remedy the same and (ii) promptly, and in any event within five Business
Days, after any senior officer of any member of the Borrower Group obtains
knowledge thereof, notice of:

                      (A) any litigation, arbitration or governmental proceeding
pending or threatened in writing (1) against any member of the Borrower Group
(x) involving a claim or claims in excess of $1,000,000 individually or
$2,000,000 in the aggregate or (y) which, if decided adversely to such member or
members, would constitute a Material Adverse Effect, or (2) with respect to any
Financing Agreement;

                      (B) any proceeding or legislation by any Governmental
Authority to acquire compulsorily ail or any portion of the Collateral or all or
any portion of the business or assets of any member of the Borrower Group
(whether or not constituting an "Event of Default" hereunder);

                      (C) any change in the Authorized Officers of the Company
or other member of the Borrower Group, giving certified specimen signatures of
any new officer so appointed and, if requested by an Administrative Agent,
reasonably satisfactory evidence of the authority of such new officer;

                      (D) any notice relating to a material dispute received or
initiated by any member of the Borrower Group under any of the Licenses;

                      (E) any Lien (other than a Permitted Lien) being granted
or established or becoming enforceable over any portion of the Collateral;

                      (F) any one or more events, conditions or circumstances
(including any event of force majeure or any on going or threatened strike,
slowdown or work stoppage by the employees of any member of the Borrower Group
or of any Vendor) known by a senior officer of any member of the Borrower Group
to exist or to have occurred or in the reasonable judgment of such officer are
expected or imminent that, in any case, constitute a Material Adverse Effect;

                      (G) any notice received by any member of the Borrower
Group purporting to cancel or materially alter in an adverse manner the terms of
any insurance contract (including any notification of any premium increase in
excess of 20% over the prior premium payable for such insurance contract); and


                                       28
<PAGE>


                      (H) any (i) fact, circumstance, condition or occurrence
that results in noncompliance with any Environmental Law and constitutes a
Material Adverse Effect and (ii) pending or, to the best knowledge of any member
of the Borrower Group, threatened (in writing) Environmental Claim against any
such member.

             (g) GOVERNMENTAL REPORTS. Within 30 days after the date on which
any such report is submitted, a copy of any material report required to be filed
by any member of the Borrower Group with any Governmental Authority with respect
to an environmental aspect of the System.

             (h) INFORMATION WITH RESPECT TO AMENDMENT, WAIVER OR CONSENT. In
connection with any proposed amendment, waiver or consent in respect of any of
the provisions hereof or of any other Transaction Document for which the
approval of any Agent or any Senior Lender is required, sufficient information
(including a narrative description of the effect thereof), sufficiently far in
advance of the date a decision is required, to enable such Agent or the Senior
Lenders to make an informed and considered decision with respect thereto
(provided that such information shall be required to be delivered only to those
Agents and Senior Lenders the consent of which is required).

             (i) NOTICE OF DEFAULT, LITIGATION OR ENVIRONMENTAL CLAIM. Promptly,
and in any event within three Business Days after any Responsible Officer of the
Company obtains knowledge thereof, notice of (y) the termination of either of
the Alcatel Procurement Agreement or the QUALCOMM Procurement Agreements and (z)
any change in the ownership of Holdings of which it has knowledge. Each notice
pursuant to this subsection shall specify the nature thereof, the period of
existence thereof and what action, if any, the Borrower Group proposes to take
with respect thereto.

             (j) YEAR 2000 COMPLIANCE. Promptly in the event the Borrower Group
discovers or determines that any computer application (including those of its
material suppliers and vendors) that is material to its or any of the Business
will not be Year 2000 compliant on a timely basis, except to the extent that
such failure would not have a Material Adverse Effect.

             (k) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the United States
Securities and Exchange Commission or any comparable Mexican Governmental
Authority by Holdings, (ii) copies of all financial statements, proxy
statements, notices and reports as Holdings shall send generally to public
shareholders and (iii) with reasonable promptness, such other information or
documents (financial or otherwise) as any Secured Party may reasonably request
from time to time (provided that such information shall be required to be
delivered only to the Secured Party or Parties requesting such information).

        5.02 BOOKS, RECORDS AND INSPECTIONS; ACCOUNTING AND AUDIT MATTERS.

             (a) Each member of the Borrower Group will maintain adequate
management information and cost control systems and will keep proper books of
record and account adequate to reflect fairly the financial condition and
results of operations of the


                                       29
<PAGE>


Borrower Group (taken as a whole) and all dealings and transactions related to
its business in which full, true and correct entries shall be made in conformity
with GAAP, consistently applied.

             (b) Each member of the Borrower Group will permit, upon reasonable
notice from any Secured Party or a Relevant Party and during normal business
hours, such Administrative Agent or Relevant Party, as the case may be, and the
officers and designated representatives of such Person to visit and inspect any
of the properties of such member, and to examine and make copies of the books of
record and account and documents of such member and discuss the affairs and
accounts of the Borrower Group with, and be advised as to the same by, their
officers, all at such reasonable times and intervals and to such reasonable
extent as such Administrative Agent or Relevant Party may request.

             (c) The Chief Financial Officer of Holdings shall authorize the
Independent Accountant (whose fees and expenses shall be for the account of the
Borrower Group) to communicate directly with the Relevant Parties, the Alcatel
Administrative Agent and the Qualcomm Administrative Agent, at reasonable times
regarding the accounts and operations of the Borrower Group, subject to the same
precondition as is described in Section 3.01(n).

             (d) In the event that the Borrower Group wishes to replace the
existing Independent Accountant for any reason, the Borrower Group shall (i)
provide the Collateral Agent with written notice of its rationale therefor and
(ii) propose an alternative firm of independent public accountants to serve as
the Independent Accountant, which firm shall be internationally recognized.

        5.03 MAINTENANCE OF PROPERTY AND INSURANCE.

             (a) Each member of the Borrower Group will keep all property
necessary to its business in good working order and condition in accordance with
generally accepted practices, standards and requirements; and shall, from time
to time, in respect of its properties and equipment, make all necessary and
proper repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.

             (b) Each member of the Borrower Group will keep its present and
future properties and Business insured as required by and in accordance with the
terms and provision described in Schedule 5.03.

        5.04 CORPORATE FRANCHISES AND SYSTEM PERMITS; ENFORCEMENT OF TRANSACTION
DOCUMENTS. The Borrower Group will:

             (a) take, or cause to be taken, all actions necessary to obtain in
a timely manner all authorizations, consents and permits which are the
responsibility of the Borrower Group, and will promptly make, or cause to be
made, all required filings with governmental or similar authorities in Mexico,
in each case, to preserve, renew and keep in full force and effect (i) the
existence as a sociedad anonima de capital variable in good standing under the
laws of Mexico of each such member, (ii) its qualification to do business in
Mexico and (iii) (except to the extent the absence of which would not constitute
a Material Adverse Effect) its material rights, franchises, licenses, contracts,
powers, privileges and patents


                                       30
<PAGE>


necessary for the construction, development, operation and maintenance of the
System, the conduct of the Business, and the performance of its obligations
under the Transaction Documents;

             (b) obtain and maintain, or cause to be obtained and maintained in
full ford and effect (or where appropriate, renew), (i) all consents,
authorizations and permits which arc the responsibility of the Borrower Group,
licenses and patents, trademarks (and other intellectual property) necessary or
desirable for the care, custody, control, construction, development operation
and maintenance of the System as contemplated by the Business Plan (other than
such consents, authorizations and permits the absence of which would not
constitute a Material Adverse Effect), and (ii) all consents, authorizations and
permits necessary for the conversion to Dollars of all Peso amounts which are
required to be converted by the Financing Agreements and for the remittance to
the United States in Dollars of any amounts paid or payable in Dollars, as
applicable, to the Senior Lenders in connection with any Financing Agreement or
Security Document or the transactions contemplated thereby; and

             (c) preserve and maintain good and marketable title to its
properties and assets subject to no liens other than Permitted Liens.

        5.05 COMPLIANCE WITH APPLICABLE LAW. Each member of the Borrower Group
will comply in all respects with all Applicable Law applicable to it or to the
System except to the extent that the failure to so comply would not constitute a
Material Adverse Effect.

        5.06 USE OF PROCEEDS. The Company shall use the proceeds of all
Disbursements only for the purposes set forth in the applicable Credit
Agreement.

        5.07 TAXES; PROPER LEGAL FORM. Each member of the Borrower Group shall
pay or arrange for payment on or prior to the date when due of all present and
future (i) Taxes imposed on it and (ii) claims, levies or liabilities (including
claims for labor, services, materials and supplies) for sums which have become
due and payable and which have become or, if unpaid, would become a Lien (other
than a Permitted Lien) upon, or otherwise would constitute a Material Adverse
Effect on, the property of the Borrower Group (or any part thereof); provided,
however, that no member of the Borrower Group shall be required to pay any
amount otherwise payable pursuant to either clause (i) or (ii), if such amount
is the subject of a Good Faith Contest. Each member of the Borrower Group will
promptly pay or cause to be paid any valid, final judgment enforcing any such
Taxes or other claims, levies or liabilities of any member of the Borrower
Group, and shall cause the same to be satisfied of record. Each member of the
Borrower Group shall take all such further action within its control required to
ensure that each of the Transaction Documents is in proper legal form under the
laws of Mexico or under the respective governing laws selected in such
Transaction Documents, for the enforcement thereof in such jurisdictions without
any further action on the part of any Agent or any other Person.

        5.08 CREDIT AGREEMENTS. Each member of the Borrower Group will
diligently perform each of its obligations under each of the Credit Agreements.


                                       31
<PAGE>


        5.09 ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS.

             (a) Each member of the Borrower Group shall, at its own expense,
 .take all actions that have been or shall be reasonably requested by the
Collateral Agent, or that such member knows are, necessary to establish,
maintain, protect, perfect and continue the perfection of the first priority
security interests of the Collateral Agent for the benefit of the Secured
Parties created by the Security Documents and shall furnish timely notice of the
necessity of any such action, together with such instruments, in execution form,
and such other information as may be required to enable the Collateral Agent to
effect any such action. Without limiting the generality of the foregoing, each
member of the Borrower Group shall, at its own expense, (i) execute or cause to
be executed and shall file or cause to be filed or register or cause to be
registered such financing statements, continuation statements, fixture filings
and mortgages or deeds of trust in all places necessary or advisable (in the
opinion of counsel for the Collateral Agent), to establish, maintain and perfect
such security interests, (ii) discharge all other Liens (other than Permitted
Liens) or other legal and valid claims adversely affecting the rights of the
Collateral Agent and/or the other Secured Parties in the Collateral, (iii)
deliver or publish all notices to third parties that may be required to
establish or maintain the validity, perfection or priority of any Lien created
pursuant to the Security Documents, and (iv) file or cause to be filed or
register or cause to be registered the Mortgage at the Public Registry of
Commerce and/or the Public Registry of Property in each locality where the
Borrower owns any real property in Mexico, including any real property acquired
by the Borrower after the Closing Date.

             (b) Each member of the Borrower Group will do everything necessary
in the judgment of the Collateral Agent, (including filing, registering and
recording all necessary documents and paying all fees, taxes, levies, imposts
and expenses in connection therewith) to (A) create security arrangements,
including, if applicable, the establishment of a pledge or the perfection of any
Lien or, as applicable, the enforceability of a Lien as against any member of
the Borrower Group and any subsequent Lien or (including a judgment lien or),
holder of a fixed or floating charge, or transferee for or not for value, in
bulk, by operation of law, or otherwise, in each case granted, with respect to
future assets in accordance with the requirements of Mexican law and New York
law, (B) maintain the security and pledges created by the Security Documents in
full force and effect at all times (including, as applicable, the priority
thereof) and (C) preserve and protect the Collateral and protect and enforce its
rights and title, and the rights and title of the Collateral Agent, for the
benefit of the Secured Parties, to the security created by the Security
Documents. Furthermore, any member of the Borrower Group shall cause to be
delivered to the Intercreditor Agent such opinions of counsel and other related
documents as may be reasonably requested by the Collateral Agent, to assure
compliance with this Section 5.09.

        5.10 CONDEMNATION EVENT; CASUALTY EVENT. If any Casualty Event or
Condemnation Event shall occur with respect to the System or any material part
thereof, the Borrower Group shall (i) promptly upon discovery or receipt of
notice of any occurrence thereof provide written notice thereof to the Agents
and the Relevant Parties, (ii) diligently pursue all its rights to compensation
against all relevant insurers, reinsurers and/or Governmental Authorities, as
applicable, in respect of such event, (iii) not, without the written consent of
the Collateral Agent compromise or settle any claim with respect thereto if the
amount of any such claim (either individually or in the aggregate) exceeds
$25,000,000, and (iv) if the amount of Loss Proceeds exceeds $50,000,000
immediately pay or apply all such Loss Proceeds stemming from



                                       32
<PAGE>


such event to the Collateral Agent for deposit into a separate escrow account to
be maintained by the Collateral Agent for the benefit of the Secured Parties
(the "Loss Proceeds Escrow Account") and to the extent that any Loss Proceeds
are less than the minimum required for deposit into the Loss Proceeds Escrow
Account, the Borrower Group shall not be obligated to make such deposit, but
shall be required to apply such Loss Proceeds, as soon as may be practicable, to
either (a) the prepayment of all Senior Indebtedness then outstanding on a Pro
Rata Payment basis, or (b) the repairing, rebuilding, reconstructing or
re-equipment of the System. Amounts on deposit in the Loss Proceeds Escrow
Account shall be disbursed to or for the credit of the Company for the purpose
of repairing, reconstruction or re-equipment of the System which has been
damaged or destroyed or condemned, upon satisfaction of conditions to such
disbursement which shall be set forth in an agreement (the "Loss Escrow
Agreement") which shall be executed and delivered by the Collateral Agent and
each member of the Borrower Group as soon as may be practicable following the
deposit to the Loss Proceeds Escrow Account, which Loss Escrow Agreement shall
be in form and substance reasonably satisfactory to the Required Voting Parties
as set forth in the Intercreditor Agreement. If the conditions set forth in the
Loss Escrow Agreement cannot be satisfied or if the Company otherwise elects,
then all of the Loss Proceeds shall be disbursed from the Loss Proceeds Escrow
Account and applied to the prepayment of Senior Indebtedness then outstanding on
a Pro Rata Payment basis. Each member of the Borrower Group consents to the
participation of the Collateral Agent in any proceedings regarding a Casualty
Event or Condemnation Event, and each such member shall from time to time
deliver to the Collateral Agent all documents and instruments requested by it in
connection with such participation. If and to the extent that any Senior
Indebtedness then outstanding does not permit the prepayment thereof at such
time or under such circumstances as are described in this Section 5.10, or any
Senior Lender notifies the Company and each Administrative Agent that it does
not desire any such prepayment from such amounts, then any prepayment referred
to in this Section 5.10 shall be applied on a Pro Rata Payment basis as if such
Senior Indebtedness was not then outstanding. Any prepayment of Senior
Indebtedness made in accordance with this Section 5.10 shall be made
simultaneously with the prepayment of other Senior Indebtedness (other than as
set forth in the preceding sentence), provided that if such prepayment of any
such Senior Indebtedness would require a prepayment or break-funding penalty,
such prepayment amounts may, at the option of the Company, be deposited with the
applicable Administrative Agent, invested in Permitted Investments, and applied
to the prepayment of such Senior Indebtedness on the first date as to which no
prepayment or break-funding penalty would be imposed.

        5.11 APPLICATION OF EQUITY CONTRIBUTIONS. Holdings shall, immediately
upon receipt of cash or other funds or assets (i) representing the subscription
price paid in connection with the Equity Commitments or any other cash
contributions made by the shareholders of Holdings in consideration for Capital
Stock issued by Holdings, including any proceeds received by Holdings pursuant
to a Qualified Public Offering, or (ii) received as the proceeds of any
Indebtedness issued by Holdings (other than the proceeds of Indebtedness which,
is required by the Person furnishing or underwriting such Indebtedness, to be
held in a reserve or similar account by Holdings for payment of principal or
interest on such Indebtedness), or (iii) representing any other cash, liquid
investments or other assets (other than stock held by Holdings in its
subsidiaries), contribute no less than 99% of such cash or other funds or assets
to the Company (and the remainder, if any, to Pegaso PCS and/or Personnel Co.)
as an equity contribution and without any right, directly or indirectly, to
receive repayment. Other than with respect to a Qualified Public Offering,
Holdings shall ensure that each new shareholder of


                                       33
<PAGE>

Holdings, as a precondition to its contribution of equity, execute and deliver
the Sponsor Negative Pledge Agreement and in take all actions required by such
agreement with respect to the shares of such shareholder.

        5.12 TRANSLATIONS. If any Transaction Document, notice, certificate,
instrument, communication or other document required to be delivered to any
Person pursuant to this Agreement is not originally executed, delivered or given
in English (regardless of whether such requirement arises before or after the
Initial Disbursement Date), the Borrower Group shall, upon written request of
any Agent or Relevant Party entitled to receive the same, concurrently with the
delivery of such Transaction Document, notice, certificate, instrument or other
document, additionally and at the Company's expense, provide to such Person a
certified English translation thereof. Subject to Section 8.13, if any
Transaction Document, notice, certificate, instrument, communication or other
document required to be delivered to any Person pursuant to this Agreement is
not originally delivered in Spanish, and a Spanish translation thereof shall be
necessary or appropriate, in the reasonable judgment of any Secured Party, under
Mexican law of in connection with the administration or enforcement of any of
the Financing Agreements, then any Secured Party may, or upon the request of any
Secured Party the Company shall, obtain a certified Spanish translation thereof
at the Company's expense for the benefit of the Secured Parties.

        5.13 NEW SUBSIDIARIES. In the event that Holdings or any other member of
the Borrower Group (or any New Subsidiary, as defined below) forms, purchases or
acquires (whether for consideration or otherwise) any Subsidiary other than
those Persons which are, as of the Closing Date, members of the Borrower Group
(a "New Subsidiary"), then the member of the Borrower Group which has so formed,
acquired or purchased such New Subsidiary shall (at its own expense), within 30
days of the date of such formation, acquisition or purchase, deliver to the
Agents and the Relevant Parties the following documents (which shall be in form
and substance reasonably acceptable to the Agents): (A) a guaranty by the New
Subsidiary of all of the Obligations, substantially in the form of the Pegaso
Guaranty Agreement delivered by the Guarantors on the Closing Date, (B) a trust
agreement (substantially in the form of the Guaranty Trust Agreement) entered
into by the member of the Borrower Group which is the parent company of such New
Subsidiary, as settlor, which has the effect of transferring title to 100% of
the Capital Stock of such New Subsidiary to the trustee under such trust
agreement, (C) an instrument in writing, executed and delivered by the New
Subsidiary, pursuant to which such New Subsidiary becomes a member of the
Borrower Group and subject to this Agreement and (to the extent appropriate) the
other Financing Agreements, (D) such security documents as shall (in the opinion
of the Administrative Agents) be necessary to grant to the Collateral Agent a
first priority and perfected Lien on all of the assets, contract rights,
intangibles and revenues of the New Subsidiary, and (E) opinions of counsel,
reasonably acceptable to the Administrative Agents, as to the validity and
enforceability of such foregoing agreements.

        5.14 OTHER PROPERTIES SUBJECT TO LIENS; AFTER-ACQUIRED PROPERTY.

             (a) Within 30 days of the purchase or acquisition by the Company of
any property (including, without limitation, Capital Stock of any other Person),
asset, contract or other right, or intangible which is not then subject to a
Lien granted by the Security Documents (collectively, "After-Acquired
Property"), the Company shall so notify the Administrative


                                       34
<PAGE>


Agents, the Relevant Parties and the Collateral Agent in Writing and shall
deliver to the Collateral Agent (at the expense of such member) such agreements,
instruments and other documents (including amendments to the Mortgage or other
Security Documents) as shall be deemed necessary or appropriate, in the
reasonable opinion of the Collateral Agent, to grant a first priority and
perfected Lien on such After-Acquired Property to the Collateral Agent, subject
to no Liens other than Permitted Liens.

             (b) Without limiting the generality of the foregoing and except as
expressly provided in the Post-Closing Agreement, the Company shall, within 30
days of entering into any Material Agreement, (i) execute an Assignment
Agreement in favor of the Collateral Agent, for the benefit of the Senior
Lenders, collaterally assigning all of the Company's rights under such material
agreement and (ii) obtain the consent of any contractual counterparties
necessary of desirable, in form and substance, reasonably satisfactory to the
Administrative Agents, to permit such collateral assignment.

             (c) As provided in Section 2.04, any and all property, assets,
contract or other rights or intangibles which are granted to any Senior Lender
in connection with the issuance of Additional Senior Indebtedness shall be
granted to the Collateral Agent and held for the benefit of all of the Senior
Lenders as security for all of the Obligations as provided in the Intercreditor
Agreement.

        5.15 EQUITY COMMITMENTS. Holdings shall take all actions necessary or
required to assure that all of the Equity Commitments remain in full force and
effect. Subject to any restrictions contained in the Joint Venture Agreement
relating to the timing of the obligation of the Original Mexican Shareholders to
make Equity Contributions, Holdings shall draw on such Equity Commitments, to
the extent permitted under such Equity Commitments, at the earlier to occur of
the following: (i) the last date on which any particular contribution is to be
made under such Equity Commitment, or (ii) at least five Business Days prior to
any date on which any member of the Borrower Group has an obligation to pay any
Obligation (or has any other obligation for the payment of money, the
non-payment of which would constitute a Material Adverse Effect) and has
insufficient funds on hand to make such payment. Any such drawing on the Equity
Commitments shall (subject to the limitations contained in such Equity
Commitments) be in an amount sufficient to satisfy the requirement set forth in
the preceding sentence. Holdings shall not permit the Joint Venture Agreement to
be amended or supplemented in any manner which would relieve the Original
Mexican Shareholders from fulfilling the Equity Commitments contained therein.
The obligations of Holdings under this Section 5.15 to draw upon the Equity
Commitments shall be reduced to the extent of (i) any cash equity investment
received by Holdings after the date hereof or (ii) the principal amount of any
Subordinated Loans extended to Holdings after the date hereof; provided, that
all obligations of Holdings pursuant to this Section 5.15 shall terminate upon
the investment of additional equity and/or incurrence of Subordinated Loans in
the aggregate amount of $100,000,000 after the date hereof.

        5.16 YEAR 2000 COMPLIANCE. Each member of the Borrower Group shall take
such actions as are necessary or prudent to assure that any computer application
(including those operated by the Vendors) that is material to the Business of
the Borrower Group will be Year


                                       35
<PAGE>


2000 compliant on a timely basis, except to the extent that such failure will
not result in a Material Adverse Effect.

        5.17 OPERATOR AGREEMENTS. The Borrower Group agrees to maintain in full
force and effect the Operator Agreement and to cause Leap Wireless Mexico to
maintain in full force and effect the GTE Operator Agreement, in each case,
through the date (the "Applicable Date") which is the earlier of (i) the
expiration date stated therein, and (ii) December 31, 2003; provided, however,
that (i) Leap Wireless Mexico may terminate the GTE Operator Agreement prior to
the Applicable Date so long as (a) Leap Wireless Mexico enters into a new
operator agreement substantially similar to the GTE Operator Agreement,
replacing GTE with another company of international standing and experience in
respect of operating systems (either as principal or agent) in the
telecommunications industry, and (b) the replacement operator executes a consent
in substantially the form of Appendix E-5 within 30 days of the execution of the
replacement operator agreement, and (ii) the Company may terminate the Operator
Agreement or Leap Wireless Mexico may terminate the GTE Operator Agreement so
long as (a) the Company enters into a new operator agreement substantially
similar to the GTE Operator Agreement, operating systems (either as principal or
agent) in the telecommunications industry and (b) the replacement operator
executes a Consent in substantially the form of Appendix E-5 within 30 days of
the execution of the replacement operator agreement.

        5.18 PAYMENT OF CERTAIN FEES. The Borrower Group shall pay all of the
reasonable and customary fees and expenses (including up-front and on-going fees
and expenses) of (i) the Collateral Agent, (ii) the Intercreditor Agent, (iii)
the trustee under the Guaranty Trust Agreement, in each case upon receipt of
invoices from such parties, and (iv) the notary in connection with any
amendments to the Mortgage.

        5.19 CONSENTS, APPROVALS. The Borrower Group shall, from time to time,
obtain all material governmental and third party consents, approvals, Permits
and licenses required to be obtained by such time in connection with the
transactions contemplated by the Alcatel Procurement Agreement, the QUALCOMM
Procurement Agreements and the Financing Agreements and such consents, approvals
and licenses shall be kept in effect so long as required, including, without
limitation, (i) any required consent of any Governmental Authority required to
be obtained to permit the assignment for security purposes of the Licenses and
all additional licenses granted to any member of the Borrower Group and (ii) all
required consents from contractual counterparties of the Borrower Group required
to be obtained to permit the due and proper assignment to the Collateral Agent
of the Collateral.

        5.20 MAINTENANCE OF LICENSES.

                  (i) The Company shall take any and all action necessary to
maintain the Licenses in compliance with Applicable Law, except to the extent
that the failure to do so would not constitute an Event of Default under Section
7.13.

                  (ii) The Company shall not sell, assign, transfer or partition
the Licenses other than as permitted by Section 6.02 (e).


                                       36
<PAGE>


                  (iii) The Company shall not take any action which would
violate any federal, state, national, provincial or local statute, rule
regulation or order relating to the Licenses if such violation would constitute
a Material Adverse Effect.

                  (iv) The Company shall not materially modify or amend the
Licenses if such modification or amendment would result in the Licenses not
covering at least Region 9, and either Region 4 or Region 6 (as such Regions are
defined in Exhibit A to the Joint Venture Agreement) or the number of Covered
Pops covered by the Licenses, as so modified or amended, would not exceed
40,000,000 Pops.

                  (v) The Company shall enter into all interconnection
agreements required under or by the Licenses, if any.

                  (vi) The Company shall not take any action which would violate
any License or any agreement relating to the Licenses if such action would
result in an Event of Default under Section 7.13.

                  (vii) The Company shall not (other than as contemplated by the
Security Documents) pledge as collateral the Licenses, nor subject the Licenses
to any claim, Lien, security interest or other encumbrance.

        Provided; however, that nothing in this Section 5.20 shall limit the
ability of the Company to sell or dispose of assets, including a portion of the
Licenses to the extent expressly permitted in Section 6.02(e).

        5.21 SITE ACQUISITION.

             (a) In connection with site acquisition for the placement or
installation of Intelligent Base Station Controllers ("BSCs"), Base Station
Transceivers ("BTSs"), Mobile Switching Centers ("MSCs") or other infrastructure
equipment, the Company shall enter into a Site Lease with minor modifications as
shall be reasonably necessary to negotiate with particular landlords; and

             (b) concurrently with entering into any lease of real property in
connection with the placement or installation of BSCs, BTSs, MSCs or other
infrastructure equipment, whether or not in the form of a Site Lease, the
Company shall deliver to the Collateral Agent (i) a copy of such lease and (ii)
if the lessor of such real property is party to a lending arrangement with
respect to such real property, a nondisturbance agreement, duly executed by the
lessor's lender in form suitable for recordation, or, in the case of each item
(a) or (b) of this Section 5.21, other documentation reasonably satisfactory to
the Collateral Agent.

        5.22 MINIMUM ASSETS. The Company shall at all times own, legally and
beneficially, title to the Minimum Assets.



                                       37
<PAGE>


                                    ARTICLE 6

                               NEGATIVE COVENANTS

        Each member of the Borrower Group covenants and agrees, jointly and
severally, that, until the Commitments have been terminated and all Obligations
in connection with the Senior Indebtedness are paid in full (unless waived in
writing in accordance with the Intercreditor Agreement):

        6.01 LIENS. Each member of the Borrower Group will not, and will not
agree to, create, incur, assume or suffer to exist any Lien upon or with respect
to any of its property, revenues or assets (real, personal or mixed, tangible or
intangible) whether now owned or hereafter acquired or sell any such property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable or
notes with recourse to such Person) or assign any right to receive income;
provided that the provisions of this Section 6.01 shall not prevent the
creation, incurrence, assumption or existence of the following Liens, rights or
trusts (each, a "Permitted Lien"):

                  (i) Liens created by any of the Security Documents or the
other Financing Agreements, or otherwise in favor of the Collateral Agent for
the benefit of the Senior Lenders in connection with the transactions
contemplated by this Agreement;

                  (ii) Liens in respect of property, revenues or assets of a
member of the Borrower Group imposed by Applicable Law, which were incurred in
the ordinary course of business, do not secure Indebtedness and do not arise as
a consequence of any default by a member of the Borrower Group in connection
with any Transaction Document or any obligation owed to any Person, and (x)
which do not in the aggregate materially detract from the value of such property
or assets or materially impair the use thereof in the operation of the Business
of the Borrower Group or (y) which are the subject of a Good Faith Contest by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such Lien;

                  (iii) Liens for taxes, assessments and other governmental
charges of requirements which are not then due or which are subject to a Good
Faith Contest;

                  (iv) Liens in respect of judgments or awards against a member
of the Borrower Group which are subject to a Good Faith Contest but only to the
extent, for an amount and for a period not resulting in an Event of Default
under Section 7.12;

                  (v) Liens created pursuant to Capital Leases permitted by
Section 6.04(c);

                  (vi) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business (exclusive of obligations in respect
of the payment for borrowed money);


                                       38
<PAGE>


                  (vii) leases, subleases or licenses granted to others not
interfering in any material respect with the Business;

                  (viii) easements, rights-of-way, restrictions, minor defects
or irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the Business;

                  (ix) any interest or title of a lessor under any lease
permitted by this Agreement and Liens arising from financing statements
regarding leases permitted by this Agreement;

                  (x) purchase money Liens securing payables arising from the
purchase by any member of the Borrower Group of any equipment or goods in the
normal course of business, provided that such payables do not constitute
Indebtedness;

                  (xi) Liens arising pursuant to purchase money mortgages or
security interest securing Indebtedness not constituting Senior Indebtedness or
High Yield Debt representing the purchase price of assets acquired by any member
of the Borrower Group after the Closing Date; provided that any such Liens
attach only to the asset so acquired and that all Indebtedness secured by Liens
created pursuant to this clause (xi) is permitted by this Article 6;

                  (xii) Liens on property (other than Capital Stock) of any
Person that becomes a member of the Borrower Group after the date hereof,
provided that such Liens are in existence at the time such Person becomes a
member of the Borrower Group, were not created in anticipation thereof and do
not attach to any property of any other member of the Borrower Group;

                  (xiii) Liens on wireless telecommunication handsets granted in
favor of a holder of Indebtedness, provided that (a) such Indebtedness was
incurred for the purpose of, and the proceeds thereof were expended for, the
payment for such handsets, and (b) such Indebtedness does not constitute
Additional Senior Indebtedness;

                  (xiv) with respect to the incurrence of High Yield Debt, the
Lien described in the parenthetical in Section 6.04(h)(C); and

                  (xv) Liens (other than Liens elsewhere described in this
Section 6.01), provided that (A) the aggregate amount of the Indebtedness
secured by such Liens does not at any time exceed the greater of (a)
$10,000,000, or (b) one percent (1 %) of the aggregate of the Consolidated Debt
and the Consolidated Paid-In Equity at the time of the incurrence of such
Indebtedness, and (B) such Liens do not encumber any of the following assets or
properties: (a) the Licenses, (b) any assets or equipment furnished under the
Vendor Agreements, (c) any intellectual property rights, (d) any accounts
receivable or proceeds thereof related to the Business, or (e) any real estate;
provided further, that this clause (xv) shall not apply to permit any Liens by
New Subsidiaries.

        6.02 CONSOLIDATION; MERGER; SALE OF ASSETS. No member of the Borrower
Group will wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, sell or otherwise dispose of all or any
part of its property or assets (other than


                                       39
<PAGE>


sales and other dispositions (including asset swaps and similar transactions)
when no Event of Default exists to the extent such sale or disposition is in the
ordinary course of business) or purchase, lease or otherwise acquire all or any
part of the property or assets of any Person (other than purchases or
acquisitions of inventory, leases, materials and equipment in the ordinary
course of business) or agree to do any of the foregoing at any future time,
except that the following shall be permitted:

             (a) any Subsidiary of a member of the Borrower Group (other than
the Company) may be merged or consolidated with or into, or be liquidated into,
another member of the Borrower Group (so long as a member of the Borrower Group
is the surviving corporation), or all or any part of its business, properties
and assets may be conveyed, leased, sold or transferred to a member of the
Borrower Group, in each case to the extent that (i) no detriment results in the
operation of the Business, (ii) there is no detriment to the security interests
and Liens created pursuant to the Security Documents, and (iii) the Company
continues to own, both legally and beneficially, the Minimum Assets;

             (b) Capital Expenditures; provided that such Capital Expenditures
do not exceed $750,000,000 from January 1, 1998 through December 31, 2000, and
do not exceed $200,000,000 for each calendar year thereafter; provided that if
any portion of such permitted Capital Expenditure is not made within the
designated period, such unused amount shall be available (and permitted) to be
made as Capital Expenditures in ensuing periods;

             (c) each member of the Borrower Group may lease (as lessee) real or
personal property in the ordinary course of business (so long as such lease does
not create a Capitalized Lease Obligation not otherwise permitted by Section
6.04(c));

             (d) licenses or sublicenses by members of the Borrower Group of
intellectual property in the ordinary course of business of such members,
provided, that such licenses or sublicenses shall not interfere with the
Business;

             (e) sales of Licenses (or portions thereof), provided that (i)
following such sale or sales, the Company continues to own the Licenses covering
at least Region 9 and either Region 4 or Region 6 (as defined in Exhibit A to
the Joint Venture Agreement), (ii) following such sale or sales, the total
Covered Pops in the Regions covered by the Licenses (or portions thereof) owned
by the Company following such sale or sales are not less than 40,000,000, and
(iii) to the extent the amount of the net proceeds of such sale or sales exceeds
the aggregate amount of (A) Capital Expenditures of the Company (whether or not
financed) plus (B) all amounts paid in connection with acquisitions permitted
under clause (g) below, in each case, during the period from the date of receipt
of such net proceeds by the Company through and including the date that is 180
days thereafter, such excess shall be applied to the prepayment of outstanding
Senior Indebtedness on a Pro Rata Payment basis as soon as may be practicable
following the end of such 180-day period;

             (f) sales or dispositions of assets (other than the Licenses or
portions thereof) provided, that to the extent the amount of the net proceeds of
such sale or sales exceeds the aggregate amount of (A) Capital Expenditures of
the Company (whether or not financed) plus (B) all amounts paid in connection
with acquisitions permitted under clause (g) below, in


                                       40
<PAGE>


each case, during the period from the date of receipt of such net proceeds by
the Company through and including the date that is 180 days thereafter, such
excess shall be applied to the prepayment of outstanding Senior Indebtedness on
a Pro Rata Payment basis as soon as may be practicable following the end of such
180-day period; and

             (g) other than with respect to New Subsidiaries, the acquisitions
of additional telecommunications businesses and assets in Mexico, provided that
the aggregate acquisition price of all such businesses and assets does not
exceed $50,000,000.

        In connection with the sale or disposition of any License (or portion
thereof) or any other asset or property of a member of the Borrower Group which
is permitted under this Section 6.02 and which is then subject to a Lien created
by the Security Documents, the Collateral Agent shall execute such documents of
release as shall be reasonably requested by the Borrower Group in order to
release such Licenses (or portions thereof) or such other asset or property from
the Lien created by the Security Documents. If and to the extent that any Senior
Indebtedness then outstanding does not permit the prepayment thereof at such
time or under such circumstances as are described in clause (e) or clause (f) of
this Section 6.02, or any Senior Lender notifies the Company and each
Administrative Agent that it does not desire any such prepayment from such
sources, then any prepayment referred to in such clauses shall be applied on a
Pro Rata Payment basis as if such Senior Indebtedness was not then outstanding.
Any prepayment of Senior Indebtedness made in accordance with this Section 6.02
shall be made simultaneously with the prepayment of other Senior Indebtedness
(other than as set forth in the preceding sentence), provided that if such
prepayment of any such Senior Indebtedness would require a prepayment or
break-funding penalty, such prepayment amounts may, at the option of the
Company, be deposited with the applicable Administrative Agent, invested in
Permitted Investments, and applied to the prepayment of such Senior Indebtedness
on the first date as to which no prepayment or break-funding penalty would be
imposed.

        6.03 RESTRICTED PAYMENTS. No member of the Borrower Group will declare
or pay any dividends (other than dividends payable solely in Capital Stock of
such Person) or return any capital to, its stockholders or authorize or make any
other distribution, payment or delivery of property or cash to its stockholders
as such, or redeem, retire, purchase, or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its Capital Stock now
or hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), or set aside any funds for any of the
foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the Capital Stock of any
other member of the Borrower Group or any other Subsidiary, as the case may be,
now or hereafter outstanding (or any options or warrants or stock appreciation
rights issued by such Person with respect to its capital stock) (all of the
foregoing "Dividends"), except that (A) any Subsidiary of the Company, Pegaso
PCS or Personnel Co. may pay Dividends to the Company, Pegaso PCS or Personnel
Co., as applicable, (B) each of the Company, Pegaso PCS or Personnel Co. may pay
cash Dividends to Holdings to the extent, but only to the extent, that Holdings
needs all of such Dividends within five Business Days following the payment of
such Dividend to pay (i) normal, reasonable and customary administrative costs
incurred in the ordinary course of its business, (ii) Taxes paid in cash related
to the Business on behalf of the Borrower Group, (iii) to the extent that no
Default or Event of Default exists at the time such Dividend is paid and the
Company reasonably believes that it has, or will have on each of the


                                       41
<PAGE>


next following Payment Dates applicable to each tranche of Senior Indebtedness,
cash or Permitted Investments equal to the debt service coming due on such
Payment Dates, interest on, and (subject to Section 6.04(h)(B)) regularly
scheduled principal coming due on, High Yield Debt (issued by Holdings) within
such five Business Day-period (and any Dividends not so utilized within such
five Business Day-period shall be returned to the appropriate Subsidiary of
Holdings) and (iv) to the extent no Default or Event of Default exists at the
time of such payment, dividends by Holdings which are permitted to be paid
pursuant to clause (C) below, and (C) at any time during any fiscal year,
Holdings may pay Dividends to its shareholders provided that, (1) the Cash Flow
Test shall be satisfied as of the date of such Dividend payment, (2) the EBITDA
Test shall be less than or equal to 5.0 as of the date of such Dividend payment;
provided, that for purposes of this Section 6.03 the components of the EBITDA
Test shall be calculated as follows: (x) Consolidated Debt, cash and Permitted
Investments shall be measured as of the date of such Dividend payment and (y)
EBITDA shall be measured based on the two preceding fiscal quarters most
recently ended, and (3) simultaneously with any such Dividend payment, there
shall be paid to the holders of Senior Indebtedness, as a prepayment of the
principal amount of such Senior Indebtedness then outstanding and on a Pro Rata
Payment basis, an amount equal to such Dividend multiplied by the ratio
(expressed as a percentage of not less than 100%) which (i) the total principal
amount of Senior Indebtedness outstanding on the date of such prepayment bears
to (ii) the total Consolidated Paid In Equity as of such date, both calculated
in a manner consistent with the provisions of Section 6.10. If and to the extent
that any Senior Indebtedness then outstanding does not permit the prepayment
thereof at such time or under such circumstances as are described in this
Section 6.03, or any Senior Lender notifies the Company and each Administrative
Agent that it does not desire any such prepayment from such sources, then any
prepayment referred to in this Section 6.03 shall be applied on a Pro Rata
Payment basis as if such Senior Indebtedness was not then outstanding. Any
prepayment of Senior Indebtedness made in accordance with this Section 6.03
shall be made simultaneously with the prepayment of other Senior Indebtedness
(other than as set forth in the preceding sentence), provided that if such
prepayment of any such Senior Indebtedness would require a prepayment or
break-funding penalty, such prepayment amounts may, at the option of the
Company, be deposited with the applicable Administrative Agent, invested in
Permitted Investments, and applied to the prepayment of such Senior Indebtedness
on the first date as to which no prepayment or break-funding penalty would be
imposed.

        6.04 INDEBTEDNESS. No member of the Borrower Group will contract,
create, incur, assume or suffer to exist any Indebtedness, except the following
("Permitted Indebtedness"):

             (a) subject to Section 6.09 or Section 6.10 (whichever is then
applicable), Indebtedness incurred pursuant to the Alcatel Credit Agreement and
the Qualcomm Credit Agreement and Indebtedness incurred as a result of the
Alcatel Commitment Letter;

             (b) Indebtedness owing by any member of the Borrower Group to
another member of the Borrower Group so long as (i) not otherwise restricted by
this Agreement, and (ii) any payment of such debt (whether principal, interest
or otherwise) is specifically subordinated to the Senior Indebtedness and is not
secured in any form; provided, however, that no loan or advance may be made by
the Company to any other member of the Borrower Group if (A) an Event of Default
has occurred and is then continuing or (B) the total amount so loaned or


                                       42
<PAGE>


advanced by the Company and then outstanding exceeds an amount equal to 1% of
the Consolidated Paid-In Equity;

             (c) Capitalized Lease Obligations of a member of the Borrower Group
not constituting Senior Indebtedness and Indebtedness incurred pursuant to
purchase money mortgages or security interests permitted by Section 6.01(xi),
provided that the aggregate of such Capitalized Lease Obligations under all
Capitalized Leases entered into after the Closing Date plus the principal amount
of all Indebtedness secured by such purchase money mortgages or security
interests shall not exceed at any time outstanding the greater of (i)
$15,000,000 or (ii) two percent (2%) of the sum of Consolidated Debt and
Consolidated Paid-In Equity at the time of incurrence thereof;

             (d) Additional Senior Indebtedness as provided in Section 2.04,
provided that (i) after the incurrence thereof the Leverage Ratio set forth in
Section 6.10 or the EBITDA Test set forth in Section 6.09 (whichever is then
applicable) shall be satisfied as of the last day of the last fiscal quarter
last ended for which financial statements have been delivered in accordance with
Section 5.01(a), on a pro forma basis as if such Additional Senior Indebtedness
and any other Indebtedness which was incurred after such last day was incurred
and outstanding on such last day and any Indebtedness which was repaid after
such last day was not outstanding on such last day, and (ii) the weighted
average life of such Additional Senior Indebtedness is not shorter than the
shorter of (A) 4.3 years or (B) the remaining weighted average life of the
Indebtedness under the Alcatel Credit Agreement and the Qualcomm Credit
Agreement outstanding immediately prior to the issuance of such Additional
Senior Indebtedness;

             (e) other Indebtedness outstanding prior to, and to remain
outstanding after, the Closing Date to the extent specified in Schedule 6.04;

             (f) Contingent Obligations of any of the Borrower Group arising
with respect to customary indemnification obligations incurred in connection
with permitted asset dispositions;

             (g) unsecured Indebtedness of the Company taking the form of a
working capital revolving credit facility, provided that (A) the principal
amount of such Indebtedness does not at any time exceed $50,000,000, and (B)
after the incurrence thereof the EBITDA Test set forth in Section 6.09 or the
Leverage Ratio set forth in Section 6.10 (whichever is then applicable) shall be
satisfied on the last day of the last fiscal quarter last ended for which
financial statements have been delivered in accordance with Section 5.01(a), on
a pro forma basis as if such unsecured Indebtedness and any other Indebtedness
which was incurred since such last day was incurred and outstanding on such last
day and any Indebtedness which was paid after such last day was not outstanding
on such last day;

             (h) Indebtedness incurred by any member of Borrower Group, other
than the New Subsidiaries, not otherwise described in this Section 6.04 ("High
Yield Debt"), provided that (A) the proceeds of such High Yield Debt are
intended to be applied (and are applied) to System Costs, to operating expenses
of the Business, or to cover required debt service payments on Senior
Indebtedness, (B) no principal installments of such High Yield Debt are
scheduled to be due and payable (or are otherwise required to be paid by
Holdings) prior to


                                       43
<PAGE>


January 15, 2008, (C) such High Yield Debt is not subject to any Lien on any
property or assets of any member of the Borrower Group (other than any reserve
or similar fund established in connection therewith which is funded from the
proceeds thereof and which is to be used to pay interest or principal on such
High Yield Debt), (D) following the issuance of such High Yield Debt, the EBITDA
Test set forth in Section 6.09 or the Leverage Ratio set forth in Section 6.10
(whichever is then applicable) shall be satisfied as of the last day of the last
fiscal quarter last ended for which financial statements have been delivered in
accordance with Section 5.01(a), on a pro-forma basis as if such High Yield Debt
and any other Indebtedness which was incurred since such last day were issued
and outstanding on such last day and any Indebtedness which was paid after such
last day was not outstanding on such last day, and (E) such High Yield Debt is
issued by Holdings and is not guaranteed by any other member of the Borrower
Group;

             (i) Indebtedness incurred in connection with the financing of
wireless telecommunication handsets, subject to the restrictions contained in
Section 6.01 (xiii);

             (j) Contingent Obligations not otherwise permitted under this
Section 6.04 to the extent not exceeding in the aggregate at any time
outstanding $5,000,000;

             (k) Subordinated Loans;

             (l) Obligations in respect of Swap Agreements as described in
Section 2.07; and

             (m) with respect to all New Subsidiaries, Indebtedness not
exceeding the aggregate principal amount of $5,000,000 outstanding at any one
time; provided, that no category of Permitted Indebtedness under this Section
6.04, other than this clause (m), shall apply to permit the incurrence of
Indebtedness by New Subsidiaries; provided, further, in any event, any guaranty
by any New Subsidiary pursuant to Section 5.13 hereof shall be permitted and
shall not apply to reduce the maximum allowable amount under this clause (m).

        6.05 SUBSIDIARIES. No member of the Borrower Group will establish,
create or acquire any Subsidiary except Wholly-owned Subsidiaries which are
established, formed or purchased in accordance with the restrictions and
limitations set forth in Section 5.13. The assets owned by any such Subsidiary
shall not cause the Borrower Group to breach its representation made in Section
4.10(c) hereof (e.g. Minimum Assets).

        6.06 ADVANCES, INVESTMENTS AND LOANS. No member of the Borrower Group
will lend money or credit or make advances to any Person, or purchase or acquire
any stock, obligations or securities of, or any other interest in, or make any
capital contribution to any Person, except:

             (a) any member of the Borrower Group may invest in Permitted
Investments;

             (b) any member of the Borrower Group may acquire and hold
receivables owing to them, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;


                                       44
<PAGE>


             (c) any member of the Borrower Group may incur intercompany
Indebtedness to the extent permitted pursuant to Section 6.04(b);

             (d) any member of the Borrower Group may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;

             (e) any member of the Borrower Group may make investments in any
other member of the Borrower Group provided that such investment does not cause
a breach of any representation or covenant hereunder;

             (f) any member of the Borrower Group may make loans and advances to
officers and employees of the Borrower Group (but not to any shareholders or
non-employee directors of a member of the Borrower Group), provided that any
such loan or advance is made in the ordinary course of business and in an
aggregate principal amount not to exceed $5,000,000 (or the Peso Equivalent
thereof) at any time outstanding; and

             (g) any member of the Borrower Group may make acquisitions
permitted by Section 6.02 (g).

        6.07 AFFILIATE TRANSACTIONS. Each member of the Borrower Group will not,
and will not permit any Subsidiary to, enter into any transactions or series of
transactions whether or not in the ordinary course of business, with any
Affiliate other than on terms and conditions substantially as favorable to such
member of the Borrower Group or such Subsidiary as would be obtainable by such
member of the Borrower Group or such Subsidiary at the time in a comparable
arm's-length transactions with a Person other than an Affiliate; provided that
the foregoing restrictions shall not apply to (i) transactions solely among the
members of the Borrower Group, (ii) employment arrangements entered into in the
ordinary course of business with officers of such member, (iii) customary fees
paid to members of the Board of Directors of Holdings, and (iv) any transaction
permitted by the Joint Venture Agreement as in effect on the Closing Date.

        6.08 NO OTHER BUSINESS. No member of the Borrower Group will undertake
and business other than the Business and activities reasonably incidental
thereto.

        6.09 EBITDA TEST. From and after the Trigger Date, the Borrower Group
will no permit the EBITDA Test to be more than the following ratios for the
following dates (when calculating Consolidated Debt less cash and Permitted
Investments) and quarterly and annual periods (when calculating EBITDA) ending
on such dates:

<TABLE>
<CAPTION>
  PERIOD               PERIOD ENDING ON                    EBITDA RATIO
  ------               ----------------                    ------------
<S>                    <C>                                 <C>
  Annual               December 31, 2003                           8:1

  Quarterly            March 31, June 30 and
                       September 30, 2004                          8:1
</TABLE>


                                       45
<PAGE>

<TABLE>
<S>                    <C>                                 <C>
  Annual               December 31, 2004
                       and each December 31 thereafter             6:1

  Quarterly            March 31, June 30 and
                       September 30 of each year,
                       commencing March 31, 2005
                       and thereafter                              6:1
</TABLE>

All calculations made for purposes of determining compliance with this financial
covenant shall be based on financial statements reconciled to U.S. GAAP;
provided, that for purposes of this Section 6.09, Consolidated Debt and
Permitted Investments shall be calculated in Dollars on the date of any
determination.

        6.10 LEVERAGE RATIO. At all times prior to the Trigger Date, the
Borrower Group will not permit the Leverage Ratio to exceed 1.5 to 1.0. All
calculations made for purposes of determining compliance with this financial
covenant shall be based on financial statement reconciled to U.S. GAAP;
provided, that for purposes of this Section 6.10, Consolidated Paid-In Equity
shall be calculated in Dollars on the date of contribution or dates of
contribution of such Consolidated Paid-In Equity, and Consolidated Debt and
Permitted Investments shall be calculated in Dollars on the date of any
determination.

        6.11 LIMITATION ON ISSUANCE OF STOCK. No member of the Borrower Group
(other than Holdings) will, nor will it permit, any of its Subsidiaries,
directly or indirectly, to, issue an. shares of its capital stock or other
securities (or warrants, rights or options to acquire shares or other equity
securities), except (i) in favor of Holdings or another member of the Borrower
Group that is the parent company, (ii) for replacements of then outstanding
shares of Capital Stock, (iii) for stock splits, stock dividends and similar
issuances which do not decrease the percentage ownership of the Borrower Group
in any class of the Capital Stock of such other members or such Subsidiary, and
(iv) for issuances by newly created or acquired Subsidiaries in accordance with
Section 5.13.

        6.12 PREPAYMENTS. So long as the Company shall have any Senior
Indebtedness outstanding, the Company shall not prepay any principal of High
Yield Debt or pay or prepay any principal or interest in respect of Subordinated
Loans.

        6.13 MODIFICATIONS OF CERTAIN DOCUMENTS AND AGREEMENTS. No member of the
Borrower Group shall amend or modify any of its Charter Documents or change its
Fiscal Year without the prior written consent of the Required Voting Parties,
except for any modifications to its Charter Documents (including the Joint
Venture Agreement) that are not materially adverse to any Secured Party. For
purposes of this Section 6.13, any amendment or modification to the Equity
Commitments set forth in the Joint Venture Agreement prior to the date on which
the sum of additional equity contributions made to Holdings after the Closing
Date and the Subordinated Loans made to Holdings after the Closing Date which
have not been repaid equal or exceeds $100,000,000 shall be deemed materially
adverse.


                                       46
<PAGE>


        6.14 ABANDONMENT OF THE SYSTEM. No member of the Borrower Group shall
(i) abandon the System, (ii) agree to abandon the System or (iii) make any
public declaration or statement regarding its intention to abandon the System.

        6.15 HAZARDOUS SUBSTANCES. No member of the Borrower Group shall
release, emit or discharge into the environment any Hazardous Materials in
violation of any Environmental Law to the extent that any such release, emission
or discharge would constitute a Material Adverse Effect. No member of the
Borrower Group will exercise care, custody or control over the System or any
real property owned or leased by any member of the Borrower Group in any manner
that would pose a major or unreasonable hazard to the environment, health or
safety.

        6.16 IMMUNITY. In any proceedings in Mexico or elsewhere in connection
with any of the Financing Agreements to which a member of the Borrower Group is
a party, no such member shall claim for itself or any of its assets immunity
from suit, execution, attachment or other legal process.

        6.17 REGULATIONS. No member of the Borrower Group shall directly or
indirectly apply any part of the proceeds of any Loan or other revenues to the
purchasing or carrying of margin stock within the meaning of Regulation T, U or
X of the Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

        6.18 INVESTMENT COMPANY ACT. No member of the Borrower Group shall take
(or permit any other Person to take) any action which could reasonably result in
such member falling within the definition of an "investment company" or a
company "controlled" by an "investment company," under the Investment Company
Act of 1940.

        6.19 DISPUTES. No member of the Borrower Group will agree, authorize or
otherwise consent to any proposed settlement, resolution or compromise of any
litigation, arbitration or other dispute with any Person which is an Affiliate,
unless such settlement, resolution or compromise is made on terms similar to
those which would apply if such Person were not an Affiliate.

                                    ARTICLE 7

                                EVENTS OF DEFAULT

        Each of the specified events set forth in Sections 7.01 through 7.16
shall constitute an "Event of Default":

        7.01 PAYMENTS. A failure by one or more members of the Borrower Group to
pay (whether by scheduled maturity, required prepayment, by acceleration or
otherwise) any principal of any Senior Indebtedness, any interest on any Senior
Indebtedness, any other amounts owing hereunder or under any other Financing
Agreement or any other amounts constituting Obligations within three Business
Days after such principal, interest or other amount first becomes due.


                                       47
<PAGE>


        7.02 REPRESENTATIONS. Any representation or warranty made by any
Sponsor, Guarantor, or any member of the Borrower Group herein or in any other
Financing Agreement or any representation, warranty or statement in any
certificate, financial statement or other document furnished to any Secured
Party by or on behalf of the Borrower Group hereunder or under any other
Financing Agreement shall prove to have been false or misleading in any material
respect as of the time made, deemed made, confirmed or furnished; provided,
however, that no Event of Default shall occur pursuant to this Section 7.02 if
the false or misleading representation, warranty or statement can be eliminated
or otherwise cured within 30 days after any responsible officer of the Borrower
Group receives notice or has knowledge thereof such that the applicable
representation, warranty or statement is no longer false or misleading in any
material respect.

        7.03 COVENANTS.

             (a) A member of the Borrower Group shall default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 5.13, 5.15, 5.16, 5.17 or Article 6.

             (b) Any member of the Borrower Group shall default in the due
performance or observance by it of any term, covenant or agreement contained
herein or in any other Financing Agreement (except as otherwise provided in
Section 7.01 and paragraph (a) of this Section 7.03), and such default shall
continue unremedied for a period of 30 days after the date on which written
notice thereof shall have been received by a member of the Borrower Group from
the Collateral Agent; provided, that if (A) any such default under this Section
7.03(b) does not involve the payment of money and cannot be cured within such
30-day period, (B) such failure is in fact susceptible of cure, (C) no other
independent Default or Event of Default has occurred and is continuing, (D) the
Borrower Group is proceeding with diligence and in good faith to cure such
failure, (E) the existence of such failure does not constitute a Material
Adverse Effect and (F) the Collateral Agent shall have received an officer's
certificate signed by an Authorized Officer of the Company to the effect of
clauses (A), (B), (C), (D) and (E) above and describing all action the Borrower
Group is taking to cure such failure, such 30-day cure period shall be extended
by up to an additional 60 days as shall be necessary for the Borrower Group to
diligently cure such failure.

        7.04 DEFAULT UNDER OTHER AGREEMENTS.

             (a) Any member of the Borrower Group defaults for a period beyond
the applicable grace period in the payment of any principal, interest or other
amount due under any agreement evidencing, securing or creating any Indebtedness
of such member (including swap or similar derivative agreements) in excess
(individually or in the aggregate) of $15,000,000.

             (b) Any member of the Borrower Group shall default in the
observance or performance of any agreement or condition relating to any
Indebtedness the principal amount of which (individually or in the aggregate)
exceeds $25,000,000, or any other event or condition shall have occurred
thereunder, the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness (or a trustee acting


                                       48
<PAGE>
on behalf of such holders) to cause any such Indebtedness to become due prior to
its stated maturity; or any such Indebtedness of any member of the Borrower
Group shall be declared due and payable prior to the stated maturity thereof.

        7.05 INVOLUNTARY BANKRUPTCY, ETC. An involuntary proceeding shall have
been commenced against any member of the Borrower Group or seeking that such
Person be wound up or liquidated, adjudging such Person bankrupt or insolvent or
seeking reorganization, arrangement, adjustment or composition of or in respect
of such Person under any Applicable Law or seeking the appointment of a
receiver, liquidator, sindico, interventor, assignee, trustee, sequestrator (or
other similar official) of such Person or of any substantial part of its
property or other assets, or the winding up or liquidation of its affairs and
such proceeding continues undismissed for 60 days.

        7.06 VOLUNTARY BANKRUPTCY, ETC. The institution by any member of the
Borrower Group of proceedings to be adjudicated bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it; or the filing by it of a petition or answer or consent seeking
reorganization or debt relief under any Applicable Law or to the appointment of
a receiver, liquidator, sindico, interventor, assignee, trustee, sequestrator
(or other similar official) of any such Person or of any substantial part of its
property; or the making by it of an assignment for the benefit of creditors
generally; or the admission by it in writing of its inability to pay its debts
generally as they become due; or any other event shall have occurred which under
any Applicable Law would have an effect analogous to any of those events listed
above in this Section 7.06 with respect to any such Person; or any action is
taken by any such Person for the purpose of effecting any of the foregoing.

        7.07 ANALOGOUS PROCEEDINGS. There occurs, in relation to any member of
the Borrower Group, in any country or territory in which any of them carries on
business or to the jurisdiction of whose courts any part of their assets is
subject, any event which in that country or territory corresponds with, or has
an effect equivalent or similar to, any of those mentioned in Section 7.05 or
7.06.

        7.08 ATTACHMENT OF COLLATERAL. Any Person other than the Collateral
Agent for the benefit of the Secured Parties or a Senior Lender attaches or
institutes proceedings to attach all e any part of the Collateral, and any
attachment or any judgment Lien against any such Collateral (i) remains
unlifted, unstayed or undischarged for a period of 30 days or (ii) is upheld in
a final nonappealable judgment of a court of competent jurisdiction.

        7.09 FINANCING AGREEMENTS.

             (a) This Agreement or any of the Financing Agreements or any
material provision hereof or thereof is or becomes invalid, illegal or
unenforceable or the Company or any Guarantor shall have repudiated or disavowed
or taken any action to challenge the validity or enforceability of such
agreement.

             (b) Any of the Security Documents, once executed and delivered,
shall fail to provide the Liens, security interests, rights, titles, interests,
remedies, powers or privilege intended to be created thereby (including the
priority intended to be created thereby), or such


                                       49
<PAGE>
Lien shall fail to have the priority contemplated therefor in such Security
Documents, or any such Security Document shall cease to be in full force and
effect, or the validity thereof or the applicability thereof to any obligations
purported to be secured or guaranteed thereby or any part thereof, shall be
disaffirmed in writing by or on behalf of a member of the Borrower Group or any
other party thereto.

        7.10 EXPROPRIATION. There shall have occurred any act or series of acts
attributable to a Mexican Governmental Authority which (i) in the reasonable
judgment of the Required Voting Parties has the effect of depriving the Senior
Lenders of their fundamental rights as creditors in respect of this Agreement
(including rights under the security interests granted under the Security
Documents), or (ii) confiscates, expropriates or nationalizes the ownership or
control of all or any substantial part of the System or other assets of a member
of the Borrower Group and such act or series of acts continues uncured for 120
days or more.

        7.11 MONETARY RESTRICTIONS. Any law, order, decree or regulation shall
impose and restriction on (i) the lawful transfer of Dollars by the Borrower
Group from Mexico to the Collateral Agent (and from the Collateral Agent to any
other Person or locale whether within or outside of Mexico), or (ii) the
conversion of (a) Dollars to Pesos or (b) Pesos to Dollars and which restriction
constitutes a Material Adverse Effect.

        7.12 JUDGMENTS. One or more judgments or decrees shall be entered
against one or more members of the Borrower Group and such judgments or decrees
shall not be vacated discharged or stayed or bonded pending appeal for any
period of 60 consecutive days, and the aggregate amount of all such judgments
and decrees outstanding at any time (except to the extent any applicable
insurer(s) shall have acknowledged liability therefor) exceeds $5,000,000.

        7.13 LICENSES AND PERMITS. The Borrower Group shall fail to obtain,
renew, maintain or comply in all material respects with the Licenses (or any
portion thereof); or any License (or any portion thereof) shall be rescinded,
terminated, suspended, modified or withheld or shall be determined to be invalid
or shall cease to be in full force and effect; or any proceedings shall be
commenced by or before any Governmental Authority for the purpose of rescinding,
terminating, suspending, modifying or withholding any such License (or any
portion thereof) and such proceeding is not dismissed within 60 days; and as a
result of such failure, rescission, determination of invalidity, termination,
suspension, modification, withholding, cessation or commencement the valid,
enforceable and effective Licenses then owned by the Company (a) fail to cover
all of Region 9, and either all of Region 4 or all of Region 6 (as such Regions
are defined in Exhibit A to the Joint Venture Agreement) or (b) result in
Covered Pops being less than 40,000,000 Pops.

        7.14 CHANGE OF CONTROL. A Change of Control shall have occurred and be
continuing.

        7.15 OTHER SENIOR INDEBTEDNESS. An "event of default" shall have
occurred and be continuing under (and as defined in the documentation relating
to) any Credit Agreement relating to Senior Indebtedness, including any Senior
Indebtedness which is described in Section 2.04.


                                       50

<PAGE>
        7.16 MORTGAGE. The Company shall fail to deliver to the Collateral Agent
within forty five (45) days after the filing of Amendment No. 1 to the Mortgage,
the first testimony of the public deed evidencing the execution and delivery of
Amendment No. 1 to the Mortgage, duly recorded at the Public Registry of
Commerce of the Federal District of Mexico; or the Company shall fail to deliver
to the Collateral Agent (i) within ninety (90) days after filing of the
Mortgage, the first testimony of the public deed evidencing the execution and
delivery of the Mortgage, duly recorded at the Telecommunications Registry of
Mexico and (ii) within ninety (90) days after filing of Amendment No. 1 to the
Mortgage, the first testimony of the public deed evidencing the execution and
delivery of Amendment No. 1 to the Mortgage, duly recorded at the
Telecommunications Registry of Mexico.

        7.17 REMEDIES. Subject to the provisions of the Intercreditor Agreement
and the Collateral Agency Agreement, upon the occurrence and during the
continuation of an Event of Default, the Secured Parties may, without further
notice of default, presentment or demand for payment, protest or notice of
non-payment or dishonor, or other motion or demands of any kind, all such
notices and demands being waived (to the extent permitted by Applicable Law),
exercise any or all rights and remedies at law or in equity (in any combination
or order that the Secured Parties may elect) and, without limitation or
prejudice to the foregoing, the Secured Parties may:

             (a) unless otherwise provided in the applicable Credit Agreement,
refuse, and they shall not be obligated, to make any Disbursements and/or may
suspend or terminate their Commitments;

             (b) declare and make all sums of accrued and outstanding principal
and accrued but unpaid interest remaining under the Credit Agreements and Credit
Facilities, and any other Senior Indebtedness, including unpaid fees, costs and
charges, immediately due and payable, provided that in the event of an Event of
Default occurring under Section 7.05, 7.06 or 7.07 (in each case in respect of a
member of the Borrower Group), all such amounts shall become immediately due and
payable without reference to the Credit Agreements or any other Financing
Agreement and without further notice, demand or act of any Secured Party;

             (c) set off and apply all monies on deposit with any Secured Party
to the satisfaction of the Obligations under all of the Financing Agreements and
otherwise in accordance with the terms of any such applicable document; and

             (d) exercise any and all rights and remedies available to them
under any of the Security Documents or any of the other Financing Agreements or
as otherwise permitted by Applicable Law.


                                    ARTICLE 8

                                  MISCELLANEOUS

        8.01 PAYMENT OF EXPENSES, ETC.

            (a) Without limiting any amounts agreed to be paid by the Borrower
Group under the applicable Credit Agreements, each member of the Borrower Group
shall, jointly and severally, whether or not the transactions herein
contemplated are consummated, pay:



                                       51
<PAGE>

(i) all reasonable out-of-pocket costs and expenses of each of the Collateral
Agent and the Intercreditor Agent (including all commissions, charges, costs and
expenses for the conversion of currencies and all other reasonable costs,
charges and expenses (including all reasonable fees and expenses of the legal
counsel, consultants and advisors for any of the foregoing)) made, paid,
suffered or incurred in connection with (A) any amendment or modification to, or
the protection or preservation of any right or claim under, or consent or waiver
in connection with, this Agreement or any other Transaction Document, any such
other document or instrument related hereto or thereto, or any Collateral, (B)
the authentication, registration, translation and recordation (where
appropriate) and the delivery of the evidences of indebtedness relating to the
Loans and the Disbursements thereof and (C) the administration and enforcement
(including with respect to a work out) of this Agreement, the other Transaction
Documents and any other documents and instruments referred to herein or therein
(including the reasonable fees and disbursements of one common Mexican counsel
and one common United States counsel for the Collateral Agent and the
Intercreditor Agent upon the occurrence and during the continuation of an Event
of Default, (ii) the fees of the Insurance Consultant retained pursuant to the
Financing Agreements, and (iii) the expenses set forth in Section 3.06 and
Section 6.03 (a) (iv) of the Intercreditor Agreement.

            (b) Each member of the Borrower Group shall, whether or not the
transactions herein contemplated are consummated, jointly or severally,
indemnify each of the Secured Parties and their respective officers, directors,
employees, representatives, attorneys and agents (each an "Indemnified Party"
and, collectively, the "Indemnified Parties") from and hold each of them
harmless against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses and disbursements
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation, litigation or other proceeding or
inquiry (whether or not such Indemnified Party is a party thereto) related to
the entering into and/or performance of any Transaction Document or the
disbursement of, or use of the proceeds of, any Senior Indebtedness or the
consummation of any transactions contemplated herein or in any Transaction
Document, including the reasonable fees and disbursements of counsel selected by
such Indemnified Party incurred in connection with any such investigation,
litigation or other proceeding or in connection with enforcing the provisions of
this Section 8.01(b) (but excluding any such liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses and
disbursements to the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified or its officers, directors,
employees, representatives, attorneys or agents, as the case may be, as
determined pursuant to a final, non-appealable judgment by a court of competent
jurisdiction).

            (c) Without limitation to the provisions of Section 8.01(b) above,
each member of the Borrower Group agrees to defend, protect, indemnify and hold
harmless each Indemnified Party from and hold each of them harmless against any
and all liabilities (including removal and remedial actions), obligations,
losses; damages, penalties, claims, actions, judgments, suits, costs, expenses
and disbursements (including reasonable attorneys' and consultants' fees and
disbursements) imposed on or asserted against any such Persons directly or
indirectly based on, or arising or resulting from (i) the actual or alleged
presence of Hazardous Materials on, under or at the System or any real property
owned or leased by any member of the Borrower Group, (ii) any Environmental
Claim relating to any member of the Borrower Group or the System or any real
property owned or leased by any member of the Borrower Group, or



                                       52
<PAGE>
(iii) the exercise of any Indemnified Party's rights under any of the provisions
of this Section 8.01, but excluding any matter based solely on the gross
negligence or willful misconduct of any such Indemnified Party, as the case may
be, as determined pursuant to a final, non-appealable judgment by a court of
competent jurisdiction.

            (d) To the extent that the undertaking in the preceding paragraphs
of this Section 8.01 may be unenforceable because it is violative of any law or
public policy, the Borrower Group will contribute the maximum portion that it is
permitted to pay and satisfy under Applicable Law to the payment and
satisfaction of such undertakings.

            (e) All sums paid and costs incurred by any Indemnified Party with
respect to any matter indemnified hereunder shall bear interest at the default
rate applicable to their respective Credit Facility from the date any member of
the Borrower Group receives notice thereof from such Indemnified Party, until
reimbursed by the Borrower Group, and all such sums and costs shall be added to
the debt and be secured by the Security Documents and shall be immediately due
and payable on demand. Each such Indemnified Party shall promptly notify the
Company in a timely manner of any such amounts payable by the Borrower Group
hereunder, provided that any failure to provide such notice shall not affect the
Borrower Group's obligations under this Section 8.01.

            (f) Each Indemnified Party pursuant to Section 8.01(b) and (c)
above, within 10 days after the receipt by it of notice of the commencement of
any action for which indemnity may be sought by it, or by any Person controlling
it, from the Borrower Group on account of the agreements contained in this
Section 8.01, shall notify the Company in writing of the commencement thereof,
but the failure of such Indemnified Party to so notify the Company of any such
action shall not release the Borrower Group from any liability which it may have
to such Indemnified Party.

        8.02 RIGHT OF SETOFF. Subject to the terms of the Intercreditor
Agreement, upon the occurrence and during the continuance of any Event of
Default, each Senior Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Senior Lender to or for
the credit or the account of any member of the Borrower Group against any and
all of the obligations of the Borrower Group now or hereafter existing under the
applicable Credit Agreement and, if applicable, the corresponding Note held by
such Senior Lender, irrespective of whether or not such Senior Lender shall have
made any demand under the applicable Credit Agreement or Note, and without
presentment, protest or other notice of any kind to any member of the Borrower
Group, all of which are hereby expressly waived and although such obligations
may be unmatured.

        8.03 NOTICES.

             (a) Except as otherwise expressly provided herein or in any
Financing Agreement, all notices and other communications provided for hereunder
or thereunder shall be (i) in writing (including telex or telecopier) and (ii)
telexed, telecopied or sent by overnight courier (if for inland delivery) or
international courier (if for overseas delivery) to a party hereto



                                       53
<PAGE>

(with a copy to the Relevant Party) or to a Relevant Party at its address and
contact number specified in Schedule 8.03, or at such other address and contact
number as is designated by such party in a written notice to the other parties
hereto.

             (b) All such notices and communications shall be effective (i) if
sent by telex, when sent (with the correct answer back), (ii) if sent by
telecopier, when sent (on receipt of confirmation) and (iii) if sent by courier,
(x) one day after deposit with an overnight courier if for inland delivery and
(y) three days after deposit with an international courier if for overseas
delivery.

        8.04 BENEFIT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, no member of the Borrower
Group may assign or transfer any of its rights or obligations hereunder without
the prior written consent of each of the Senior Lenders. Any Senior Lender may
transfer, assign or grant its rights hereunder in connection with an assignment
or transfer of all or any part of its interest in its Senior Indebtedness in
accordance with the provisions of the applicable Credit Agreement; provided that
any such assignee has agreed to be bound by the terms of the Financing
Agreements, including the Intercreditor Agreement. Notwithstanding anything to
the contrary contained in any Financing Agreement (including this Agreement),
the Senior Lenders under each respective Credit Agreement shall be entitled to
appoint a successor administrative agent in accordance with the terms of such
Credit Agreement upon the resignation or removal of their Administrative Agent
without any consent of or notice to any other Secured Party, and upon such
appointment becoming effective in accordance with such terms, such successor
shall be deemed to be the "Administrative Agent" of such Senior Lenders for all
purposes of this Agreement and the other Financing Agreements. Each of the
Relevant Parties shall be deemed a third party beneficiary to this Agreement to
the extent that it is to receive any document, instrument, notification or other
paper as provided herein.

        8.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
the Collateral Agent, any other Agent, or any Senior Lender in exercising any
right, power or privilege hereunder or under any other Financing Agreement and
no course of dealing between any member of the Borrower Group, or any of its
Affiliates, on the one hand, and the Collateral Agent, any other Agent and the
Senior Lenders, on the other hand, shall impair any such right, power or
privilege or operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Financing
Agreement preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder of thereunder. The rights, powers and
remedies herein or in any other Financing Agreement expressly provided are
cumulative and not exclusive of any rights, powers or remedies which any party
thereto would otherwise have. No notice to or demand on a member of the Borrower
Group in any case shall entitle such member (or any other member) to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Collateral Agent, any other Agent, or any Senior
Lender to any other or further action in any circumstances without notice or
demand.

        8.06 SEVERABILITY. Any provision of any Financing Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the



                                       54
<PAGE>
extent of prohibition or unenforceability, but that shall not invalidate the
remaining provisions of such Financing Agreement or affect such provision in any
other jurisdiction.

        8.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when executed and delivered, shall be effective for purposes of
binding the parties hereto, but all of which shall together constitute one and
the same instrument. A set of counterparts executed by all the parties hereto
shall be lodged with each of the parties hereto.

        8.08 EFFECTIVENESS. This Agreement shall become effective on the date
hereof. Any Credit Agreement shall become effective pursuant to its terms
(except for this Agreement having become effective, if that is a condition of
effectiveness of any of such agreement).

        8.09 SURVIVAL. All indemnities set forth herein, including in Section
8.01, shall survive the execution and delivery of this Agreement and the making
and repayment of the Senior Indebtedness.

        8.10 CURRENCY OF PAYMENT. The obligation of the Company and the Borrower
Group to pay in Dollars those amounts of the sums specified to be due in
Dollars, under this Agreement or the respective Financing Agreements (the
"Financing Agreement Currency") shall not be deemed to have been novated,
discharged or satisfied by any tender of (or recovery under judgment expressed
in) any currency other than the Financing Agreement Currency, except to the
extent to which such tender (or recovery) shall result in the effective payment
of such aggregate amount in the applicable Financing Agreement Currency at the
place where such payment is to be made and, accordingly, the amount (if any) by
which any such tender (or recovery) shall fall short of such amount shall be and
remain due to the Senior Lenders as a separate Obligation, unaffected by
judgment having been obtained (if such is the case) for any other amounts due in
respect of this Agreement or the Financing Agreements.

        8.11 JUDGMENT CURRENCY.

             (a) The obligations of the Borrower Group hereunder and under the
other Financing Agreements to make payments in Dollars (the "Obligation
Currency"), shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any currency other than
the Obligation Currency, except to the extent that such tender or recovery
results in the effective receipt by the respective Secured Party of the full
amount of the Obligation Currency expressed to be payable to such Secured Party
under this Agreement or the other Transaction Documents. If for the purpose of
obtaining or enforcing judgment against the Company in any court or in any
jurisdiction, it becomes necessary to convert into or from any currency other
than the Obligation Currency (such other currency being hereinafter referred to
as the "Judgment Currency") an amount due in the Obligation Currency, the
conversion shall be made at the Peso Equivalent, in the case of Pesos, and in
the case of other currencies, the rate of exchange (as quoted by the
Intercreditor Agent or if the Intercreditor Agent fails to quote a rate of
exchange on such currency, by a known dealer in such currency designated by the
Intercreditor Agent) determined, in each case, as of the day on which the
judgment is given (such Business Day being hereinafter referred to as the
"Judgment Currency Conversion Date").



                                       55
<PAGE>
             (b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrower Group covenants to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount), as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.

             (c) For purposes of determining the Peso Equivalent or rate of
exchange under this Section 8.11, such amounts shall include any premium and
costs payable in connection with the purchase of the Obligation Currency.

        8.12 EVIDENCE OF DEBT.

             (a) Each Senior Lender shall maintain, or cause to be maintained,
in accordance with its usual practice, internal records evidencing the amounts
from time to time lent by and owing to it under its respective Financing
Agreement and each of the payments from time to time made in respect thereof.

             (b) Except as otherwise provided in any Financing Agreement, in any
legal action or proceeding arising out of or in connection with any Financing
Agreement or any other Transaction Document, the entries made in the internal
records maintained by each of the Senior Lenders pursuant to clause (a) above
shall be prima facie evidence of the existence and amount of obligations of the
Borrower Group as therein recorded.

        8.13 ENGLISH LANGUAGE This Agreement is made in the English language.
One Spanish language translation of this Agreement prepared at the Company's
expense by an official public interpreter and approved by Mexican counsel to the
Company and Mexican counsel to the Senior Lenders under the Alcatel Credit
Agreement and the Qualcomm Credit Agreement shall be the agreed Spanish language
translation hereof for all purposes. Such translation and no other may be filed
in one or more public registries in Mexico or used in any proceeding in Mexico.
For all purposes, the English language version hereof shall be the original
instrument and in all cases of conflict between the English and the Spanish
versions, the English version shall control.

        8.14 ENTIRE AGREEMENT. This Agreement (including the exhibits, schedules
and appendices attached hereto), including the documents referred to herein,
embodies the entire agreement and understanding of the parties hereto and
supersedes all prior agreements and understandings of the parties hereto
relating to the subject matter herein contained.

        8.15 WAIVER OF SOVEREIGN IMMUNITY. Each member of the Borrower Group
acknowledges and agrees that the activities contemplated by the provisions of
the Financing Agreements are commercial in nature rather than governmental or
public, and therefore acknowledges and agrees that it is not entitled to any
right of immunity on the grounds of sovereignty or otherwise with respect to
such activities or in any legal action or proceeding arising out of or relating
to the Financing Agreements. Each member of the Borrower Group, in



                                       56
<PAGE>

respect of itself, its process agents, and its properties and revenues,
expressly and irrevocably waives any such right of immunity which may now or
hereafter exist (including any immunity from any legal process, from the
jurisdiction of any court or from any execution or attachment in aid of
execution prior to judgment or otherwise) or claim thereto which may now or
hereafter exist, and agrees not to assert any such right or claim in any such
action or proceeding, whether in the United States or otherwise.

        8.16 REINSTATEMENT. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
obligations of the Company or the Borrower Group hereunder, or any part thereof,
is, pursuant to Applicable. Law, rescinded or reduced in amount, or must
otherwise be restored or returned by the Collateral Agent or any Secured Party.
In the event that any payment or any part thereof is so rescinded, reduced,
restored or returned, such obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, restored or returned.

        8.17 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL.

             (a) This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, United States, without
reference to principles of conflicts of law (other than Section 5-1401 of the
General Obligations Laws of the State of New York); provided, however, that, in
connection with any legal action or proceeding (other than an action to enforce
a judgment obtained in another jurisdiction) brought in respect to this
Agreement in the courts of Mexico or any political subdivision thereof, this
Agreement shall be deemed to be an instrument made under the laws of Mexico and
for such purposes shall be governed by, and construed in accordance with, the
laws of the Federal District of Mexico.

             (b) Each party hereto hereby agrees that any suit, action or
proceeding with respect to this Agreement or any judgment entered by any court
in respect thereof may be brought in the United States of America District Court
for the Southern District of New York, in the Supreme Court of the State of New
York sitting in New York County (including its Appellate Division), or in any
other appellate court in the State of New York or the competent courts of the
Federal District of Mexico, as the party commencing such suit, action or
proceeding may elect in its sole discretion; and each party hereto hereby
irrevocably submits to the jurisdiction of such courts for the purpose of any
such suit, action, proceeding or judgment. Each party hereto further submits,
for the purpose of any such suit, action, proceeding or judgment brought or
rendered against it, to the appropriate courts of the jurisdiction of its
domicile. Each member of the Borrower Group hereby waives any rights to a
specific jurisdiction it may have by virtue of its present or any future
domicile, or otherwise.

             (c) Each member of the Borrower Group hereby agrees that service of
all writs, process and summonses in any such suit, action or proceeding brought
in the State of New York may be made upon CT Corporation System, presently
located at 1633 Broadway, New York, New York 10019, U.S.A. (the "Process
Agent"), and each member of the Borrower Group hereby confirms and agrees that
the Process Agent has been duly and irrevocably appointed as its agent and true
and lawful attorney-in-fact in its name, place and stead to accept such service
of any and all such writs, process and summonses, and agrees that the failure of
the



                                       57
<PAGE>

Process Agent to give any notice of any such service of process to such member
of the Borrower Group shall not impair or affect the validity of such service or
of any judgment based thereon. Each member of the Borrower Group hereby further
irrevocably consents to the service of process in any suit, action or proceeding
in said courts by the mailing thereof by any Secured Party by registered or
certified mail, postage prepaid, at its address set forth beneath its signature
hereto.

             (d) Nothing herein shall in any way be deemed to limit the ability
of the Secured Parties to serve any such writs, process or summonses in any
other manner permitted by applicable law or to obtain jurisdiction over any
member of the Borrower Group in such other jurisdictions, and in such manner, as
may be permitted by applicable law.

             (e) Each member of the Borrower Group hereby irrevocably waives any
objection that it may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
other Financing Agreement brought in the Supreme Court of the State of New York,
County of New York, or in the United States of America District Court for the
Southern District of New York or the competent courts of the Federal District of
Mexico, and hereby further irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.

             (f) The Borrower Group hereby agrees to cause the Process Agent to
execute and deliver to each Agent a letter from the Process Agent to each such
Agent confirming Process Agent's acceptance of the appointment by the members of
Borrower Group.

             (g) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY OF THE FINANCING AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY.

        8.18 CALCULATIONS; COMPUTATIONS. The financial statements to be
furnished to the Agents, to the Relevant Parties and/or the Senior Lenders
pursuant hereto shall be made and prepared in accordance with GAAP consistently
applied throughout the periods involved (except as set forth in the notes
thereto); provided that (x) except as otherwise specifically provided herein,
all computations of determining compliance with Sections 6.09 and 6.10,
including definitions used therein, except to the extent otherwise set forth
therein, shall utilize accounting principles and policies in effect at the
Closing Date, (y) in the event GAAP shall be modified from that in effect on the
Closing Date, the Borrower Group shall be entitled to utilize GAAP, as so
modified, for purposes of such computations to the extent that (i) the Company
gives each Administrative Agent 30 days' prior written notice of such proposed
modification and (ii) prior thereto the Company and such Administrative Agents
shall have agreed upon adjustments, if any, to such definitions and/or such
Sections the sole purpose of which shall be to give effect to such proposed
change (it being understood and agreed that to the extent that the Company and
such Administrative Agent cannot agree on appropriate adjustments to such
definition and/or Sections (or that no adjustments are necessary), the proposed
change will not be utilized for the purposes of computations under such
definition and/or Sections) and (z) if at any time such computations utilize
accounting principles different from those utilized in the financial



                                       58
<PAGE>

statements furnished pursuant to Section 5.01(a), such financial statements
shall be accompanied by reconciliation worksheets.

        8.19 NO THIRD-PARTY BENEFICIARIES. The covenants contained herein are
made solely for the benefit of the parties hereto (and the Senior Lenders), and
successors and assigns of such parties as specified herein, and shall not be
construed as having been intended to benefit any third party not a party to this
Agreement, except as expressly set forth in Section 8.04 or otherwise herein.

        8.20 AMENDMENTS.

             (a) Any provision of this Agreement may be amended, modified,
supplemented or waived only by an instrument in writing signed by each member of
the Borrower Group, the Administrative Agents, the Collateral Agent and the
Intercreditor Agent (with the Administrative Agents, Collateral Agent and
Intercreditor Agent acting pursuant to the provisions of the Intercreditor
Agreement).

             (b) Notwithstanding anything in the Intercreditor Agreement to the
contrary and only with respect to the following terms set forth therein, any
amendment or modification thereof which would extend the time periods or
decrease any Voting Party Percentage set forth in the definition of "Initiating
Voting Parties" or which would increase the Voting Party Percentage applicable
to clauses (iii) and (iv) of the definition of "Required Voting Parties," shall
be signed by each member of the Borrower Group; provided however, that neither
the foregoing nor any provision of the Intercreditor Agreement shall in any way
restrict the ability of the parties to the Intercreditor Agreement or the Senior
Lenders from entering into additional agreements among themselves as to how such
Persons will vote in connection with any issue arising under the Financing
Agreements notwithstanding the fact that such additional agreements would have
the practical effect of making such amendment or modification.

        8.21 CONFIDENTIALITY. Subject to the right of each Senior Lender to
assign or sell a participation in any Loans held by it or in its commitment and
to furnish information in connection therewith, the Senior Lenders shall hold
all nonpublic information obtained pursuant to the requirements of this
Agreement which has been identified as such by any member of the Borrower Group
in accordance with its customary procedure for handling confidential information
of this nature and in accordance with safe and sound banking practices and in
any event may make disclosure to its Affiliates, employees, auditors, advisors,
or counsel or as reasonably required by any bona fide transferee or participant
in connection with the contemplated transfer of any Loans or participation
therein (so long as such transferee or participant agrees to be bound by the
provisions of this Section 8.21) or as required or requested by any governmental
agency or representative thereof or pursuant to legal process; provided that,
unless specifically prohibited by Applicable Law or court order, each Senior
Lender shall notify the Company of any request by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Senior Lender by such
governmental agency) for disclosure of any such nonpublic information prior to
disclosure of such information; and provided further, that in no event shall any
Senior Lender be obligated or required to return any materials furnished by any
member of the Borrower Group.



                                       59
<PAGE>


        IN WITNESS WHEREOF, the parties hereto have caused this Common Agreement
to be executed and acknowledged by their respective officers or representatives
hereunto duly authorized, as of the date first above written.



PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.


By:
   ----------------------------------------
   Name:
        -----------------------------------
   Title:
         ----------------------------------


PEGASO TELECOMUNICACIONES, S.A. DE C.V.

By:
   ----------------------------------------
   Name:
        -----------------------------------
   Title:
         ----------------------------------


PEGASO PCS, S.A. DE C.V.

By:
   ----------------------------------------
   Name:
        -----------------------------------
   Title:
         ----------------------------------


PEGASO RECURSOS HUMANOS, S.A. DE C.V.

By:
   ----------------------------------------
   Name:
        -----------------------------------
   Title:
         ----------------------------------




                                       60
<PAGE>
CITIBANK, N.A., as Intercreditor Agent

By:
   ----------------------------------------
   Name:
        -----------------------------------
   Title:
         ----------------------------------


CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as Collateral Agent

By:
   ----------------------------------------
   Name:
        -----------------------------------
   Title:
         ----------------------------------


CITIBANK INTERNATIONAL PLC, as Alcatel Administrative Agent

By:
   ----------------------------------------
   Name:
        -----------------------------------
   Title:
         ----------------------------------


ABN AMRO BANK N.V., as Qualcomm Administrative Agent

By:
   ----------------------------------------
   Name:
        -----------------------------------
   Title:
         ----------------------------------


By:
   ----------------------------------------
   Name:
        -----------------------------------
   Title:
         ----------------------------------





                                       61


<PAGE>

                         APPENDIX A TO COMMON AGREEMENT

DEFINED TERMS.

        As used in any Financing Agreement (as defined below), including the
Common Agreement, the following terms shall have the following meanings, except
to the extent otherwise defined in such Financing Agreement:

        "Acceptable Financial Institution" shall mean a bank or trust company
with a combined capital plus surplus of at least $500,000,000 and whose
long-term senior unsecured debt is rated "A" or higher by S&P or "A2" or higher
by Moody's.

        "Additional Senior Indebtedness" shall have the meaning set forth in
Section 2.04. Any Alcatel Loans made under or pursuant to the Alcatel Commitment
Letter (or any credit or similar agreement in connection therewith) constitute
Additional Senior Indebtedness, but shall be permitted as provided in Section
6.04 (a) without compliance with the provisions of Section 6.04(d).

        "Additional Senior Indebtedness Lenders" shall have the meaning set
forth in Section 2.04.

        "Additional Senior Indebtedness Loans" shall mean, collectively, all of
the loans and notes made pursuant to the documentation relating to or evidencing
the Additional Senior Indebtedness.

        "Administrative Agent" shall mean (i) with respect to the Alcatel Credit
Agreement, the Alcatel Administrative Agent, or any successor Administrative
Agent appointed pursuant to Section 10.08 of the Alcatel Credit Agreement, (ii)
with respect to the Qualcomm Credit Agreement, the Qualcomm Administrative
Agent, or any successor Administrative Agent appointed pursuant to Section 10.8
of the Qualcomm Credit Agreement, and (iii) with respect to any Additional
Senior Indebtedness, the administrative agent (or, in the case of notes, bonds
or other debt securities, the trustee, fiscal agent or comparable fiduciary)
appointed pursuant to the documentation evidencing such Additional Senior
Indebtedness, or any successor administrative agent appointed pursuant to the
applicable section of such documentation.

        "Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly controls, or is under common control with,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns directly or indirectly 10% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, (i) no individual
shall be deemed to be an Affiliate of a Person solely by reason of his or her
being a director, committee member, officer or


                                       1
<PAGE>


employee of such person and (ii) each member of the Borrower Group and each of
their respective Affiliates shall be deemed to be an Affiliate of each other
member of the Borrower Group.

        "Agents" shall mean, collectively, the Intercreditor Agent, the
Collateral Agent and the Administrative Agents.

        "Alcatel" shall mean Alcatel, a corporation duly incorporated under the
laws of France.

        "Alcatel Administrative Agent" shall mean Citibank International plc, in
its capacity as Administrative Agent under the Alcatel Credit Agreement.

        "Alcatel Commitment Letter" shall mean the commitment letter dated as of
October 28, 1998, from Electro Banque to, and accepted by, the Company relating
to Facility 2 (as therein defined and described), as supplemented, updated and
confirmed pursuant to SECTION 3.01(v).

        "Alcatel Costs" shall mean all of the amounts (other than value-added
taxes) due and payable by the Company or other members of the Borrower Group to
or for the account of Alcatel Intedel under the provisions of the Alcatel
Procurement Agreement , and including the repayment of any bridge or similar
loan (and interest thereon) made by Citibank, N.A., London Branch to the Company
and guaranteed by Alcatel, the proceeds of which were used to pay the foregoing
costs.

        "Alcatel Credit Agreement" shall mean the Credit Agreement, dated as of
the date hereof, between the Company, the Alcatel Lenders referred to therein
and the Alcatel Administrative Agent.

        "Alcatel Guaranty" shall mean the Guaranty Agreement, dated as of the
date hereof, between Alcatel and the Alcatel Administrative Agent pursuant to
which Alcatel has guaranteed the payment obligations of the Company under the
Alcatel Credit Agreement as therein provided.

        "Alcatel Intedel" shall mean Alcatel Intedel Industria de
Telecomunicacion S.A. de C.V., a sociedad anonima de capital variable under the
laws of Mexico.

        "Alcatel Lenders" shall mean the Persons from time to time making or
carrying Loans and Commitments to the Company under the Alcatel Credit Agreement
or under the credit agreement executed as a result of the Alcatel Commitment
Letter.

        "Alcatel Loans" shall mean, collectively, all of the loans made under
the Alcatel Credit Agreement and all of the loans made under the credit
agreement referred to in the Alcatel Commitment Letter.

        "Alcatel Procurement Agreement" shall mean the Agreement for Services,
Procurement, and Construction, with an effective date of October 21, 1998,
between the Company and Alcatel Indetel.


                                       2
<PAGE>

        "Alcatel Qualified Costs" shall mean (a) all of the Alcatel Costs other
than (i) the cost of the towers to be delivered by Alcatel Indetel under the
Alcatel Procurement Agreement and (ii) the cost of the shelters to be delivered
by Alcatel Indetel under the Alcatel Procurement Agreement. For the avoidance of
doubt, the term "Alcatel Qualified Costs" shall not include interest on any
Indebtedness, whether capitalized or otherwise (other than the interest referred
to in the definition of Alcatel Costs) nor any VAT costs paid in connection with
services rendered, or equipment or other property furnished, under the Alcatel
Procurement Agreement.

        "Applicable Currency Exchange Rate" shall mean, as of any date of
determination, the rate of exchange (net of all fees and commissions) then
applicable to (i) the conversion of Dollars to Pesos or, (ii) the conversion of
Pesos to Dollars, as the context may require. The applicable rate of exchange
shall be the most favorable rate quoted by the Intercreditor Agent at 11:00 a.m.
(Mexico City time) on the applicable date of determination (or, if no such
quotations shall be available on such date, on the date closest to such date of
determination).

        "Applicable Law" shall mean any constitution, statute, law, rule,
regulation, ordinance, judgment, order, decree, Permit, or any published
directive, guideline, requirement or other governmental restriction which has
the force of law, or any determination by, or interpretation of any of the
foregoing by, any judicial authority, binding on a given Person whether in
effect as of the date hereof or as of any date thereafter, including all
applicable Environmental Laws.

        "Applicable Shares" shall have the meaning set forth in Section 4.10.

        "Assignment Agreements" shall mean the Assignment Agreements as referred
to in the Post-Closing Agreement (appropriately completed) pursuant to which (i)
the Sponsors and Holdings have collaterally assigned to the Collateral Agent all
of the rights they have or may have as against the Original Mexican Shareholders
regarding the Equity Commitments, (ii) the Company has collaterally assigned to
the Collateral Agent all of the rights it has or may have as against Holdings
regarding the subscription of additional shares of the Company by Holdings with
the proceeds of the Equity Commitments, (iii) the Company has collaterally
assigned to the Collateral Agent all of its rights under the Pegaso PCS Services
Agreement, the Vendor Agreements, the Operator Agreement, and the
Interconnection Agreements, (iv) Pegaso PCS has collaterally assigned to the
Collateral Agent all of its rights under the Personnel Co. Services Agreement
and the Site Leases.

        "Authorized Officer" shall mean, with respect to any Person, the
Managing Director, the President, the Vice President, the Assistant Vice
President, the Treasurer, the Assistant Treasurer or equivalent officers of such
Person and, with respect to the Company, shall include any officer or
representative holding any of the foregoing positions (or their equivalent)
whose name appears on a certificate of incumbency delivered concurrently with
the execution of this Agreement, as such certificate of incumbency may be
amended from time to time to identify names of the individuals then holding such
offices or the names of such representatives and the capacity in which they are
acting.

        "Borrower" or "Company" shall mean Pegaso Comunicaciones y Sistemas,
S.A. de C.V., a sociedad anonima de capital variable under the laws of Mexico.



                                       3
<PAGE>


        "Borrower Group" shall mean (i) the Company, (ii) Holdings, (iii) Pegaso
PCS, (iv) Personnel Co. (v) the respective Subsidiaries of each of the foregoing
in existence as of the Closing Date, and (vi) any Subsidiary of any of the
foregoing which is formed, established, purchased or acquired after the Closing
Date as described in Section 5.13. Any reference to a "member" or to a "member
of the Borrower Group" shall mean one or more of the Persons described in clause
(i) through (vi) of this definition.

        "Business" shall mean the business of development, operation and use of
the Licenses (and, subject to Articles 4, 5 and 6, other new licenses and/or
concessions issued to any member of the Borrower Group) and pursuant thereto the
installation and operation of terrestrial-based wireless telecommunications
systems in Mexico and, to the extent integral to such wireless terrestrial-based
telecommunications systems, long-distance telecommunications systems in Mexico.

        "Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the City of New York, in the Federal District of Mexico or in the City of
London a legal holiday or a day on which banking institutions are authorized by
law or other governmental actions to close and (ii) with respect to any
determination of the Eurodollar Rate, any day which is a Business Day described
in clause (i) and which is also a day for trading by and between banks in U. S.
Dollar deposits in the interbank Eurodollar market.

        "Business Plan" shall mean the Final Business Plan, as updated from time
to time as provided in Section 5.01(d).

        "Capital Expenditures" shall mean, with respect to any Person for any
period, expenditures that are capitalized in accordance with U.S. GAAP and, for
purposes of this definition, expenditures made during such period for equipment
and services financed under sale/leaseback arrangements or under an operating
lease.

        "Capital Lease" as applied to any Person, shall mean any lease of any
property (whether real personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of such Person.

        "Capital Stock" of any Person shall mean any and all shares, interest,
rights to purchase, warrants, options, participations or other equivalents of or
interest in (however designated) the common or preferred equity or equity or
preference share capital of such Person, including, without limitation,
partnership interests.

        "Capitalized Lease Obligations" shall mean all obligations under Capital
Leases of any Person in each case taken at the amount thereof accounted for as
liabilities in accordance with GAAP.

        "Cash Flow Test" shall mean, for any date or any particular calculation
period, that (A) EBITDA for the two consecutive fiscal quarters ending on the
date of the last financial statements delivered in accordance with Section
5.01(a) multiplied by a factor of two (2), is at least equal to (B) the total
regularly scheduled principal and interest on Indebtedness outstanding on the
date of such calculation (other than Indebtedness described in clauses (g), (k)
and (l) of


                                       4
<PAGE>
Section 6.04) to become due during the twelve-month period commencing on the
date of such financial statements; provided, that for purposes of the
calculation in clause (B), the pro forma interest shall be based on the amount
of principal Indebtedness outstanding and the interest rates existing on the
date of determination and it shall be assumed that principal amounts will be
repaid as scheduled.

        "Casualty Event" shall mean an event which causes all or a portion of
the System to be damaged, destroyed or rendered unfit for normal use for any
reason whatsoever.

        "Change of Control" shall mean (i) the failure at any time prior to the
consummation of a Qualified Public Offering of (a) the Original Mexican
Shareholders to own at least 51 % of the voting Capital Stock of Holdings, or
(b) Leap to own, directly or indirectly through a wholly-owned Subsidiary, at
least 20% of the Capital Stock of Holdings, or (ii) at any time after the
consummation of a Qualified Public Offering, any transaction or series of
transactions whereby (A) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of voting Capital Stock of Holdings representing
35% or more of the combined voting power of all voting stock of Holdings, or (B)
during any period of 18 consecutive months, commencing before or after the date
of this Agreement, individuals who at the beginning of such 18 month period were
directors of Holdings, together with such directors who are approved by
directors who were directors at the beginning of such period, shall cease for
any reason to constitute a majority of board of directors of Holdings; or (iii)
any Person or two or more Persons acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence over the management or
policies of Holdings, or (iv) the failure of Holdings to own all of the Capital
Stock of each of the Company, Pegaso, PCS and Personnel Co. (other than one
share of such Capital Stock which is owned, and shall continue to be owned, by
another member of the Borrower Group). Notwithstanding the foregoing, any such
transaction or series of transactions described in clause (ii) above shall not
constitute a Change of Control if the Original Mexican Shareholders or their
wholly-owned Subsidiaries and Leap continue to own, directly or indirectly, in
the aggregate a greater percentage of the voting Capital Stock of Holdings than
any other Person or two or more Persons acting in concert.

        "Charter Documents" shall mean, with respect to any Person, the articles
of incorporation, by-laws, partnership agreements or such other documents or
instruments which are required to be registered or lodged in the place of
incorporation or organization of such Person and which establish the legal
existence of such Person. With respect to Holdings, the term "Charter Documents"
shall also include the Joint Venture Agreement.

        "Closing Date" shall mean the later to occur of (i) the execution and
delivery of the Alcatel Credit Agreement, or (ii) the execution and delivery of
the Qualcomm Credit Agreement.

        "COFETEL" shall mean Comision Federal de Telecomunicaciones de Mexico.

        "Collateral" shall mean the security for the Senior Indebtedness,
including: (i) all property, assets (including cash, investments and accounts
receivable held from time to time by


                                       5
<PAGE>

the Company) and contract rights (including rights to intellectual property),
whether now owned or hereafter acquired, of the Company which are described
(either specifically or generally) in the Mortgage, (ii) all property, assets
and rights of any member of the Borrower Group which is made subject to a Lien
as required by Section 5.14, (iii) the rights of the Sponsors and Holdings and
the other members of the Borrower Group which are collaterally assigned pursuant
to the Assignment Agreements, (iv) the Capital Stock of the Company, Pegaso PCS
and Personnel Co., which will be pledged to the Secured Parties pursuant to the
PCS/Recursos Pledge Agreement and Sistemas Pledge Agreements or transferred to
the trustee under the Guaranty Trust Agreement, (v) the Capital Stock of any New
Subsidiary, which will be pledged to the Secured Parties pursuant to a pledge
agreement substantially similar to the above-referenced pledge agreements or
transferred to the trustee under the Guaranty Trust Agreement (vi) any and all
security provided by any member of the Borrower Group in connection with any
Additional Senior Indebtedness as provided in Section 2.04(c), and (vii) all
proceeds and revenues of the foregoing.

        "Collateral Agent" shall mean Citibank Mexico, S.A., Grupo Financiero
Citibank, or any successor designated as collateral agent pursuant to Article 2
of the Collateral Agency Agreement.

        "Collateral Agency Agreement" shall mean the Collateral Agency
Agreement, dated as of the date hereof, among the Collateral Agent, the
Intercreditor Agent, the Administrative Agents and the Company.

        "Commitments" shall mean, collectively, (i) the commitment of the Senior
Lenders to make Loans under the Alcatel Credit Agreement, (ii) the commitment of
the Senior Lenders to make Loans under the Qualcomm Credit Agreement, (iii) the
commitment of Alcatel to make Loans under the Alcatel Commitment Letter and (iv)
the commitment of the Senior Lenders to make Loans under any credit or similar
agreement evidencing Additional Senior Indebtedness.

        "Commitment Fees" shall mean (i) in the case of the Alcatel Credit
Agreement, the fees payable by the Company under Section 2.03 thereof, (ii) in
the case of the Qualcomm Credit Agreement, the fees payable by the Company under
Section 2.1 thereof, (iii) in the case of the Alcatel Commitment Letter, the
fees payable by the Company in consideration thereof, and (iv) in the case of
any Additional Senior Indebtedness, those fees specified therein which are
payable to the Senior Lenders thereunder in consideration for the Commitments
made by such Senior Lenders thereunder.

        "Condemnation Event" shall mean any compulsory transfer or taking, or
transfer under threat of compulsory transfer or taking, of all or any part of
the System by any Governmental Authority.

        "Consents" shall mean, collectively, each consent and agreement, as
referred to in the Post-Closing Agreement, from (i) each Vendor, (ii) Personnel
Co., with respect to the assignment of the Personnel Co. Services Agreement, and
Pegaso PCS, with respect to the assignment of the Pegaso PCS Services Agreement,
(iii) Leap Wireless Mexico, with respect to the assignment of the Operator
Agreement, and GTE, with respect to the assignment of the GTE Operator
Agreement, (iv) TelMex and TelNor, with respect to the assignment of their
respective



                                       6
<PAGE>
Interconnection Agreements, and (v) each additional consent and agreement
required to be delivered pursuant to Section 5.04(b)(ii).

        "Consolidated Debt" shall mean, as of any date of determination, the
aggregate amount of all Indebtedness of each member of the Borrower Group on a
combined basis, as shown on the balance sheet, or as would be shown on the
balance sheet, as of the date of determination, determined in accordance with
GAAP, plus (without duplication) any Indebtedness for borrowed money of any
other Person which has been (directly or indirectly) guaranteed by a member of
the Borrower Group or any other Contingent Obligation of a member of the
Borrower Group.

        "Consolidated Paid-In Equity" shall mean, as of any date of
determination, and without duplication, the sum of (a) the aggregate amount of
equity capital which has been contributed in cash, as of such date of
determination, to Holdings by the Existing Shareholders and the New Shareholders
less any Dividends paid to the shareholders of Holdings in accordance with
Section 6.03 prior to such date of calculation, and (b) the aggregate principal
amount of Subordinated Loans then outstanding. The term "Consolidated Paid-In
Equity" shall not include the Equity Commitments until such time as such Equity
Commitments have been honored and converted into cash by Holdings.

        "Contingent Obligations" shall mean as to any Person any obligation of
such Person Guaranteeing or intending to Guarantee any Indebtedness ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (d) otherwise
to assure, indemnify or hold harmless the owner of such primary obligation
against loss in respect thereof (other than indemnity obligations arising in the
ordinary course of business), provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined in good faith.

        "Covered Pops" shall mean, as of any date of determination, Pops for
those geographical areas as to which (a) the Company has the right under valid,
enforceable and effective Licenses owned by the Company to provide PCS and WLL
services, and (b) the Company has, as of such date of determination, constructed
or intends to construct facilities to provide such services.

        "Credit Agreements" shall mean, collectively, (i) the Alcatel Credit
Agreement, (ii) the Qualcomm Credit Agreement, and (iii) any and all credit or
similar agreements evidencing any Additional Senior Indebtedness.



                                       7
<PAGE>

        "Credit Facilities" shall mean the credit facilities made available to
the Company under the Credit Agreements.

        "Default" shall mean any event, act or condition which, with the giving
of notice, lapse of time, fulfillment of any condition or any combination
thereof, would become an Event of Default.

        "Disbursement" shall mean any disbursement to or for the benefit of the
Company by any Senior Lender of the proceeds of Senior Indebtedness.

        "Dividends" shall have the meaning provided in Section 6.03.

        "Dollars" or "$" shall mean the lawful currency of the United States.

        "EBITDA" shall mean, for any period of calculation, the total earnings
of the Borrower Group before interest, Taxes, depreciation and amortization
during such period of calculation, calculated in accordance with GAAP
eliminating (i) any net income or gain (or net loss), net of any tax effect,
during such period from any extraordinary items as defined according to GAAP,
(ii) any interest income, (iii) gains or losses on the sale of assets (other
than the sale of inventory in the ordinary course of business), (iv) any
extraordinary non-cash items deducted from or included in the calculation of
pre-tax net income (other than items which will require cash payments and for
which an accrual or reserve is, or is required by GAAP to be, made) and (v) the
EBITDA of any Subsidiaries or other assets disposed of or discontinued during
such period.

        "EBITDA Test" shall mean, for any annual or quarterly period of
calculation ending on a specified date, the ratio (i) of the Consolidated Debt
of the Borrower Group outstanding on such date (other than Subordinated Loans)
less cash and Permitted Investments in excess of $5,000,000 held by the Borrower
Group on such date to (ii)(x) the EBITDA for the two consecutive fiscal quarters
last ended on or prior to such date for which financial statements have been
delivered in accordance with Section 5.01(a) multiplied by (y) 2.

        "Eligible Swap Counterparty" shall mean a swap counterparty that (i) has
a long-term Dollar denominated debt rating of at least "A," as determined by
both Standard & Poors, a division of the McGraw-Hill Companies, Inc. and Moody's
Investors Service, Inc., (ii) shall, at the time of execution of the Swap
Agreement, already be a Senior Lender hereunder, (iii) shall be Banamex,
Bancomer, S.A., Citibank Mexico or Banco Santander, or (iv) shall otherwise be
acceptable to Required Voting Parties.

        "Environmental Claims" shall mean, with respect to any Person, any
notice, claim, administrative, regulatory or judicial action, suit, judgment,
demand or other communication (whether written or oral) by any other Person
alleging or asserting such Person's liability for investigatory costs, cleanup
costs, governmental response costs, damages to natural resources or other
property of such Person, personal injuries, fines or penalties arising out of,
based on or resulting from (i) the presence, use, or release into the
environment of any Hazardous Material at any location, whether or not owned by
such Person or (ii) any fact, circumstance, condition or occurrence forming the
basis of any violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, (a) any and all claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages


                                       8
<PAGE>


pursuant to any applicable Environmental Law and (b) any and all claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.

        "Environmental Law" shall mean any statute, law, rule, regulation,
ordinance, code or policy having the force of law, in each case, applicable to
any member of the Borrower Group or the System now or hereafter in effect and in
each case as amended, and any applicable judicial or administrative
interpretation thereof, including any judicial or administrative order, decree
or judgment, relating to any Environmental Matter.

        "Environmental Matter" shall mean any:

        (a) release emission, entry or introduction of any Hazardous Materials
into the air, including the ambient air;

        (b) discharge, release or entry of any Hazardous Materials into water,
including into any river, watercourse, lake, or pond (whether natural or
artificial or above ground or which joins or flows into any such water outlet
above ground), or reservoir, or the surface of the river bed or of other land
supporting such waters, ground waters, sewer or the sea;

        (c) deposit, disposal, keeping, treatment, importation, exportation,
production, transportation, handling, processing, carrying, manufacture,
collection, sorting or presence of any Hazardous Materials;

        (d) nuisance, noise, defective premises, health and safety and work,
industrial illness, industrial injury due to environmental factors,
environmental health problems (including without limitation, asbestosis or other
illness or injury caused by exposure to asbestos) which is regulated by
Applicable Law;

        (e) conservation, preservation or protection of the natural resources
environment which is regulated by Applicable Law; or

        (f) other matter whatsoever directly affecting the environment or any
part of it which is regulated by Applicable Law.

        "Equity Commitments" shall mean the commitments of the Original Mexican
Shareholders as set forth in Article III of the Joint Venture Agreement and in
resolutions adopted at various shareholder meetings pursuant to which such
Persons have become obligated to contribute specified amounts of equity capital
to Holdings on or prior to the dates specified therein in consideration for
Capital Stock to be issued by Holdings.

        "Event of Default" shall have the meaning set forth in Article 7.

        "Existing Equity" shall mean the equity capital contributed to Holdings
by the Existing Shareholders and the New Shareholders (in consideration for
Capital Stock of Holdings issued to such shareholders) prior to the Closing
Date, in the aggregate amount of $300,000,000.


                                       9
<PAGE>

        "Existing Shareholders" shall have the meaning set forth in the Joint
Venture Agreement.

        "Final Business Plan" shall mean the Business Plan approved by the Board
of Directors of Holdings and delivered to the Administrative Agents and the
Relevant Parties.

        "Financing Agreements" shall mean, collectively, the following
agreements and instruments: (i) the Common Agreement, (ii) the Alcatel Credit
Agreement, (iii) the Qualcomm Credit Agreement, (vi) the Alcatel Commitment
Letter and any credit or similar agreements executed as contemplated therein,
(v) the Notes, (vi) any and all credit or similar agreements evidencing
Additional Senior Indebtedness, (vii) each of the Guaranty Agreements, (viii)
the Security Documents, (ix) the Intercreditor Agreement, and (x) the Collateral
Agency Agreement.

        "Fiscal Year" shall mean the accounting year of the Company or the
Borrower Group, as the case may be, commencing each year on January 1 and ending
on December 31 or such other period agreed between the Company or the Borrower
Group, as the case may be, and the Intercreditor Agent.

        "Frequency Band Concessions" shall mean the Concessions for the Use,
Development and Operation of Radio-electric Spectrum Frequency Bands to Provide
Fixed or Mobile Wireless Access Services issued by the Secretariat of
Communications of Transport in favor of, and held by, the Company by means of
its decision dated May 8, 1998 for the bands of frequencies of the radioelectric
spectrum in order to render wireless access services and more fully described in
the Joint Venture Agreement, including Exhibit A thereto.

        "Further Provisions" shall have the meaning set forth in Section
2.04(b).

        "GAAP" shall mean generally accepted accounting principles in Mexico as
in effect on the date of this Agreement, it being understood and agreed that
determinations in accordance with GAAP (i) for purposes of Articles 5 and 6 of
the Common Agreement, including defined terms as used therein, are subject (to
the extent provided therein) to Section 8.18 and shall include U.S. GAAP
reconciliations, and (ii) for the purposes of any other Section, to the extent
that GAAP is limited, qualified or modified in any such particular Section of
this Agreement, such determinations are subject to such limitations,
qualifications or modifications as are set forth in such Section (but only as
applied to such Section).

        "Good Faith Contest" shall mean, with respect to the payment of Taxes or
any other claims or liabilities by any Person, the satisfaction of each of the
following conditions: (i) the validity or amount thereof is being diligently
contested in good faith by such Person by appropriate proceedings timely
instituted, (ii) during the period of such contest, the enforcement of any
contested item is effectively stayed, and (iii) such contest and any resultant
failure to pay or discharge the claimed or assessed amount is not reasonably
likely to have a Material Adverse Effect.

        "Government of Mexico" shall mean the Government of Mexico, including
any instrumentality, subdivision, authority, agency, ministry or statutory or
legal entity or person (whether autonomous or not) thereof, including any
successors thereof, whether lawful or not.



                                       10
<PAGE>

        "Governmental Authority" shall mean any national, state, county, city,
town, village, municipal or other local government department, commission,
board, bureau, agency, authority or instrumentality of the United States, Mexico
or any other national authority or any political subdivision of any thereof, and
any Person exercising executive, legislative, judicial, regulatory
administrative functions of or pertaining to any of the foregoing entities,
having jurisdiction over the Person or matters in question.

        "GTE" shall mean GTE Data Services Mexico, S.A. de C.V., a sociedad
anonima de capital variable under the laws of Mexico.

        "GTE Operator Agreement" shall mean the "GTE Operator Agreement," as
referred to in the Post-Closing Agreement, between Leap Wireless Mexico and GTE.

        "Guarantors" shall mean (i) Pegaso PCS, (ii) Personnel Co. (iii)
Holdings, and (iv) any other Subsidiary of a member of the Borrower Group
executing a Guaranty Agreement as required by Section 5.13.

        "Guaranty" by any Person shall mean any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing in any manner any
Indebtedness of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided that the term "Guaranty" shall not include (x) endorsements for
collection or deposit in the ordinary course of business, or (y) indemnity or
hold harmless provisions included in contracts entered into in the ordinary
course of business. The term "Guaranty" or "Guaranteed" used as a verb has a
correlative meaning.

        "Guaranty Agreements" shall mean any agreement by which a Guarantor
Guarantees the obligations of the Company under any of the Credit Agreements,
including, without limitation the Pegaso Guaranty Agreement.

        "Guaranty Trust Agreement" shall mean the Irrevocable Administration and
Guaranty Trust Agreement pursuant to which Holdings will (except to the extent
described in the last sentence of Section 5.23) transfer title to 100% of the
Capital Stock of the Company, Pegaso PCS, and Personnel Co. to the trustee
thereunder for the benefit of the Secured Parties represented by the Collateral
Agent.

        "Hacienda" shall mean the Secretaria de Hacienda y Credito Publico
(Ministry of Finance and Public Credit) of Mexico.

        "Hazardous Materials" shall mean (i) any chemicals, materials or
substances defined as or included in the definition "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import, under any


                                       11
<PAGE>
applicable Environmental Law and (ii) any other chemical, material or substance,
in each case to the extent exposure to the same is prohibited, limited or
regulated by any Environmental Law by reason of its hazardous nature.

        "High Yield Debt" shall have the meaning set forth in Section 6.04(h).

        "Holdings" shall mean Pegaso Telecomunicaciones, S.A. de C.V., a
sociedad anonima de capital variable under the laws of Mexico.

        "Holdings Shares" shall have the meaning set forth in Section 4.10.

        "Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money, (ii) all obligations of such Person for the deferred
purchase price of property or services, other than trade accounts payable
arising, and accrued expenses incurred, in the ordinary course of business so
long as such trade accounts payable are payable (and have been paid) within 90
days of the date the respective goods are delivered or the respective services
are rendered, (iii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iv) the currently available amount of
all letters of credit issued for the account of such Person and all outstanding
reimbursement obligations with respect to such letters of credit, (v) all
liabilities secured by any Lien on any property owned by such Person, (vi) any
Guaranty of Indebtedness by such Person, (vii) all obligations under trade or
bankers' acceptances, (viii) Capitalized Lease Obligations, (ix) without
duplication, any amounts due to trade creditors and accrued expenses, (x) all
net obligations under agreements providing for swaps, ceiling rates, ceiling and
floor rates, contingent participation or other hedging mechanisms with respect
to the payment of interest or the convertibility of currency, (xi) all
obligations under any conditional sale agreement or other title retention
agreement and (xii) all Contingent Obligations of such Person; provided that
Indebtedness shall not include trade credit and accrued expenses, in each case
arising in the ordinary course of business.

        "Indemnified Parties" shall have the meaning set forth in Section
8.01(b).

        "Independent Accountant" shall mean Price Waterhouse Coopers or any
replacement therefor of international recognized standing appointed by the
Borrower Group.

        "Initial Disbursement" shall mean, with respect to any tranche of Senior
Indebtedness, the first Disbursement to occur on or after the Closing Date to or
for the benefit of the Company by one or more of the Senior Lenders of the
proceeds of such tranche of Senior Indebtedness under a Credit Agreement to
which it is a party.

        "Initial Disbursement Date" shall mean the date on which the Initial
Disbursement is made.

        "Insurance Consultant" shall mean AON Risk Services, or any replacement
therefor of international recognized standing appointed by the Intercreditor
Agent after consultation with the Company.



                                       12
<PAGE>

        "Insurance Contracts" shall mean the insurance policies required to be
obtained by the Company or any other member of the Borrower Group pursuant to
any Financing Agreement.

        "Interconnection Agreements" shall mean, collectively, (i) that certain
Interconnection Agreement dated as of November 26, 1998 between the Company and
TelMex, and (ii) that certain Interconnection Agreement dated as of November 26,
1998 between the Company and TelNor.

        "Intercreditor Agent" shall mean Citibank, N.A., or any successor
intercreditor agent designated pursuant to the Intercreditor Agreement.

        "Intercreditor Agreement" shall mean the Intercreditor Agreement, dated
as of the date hereof, among the Intercreditor Agent, the Collateral Agent and
the Administrative Agents.

        "Interest Expense" shall mean, for any period, determined on a
consolidated basis for the Borrower Group, the sum (without duplication) of (a)
interest expense on Indebtedness, including (i) fees, (ii) payments under any
interest rate protection agreements or other hedging agreements, (iii) the
interest portion of any deferred payment obligations, (iv) all fees and charges
owed with respect to letters of credit or performance or other bonds, (v) all
accrued or capitalized interest, (vi) any amortization of debt discount and
(vii) all but the principal component of Capital Lease payments and (b)
dividends declared or paid pursuant to this Agreement.

        "Investment Company Act of 1940" shall mean the U.S. Investment Company
Act of 1940, as amended and the rules and regulations promulgated thereunder.

        "Joint Venture Agreement" shall mean the Joint Venture Agreement entered
into as of July 16, 1998 by and among the Existing Shareholders, Leap Mexico,
Holdings and the New Shareholders, in the form delivered to the Collateral Agent
prior to the Closing Date.

        "Judgment Currency" shall have the meaning set forth in Section 8.11.

        "Judgment Currency Conversion Date" shall have the meaning set forth in
Section 8.11.

        "Leap" shall mean Leap Wireless International, Inc., a corporation under
the laws of Delaware.

        "Leap Mexico" shall mean Leap PCS Mexico, Inc., a corporation under the
laws of California, formerly called Qualcomm PCS Mexico, Inc.

        "Leap Wireless Mexico" shall mean Leap Wireless Mexico, a corporation
under the laws of Mexico.

        "Leases" shall mean all leases of real property in which Pegaso PCS is
the lessee, including any and all leases entered into for the purpose of placing
components of the System.

        "Leverage Ratio" shall mean, as of any date of determination, the ratio
of (i) Consolidated Debt as of such date, less cash and Permitted Investments in
excess of



                                       13
<PAGE>
$5,000,000 held by the Borrower Group on such date, to (ii) Consolidated Paid-In
Equity as of such date.

        "Licenses" shall mean the Frequency Band Concessions and the
Telecommunication Networks Concession and any other licenses acquired by the
Company in connection with the Business.

        "Lien" shall mean any security interest, mortgage, pledge, assignment by
way of security, charge, lease, easement, servitude, deposit arrangement,
encumbrance, lien (statutory or other), preference, priority or other security
agreement of any kind or nature whatsoever including, without limitation, (i)
any conditional sale or other title retention agreement, any financing or
similar statement or notice filed under any recording or notice statute, and any
lease having substantially the same effect as any of the foregoing, and (ii) any
designation (except as contemplated by this Agreement, or any Credit Agreement)
of loss payees or beneficiaries or any similar arrangement under any Insurance
Contract.

        "Loans" shall mean, as the context shall indicate, either one or all of
(i) the Alcatel Loans, (ii) the Qualcomm Loans, or (iii) the Additional Senior
Indebtedness Loans.

        "Loss Proceeds" any and all amounts received by any member of the
Borrower Group (i) under insurance policies maintained by or for the benefit of
such member, or (ii) from any Governmental Authority as a result of a
Condemnation Event.

        "Material Adverse Effect" shall mean an event, circumstance, occurrence
or condition which has caused or could reasonably be expected to cause, as of
any date of determination, a material and adverse effect on (i) the business,
assets, liabilities, operations or financial condition of the Borrower Group
(taken as a whole), (ii) the ability of the Borrower Group (taken as a whole) to
perform its (or their) material obligations under the Financing Agreements
(including its (or their) ability to pay its (or their) Obligations under the
Financing Agreements as such obligations become due, (iii) the validity or
enforceability of any of the Financing Agreements (including the ability of any
Secured Party to enforce any of its remedies under any Financing Agreement), or
(iv) the validity, priority or enforceability of the Secured Parties in the
Collateral.

        "Material Agreement" shall mean (i) any operator agreement or
replacement operator agreement, (ii) any equipment or services procurement
agreement (other than the Qualcomm Procurement Agreement or the Alcatel
Procurement Agreement) pursuant to which the aggregate payments are expected to
exceed $5,000,000, and (iii) any interconnection agreement, the absence of which
would be reasonably likely to reduce the Company's gross revenues by more than
ten percent (10%) of gross revenues projected over the twelve months following
the date upon which the agreement was entered.

        "Mexico" shall mean the United Mexican States.

        "Minimum Assets" shall mean those assets of the Borrower Group which (a)
constitute not less than 95% of the value of all assets of the Borrower Group
(valued on the same basis as such assets are carried on the books of each member
of the Borrower Group on a consolidated basis), and (b) are necessary to carry
on the Business of the Borrower Group in substantially the same manner as is
then being carried out by the Borrower Group, and (c) the legal and beneficial


                                       14
<PAGE>


ownership of which is required to be maintained in the name of the Company as
required by Section 4.10 and is required to be subject to the Mortgage as
provided in Section 4.10. For the avoidance of doubt, the term Minimum Assets
shall include all Licenses, all accounts receivable, and all real estate,
fixtures and personal and intellectual property (including customer lists,
billing and other records of the Borrower Group and computer software.

        "Moody's" shall mean Moody's Investors Service, Inc. or any successor
thereto.

        "Mortgage" shall mean the mortgage, dated as of October 30, 1998 (the
"Original Mortgage"), as amended by Amendment No. 1 dated as of December [___],
1998 ("Amendment No. 1 to the Mortgage"), established under the
Telecommunications Law, pursuant to which the Company has granted a Lien in
favor of the Collateral Agent over all of its properties and assets, including,
without limitation, (i) all components of the System, (ii) the Licenses, (iii)
all accounts receivable of the Company (including all amounts owed from time to
time by subscribers of the System), (iv) all cash and securities owned by the
Company, and (v) the Company's rights in, to and under the Vendor Agreements,
the Operator Agreement, the Pegaso PCS Services Agreement and any other contract
to which the Company is a party.

        "New Shareholders" shall have the meaning set forth in the Joint Venture
Agreement.

        "Non-Vendor Financing" shall mean the financing other than (i) the
financing provided under the Qualcomm Credit Agreement and the Alcatel Credit
Agreement or the Alcatel Commitment Letter, and (ii) other financing provided by
Persons to directly finance the purchase of equipment and services, which when
taken together with similar financing provided by such Person and its Affiliates
exceeds $5,000,000 in amount outstanding.

        "Note" shall mean any promissory note issued by the Company pursuant to
a Credit Agreement.

        "Obligation Currency" shall have the meaning ascribed thereto in Section
8.11.

        "Obligations" shall mean all obligations of members of the Borrower
Group now existing or hereinafter arising, direct or indirect, absolute or
contingent, due or to become due, under any of the Financing Agreements,
including (and without duplication) (i) the principal of and interest on the
Loans and other Senior Indebtedness and all other obligations, advances, debts
and liabilities of members of the Borrower Group, including indemnities,
Commitment Fees and other fees and interest incurred under, arising out of or in
connection with the Credit Agreements or any other Financing Agreement (whether
or not evidenced by any note, bond or other instrument and whether or not for
the payment of money), (ii) any and all sums advanced by the Collateral Agent,
in order to preserve the Collateral or preserve its security interest in the
Collateral and (iii) in the event of any proceeding for the collection or
enforcement of the Obligations, after an Event of Default shall have occurred
and be continuing and unwaived, the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the Collateral,
or of any exercise by the Collateral Agent of its rights under the Security
Documents, together with reasonable attorneys' fees and court costs.



                                       15
<PAGE>


        "Operator Agreement" shall mean the "Operator Agreement," as referred to
in the Post-Closing Agreement, between the Company and Leap Wireless Mexico,
which agreement shall provide for operation of the System.

        "Original Business Plan" shall mean the business plan, upon which the
management, officers and directors of the Borrower Group are relying to operate
the Business as of the Closing Date, and which shall be delivered to the
Administrative Agents and the Relevant Parties prior to the Closing Date.

        "Original Mexican Shareholders" shall mean Pegaso Comunicaciones y
Servicios, S.A. de C.V., Corporativo del Valle de Mexico, S. A. de C. V. and
Alejandro Burillo Azcarraga.

        "Overnight Eurodollar Rate" shall mean the Eurodollar Rate determined
daily for an Interest Period of one day (or if longer the shortest period for
which an interest rate is quoted).

        "Payment Date" shall mean the date on which any interest or principal
payments are to be made on any Senior Indebtedness pursuant to any Credit
Agreement.

        "PCS/Recursos Pledge Agreement" shall have the meaning set forth in
Section 3.01(h).

        "Pegaso Guaranty Agreement" shall mean the Guaranty Agreement dated as
of December 15, 1998 as executed by each of the Guarantors in favor of the
Collateral Agent for the benefit and on behalf of the Senior Lenders.

        "Pegaso PCS" shall mean Pegaso PCS, S.A. de C.V., a sociedad anonima de
capital variable under the laws of Mexico.

        "Pegaso PCS Services Agreement" shall mean the Services Agreement, dated
as of December 15, 1998 between Pegaso PCS and the Company.

        "Permit" shall have the meaning set forth in Section 4.05.

        "Permitted Indebtedness" shall have the meaning set forth in Section
6.04.

        "Permitted Investments" of any Person shall mean (A) (i) obligations
issued or Guaranteed as to principal and interest by the United States or any
agency thereof whose obligations are backed by the full faith and credit of the
United States, as applicable, and in either case, which mature no later than one
year after the date of acquisition, (ii) certificates of deposit or other
interest-bearing obligations, maturing no later than six months after the date
of acquisition, of any Acceptable Financial Institution, (iii) commercial paper
and other corporate debt securities rated, on the date of purchase, "A-1" or
"P-1" (as applicable) by S&P or Moody's, respectively, or higher for securities
with original maturities of less than one year and "A" or "A2" by S&P and
Moody's, respectively, or higher, for securities with original maturities of one
year or greater (or the equivalent rating) and maturing no later than one year
after the date of acquisition, (iv) repurchase agreements with respect to any of
the foregoing obligations or securities, maturing no later than one year after
the date of acquisition, with any bank of the type referred to in clause (ii)
above, (v) participations in 28-day auction-rate tax-exempt funds rated, on the
date of purchase, "AA" or "Aa2" by S&P or Moody's (as applicable) or higher,
(vi) any


                                       16
<PAGE>


mutual funds comprising investments referred to in clauses (i) through (v)
above, and (vii) any other investments approved by the Collateral Agent;
provided, however, in order for any investment described above, which has been
rated both by S&P and Moody's, to qualify as a Permitted Investment, such
investment must have received at least the minimum rating specified above from
each such rating institution, and (B) investments in any of the following
denominated in Pesos: (i) obligations with a maturity of six months or less
which are direct obligations of Mexico or of entities representing the full
faith and credit of Mexico, or obligations which are unconditionally guaranteed
by Mexico; (ii) obligations with a maturity of six months or less of Mexican
commercial banks of recognized stature, supervised by the Mexican National
Banking and Securities Commission, with a capital and surplus of at least
$250,000,000; provided, that the aggregate investments of the Borrower Group in
Mexican commercial banks other than Banamex or Bancomer, S.A., Citibank Mexico
or Banco Santander will not exceed $5,000,000 at any time; (iii) commercial
paper of Mexican corporations with a maturity of six months or less and rated at
least "A3" by Calificadora de Valores S.A. de C.V.; provided, that the aggregate
amount invested under this clause (iii) shall not exceed $2,500,000 at any time,
and (iv) repurchase agreements with maturities of not more than 90 days related
to any of the obligations described in clause (i), (ii) or (iii) above, and that
are collateralized by such obligations with any Mexican commercial bank which
meets the criteria outlined in clause (ii) above; provided, that the aggregate
amount invested under this clause (iv) shall not exceed $2,500,000 at any time;
provided further that the aggregate amount invested in all investments in this
clause (B) shall not exceed the amount equal to the Company's average monthly
operating expenses for the preceding six months.

        "Permitted Lien" shall have the meaning set forth in Section 6.01.

        "Person" shall mean any individual, corporation, partnership (including,
without limitation, association), limited liability company, joint stock
company, trust, unincorporated organization or government or political
subdivision thereof.

        "Pesos" or "Ps." shall mean the lawful currency of Mexico.

        "Peso Equivalent" shall mean, with respect to any monetary amount in
Pesos, at any time for the determination thereof, the amount of Dollars obtained
or obtainable by converting the amount of Pesos involved in such computation
into Dollars at the Applicable Currency Exchange Rate against delivery of Pesos
at approximately 11:00 A.M. (Mexico City time) on the date of determination
thereof.

        "Personnel Co." shall mean Pegaso Recursos Humanos, S.A. de C.V., a
sociedad anonima de capital variable under the laws of Mexico.

        "Personnel Co. Services Agreement" shall mean the Services Agreement,
dated as of December 15, 1998, between Pegaso PCS and Personnel Co., pursuant to
which Personnel Co. will provide certain services to Pegaso PCS.

        "Pops" shall mean population, as based on specific population estimates
of geographic areas as determined in accordance with those population estimates
provided by COFETEL in connection with the bidding for and award of the
Licenses.


                                       17
<PAGE>


        "Post-Closing Agreement" shall have the meaning set forth in Section
3.01(y).

        "Pro Rata Payment" shall mean a payment to a Senior Lender on any
Payment Date in which (a) interest paid to such Senior Lender on such Payment
Date bears the same proportion to the total interest payments made to all Senior
Lenders on such Payment Date as (i) the total Obligations for interest due to
such Senior Lender on such Payment Date bears to (ii) the total Obligations for
interest due to all Senior Lenders on such Payment Date, (b) principal paid or
prepaid to such Senior Lender on such Payment Date bears the same proportion to
the total principal payments or prepayments made to all Senior Lenders on such
Payment Date as (i) the total Obligations for principal due to such Senior
Lender on such Payment Date bears to (ii) the total Obligations for principal
due to all Senior Lenders on such Payment Date and (c) fees, commissions,
indemnities and all amounts other than interest and principal paid to such
Senior Lender on such Payment Date bears the same proportion to the total fees,
commissions, indemnities and such other amounts paid to all Senior Lenders on
such Payment Date as (i) the total Obligations for fees, commissions,
indemnities and such other amounts due to such Senior Lender on such Payment
Date bears to (ii) the total Obligations for fees, commission, indemnities and
such other amounts due to all Senior Lenders on such Payment Date; provided,
that, unless otherwise provided in this Agreement, (x) all Commitment Fees shall
be paid in full when due; no such fees shall be paid on a Pro Rata Payment basis
or included in any Pro Rata Payment calculation, (y) any prepayment premiums or
break-funding amounts shall be paid in full at the time of prepayment; no such
amounts shall be paid on a Pro Rata Payment basis or included in any Pro Rata
Payment calculation, and (z) any prepayment of a Loan the proceeds of which were
used for the payment of VAT shall not be paid on a Pro Rata Payment basis and
any such Loans shall not be included in any Pro Rata Payment calculation.

        "Qualcomm" shall mean QUALCOMM, Incorporated, a corporation under the
laws of Delaware.

        "Qualcomm Administrative Agent" shall mean ABN AMRO Bank N.V., in its
capacity as Administrative Agent under the Qualcomm Credit Agreement.

        "Qualcomm Costs" shall mean the cost of all equipment and services
delivered to the Company under the Qualcomm Procurement Agreements, plus brokers
fees, export credit insurance premiums, transportation costs and import duties
payable in connection therewith but in no event including any Subscriber Units
(as defined in the Qualcomm Equipment Agreement).

        "Qualcomm Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of December 15, 1998, between the Company, the Qualcomm
Lenders referred to therein and the Qualcomm Administrative Agent.

        "Qualcomm Lenders" shall mean the financial institutions and other
entities making Loans and Commitments under the Qualcomm Credit Agreement;
provided, that such term shall refer to such Persons only in their capacities as
lenders under the Qualcomm Credit Agreement and not in their capacities as
equipment suppliers or otherwise.

        "Qualcomm Loans" shall mean all of the loans made under the Qualcomm
Credit Agreement



                                       18
<PAGE>

        "Qualcomm Procurement Agreements" shall mean collectively, (i) the
Equipment Purchase Agreement dated as of June 10, 1998 between the Company (by
assignment or otherwise) and Qualcomm, including the Software Maintenance
Agreement dated as of June 10, 1998 between the Company and Qualcomm, which
agreement was attached as Exhibit D to the Equipment Purchase Agreement and
separately executed, and (ii) the Services Agreement dated as of June 10, 1998
between Qualcomm Wireless Services (Mexico) S.A. de C.V. (by assignment or
otherwise) and the Company (by assignment or otherwise).

        "Qualified Public Offering" shall mean a public offering of common stock
of Holdings, (i) in which the offering is made by Holdings and the proceeds are
to used by Holdings in its Business, (ii) the amount received by Holdings (net
of commissions, discounts and expenses) is not less than $75,000,000, and (iii)
such offering results in the common stock (or depository receipts with respect
thereto) of Holdings being listed on a national securities market in the United
States or in the European Economic Union.

        "Rating Agencies" shall mean, collectively, S&P, Moody's and any other
internationally recognized statistical ratings organization approved by the
Collateral Agent.

        "Relevant Lender" shall have the meaning given to that term in Section
4.22.

        "Relevant Parties" shall mean (i) so long as the Alcatel Guaranty shall
remain in effect, Alcatel, (ii) with respect to loans made in accordance with
the Alcatel Commitment Letter that are subject to credit support from a third
party, such third party, and (iii) if and to the extent that Qualcomm (or any
Subsidiary of Qualcomm) shall guarantee the obligations of the Company under the
Qualcomm Credit Agreement, and for so long as such guaranty shall remain in
effect, Qualcomm or such Subsidiary of Qualcomm.

        "Required Pops" shall mean Covered Pops (a) covering the entire
population of Regions 9, 4 and 6 (as such regions are defined in Exhibit A to
the Joint Venture Agreement), and (b) covering at least 40 million Pops.

        "Required Voting Parties" shall have the meaning given to that term in
the Intercreditor Agreement.

        "Responsible Officer" shall mean, with respect to any member of the
Borrower Group, the President, Chief Executive Officer, Chief Financial Officer,
Chief Operating Officer or General Counsel of such member, or any Person having
a similar function.

        "S&P" shall mean Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or any successor thereto.

        "Secured Parties" shall mean, collectively, (i) the Senior Lenders and
(ii) the Agents.

        "Security Documents" shall mean, collectively, the Mortgage, the
PCS/Recursos Pledge Agreement, the Sistemas Pledge Agreement, the Guaranty Trust
Agreement, the Sponsors Negative Pledge Agreement, the Assignment Agreements,
the Guaranty Agreements, the Consents, any documents or instruments executed in
accordance with Section 2.04(c), Section 5.13(A), Section 5.13(B), Section
5.13(D) and Section 5.14(a) and (b), and any filings


                                       19
<PAGE>

registrations, recordings or similar instruments or documents necessary or
required by the Collateral Agent or any other Secured Party to record, perfect
or otherwise evidence a security interest in the Collateral.

        "Senior Indebtedness" shall mean, collectively, the Obligations under
the Alcatel Loans, the Obligations under the Qualcomm Loans and the Obligations
under any Additional Senior Indebtedness.

        "Senior Lenders" shall mean, collectively, the Alcatel Lenders, the
Qualcomm Lenders and the lenders providing funds under any Additional Senior
Indebtedness; provided, however, that with respect to, and to the extent of, any
Obligations paid by Alcatel under the Alcatel Guaranty, Alcatel shall be deemed
the Senior Lender as described in the Alcatel Guaranty.

        "Services Agreements" shall mean, collectively, the Personnel Co.
Services Agreement and Pegaso PCS Services Agreement.

        "Sistemas Pledge Agreement" shall have the meaning set forth in Section
3.01(h).

        "Site Lease" shall mean a Site Lease Agreement, substantially in the
form of Exhibit A to the Common Agreement; provided, however, that with respect
to any Site Lease Agreement which has not yet been forwarded to a potential
lessor on or before the Amendment Effective Date, such Site Lease Agreement
shall reflect appropriate changes to reflect the ownership of the Company in
assets located at the leased sites.

        "Sponsors" shall mean collectively all of the shareholders of Holdings,
which as of the date hereof are Leap Mexico, the Original Mexican Shareholders
and the New Shareholders.

        "Sponsors Negative Pledge Agreement" shall mean the Negative Pledge
Agreement, dated as of the date hereof, pursuant to which each of the Sponsors
has agreed not to grant a Lien to any third party on the Capital Stock of
Holdings held by such Sponsor.

        "Subordinated Loans" shall mean unsecured loans or other advances made
to Holdings by shareholders of Holdings or any Affiliate of any such
shareholder, or which are made by third parties and are guaranteed directly or
indirectly by such shareholder or Affiliate, which (i) are subordinated in right
of payment to all other Indebtedness of the Borrower Group, (ii) do not require
that any payment of principal or interest be made (whether at scheduled
maturity, by acceleration or otherwise) until the date which is one year
following the latest final maturity date for any Senior Indebtedness then
outstanding, (iii) are not guaranteed by any other member of the Borrower Group
and (iv) are the subject of an instrument executed by such shareholder or
Affiliate or third party and deposited with the Intercreditor Agent pursuant to
which such Person acknowledges that it shall receive no payment or amount or
other consideration (other than as permitted by Section 6.12) in respect of such
Subordinated Loan until all Senior Indebtedness has been paid in full.

        "Subsidiary" shall mean, for any Person, any other Person (whether now
existing or hereafter organized) for which at least a majority of the securities
or other ownership interests having ordinary voting power for the election of
directors or other managers are at the time


                                       20
<PAGE>

owned or controlled by such first Person or one or more Subsidiaries of such
first Person or any combination thereof.

        "System" shall mean the wireless broadband PCS system to be constructed
and rolled out by the Borrower Group pursuant to the Business Plan.

        "System Agreements" shall mean, collectively, the Vendor Agreements, the
Joint Venture Agreement, the Operator Agreement, the GTE Operator Agreement, or,
subject to Section 5.17, any replacement operator agreement, the Services
Agreements, the Site Leases, the Interconnection Agreements and the Licenses.

        "System Costs" shall mean all costs incurred by the Company or other
members of the Borrower Group in connection with the care, custody, control,
construction, development and financing of the System, in all cases as and to
the extent set forth in the Business Plan, including (without duplication or
limitation):

        (i) amounts payable under the Vendor Agreements (other than indemnities,
if any);

        (ii) interest, fees, expenses and withholding taxes payable under the
Credit Facilities, in each case prior to the date on which the System is
completed in accordance with the Business Plan;

        (iii) costs and expenses of legal, engineering, accounting, construction
management and other advisors or consultants incurred in connection with the
System and the Business prior to the date on which the System is completed in
accordance with the Business Plan;

        (iv) fees, commissions and expenses payable to the Secured Parties at
the Initial Disbursement Date for each Facility;

        (v) construction insurance premiums for coverage obtained prior to the
date on which the System is completed in accordance with the Business Plan;

        (vii) the Company's labor costs; and

        (viii) value-added taxes and import duties payable by the Company in
Mexico with respect to equipment and material imported by or on behalf of the
Company;

        "Taxes" shall mean all taxes of every kind (including without
limitation, gross and net income, gross and net receipts, capital gains, excess
profits and minimum taxes, taxes on tax preferences, capital, net worth,
franchise, sales, use value-added, stamp, documentary, excise, property and
other similar taxes), charges and withholdings, levies, imposts, duties, fees
and deductions imposed by any government or political subdivision thereof,
quasi-governmental authority or taxing jurisdiction or authority, together with
all interest, additions to tax, penalties and similar add-ons payable with
respect thereto.

        "Tax Return" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes or any amendment thereto, and
including any schedule or attachment thereto.


                                       21
<PAGE>

        "Telecommunication Law" shall mean the Mexican General Means of
Communications Law.

        "Telecommunication Networks Concession" shall mean the license granted
on June 23, 1998 by the Secretariat of Communications of Transport in favor of,
and held by, the Company to install, operate and exploit a public
telecommunications network.

        "TelMex" shall mean Telefonos de Mexico, S.A. de C.V.

        "TelNor" shall mean Telefonos del Noroeste, S.A. de C.V.

        "Transaction Documents" shall mean, collectively, the System Agreements
and the Financing Agreements.

        "Transfer" shall mean any sale, assignment or other transfer, regardless
of whether carried out directly or indirectly.

        "Trigger Date" shall mean the date on which the Company delivers to the
Administrative Agents and the Relevant Parties financial statements for the
Borrower Group for the fiscal quarter ended December 31, 2003 in accordance with
Section 5.01(a).

        "United States" or "U.S." shall mean the United States of America.

        "U.S. GAAP" means generally accepted accounting principles in the United
States.

        "VAT" shall mean Mexican impuesto al valor agregado (value-added taxes).

        "Vendor" shall mean each Person (other than the Company) which is a
party to a Vendor Agreement.

        "Vendor Agreements" shall mean collectively (i) the Alcatel Procurement
Agreement; and (ii) the Qualcomm Procurement Agreements.

        "Voting Party" shall have the meaning set forth in the Intercreditor
Agreement.

        "Wholly-owned" when used in respect of any Subsidiary, shall mean that
the parent company of such Subsidiary owns all of the Capital Stock of such
Subsidiary, other than any minimal shares which are required by Mexican (or
other) Applicable Law to be owned by another Person.

        "Wireless Services" shall mean PCS (Personal Communications Services)
and/or WLL (wireless local loop) services.

        "Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.


                                       22

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.46
<SEQUENCE>5
<FILENAME>a76829ex10-46.txt
<DESCRIPTION>EXHIBIT 10.46
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.46

                 PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.

                       -----------------------------------

                                CREDIT AGREEMENT

                         DATED AS OF SEPTEMBER 25, 1998

                       -----------------------------------

                              QUALCOMM INCORPORATED
                       AS LENDER AND ADMINISTRATIVE AGENT


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                    <C>
SECTION 1. AMOUNT AND TERMS OF CREDIT...............................................     1
      1.1  Commitment...............................................................     1
      1.2  Types of Long-Term Loans.................................................     3
      1.3  Conversion and Continuation Elections....................................     3
      1.4  Duration of Interest Periods.............................................     3
      1.5  Existing Loans and Notice and Manner of Making Additional Loans or
           Converting/Continuing Long-Term Loans....................................     4
           (a)    Existing Loans....................................................     4
           (b)    Notice and Manner of Making Additional Loans......................     4
           (c)    Conversions/Continuations of Loans................................     5
      1.6  Evidence Of Debt.........................................................     6
      1.7  Pro Rata Borrowings......................................................     7
      1.8  Interest.................................................................     7
      1.9  Increased Costs, Illegality, Etc.........................................     8
      1.10 Compensation.............................................................    10
      1.11 Change Of Lending Office.................................................    10
      1.12 EXIM Financing, Etc......................................................    10
      1.13 Common Terms Agreement; Conformance to Pari Passu Debt...................    11
      1.14 No Net Payments..........................................................    12
      1.15 Replacement of Lenders...................................................    13
SECTION 2. FEES; COMMITMENTS........................................................    13
      2.1  Fees.....................................................................    13
      2.2  Voluntary Reduction Of Commitments.......................................    14
      2.3  Mandatory Adjustments Of Commitments, Etc................................    14
SECTION 3. PAYMENTS.................................................................    14
      3.1  Voluntary Prepayments....................................................    14
      3.2  Mandatory Prepayments and Repayments.....................................    15
      3.3  Method And Place Of Payment..............................................    16
      3.4  Net Payments.............................................................    16
</TABLE>


                                       i.
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                    <C>
SECTION 4. CONDITIONS PRECEDENT TO ADDITIONAL LOANS.................................    17
      4.1  Conditions Precedent To Additional Loans on Additional Loans
           Closing Date.............................................................    17
           (a)    Effectiveness; Notes..............................................    17
           (b)    Opinion Of Counsel................................................    17
           (c)    Corporate Proceedings.............................................    18
           (d)    Guaranty..........................................................    18
           (e)    Security Documents................................................    18
           (f)    Consent Letter....................................................    19
           (g)    QUALCOMM Procurement Agreements and Other Agreements..............    19
           (h)    Officer's Certificate.............................................    19
           (i)    Adverse Change....................................................    19
           (j)    Consents, Approvals...............................................    19
           (k)    Litigation........................................................    19
           (l)    Incumbency Certificates...........................................    19
           (m)    Evidence Of Insurance.............................................    20
           (n)    Fee Letter........................................................    20
           (o)    Capital Contributions.............................................    20
           (p)    License Fees......................................................    20
           (q)    All Integral Assets In Borrower; Holdings Undertaking.............    20
           (r)    Spanish Translations..............................................    20
           (s)    Government Authorizations.........................................    20
           (t)    Mortgage..........................................................    20
           (u)    Frequency Band License............................................    21
           (v)    Additional Matters, Documents Or Information......................    21
      4.2  Conditions Precedent To All Additional Loans.............................    21
           (a)    Borrowing Notice..................................................    21
           (b)    No Default; Representations And Warranties........................    21
</TABLE>


                                      ii.
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                    <C>
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS...............................    21
      5.1  Corporate Status.........................................................    22
      5.2  Corporate Power And Authority............................................    22
      5.3  No Violation.............................................................    22
      5.4  Enforceability...........................................................    22
      5.5  Litigation...............................................................    22
      5.6  Use Of Proceeds..........................................................    23
      5.7  Governmental Approvals...................................................    23
      5.8  Financial Condition; Financial Statements................................    23
      5.9  Security Interests.......................................................    23
      5.10 Subsidiaries.............................................................    24
      5.11 Intellectual Property....................................................    24
      5.12 Compliance With Law; Licenses............................................    24
      5.13 Environmental Matters....................................................    24
      5.14 Year 2000................................................................    24
      5.15 No Subordination.........................................................    24
      5.16 Taxes....................................................................    25
      5.17 Ownership And Liens......................................................    25
      5.18 Indebtedness.............................................................    25
      5.19 Accuracy Of Information Furnished; Complete Disclosure...................    25
      5.20 Other Regulatory Compliance..............................................    26
      5.21 Employee Benefit Plans; Employment Matters...............................    26
      5.22 Sovereign Immunity.......................................................    27
SECTION 6. AFFIRMATIVE COVENANTS....................................................    27
      6.1  Information Covenants....................................................    27
           (a)    Annual Financial Statements.......................................    27
           (b)    Quarterly Financial Statements....................................    27
           (c)    Business Plan.....................................................    28
           (d)    Officer's Certificates............................................    28
           (e)    Notice Of Default, Litigation Or Environmental Claim..............    28
</TABLE>


                                      iii.
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                    <C>
           (f)    Year 2000 Compliance..............................................    28
           (g)    Other Information.................................................    28
      6.2  Books, Records And Inspections...........................................    29
      6.3  Insurance................................................................    29
      6.4  Payment Of Taxes.........................................................    29
      6.5  Corporate Franchises.....................................................    29
      6.6  Compliance With Statutes, Etc............................................    29
      6.7  Good Repair..............................................................    30
      6.8  Alcatel Procurement Agreement and Alcatel Credit Agreement...............    30
      6.9  Shareholder Pledge of Holdings Stock.....................................    30
      6.10 Intragroup Service Agreements............................................    30
      6.11 Business Plan............................................................    30
      6.12 Additional Security; Further Assurances..................................    30
      6.13 Consents, Approvals......................................................    31
      6.14 Maintenance Of Licenses And Compliance With Regulations And Related
           Agreements...............................................................    32
      6.15 Site Acquisition.........................................................    32
      6.16 Completion of Conditions Precedent.......................................    33
      6.17 Addition of Other Secured Creditors......................................    33
SECTION 7. NEGATIVE COVENANTS.......................................................    33
      7.1  Changes In Business......................................................    33
      7.2  Consolidation, Merger, Sale Or Purchase Of Assets, Etc...................    33
      7.3  Liens....................................................................    34
      7.4  Indebtedness.............................................................    36
      7.5  Advances, Investments And Loans..........................................    37
      7.6  Limitation On Creation Of Subsidiaries...................................    37
      7.7  Prepayments; Modifications...............................................    37
      7.8  Dividends, Etc...........................................................    38
      7.9  Transactions With Affiliates.............................................    39
      7.10 Leverage Ratio...........................................................    39
</TABLE>


                                      iv.
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                    <C>
      7.11 Minimum Asset Ownership Concentration....................................    39
      7.12 Limitation On Issuance Of Stock..........................................    39
      7.13 Compliance With Certain Regulations......................................    39
SECTION 8. EVENTS OF DEFAULT........................................................    39
      8.1  Payments.................................................................    40
      8.2  Representations, Etc.....................................................    40
      8.3  Covenants................................................................    40
      8.4  Default Under Other Agreements...........................................    40
      8.5  Bankruptcy...............................................................    40
      8.6  Security Documents.......................................................    41
      8.7  Guaranty.................................................................    41
      8.8  Judgments................................................................    41
      8.9  Lost Licenses............................................................    41
      8.10 Change Of Control........................................................    41
      8.11 Failure to Complete Conditions...........................................    41
      8.12 Objection to Pledge......................................................    41
      8.13 Mortgage.................................................................    42
SECTION 9. DEFINITIONS..............................................................    42
      9.2  Other Interpretive Provisions............................................    58
SECTION 10. ADMINISTRATIVE AGENT....................................................    59
      10.1 Appointment of QUALCOMM as Administrative Agent..........................    59
      10.2 Delegation of Duties by Administrative Agent.............................    59
      10.3 Liability of Administrative Agent........................................    59
      10.4 Reliance by Administrative Agent.........................................    60
      10.5 Notice of Default........................................................    60
      10.6 Non-Reliance by Lenders..................................................    61
      10.7 Indemnification..........................................................    61
      10.8 Successor Administrative Agent...........................................    62
</TABLE>


                                       v.
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                    <C>
SECTION 11. MISCELLANEOUS...........................................................    63
      11.1  Payment Of Expenses, Indemnification, Etc...............................    63
      11.2  Right Of Setoff.........................................................    63
      11.3  Notices.................................................................    63
      11.4  Benefit Of Agreement....................................................    64
      11.5  No Waiver; Remedies Cumulative..........................................    65
      11.6  Payments Pro Rata.......................................................    66
      11.7  Calculations; Computations..............................................    66
      11.8  Governing Law; Submission To Jurisdiction; Venue; Waiver Of Jury
            Trial...................................................................    66
      11.9  Counterparts............................................................    67
      11.10 Effectiveness...........................................................    68
      11.11 Headings Descriptive....................................................    68
      11.12 Amendment Or Waiver.....................................................    68
      11.13 Survival................................................................    68
      11.14 Domicile Of Loans.......................................................    68
      11.15 Confidentiality.........................................................    69
      11.16 Lender Register.........................................................    69
      11.17 Judgment Currency.......................................................    69
      11.18 Entire Agreement; Construction..........................................    70
</TABLE>


                                      vi.
<PAGE>

                                CREDIT AGREEMENT

       CREDIT AGREEMENT, dated as of September 25, 1998, among PEGASO
COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a corporation organized under the laws
of Mexico (the "Borrower"), QUALCOMM INCORPORATED, a corporation organized under
the laws of Delaware, ("QUALCOMM"), the lenders from time to time party hereto
(each, a "Lender" and, collectively, the "Lenders"), and QUALCOMM as agent for
the Lenders ("Administrative Agent"). Unless otherwise defined herein, all
capitalized terms used herein and defined in SECTION 9 are used herein as so
defined.

                                   WITNESSETH

       WHEREAS, Borrower Group intends to construct and operate a nationwide
wireless broadband PCS system (the "System") in Mexico and QUALCOMM has entered
into the Equipment Agreement and QUALCOMM Wireless Services (Mexico), S.A. de
C.V., a wholly-owned subsidiary of QUALCOMM, (QUALCOMM and QUALCOMM Wireless
Services, (Mexico), S.A. de C.V. each being a "Vendor" and collectively
"Vendors") has entered into the Services Agreement pursuant to which Vendors
have agreed to supply to Borrower certain of the equipment and services needed
to complete and operate such system;

       WHEREAS, QUALCOMM has agreed to make available to Borrower credit
facilities, the proceeds of which shall be used to finance certain of such
equipment and services;

       WHEREAS, Borrower and QUALCOMM wish to enter into this Agreement to
establish the credit facilities described above;

       NOW, THEREFORE, IT IS AGREED:

SECTION 1. AMOUNT AND TERMS OF CREDIT.

       1.1 COMMITMENT. Subject to and upon the terms and conditions, and subject
to the limitations, herein set forth, each Lender severally agrees to make Loans
to Borrower, which Loans shall be drawn, to the extent such Lender has a
commitment under such Facility, under Facility-1, Facility-2 and the VAT
Facility, as set forth below:

              (a) Loans under Facility-1 (each, together with Facility-1 Loans
deemed made pursuant to SECTION 1.5(b), a "Facility-1 Loan" and, collectively,
the "Facility-1 Loans") shall (i) be made from time to time on a Business Day
during the Facility-1 Availability Period, (ii) constitute Tranche A Loans if
such Loans are EXIM Qualified and are made prior to the Facility-1 Refinancing
Date, (iii) constitute Tranche C Loans if such Loan are not EXIM Qualified and
do not exceed $55,000,000 in aggregate original principal amount, (iv)
constitute Tranche B Loans if such Loans are not Loans or Tranche C Loans, (v)
not exceed in aggregate principal amount for any Lender with respect to any
incurrence thereof the Facility-1 Commitment of such Lender as in effect on the
date of such incurrence and (vi) to the extent made in any calendar year, not
exceed in the aggregate the sum of the Base Financing Percentage plus the
Contingent Financing Percentage, if any, for such calendar year of QUALCOMM
Costs required to be paid in such calendar year; provided that, with respect to
all of the foregoing, no Loans that are EXIM


                                       1.
<PAGE>

Qualified will be made under Facility-1 after the Facility-1 EXIM Loans Closing
Date. Once repaid, Facility-1 Loans may not be reborrowed.

              (b) Loans under Facility-2 (each a "Facility-2 Loan" and,
collectively, the "Facility-2 Loans") shall (i) be made from time to time on a
Business Day during the Facility-2 Availability Period, (ii) constitute (x)
Tranche A Loans if such Loans are EXIM Qualified and are made prior to the
Facility-2 Refinancing Date or (y) Tranche B if such Loans are not EXIM
Qualified or are made on and after the Facility-2 Refinancing Date, (iii) not
exceed in aggregate principal amount with respect to any incurrence thereof the
Facility-2 Commitment of such Lender as in effect on the date of such incurrence
and (iv) to the extent made in any calendar year, not exceed in the aggregate
the sum of the Base Financing Percentage plus the Contingent Financing
Percentage, if any, for such calendar year of QUALCOMM Costs required to be paid
in such calendar year; provided that, with respect to all of the foregoing, no
Loans that are EXIM Qualified will be made under Facility-2 after the Facility-2
EXIM Loans Closing Date. Once repaid, Facility-2 Loans may not be reborrowed.

              (c) Loans under the VAT Facility (each, a "VAT Loan" and,
collectively, the "VAT Loans") (i) shall, except for the Existing VAT Loans, be
made at any time and from time to time on a Business Day during the VAT Facility
Availability Period, (ii) may be repaid and reborrowed in accordance with the
provisions hereof and (iii) shall not exceed (inclusive of the Existing VAT
Loans and giving effect to any incurrence) for any Lender in aggregate principal
amount at the time of the incurrence thereof the VAT Loan Commitment of such
Lender at such time.

              (d) Notwithstanding anything in this Agreement to the contrary, no
Lender shall be obliged to make any Loan, to the extent that the initial
aggregate principal amount of all Loans (other than Loans representing the
capitalization of interest pursuant to SECTION 1.8) made hereunder shall exceed
the Total Commitment.

              (e) Long-Term Loans which are incurred on or after the Effective
Date shall be allocated among Tranche A, Tranche B and Tranche C Loans in the
following priority:

       First, to Tranche A Loans to the extent of 85% of each Invoice for
       QUALCOMM Costs allocable to the sale of equipment and to the provision of
       services in the U.S.;

       Second, to Tranche C Loans to the extent of the availability thereof; and

       Third, to Tranche B Loans to the extent of the availability thereof;

       provided, however, that upon receiving confirmation satisfactory to
       QUALCOMM from the Export Import Bank of the U.S. that costs reflected in
       any Invoice are, or are not, EXIM Qualified, QUALCOMM may, but shall not
       be obligated to, redesignate Tranche A Loans, in whole or part, in order
       of priority according to availability, to be Tranche C Loans or Tranche B
       Loans and, upon written notice to Administrative Agent, with a copy
       thereof to Borrower, the interest accrued pursuant to each such
       redesignated Loan shall be retroactively adjusted and paid, or credited,
       as applicable, on the next succeeding Interest Payment Date; provided
       further, that with respect to Loans made under Facility-


                                       2.
<PAGE>

       2, the foregoing references to Tranche C Loans, and designation and
       redesignation of Loans as Tranche C Loans shall be ignored.

       1.2 TYPES OF LONG-TERM LOANS. Each Long-Term Loan shall, in accordance
with the terms of this Agreement, be in the form of either a Base Rate Loan or a
Eurodollar Loan; provided, however, that, notwithstanding anything to the
contrary herein, each initial borrowing of Long-Term Loans pursuant to SECTION
1.5(b) hereof shall be comprised solely of Base Rate Loans until the first
Business Day of the calendar month next succeeding the effective date of such
initial borrowing of such Loans but may as of such Business Day be converted
into Eurodollar Loans and continued as provided in SECTION 1.3 hereof. At no
time may Borrower maintain Eurodollar Loans in more than six (6) separate
Interest Periods in respect of Facility-1 Loans and six (6) separate Interest
Periods in respect of Facility-2 Loans.

       1.3 CONVERSION AND CONTINUATION ELECTIONS. Borrower may, upon irrevocable
written notice to Administrative Agent, with reference to the Long-Term Loans:

              (a) elect to convert on any Business Day, Base Rate Loans in an
amount equal to Two Million Five Hundred Thousand ($2,500,000) (or any integral
multiple of One Hundred Thousand Dollars ($100,000) in excess thereof) into
Eurodollar Loans; or

              (b) elect to convert any Eurodollar Loans into Base Rate Loans on
the last day of the Interest Period applicable to such Eurodollar Loans; or

              (c) elect to continue any Eurodollar Loans (or any part thereof in
an amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000) or any
integral multiple of One Hundred Thousand Dollars ($100,000) in excess thereof)
as Eurodollar Loans on the last day of the Interest Period applicable to such
Eurodollar Loans.

       1.4 DURATION OF INTEREST PERIODS.

              (a) Subject to the provisions of the definition of Interest Period
and SECTION 1.2 and SECTION 1.3 above, the duration of each Interest Period
applicable to a Eurodollar Loan shall be as specified in the applicable Notice
of Conversion/Continuation.

              (b) If Administrative Agent does not receive a notice of election
of duration of an Interest Period with respect to a borrowing of Eurodollar
Loans pursuant to SUBSECTION (a) above within the applicable time limits
specified herein, Borrower shall be deemed to have elected to make or convert
such Loans in whole into Eurodollar Loans with an Interest Period of one month
on the last day of the then current Interest Period with respect thereto.
Notwithstanding anything to the contrary herein, any and all Eurodollar Loans
shall be converted in whole into Base Rate Loans on the last day of the then
existing Interest Period with respect thereto if Administrative Agent shall have
received notice from Borrower or a Lender that an Event of Default exists and
Administrative Agent, at the direction of Required Lenders shall have delivered
to Borrower notice that such conversion is required.


                                       3.
<PAGE>

       1.5 EXISTING LOANS AND NOTICE AND MANNER OF MAKING ADDITIONAL LOANS OR
           CONVERTING/CONTINUING LONG-TERM LOANS.

              (a) EXISTING LOANS. Set forth on SCHEDULE 1.5 hereto is a schedule
of all amounts currently due or to become due under the QUALCOMM Procurement
Agreements which the parties have agreed, on the Effective Date, are to be
financed under Facility-1. Each such amount shall be deemed to be Tranche A
Loans, Tranche B Loans or Tranche C Loans thereunder, outstanding under the
Notes, if applicable, on and after the Effective Date. SCHEDULE 1.5 also sets
forth a schedule of all Pagares outstanding on the Effective Date which the
parties have agreed will be financed under the VAT Facility and shall continue
to be outstanding on the terms set forth therein and shall be treated as VAT
Loans hereunder on and after the Effective Date.

              (b) NOTICE AND MANNER OF MAKING ADDITIONAL LOANS.

                     (i) Not fewer than five (5) Business Days prior to the date
Borrower desires to borrow hereunder, Borrower shall deliver by electronic
facsimile transmission: (A) to each of Administrative Agent and QUALCOMM,
written notice specifying (1) whether the requested Loan shall be made in cash
(a "Cash Advance") or by means of a credit (a "Credit Advance") against amounts
due to the applicable Vendor under the QUALCOMM Procurement Agreements, (2) the
amount of such Borrowing which, in the case of a Cash Advance under either
Long-Term Facility shall not be less than the Minimum Borrowing Amount, (3) with
respect to requests of Cash Advances not made to Borrower, the Person to which
such Cash Advance is requested to be made on behalf of Borrower and (4) the
effective date for such Borrowing of Loans (which for Credit Advances shall be
no earlier than the date on which payment is due under the QUALCOMM Procurement
Agreements), which notice shall be in the form of EXHIBIT C to this Agreement
(an "Loan Request"); and (B) to QUALCOMM, all invoices and any other supporting
documentary information necessary to evidence the QUALCOMM Costs and VAT, if
applicable, giving rise to such Loan Request (the "Invoices). After the date on
which QUALCOMM receives each Loan Request and the accompanying Invoices,
QUALCOMM shall have four (4) Business Days (the "Loan Request Review Period")
during which to acknowledge receipt of the same and transmit such to
Administrative Agent. Provided that QUALCOMM has acknowledged receipt of such
Loan Request and such Invoices to Administrative Agent in writing or, if
QUALCOMM has not so acknowledged within the Loan Request Review Period, the
effective date for such borrowing of such Loans under Credit Advances shall be
the first (1(st)) Business Day after the final day of such Loan Request Review
Period and the applicable Invoice shall be deemed paid to the extent of such
Loan.

                     (ii) On each date prior to the end of the Facility-1
Availability Period or the Facility-2 Availability Period, as applicable, on
which payment under the QUALCOMM Procurement Agreements is due to QUALCOMM for
which Borrower has delivered an Invoice, and such payment has not been made or a
borrowing of Long-Term Loans has not been requested by Borrower pursuant to
SECTION 1.5(b)(i) hereof, QUALCOMM shall deliver to Administrative Agent by
electronic facsimile transmission written notice of such due date and the amount
of such payment due under the QUALCOMM Procurement Agreements (less any amounts
as to which QUALCOMM and the Administrative Agent have received written notice
from Borrower of any dispute with respect to such amount being due and payable),
which notice


                                       4.
<PAGE>

shall be in the form of EXHIBIT D to this Agreement (a "Notice of Deemed Loan"),
and a borrowing of Base Rate Loans (which Loans shall be Tranche A Loans,
Tranche B Loans or Tranche C Loans as shall be determined pursuant to SECTION
1.1(e)) shall be deemed to have been made as of the date on which such payment
was due pursuant to the QUALCOMM Procurement Agreements and the amount of
Long-Term Loans owing to each Lender shall automatically be increased as of such
date to add to the principal amount thereof the amount of such required payment
according to the Commitment of each Lender making such Long-Term Loan; provided,
however, that Borrower may thereafter, elect to convert such Long-Term Loans in
whole or in part to Eurodollar Loans in accordance with SECTION 1.5(c) below.

                     (iii) With regard to Long-Term Loans which are Credit
Advances: (A) to the extent that, with respect to any Lender, the amount equal
to such Lender's Percentage under the applicable Facility multiplied by the
aggregate amount required to be paid by Borrower at such time under the QUALCOMM
Procurement Agreements exceeds amounts owing to such Lender under the QUALCOMM
Procurement Agreements on such date, such Lender shall, by 12:00 noon New York
time on such date, remit by wire transfer such excess to Administrative Agent;
and (B) to the extent that, with respect to any Lender, the amount equal to such
Lender's Percentage under the applicable Facility multiplied by the aggregate
amount required to be paid by Borrower at such time under the QUALCOMM
Procurement Agreements is less than the amount reported by QUALCOMM to
Administrative Agent as amounts owing to such Lender under the QUALCOMM
Procurement Agreements on such date, Administrative Agent shall promptly remit
(from amounts received by Administrative Agent pursuant to (A) above) by wire
transfer such shortfall to such Lender.

                     (iv) With regard to Loan Requests for Cash Advances,
Administrative Agent shall promptly notify each Lender having a Commitment with
respect thereto as to the content of each Loan Request for Cash Advances and
whether or not QUALCOMM has advised Administrative Agent that the conditions set
forth in the second sentence of SECTION 1.5(b)(i) have been satisfied. Provided
that QUALCOMM has acknowledged Borrower's Loan Request to Administrative Agent
in writing, such Lenders shall disburse to Administrative Agent in immediately
available funds by 12:00 noon New York time on the requested funding date an
amount equal to their respective Percentages multiplied by the amount of the
borrowing requested in such Loan Request, and Administrative Agent shall
promptly disburse the aggregate of such amounts in immediately available funds
to Borrower or such other Person designated by Borrower in the Loan Request.

              (c) CONVERSIONS/CONTINUATIONS OF LOANS. On each date on which
Borrower desires, with respect to Long-Term Loans to (A) continue any such
Long-Term Loans that are Eurodollar Loans for another Interest Period, or (B)
convert any such outstanding Long-Term Loans into Long-Term Loans of another
type provided for in this Agreement, Borrower shall notify Administrative Agent
(which notice shall be irrevocable) in writing by electronic facsimile
transmission received no later than 1:00 p.m. New York time on the date one (1)
Business Day before the day on which such requested Long-Term Loans are to be
converted into Base Rate Loans, and received no later than 1:00 p.m. New York
time on the date three (3) Business Days before the date on which such requested
Long-Term Loans are to be continued for another Interest Period as or converted
into Eurodollar Loans. Such notice shall specify (i) the effective date and
amount of such Long-Term Loans or portion thereof to be continued or converted,


                                       5.
<PAGE>

subject to the limitations set forth in SECTION 1.3 hereof, (ii) the interest
rate option to be applicable thereto, and (iii) the duration of the applicable
Interest Period, if any (subject to the provisions of the definition of Interest
Period and SECTION 1.4) hereof. Each such notification (a "Notice of
Conversion/Continuation") shall be in the form of EXHIBIT E to this Agreement.

              (d) Administrative Agent shall promptly notify each Lender as to
the content of each Loan Request, Notice of Deemed Loan, and Notice of
Conversion/Continuation.

              (e) Unless Administrative Agent shall have been notified by any
Lender no later than the Business Day prior to the respective funding date of
any borrowing of Loans that such Lender does not intend to make available to
Administrative Agent immediately available funds equal to such Lender's
Percentage under the relevant Facility of the total principal amount of such
borrowing, Administrative Agent may (in its sole and absolute discretion) assume
that such Lender has advanced funds in the amount of such Lender's relevant
Percentage of such borrowing to Administrative Agent on the applicable funding
date and Administrative Agent may, in reliance upon such assumption, make
available to Borrower corresponding funds. Administrative Agent agrees to give
prompt notice to Borrower in the event it advances funds on behalf of a Lender
under this SECTION 1.5(e); provided that failure to give such notice shall in no
way limit, restrict or otherwise affect Borrower's obligations or Administrative
Agent's or any Lender's rights or remedies under this Agreement and the other
Credit Documents. If Administrative Agent has made funds available to Borrower
based on such assumption and such Loan is not in fact made available to
Administrative Agent by such Lender, Administrative Agent shall be entitled to
recover the corresponding amount of such Long-Term Loan on demand from such
Lender. If such Lender does not promptly pay such corresponding amount upon
Administrative Agent's demand, Administrative Agent shall notify Borrower and
Borrower shall repay such Long-Term Loan to Administrative Agent, together with
accrued interest thereon. Administrative Agent also shall be entitled to recover
from such Lender interest on such Long- Term Loan in respect of each day from
the date such Long-Term Loan was made by Administrative Agent to Borrower to the
date such corresponding amount is recovered by Administrative Agent at the
Federal Funds Effective Rate.

              (f) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
Borrower may have against any Lender as a result of any default by such Lender
hereunder.

       1.6 EVIDENCE OF DEBT.

              (a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of Borrower to such
Lender resulting from each Loan made by such Lender from time to time, including
the amounts of principal and interest payable and paid to such Lender from time
to time under this Agreement.

              (b) Administrative Agent shall maintain the Lender Register
pursuant to SECTION 11.16, and a subaccount therein for each Lender, in which
shall be recorded (i) the amount of each Loan made hereunder, and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from Borrower to each Lender hereunder
(including the amount of any capitalized interest under


                                       6.
<PAGE>

SECTION 1.8(e)) and (iii) both the amount of any sum received by Administrative
Agent hereunder from Borrower and each Lender's share thereof.

              (c) The entries made in the Lender Register and the accounts of
each Lender maintained pursuant to SECTION 1.6(b) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of Borrower therein recorded; provided, that the failure of
Administrative Agent or any Lender to maintain the Lender Register or any such
account, or any error therein, shall not in any manner affect the obligation of
Borrower to repay (with applicable interest) the Loans of each Lender in
accordance with the terms of this Agreement.

              (d) Borrower agrees that, upon the request to Administrative Agent
by any Lender under any Facility other than the VAT Facility, Borrower will
execute and deliver to such Lender a promissory note of Borrower, which shall be
jointly and severally guaranteed "avalados" by the Guarantors, dated the first
day of the Availability Period for such Facility evidencing the Loans under such
Facility of such Lender, substantially in the form of EXHIBIT A with appropriate
insertions as to date and principal amount (each, a "Note"). Thereafter, the
Loans evidenced by any such Note and interest thereon shall at all times
(including after assignment pursuant to SECTION 11.4) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein.

              (e) Borrower agrees that Borrower will execute and deliver to each
Lender making a VAT Loan a Pagare, which shall be jointly and severally
guaranteed "avalados" by the Guarantors, dated the date of issuance of such
Pagare evidencing the VAT Loan made on that date. Thereafter, the VAT Loan
evidenced by such Pagare and interest thereon shall at all times (including
after assignment pursuant to SECTION 11.4) be represented by such Pagare in such
form payable to the order of the payee named therein.

       1.7 PRO RATA BORROWINGS. All Loans under this Agreement shall be made by
the Lenders pro rata on the basis of Commitments of the Lenders with a
Commitment under the Facility under which such Loan is being made. It is
understood that no Lender shall be responsible for any default by any other
Lender in its obligation to make Loans hereunder and that each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfill its commitments hereunder.

       1.8 INTEREST.

              (a) Except as provided in the next sentence with respect to VAT
Loans and as contemplated in SECTION 1.1(e), the unpaid principal amount of each
Loan shall bear interest from the date of the incurrence thereof until payment
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times (i) in the case of Eurodollar Loans, and during each Interest
Period applicable thereto, be the Eurodollar Rate for such Interest Period plus
the relevant Applicable Margin and (ii) in the case of Base Rate Loans, be the
Base Rate plus the relevant Applicable Margin. The unpaid principal amount of
each VAT Loan shall bear interest from the date of the incurrence thereof until
payment maturity (whether by acceleration or otherwise) at a fixed rate per
annum which shall at all times be the Applicable VAT Margin


                                       7.
<PAGE>

plus the Eurodollar Rate in effect on the date of issuance of the Pagare
associated with such VAT Loan (assuming an Interest Period of six months
commencing on such date).

              (b) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the rate otherwise
applicable thereto plus two percent (2%) per annum.

              (c) Except as provided in the next sentence with respect to VAT
Loans, interest shall accrue from and including the date of the incurrence of
Loans to but excluding the date of any repayment thereof and shall be payable
(i) in the case of Base Rate Loans, on the last Business Day of each calendar
quarter, and (ii) in the case of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in the case of all Loans, on any
prepayment (on the amount prepaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand. Interest shall accrue from and
including the date of the incurrence of each VAT Loan to but excluding the date
of any repayment thereof and shall be payable on any prepayment (on the amount
prepaid), at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.

              (d) All computations of interest hereunder shall be made in
accordance with SECTION 11.7(b).

              (e) Anything in this Agreement to the contrary notwithstanding,
and unless Borrower shall notify Administrative Agent that this SECTION 1.8(e)
shall not be applicable to any of the interest payments on the Tranche A Loans
or the Tranche C Loans otherwise covered hereby, (i) the interest that accrues
on Tranche A Loans shall not be required to be paid in cash on any Interest
Payment Date occurring prior to the Facility-1 Refinancing Date and (ii) the
interest that accrues on Tranche C Loans shall not be required to be paid in
cash on any Interest Payment Date occurring prior to the first anniversary of
the Effective Date, but, in each case, on each such Interest Payment Date such
accrued interest will be capitalized and added to the principal of the Tranche A
Loans or Tranche C Loans of each Lender as to which such interest accrued.

              (f) Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Loans for any Interest Period shall promptly notify
Borrower and the Lenders thereof.

       1.9 INCREASED COSTS, ILLEGALITY, ETC.

              (a) In the event that (x) in the case of clause (i) below,
Administrative Agent or (y) in the case of clauses (ii) and (iii) below, any
Lender shall have determined in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):

                     (i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market, adequate and fair means do
not exist for ascertaining the applicable interest rate on the basis provided
for in the definition of Eurodollar Rate; or


                                       8.
<PAGE>

                     (ii) at any time, that such Lender shall incur increased
costs or reductions in the amounts received or receivable hereunder with respect
to any Eurodollar Loans (other than taxes covered by SECTION 3.4 and any
increased cost or reduction in the amount received or receivable resulting from
the imposition of or a change in the rate of taxes or similar charges) because
of (x) any change since the Effective Date in any applicable law, governmental
rule, regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to, a
change in official reserve requirements) and/or (y) other circumstances
affecting the interbank Eurodollar market or the position of such Lender in such
market; or

                     (iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Lender in good faith
with any law, governmental rule, regulation or guideline introduced or changed
after the Effective Date;

then, and in any such event, such Lender (or Administrative Agent in the case of
clause (i) above) shall (x) on such date and (y) within ten Business Days of the
date on which such event no longer exists give notice (by telephone confirmed in
writing) to Borrower and to Administrative Agent of such determination (which
notice Administrative Agent shall promptly transmit to each of the other
Lenders). Thereafter (x) in the case of clause (i) above, until such time as
Administrative Agent notifies Borrower and the Lenders that the circumstances
giving rise to such notice by Administrative Agent no longer exist, all new
Loans, and all outstanding Loans as to which existing Interest Periods expire,
shall bear interest at a rate per annum equal to (A) the Base Rate plus (B) the
Applicable Margin, (y) in the case of clause (ii) above, Borrower shall pay to
such Lender, upon written demand therefor, such additional amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its reasonable discretion shall determine after
consultation with Borrower) as shall be required to compensate such Lender for
such increased costs or reductions in amounts receivable hereunder (a written
notice as to the additional amounts owed to such Lender, describing the basis
for such increased costs and showing the calculation thereof, submitted to
Borrower by such Lender shall, absent manifest error, be final and conclusive
and binding upon all parties hereto) and (z) in the case of clause (iii) above,
the obligations of such Lender to make and maintain Loans hereunder under the
respective Facilities shall terminate and all of the outstanding Loans made by
it shall be repaid.

              (b) If any Lender shall have determined that the adoption or
effectiveness after the Effective Date of any applicable law, rule or regulation
regarding capital adequacy, or any change therein after the Effective Date, or
any change after the Effective Date in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by such Lender
or its parent corporation with any request or directive made after the Effective
Date regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the effect
of reducing the rate of return on such Lender's or its parent corporation's
capital or assets as a consequence of its commitments or obligations hereunder
to a level below that which such Lender or its parent corporation could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's or its parent corporation's policies with respect to
capital adequacy),


                                       9.
<PAGE>

then from time to time, within 15 days after demand by such Lender (with a copy
to Administrative Agent), Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or its parent corporation for
such reduction. Each Lender, upon determining in good faith that any additional
amounts will be payable pursuant to this SECTION 1.9(b), will give prompt
written notice thereof to Borrower, which notice shall describe the basis for
such claim and set forth the calculation of such additional amounts, although
the failure to give any such notice shall not release or diminish any of
Borrower's obligations to pay additional amounts pursuant to this SECTION 1.9(b)
upon the subsequent receipt of such notice;

              (c) Notwithstanding the foregoing, a Lender shall not be entitled
to receive reimbursement for claimed costs pursuant to this SECTION 1.9 incurred
more than 15 months prior to the date Lender provides notice of a claim for
reimbursement.

       1.10 COMPENSATION. Borrower shall compensate each Lender, upon its
written request (which request shall set forth the basis for requesting such
compensation), for all losses, expenses and liabilities (including, without
limitation, any loss, expense or liability incurred by reason of the liquidation
or reemployment of deposits or other funds required by such Lender to fund its
Eurodollar Loans but excluding in any event the loss of anticipated profits)
which such Lender may sustain: (i) if for any reason (other than a default by
such Lender or Administrative Agent) Eurodollar Loans are not incurred on a date
specified therefor in a Borrowing Notice (whether or not withdrawn by Borrower);
(ii) if any prepayment or repayment of any of its Eurodollar Loans (other than
VAT Loans) occurs on a date which is not the last day of an Interest Period
applicable thereto; (iii) if any prepayment of any of its Eurodollar Loans
(other than VAT Loans) is not made on any date specified in a notice of
prepayment given by Borrower; or (iv) as a consequence of any other default by
Borrower to repay its Eurodollar Loans when required by the terms of this
Agreement.

       1.11 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of SECTION 1.9(a)(ii) or
(iii), 1.9(b) or 3.4 with respect to such Lender, it will, if requested by
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Lender and
its lending office suffer no material economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this SECTION 1.11 shall
affect or postpone any of the obligations of Borrower or the right of any Lender
provided in SECTION 1.9, 1.10 or 3.

       1.12 EXIM FINANCING, ETC. QUALCOMM shall have the right to (i) attempt to
arrange and arrange at any time one or more EXIM Financings for each or both
Long-Term Facilities, with the entering into of such EXIM Financings to reduce
the respective Facility-1 Commitments and Facility-2 Commitments, as the case
may be, as provided for in SECTION 2.3; and/or (ii) attempt to arrange and
arrange for the Loans to be refinanced by other means, including a
subparticipation of the Commitments or a debt issue in the public markets (each
refinancing described in clause (i) or (ii), a "Refinancing") provided, however,
that Borrower shall not be obliged to agree to any Refinancing if the structure,
costs, and other terms and conditions and other relevant factors concerning the
financing provided under any such Refinancing are not in the best commercial
interests of Borrower as compared to the structure,


                                      10.
<PAGE>

costs, and other terms and conditions and other relevant factors concerning the
financing provided under this Agreement as they relate to the Loans and/or
Commitments to be refinanced, provided, further, that if Borrower and QUALCOMM
disagree as to whether the terms of any proposed Refinancing are in the best
commercial interests of Borrower, the parties shall submit the matter to an
independent, third party and internationally recognized investment banking firm
mutually agreeable to the parties for its determination, which determination
shall be binding on the parties hereto; and/or (iii) attempt to arrange and
arrange for a syndication that complies with the requirements of SECTION 11.4 of
the Commitments and Loans (a "Syndication"), it being agreed that Borrower and
each Credit Party will cooperate with QUALCOMM to negotiate in good faith any
such Refinancing and facilitate any such Syndication, provided, however, that
QUALCOMM shall not within the 18 month period following the Effective Date, (x)
the Borrower shall not be obligated to, and QUALCOMM shall not attempt to
arrange, any refinancing of the type referred to in clause (ii) above and (y)
QUALCOMM shall not solicit any potential Lender in connection with such
Syndication which potential Lender is actively participating in the market for
transactions similar to the Senior Bank Financing or the High Yield Debt
financing; provided, further, that Borrower shall not be obligated to cooperate
in any such attempted Syndication by QUALCOMM more than three (3) times. In
connection with any such Refinancing or Syndication, Borrower may request that
proposed participants therein shall enter into a Common Terms Agreement and if
so requested, it shall also be a condition of such Refinancing or Syndication
that such proposed participants enter the Common Terms Agreement.

       1.13 COMMON TERMS AGREEMENT; CONFORMANCE TO PARI PASSU DEBT.

              (a) A Borrower expects that it will desire to enter into an
agreement (the "Common Terms Agreement") with all holders from time to time of
Pari Passu Debt setting forth the intercreditor arrangements among all such
holders and creating certain common terms. Each Lender hereto hereby agrees that
they will become party to the Common Terms Agreement to the extent reasonably
satisfactory to QUALCOMM and such Lender. Notwithstanding anything in this
Agreement to the contrary, neither Administrative Agent, Collateral Agent nor
any Lender shall be obligated to enter into any agreement whereby it is required
to waive or modify the conditions precedent set forth in SECTION 4, or any
obligation relating to the Collateral or Borrower's obligation to satisfy such
conditions as required under SECTION 6.17.

              (b) SENIOR BANK FINANCING COMMON TERMS. Borrower and each Lender
hereby agree that in connection with Borrower's negotiation of the Senior Bank
Financing they shall negotiate with each other in good faith to promptly amend
and restate this Agreement, and enter into a Common Terms Agreement with the
holders of Pari Passu Debt, as necessary and appropriate to conform covenants
and events of defaults in this Agreement with those applicable to the Senior
Bank Financing to the extent such terms of the Alcatel Credit Agreement are
conformed to such terms governing the Pari Passu Debt.

              (c) ALCATEL COMMON TERMS. Borrower and each Lender hereby agree
that upon completion of the Alcatel Credit Agreement they shall negotiate with
each other in good faith to promptly amend and restate this Agreement, and enter
into a Common Terms Agreement with Alcatel Lender, as necessary and appropriate
to make any inconsistencies between the terms of this Agreement which relate to
interest rate, amortization, fees, representations and warranties,


                                      11.
<PAGE>

covenants, conforming changes, and events of default and the comparable terms in
the Alcatel Credit Agreement conform to the Alcatel Credit Agreement; provided,
however, that no such amendment shall have the effect of changing the terms of
this Agreement retroactively to apply to any period prior to the date of the
Alcatel Credit Agreement.

              (d) ADDITIONAL CREDIT SUPPORT. To the extent that Alcatel Lender
or any other provider of vendor financing to the Borrower Group shall, during
any period from the date hereof through that date eighteen (18) months following
the Effective Date, enjoy any credit support or security therefor from any
shareholder of Holdings or their Affiliates, then such credit support and any
security therefor, shall be immediately provided to Administrative Agent and
Lenders hereunder on a pari passu basis.

       1.14 NO NET PAYMENTS. Borrower's obligation to make payments and perform
all other obligations hereunder, and the rights of Administrative Agent and
Lenders in and to such payments and performance, shall be absolute and
unconditional and shall not be subject to any abatement, reduction, set-off,
defense, counterclaim or recoupment for any reason whatsoever, including,
without limitation, abatements or reductions due to any present or future claims
of any Credit Party or their respective Affiliates against Administrative Agent,
Collateral Agent or any Lender under this Agreement, the QUALCOMM Procurement
Agreements or otherwise, against any vendor of equipment or services used or
planned to be used as part of the System, or against any other Person for
whatever reason. Except as otherwise expressly provided herein, this Agreement
shall not terminate, nor shall the obligations of Borrower be affected, by
reason of (a) any defect in or damage to, or any loss or destruction of, any of
the equipment or services provided pursuant to the QUALCOMM Procurement
Agreements or otherwise becoming part of the System from any cause whatsoever,
(b) the interference with the use of the System by Administrative Agent,
Collateral Agent, any Lender or any other Person, (c) any defect in title to the
System or any part thereof or any Lien on such title, or (d) any bankruptcy,
insolvency, reorganization or other proceeding relating to, or any action taken
by any trustee or receiver of, Administrative Agent, any Lender or any other
Person, or (e) for any other cause, whether similar or dissimilar to the
foregoing, any present or future law or regulation to the contrary
notwithstanding, whether or not such cause shall give rise to a claim by any
Credit Party or their respective Affiliates against any Lender under the
QUALCOMM Procurement Agreements or otherwise, it being the express intention of
the parties hereto that all amounts payable by Borrower hereunder shall be, and
continue to be, payable in all events unless the obligation to pay shall be
terminated pursuant to the express provisions of this Agreement. All payments
made by Borrower hereunder as required hereby shall be final, and Borrower shall
not seek to recover any such payment or any part thereof for any reason
whatsoever. Nothing in this Agreement shall, however, release or waive any claim
Borrower may have against Administrative Agent, any Lender or any other Person,
whether in connection with the QUALCOMM Procurement Agreements or otherwise. If
for any reason whatsoever this Agreement shall be terminated in whole or in part
by operation of law or otherwise, Borrower shall nonetheless, to the extent
permitted by applicable law, pay to Administrative Agent, on behalf of Lenders,
an amount equal to each payment payable hereunder at the time and in the manner
that such payment would have become due and payable under the terms of this
Agreement if it had not been terminated in whole or in part.


                                      12.
<PAGE>

       1.15 REPLACEMENT OF LENDERS Upon the occurrence of any event giving rise
to the operation of SECTION 1.9(b) or SECTION 3.04 with respect to any Lender
which results in such Lender charging to the Borrower increased costs in excess
of those being charged generally by the Lenders or if a Lender has defaulted on
its obligation to make Loans hereunder, Borrower shall have the right, if no
Default or Event of Default then exists, to replace such Lender (the "Replaced
Lender") with one or more other Eligible Transferee (collectively, the
"Replacement Lender") reasonably acceptable to the Administrative Agent,
provided that (i) at the time of any replacement pursuant to this SECTION 1.15,
the Replacement Lender shall enter into one or more Assignment Agreements
pursuant to SECTION 11.4(b) (and with all fees payable pursuant to said SECTION
11.4(b) to be paid by the Replacement Lender) pursuant to which the Replacement
Lender shall acquire all of the Commitments and outstanding Loans of the
Replaced Lender and, in connection therewith, shall pay to the Replaced Lender
in respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued but unpaid interest on, all outstanding Loans of
the Replaced Lender and (B) an amount equal to all accrued, but unpaid,
Commitment Fees owing to the Replaced Lender pursuant to SECTION 2.1, (ii) all
obligations of the Borrower owing to the Replaced Lender (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Lender concurrently with such replacement. Upon the execution
of the respective Assignment Agreement, the payment of amounts referred to in
clauses (i) and (ii) above and, if so requested by the Replacement Lender,
delivery to the Replacement Lender of the appropriate Note or Notes executed by
the Borrower, the Replacement Lender shall become a Lender hereunder and the
Replaced Lender shall cease to constitute a Lender hereunder, except with
respect to indemnification provisions applicable to the Replaced Lender under
this Agreement, which shall survive as to such Replaced Lender.

SECTION 2. FEES; COMMITMENTS.

       2.1 FEES.

              (a) Borrower agrees to pay to Administrative Agent a commitment
fee ("Commitment Fee") (x) for the account of each Lender with a Facility-1
Commitment, for each day during the Facility-1 Availability Period computed at
the rate of .50% per annum on the average daily Facility-1 Commitment of such
Lender, (y) for the account of each Lender with a Facility-2 Commitment, for
each day during each of the Facility-1 Availability Period and the Facility-2
Availability Period computed at the rate of (i) .25% per annum during the
Facility-1 Availability Period on the daily average Facility-2 Commitment of
such Lender and (ii) .50% per annum during the Facility-2 Availability Period on
the daily average Facility-2 Commitment of such Lender, and (z) for the account
of each Lender with a VAT Loan Commitment, for each day during the VAT Facility
Availability Period, computed at the rate of .50% per annum on the daily average
unutilized VAT Loan Commitment of such Lender. All such Commitment Fees shall be
due and payable in arrears on the last Business Day of each March, June,
September and December.

              (b) Borrower shall pay to QUALCOMM, for its own account, such fees
as are set forth in the QUALCOMM Fee Letter when and as due.


                                      13.
<PAGE>

              (c) All computations of Fees shall be made in accordance with
SECTION 11.7(b).

       2.2 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least five (5) Business
Days' prior written notice (or telephonic notice confirmed in writing) to
Administrative Agent (which notice shall be deemed to be given on a certain day
only if given before 1:00 p.m. (New York time) on such day and shall be promptly
transmitted by Administrative Agent to each of the Lenders), Borrower shall have
the right, without premium or penalty, to terminate or partially reduce (x) the
Total Facility-1 Commitment and/or the Total Facility-2 Commitment, provided
that any such partial reduction shall apply to proportionately and permanently
reduce the Commitments of each Lender under the affected Facility and/or (y) the
unutilized Total VAT Loan Commitment. Any partial reduction pursuant to this
Section 2.2 shall be in the amount of at least $1,000,000.

       2.3 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC.

              (a) The Facility-1 Commitment and Facility-2 Commitment of each
Lender shall be permanently reduced upon the making of any Facility-1 Loan or
Facility-2 Loan, as the case may be, by such Lender in the principal amount of
such Facility-1 Loan or Facility-2 Loan, respectively.

              (b) The Total Facility-1 Commitment shall be reduced on each day
on which a borrowing is incurred by Borrower under any EXIM Financing entered
into to finance Facility-1 Availability Period Costs in the amount of such
borrowing, with any such reduction to be applied pro rata to the Facility-1
Commitment of each Lender.

              (c) The Total Facility-2 Commitment shall be reduced on each day
on which a borrowing is incurred by Borrower under any EXIM Financing entered
into to finance Facility-2 Availability Period Costs in the amount of such
borrowing, with any such reduction to be applied pro rata to the Facility-2
Commitment of each Lender.

              (d) The Total Facility-1 Commitment (and the Facility-1 Commitment
of each Lender) shall terminate in its entirety on the last day of the
Facility-1 Availability Period.

              (e) The Total Facility-2 Commitment (and the Facility-2 Commitment
of each Lender) shall terminate in its entirety on the last day of the
Facility-2 Availability Period.

              (f) The Total VAT Loan Commitment (and the VAT Loan Commitment of
each Lender) shall terminate in its entirety on the last day of the VAT Facility
Availability Period.

SECTION 3. PAYMENTS.

       3.1 VOLUNTARY PREPAYMENTS. Subject to the terms of SECTION 1.10, Borrower
shall have the right to prepay Loans in whole or in part, without premium or
penalty, from time to time on the following terms and conditions: (i) Borrower
shall give Administrative Agent written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay the Loans, whether such Loans are
Facility-1 Loans, Facility-2 Loans or VAT Loans, the amount of


                                      14.
<PAGE>

such prepayment and the specific Borrowing(s) pursuant to which made, which
notice shall be given by Borrower no later than 1:00 p.m. (New York time) three
(3) Business Days' prior to the date of such prepayment, and which notice shall
promptly be transmitted by Administrative Agent to each of the Lenders; (ii)
each partial prepayment of any Borrowing shall be in an aggregate principal
amount of at least $1,000,000, provided that no partial prepayment of Loans made
pursuant to a Borrowing shall reduce the aggregate principal amount of the Loans
outstanding pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount applicable thereto; (iii) each prepayment in respect of Loans
under any Facility made pursuant to a Borrowing shall be applied pro rata among
such Loans; and (iv) each prepayment of Facility-1 Loans or Facility-2 Loans
pursuant to this SECTION 3.1 shall be applied to reduce pro rata the amount of
the then remaining Scheduled Repayments under Facility-1 or Facility-2, as the
case may be.

       3.2 MANDATORY PREPAYMENTS AND REPAYMENTS.

              (a) Borrower shall repay all Tranche A Loans which are outstanding
under Facility-1 and Facility-2, as the case may be, on the Facility-1 EXIM
Loans Closing Date and Facility-2 EXIM Loans Closing Date, as the case may be.

              (b) Borrower shall repay Tranche B Loans made in any Borrowing
Year in three consecutive annual installments commencing on the third
anniversary of the last day of such Borrowing Year and ending on the fifth
anniversary thereof (each a "Scheduled Repayment"), with each Scheduled
Repayment being in an aggregate principal amount equal to the respective
percentages set forth below opposite such anniversaries of the aggregate
principal amount of Tranche B Loans made during such Borrowing Year:

                   ANNIVERSARY             PERCENTAGE

                      Third                    20%
                      Fourth                   30%
                      Fifth                    50%

For the purposes of this SECTION 3.2(b), any Tranche B Loan into which a Tranche
A Loan or Tranche C Loan has been converted shall be deemed to be a Tranche B
Loan which was made in the Borrowing Year that such converted Tranche A Loan or
Tranche C Loan was originally made.

              (c) All Tranche C Loans which are outstanding under Facility-1 on
the first anniversary of the Effective Date (including any interest capitalized
in respect thereto) shall be automatically converted into Tranche B Loans under
such Facility on such date.

              (d) Borrower shall repay the aggregate outstanding principal
amount of each VAT Loan, including all accrued and unpaid interest thereon, on
the earlier of: (i) five (5) Business Days after the date the Secretariat of
Finance and Public Credit of Mexico reimburses all or any portion of the VAT
which was advanced on behalf of Borrower or Pegaso PCS by the Lenders in
connection with such VAT Loan; or (ii) the VAT Loan Maturity Date of such VAT
Loan.


                                      15.
<PAGE>

              (e) All Tranche A Loans which are outstanding under Facility-1 and
Facility- 2 on the Facility-1 Refinancing Date or the Facility-2 Refinancing
Date, as the case may be, shall be automatically converted into Tranche B Loans
under Facility-1 or Facility-2, as the case may be, on such date.

       3.3 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note or Pagare shall
be made to Administrative Agent for the ratable account of the Lenders entitled
thereto at Administrative Agent's Account not later than 1:00 p.m. (New York
time) on the date when due and shall be made in immediately available funds and
in lawful money of the United States of America. Any payments under this
Agreement or under any Note or Pagare which are made later than 1:00 p.m. (New
York time) shall be deemed to have been made on the next succeeding Business
Day. Whenever any payment to be made hereunder or under any Note or Pagare shall
be stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.

       3.4 NET PAYMENTS.

              (a) All payments made by Borrower hereunder or under any Note or
Pagare will be made without setoff, counterclaim or other defense. All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future federal, state, or local income, payroll,
withholding, social security, sales, use, service, leasing excise, franchise,
value added, estimated, occupation, real and personal property, stamp, transfer,
workers' compensation, severance or other taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in the
third succeeding sentence, any tax imposed on or measured by the net income or
net profits of a Lender pursuant to the laws of the jurisdiction in which it is
organized or any jurisdiction in which such Lender maintains a place of business
or any subdivision thereof or therein) and all interest, penalties addition
thereto or similar liabilities with respect to such nonexcluded taxes, levies,
imposts, duties, fees, assessments or other charges (all such nonexcluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). In addition, Borrower shall pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Credit Documents (hereinafter referred to as "Other
Taxes"). If any Taxes or Other Taxes are so levied or imposed, Borrower agrees
to pay the full amount of such Taxes or Other Taxes, and such additional amounts
as may be necessary so that every payment of all amounts due under this
Agreement or under any Note or Pagare, after withholding or deduction for or on
account of any Taxes or Other Taxes, will not be less than the amount provided
for herein or in such Note or Pagare. If any amounts are payable in respect of
Taxes or Other Taxes pursuant to the foregoing, Borrower agrees to reimburse
such amounts to each Lender, upon the written request of such Lender, such Taxes
or Other Taxes as are imposed on or measured by the net income or net profits of
such Lender pursuant to the laws of the jurisdiction in which the principal
office or applicable lending office of such Lender is located or under the laws
of any political subdivision or taxing authority of any such jurisdiction


                                      16.
<PAGE>

in which the principal office or applicable lending office of such Lender is
located and for any withholding of taxes as such Lender shall determine are
payable by, or withheld from, such Lender, in each case in respect of such
amounts so paid to or on behalf of such Lender pursuant to the foregoing and in
respect of any amounts paid to or on behalf of such Lender pursuant to this
sentence. Borrower will furnish to Administrative Agent within 45 days (or as
soon thereafter as available) after the date the payment of any Taxes or Other
Taxes is due pursuant to applicable law certified copies of receipts evidencing
such payment by Borrower. Borrower agrees to indemnify and hold harmless each
Lender, and immediately reimburse such Lender upon its written request, for the
amount of any Taxes or Other Taxes so levied or imposed and paid by such Lender.

              (b) If Borrower pays any additional amount under this SECTION 3.4
to a Lender and such Lender, in such Lender's sole and absolute determination,
has received or realized in connection therewith any refund or any reduction of,
or credit against, its tax liabilities in or with respect to the taxable year in
which the additional amount is paid, such Lender shall pay to Borrower an amount
equal to the net benefit, after tax, which was obtained by the Lender in such
year as a consequence of such refund, reduction or credit. Such amount shall be
paid as soon as practicable after receipt or realization by such Lender of such
refund, reduction or credit.

              (c) Each Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions and subject to overall policy considerations
of such Lender) to file any certificate or document or to furnish any
information as reasonably requested by Borrower pursuant to any applicable
treaty, law or regulation, if the making of such filing or the furnishing of
such information would avoid the need for or reduce the amount of any amounts
payable by Borrower under SECTION 3.4(a); provided, however, that the failure of
any Lender to use such efforts shall not in any way diminish the obligations of
Borrower under this SECTION 3.4 or otherwise under this Agreement.

              (d) Notwithstanding anything in this SECTION 3.4 to the contrary,
Borrower shall have no obligation to make any payment of Taxes pursuant to this
SECTION 3.4 to any Lender, other than QUALCOMM, in excess of such Gross Up
Amounts which would be applicable in the case of payments to a Registered
Financial Institution.

SECTION 4. CONDITIONS PRECEDENT TO ADDITIONAL LOANS.

       4.1 CONDITIONS PRECEDENT TO ADDITIONAL LOANS ON ADDITIONAL LOANS CLOSING
DATE. The obligation of the Lenders to make Additional Loans on the Additional
Loans Closing Date is subject to the satisfaction of each of the following
conditions at such time:

              (a) EFFECTIVENESS; NOTES. (i) The Effective Date shall have
occurred and (ii) there shall have been delivered to Administrative Agent for
the account of each Lender requesting same the appropriate Note or Notes
executed by Borrower, in each case, in the amount, maturity and as otherwise
provided herein.

              (b) OPINION OF COUNSEL. Administrative Agent shall have received
opinions, addressed to Administrative Agent and each of the Lenders, dated the
Additional Loans Closing Date and in form and substance satisfactory to
QUALCOMM, Administrative Agent and


                                      17.
<PAGE>

Collateral Agent, from White & Case LLP, and White & Case S.C., each special
counsel to the Credit Parties.

              (c) CORPORATE PROCEEDINGS.

                     (i) Administrative Agent shall have received a certificate,
dated the Additional Loans Closing Date, signed by an Authorized Officer of each
Credit Party with appropriate insertions and deletions, together with (x) copies
of the certificate of the organizational documents of each Credit Party, (y) the
resolutions of each Credit Party referred to in such certificate and all of the
foregoing shall be reasonably satisfactory to Administrative Agent, and (z) a
statement that all of the applicable conditions, assuming Administrative
Agent's, QUALCOMM's or Lender's satisfaction where applicable, set forth in
SECTION 4.2 exist as of such date.

                     (ii) On the Additional Loans Closing Date, all corporate
and legal proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Credit Documents shall
be reasonably satisfactory in form and substance to Administrative Agent, and
Administrative Agent shall have received all information and copies of all
certificates, documents and papers, and any other records of corporate
proceedings and governmental approvals, if any, which Administrative Agent may
have reasonably requested in connection therewith, such documents and papers,
where appropriate, to be certified by proper corporate or governmental
authorities.

              (d) GUARANTY. Holdings, Pegaso PCS, Personnel Co. and each
Subsidiary of any of them and/or of Borrower then in existence shall have duly
authorized, executed and delivered a joint and several Guaranty in form and
substance satisfactory to QUALCOMM (as modified, amended or supplemented from
time to time in accordance with the terms hereof and thereof, a "Guaranty"), and
the Guaranty shall be in full force and effect and each of them shall have
executed the Notes and each Pagare "avalados;" provided, however, that the
Guaranty of Holdings shall provide that such Guaranty shall automatically
terminate on the issuance of High- Yield Debt.

              (e) SECURITY DOCUMENTS. (i) The Mortgage in form and substance
satisfactory to QUALCOMM creating first priority perfected security interests in
and Liens on all of the assets of Borrower, including, without limitation, the
Licenses, (ii) security documents in form and substance satisfactory to QUALCOMM
which QUALCOMM may elect to require creating first priority perfected security
interests in and Liens on all the assets of Pegaso PCS and Personnel Co., (iii)
the Pledge Agreements on the stock of, Borrower, Pegaso PCS and Personnel,
representing 100% of the capital stock of each such Person, (iv) Collateral
Assignment Agreements to provide for the conditional assignment of all existing
Site Lease Agreements, the PCS Services Agreements and the Personnel Services
Agreement, all for the benefit of Secured Creditors, shall have been duly
authorized, executed and delivered by, Borrower and each Guarantor, as
applicable, and shall be in full force and effect and all filings, recordations
and notices required to perfect such security interests and Liens shall have
been effected or given. All agreements entered into pursuant to this SECTION
4.1(e) are hereinafter called the "Security Documents" and all such Security
Documents shall secure the Obligations and the Pari Passu Debt on pro rata
basis.


                                      18.
<PAGE>

              (f) CONSENT LETTER. Administrative Agent shall have received a
letter from CT Corporation System, hereto, indicating its consent to its
appointment by each Credit Party as its agent to receive service of process and
confirming that its fees have been fully paid for the term of this Agreement on
behalf of each Credit Party.

              (g) QUALCOMM PROCUREMENT AGREEMENTS AND OTHER AGREEMENTS. The
QUALCOMM Procurement Agreements, the PCS Service Agreement and the Personnel Co.
Services Agreement shall have been authorized, executed and delivered by the
parties thereto and a copy thereof, certificated by an Authorized Officer as
true and complete, shall have been delivered to Administrative Agent.

              (h) OFFICER'S CERTIFICATE. Administrative Agent and Collateral
Agent shall have received certificates dated such date, signed by the president
and chief financial officer (such certificate and all other certificates
delivered under this Agreement to be in such Person's corporate, not individual,
capacity) of Borrower and each Guarantor, as applicable, stating that all of the
applicable conditions set forth in this SECTION 4.1 have been satisfied as of
such date.

              (i) ADVERSE CHANGE. There shall have occurred no developments,
events or circumstances that individually or in the aggregate have had, or are
reasonably likely to have, a Material Adverse Effect.

              (j) CONSENTS, APPROVALS. The Credit Parties shall have received
the material consents, approvals and releases of all appropriate Governmental
Authorities and all other third parties in connection with the transactions
contemplated by the QUALCOMM Procurement Agreements and the Credit Documents
(the "Governmental Consents"), including, without limitation, all required
consents from contractual counterparties of the Credit Parties required to be
obtained to permit the assignment to Collateral Agent or Lenders, or their
designees, of the Collateral and all applicable waiting periods shall have
expired without any action being taken by any competent Governmental Authority
which restrains, prevents or imposes materially adverse conditions upon the
consummation of this Agreement the Alcatel Procurement Agreement or the QUALCOMM
Procurement Agreements or building the System to the extent such are then
required to be obtained on the Additional Loans Closing Date.

              (k) LITIGATION. There shall be no actions, suits or proceedings
pending or threatened with respect to Borrower or any Subsidiary that (i) is
reasonably likely to have a Material Adverse Effect, or (ii) have a material
adverse effect on the ability of Borrower or Guarantors to perform their
respective obligations under the Alcatel Procurement Agreement or the QUALCOMM
Procurement Agreements or the rights or remedies of Lenders. There shall not
exist any judgment, order, injunction or other restraint issued or filed or a
hearing seeking injunctive relief or other material restraint pending or
notified with respect to the performance of the Alcatel Procurement Agreements,
the QUALCOMM Procurement Agreements, the Credit Documents, the making of any
Loan hereunder or Borrower's use of the Licenses.

              (l) INCUMBENCY CERTIFICATES. Administrative Agent and Lenders
shall have received signature and incumbency certificates of Borrower's, each
Guarantor's and each of their respective Subsidiaries' officers executing this
Agreement or the other Credit Documents to which it is or is to be a party.


                                      19.
<PAGE>

              (m) EVIDENCE OF INSURANCE. Collateral Agent and Lenders shall have
received certificates or other evidence of the existence of the insurance
required by this Agreement with loss payee endorsements reasonably satisfactory
to Collateral Agent and Lenders.

              (n) FEE LETTER. QUALCOMM shall have received the QUALCOMM Fee
Letter, in each case together with the payment of such fees as are set forth in
each such letter to be paid on the Additional Loans Closing Date (the payment of
which shall be deemed to be a concurrent condition).

              (o) CAPITAL CONTRIBUTIONS. Holdings shall have received (x) cash
equity contributions or, in the event contributions are not required to be made
until a date following the Additional Loans Closing Date, irrevocable cash
equity commitments, of at least $175,000,000 from the Sponsors to be invested as
needed to satisfy License requirements, (y) irrevocable cash equity commitments
from Sponsors for $50,000,000 in 1999 and for $50,000,000 in 2000 and (z) an
additional $100,000,000 in equity contributions and/or commitments, as such
contributions and commitments are required in the Joint Venture Agreement.

              (p) LICENSE FEES. Administrative Agent shall be reasonably
satisfied that Holdings will be able to pay all applicable fees for the Licenses
from equity, other than the payment of the 15% VAT, which may be financed.

              (q) ALL INTEGRAL ASSETS IN BORROWER; HOLDINGS UNDERTAKING.
Administrative Agent and Collateral Agent shall have received (i) evidence
satisfactory to them that all Integral Assets then owned by the Borrower Group
shall be fully vested in and owned by Borrower and Asset Ownership Concentration
shall exceed 95% and (ii) an undertaking from Holdings, in the Pledge Agreements
or separately, that Holdings holds and will continue to hold as its only assets
the equity stock of Borrower, Pegaso PCS and Personnel Co. (with all debt or
other obligations owing from any such entity to Holdings having been contributed
to such entity as additional capital).

              (r) SPANISH TRANSLATIONS. Administrative Agent shall have received
certified Spanish translations of this Agreement and any other agreement which
the Administrative Agent might reasonably request.

              (s) GOVERNMENT AUTHORIZATIONS. Administrative Agent shall have
received a copy of the notice to the Secretariat of Communications and Transport
of the Borrower's country for the pledge of the capital stock of the Borrower
pursuant to the corresponding Pledge Agreement duly sealed by such Secretariat.

              (t) MORTGAGE. Administrative Agent shall have received a copy of
the second testimony of the public deed evidencing the creation of the Mortgage,
together with a certificate of the relevant Public Notary that the first
testimony of such public deed has been presented for registration at (i) the
Public Registry of Commerce of the Federal District of Mexico, and (ii) the
Telecommunications Registry.


                                      20.
<PAGE>

              (u) FREQUENCY BAND LICENSE. Administrative Agent shall have
received a copy of the License issued by the Secretariat of Communications and
Transport in favor of the Borrower for the Frequency Band License.

              (v) ADDITIONAL MATTERS, DOCUMENTS OR INFORMATION. Lenders shall
have received each additional document, instrument, legal opinion or item of
information reasonably requested by any Lender, including, without limitation, a
copy of any debt instrument, security agreement or other material contract to
which Borrower, Guarantors or any of their Subsidiaries may be a party, and all
corporate and other proceedings, and all documents, instruments and other legal
matters in connection with the transactions contemplated by this Agreement, the
other Credit Documents, and the QUALCOMM Procurement Agreements shall be
reasonably satisfactory in form and substance to Lenders.

       4.2 CONDITIONS PRECEDENT TO ALL ADDITIONAL LOANS. The obligation of each
Lender to make Additional Loans (including Additional Loans made on the
Additional Loans Closing Date) is subject at the time of each such Loan, to the
satisfaction of the following conditions:

              (a) BORROWING NOTICE. Administrative Agent shall have received a
Borrowing Notice meeting the requirements of SECTION 1.2.

              (b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of the
making of each Loan and also after giving effect thereto, (i) there shall exist
no Default or Event of Default and (ii) all representations and warranties made
by any Credit Party contained herein or in the other Credit Documents shall be
true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Loans, except to the extent that such representations and warranties expressly
relate to an earlier date.

              (c) GOVERNMENT APPROVALS. Administrative Agent shall have received
evidence satisfactory to QUALCOMM showing receipt of all applicable material
Governmental Approvals necessary to the extent then required to be obtained in
connection with the sale, importation, payment, or Loans in respect of the
equipment and services under the QUALCOMM Procurement Agreements.

The acceptance of the benefits of each Loan shall constitute a representation
and warranty by Borrower to Administrative Agent and each of the Lenders that
all of the applicable conditions specified in SECTION 4.2 exist as of that time.
All of the certificates, legal opinions and other documents and papers referred
to in SECTION 4.1, unless otherwise specified, shall be delivered to
Administrative Agent for the account of each of the Lenders and, except for the
Notes and Pagares, in sufficient counterparts for each of the Lenders and shall
be reasonably satisfactory in form and substance to Administrative Agent.

SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

       In order to induce the Lenders to enter into this Agreement and to make
the Loans, Borrower, each Guarantor by execution of the Guaranty and the Pledge
Agreements, as applicable, jointly and severally makes with respect to Borrower,
each Guarantor and their respective Subsidiaries the following representations
and warranties to, and agreements with, the


                                      21.
<PAGE>

Lenders, all of which shall survive the execution and delivery of this Agreement
and the making of the Loans:

       5.1 CORPORATE STATUS. Each Credit Party (i) is a variable capital limited
liability stock corporation duly organized and validly existing under the laws
of Mexico and (ii) has the requisite corporate power and authority to own, lease
or otherwise hold its property and assets and to carry on the Business as
contemplated by the Business Plan and are qualified as foreign corporations and
are in good standing in each jurisdiction where the nature of their business or
assets requires such qualification or good standing.

       5.2 CORPORATE POWER AND AUTHORITY. Each Credit Party has the requisite
capacity, power and authority to execute the Credit Documents to which it is a
party and to perform the transactions contemplated therein and its obligations
thereunder and has duly authorized the execution and performance of the Credit
Documents to which it is a party. Each Credit Party has duly executed each
Credit Document to which it is a party.

       5.3 NO VIOLATION. The execution by each Credit Party of the Credit
Documents to which it is party does not, and the performance by each Credit
Party of the transactions contemplated by each such Credit Document to be
performed by it does not and will not: (a) contravene such Person's certificate
of incorporation or bylaw, (b) conflict with, or result in any violation of, or
constitute a default under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to loss of a benefit under, any contract,
permit, order, judgment or decree to which any Credit Party is a party
(including, without limitation, the Network License and the Frequency Band
License once the latter have been paid and issued by the respective
authorities); (c) constitute a violation of any statute, law, rule or regulation
("Law") applicable to such Credit Party; or (d) result in the creation of any
Lien upon any of the stocks, assets or properties of such Credit Party other
than the Liens created pursuant to the Credit Documents. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
third party or Mexican court, Mexican government (including its ministries) or
Mexican governmental agency, authority, entity or instrumentality ("Governmental
Entity") is required to be obtained or made by or with respect to any Credit
Party in connection with the execution and performance of any Credit Document by
such Credit Party, except for the authorizations and consents listed or
described on SCHEDULE 5.3 hereto.

       5.4 ENFORCEABILITY. This Agreement is, and each other Credit Document to
which Borrower or any Guarantor is or will be a party when delivered hereunder
will be, legal, valid and binding obligations of such Person enforceable against
it in accordance with their respective terms, provided that the enforceability
of any of such documents may be subject to or limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating to or
affecting the rights of creditors generally and the application of equitable
principles.

       5.5 LITIGATION. There are no actions, suits or proceedings pending or, to
the best of its knowledge, threatened with respect to any Credit Party (i) that
is reasonably likely to have a Material Adverse Effect or (ii) that is
reasonably likely to have a material adverse effect on the rights or remedies of
the Lenders or on the ability of the Credit Parties taken as a whole to perform
their obligations under the other Credit Documents.


                                      22.
<PAGE>

       5.6 USE OF PROCEEDS.

              (a) The proceeds of all Facility-1 Loans and Facility-2 Loans
shall be utilized to finance QUALCOMM Costs.

              (b) The proceeds of VAT Loans may be used only to finance VAT
charges imposed by Mexico in respect of the QUALCOMM Costs.

       5.7 GOVERNMENTAL APPROVALS. Except for filings and recordings in
connection with the Security Documents, no order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required in
connection with (i) the execution, delivery and performance of any Credit
Document or (ii) the legality, validity, binding effect or enforceability of any
Credit Document.

       5.8 FINANCIAL CONDITION; FINANCIAL STATEMENTS.

              (a) The consolidated and consolidating balance sheet of the
Borrower Group required to be delivered pursuant to SECTION 6.1, and the related
consolidated and consolidating statements of income and retained earnings of
Borrower and each Guarantor for the fiscal year then ended, copies of which have
been furnished to Lenders, fairly present in all material respects the financial
condition of Borrower and each Guarantor on a consolidated and consolidating
basis as at such date and the results of the operations of Borrower and each
Guarantor for the period ended on such date, all in accordance with GAAP
consistently applied.

              (b) As to any current version of the Business Plan in effect from
time to time, the detailed projections contained in such version of the Business
Plan were prepared in good faith on the basis of the assumptions described in
the Business Plan, which assumptions were believed by the Credit Parties in good
faith to be reasonable in light of conditions existing at the time of
preparation thereof, it being understood by Administrative Agent and the Lenders
that actual results may vary from the projected results contained therein.

              (c) Since the date of the last financial statements of Borrower
submitted to Agent and Lenders under Section 6.1, there has been no material
adverse change in the condition (financial or otherwise) or operations of the
Borrower, except for the operating losses contemplated by the most recent
Business Plan required to be delivered pursuant to SECTION 6.1(c).

       5.9 SECURITY INTERESTS. On and after the Additional Loans Closing Date,
each of the Security Documents creates, as security for the obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and Lien on all of the Collateral subject thereto, superior to and
prior to the rights of all third Persons and subject to no other Liens (other
than Permitted Liens relating thereto), in favor of Collateral Agent for the
benefit of the Secured Creditors. On and after the Additional Loans Closing
Date, no filings or recordings are required in order to perfect the security
interests created under any Security Document except for filings or recordings
(i) required in connection with any such Security Document which shall have been
made upon or prior to (or are the subject of arrangements, reasonably
satisfactory to


                                      23.
<PAGE>

Administrative Agent, for filing on or promptly after the date of) the execution
and delivery thereof and (ii) that are required by the relevant Security
Document to be made thereafter.

       5.10 SUBSIDIARIES. On and as of the Effective Date, Holdings has no
subsidiaries other than Borrower, Pegaso PCS and Personnel Co. Holdings is, as
of the Effective Date, the owner, directly or indirectly of 100% of the shares
representing the capital stock of all such Subsidiaries.

       5.11 INTELLECTUAL PROPERTY. The Credit Parties have obtained all material
patents, trademarks, service marks, trade names, copyrights, licenses and other
rights, free from materially burdensome restrictions, that are necessary for the
operation of the Business as presently conducted.

       5.12 COMPLIANCE WITH LAW; LICENSES. Each Credit Party is in material
compliance with each Law to which the Business, and/or the operations of such
Credit Party are subject. The Network License has been duly granted to Borrower,
is legal, valid, binding and enforceable, and is free of any Liens (other than
Liens created pursuant to the Security Documents) and conditions (other than
those conditions set forth in the corresponding concession title, a copy of
which has been delivered to Administrative Agent). Borrower holds legal, valid,
binding and enforceable title to the Frequency Band License (once they have been
paid in full and the applicable concession agreements have been delivered by the
respective authorities), free of any Liens (other than Liens created pursuant to
the Security Documents) and conditions (other than those conditions set forth in
the corresponding concession titles).

       5.13 ENVIRONMENTAL MATTERS. The operation of the Business is in
compliance with all applicable Environmental Law except where the effect of
noncompliance is not reasonably likely to have a Material Adverse Effect. The
Credit Parties have obtained and currently maintain all environmental permits
necessary for their current operations and are in compliance therewith, there
are no judicial or administrative actions, proceedings or investigations pending
against any Credit Party that is reasonably likely to have a Material Adverse
Effect and no Credit Party has received any notice from any Governmental Entity
to the effect that they are not in compliance with any Environment Law where the
effect of such noncompliance is reasonably likely to have a Material Adverse
Effect.

       5.14 YEAR 2000. Borrower reasonably believes that all computer
applications that are material to any Credit Party's business and operations
will on a timely basis be able to perform properly date-sensitive functions for
all dates before, on and after January 1, 2000 (that is, be "Year 2000
compliant"), except to the extent that a failure to do so is not reasonably
likely to have Material Adverse Effect.

       5.15 NO SUBORDINATION. The obligations of each Guarantor under the
Guaranty and Borrower under this Agreement or under any other contracts or
instruments executed by Guarantors or Borrower in connection therewith and
herewith (i) are not subordinated in right of payment to any other obligation of
Borrower or such Guarantors and (ii) will at all times rank prior to or pari
passu in right of payment with all present and future unsecured Indebtedness of
any Guarantor or Borrower, as applicable, except, in either case, to the extent
required by law.


                                      24.
<PAGE>

       5.16 TAXES. Each of Borrower and Guarantors has filed or has caused to be
filed all material tax returns which it is required to file or has obtained
extensions for the filing thereof, and each of Borrower and Guarantors has paid
(i) all taxes shown to be due and payable on said returns or on any assessments
made against it or against any of its property (other than those the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of Borrower or Guarantors, as the case may be) and (ii)
all other material taxes, fees or other charges imposed on it or imposed on any
of its property by any Governmental Authority (other than those the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of Borrower or Guarantors, as the case may be), and no
material claims are being asserted with respect to any such taxes, fees or other
charges (other than those the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of Borrower or
Guarantors, as the case may be). No tax Liens have been filed with respect to
any such taxes, fees or other charges (other than those the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided on
the books of Borrower or Guarantors, as the case may be).

       5.17 OWNERSHIP AND LIENS. Subject to the sale of equipment and services
under the QUALCOMM Procurement Agreements and the Alcatel Procurement
Agreements, Borrower owns and has good and marketable title to all assets
comprising any of the Integral Assets and Borrower and Pegaso PCS own and have
good and marketable title in fee simple absolute to, or a valid leasehold
interest in, all property necessary and appropriate to operate the System to the
extent, in each case, such assets are owned by any Guarantor. Each member of the
Borrower Group owns and has good title to, all assets held by such member
(except those disposed of in the ordinary course of business or otherwise in
compliance with this Agreement), and, except as set forth on SCHEDULE 5.17, none
of the properties and assets owned by any member of the Borrowing Group and none
of their leasehold interests are subject to any Lien, except Permitted Liens.

       5.18 INDEBTEDNESS. As of the date hereof, SCHEDULE 5.18 is a complete and
correct list of all Indebtedness, credit agreements, indentures, purchase
agreements, guaranties, capital leases and other investments, agreements and
arrangements presently in effect providing for or relating to extensions of
credit (including agreements and arrangements for the issuance of letters of
credit or for acceptance financing, but not including nondelinquent trade credit
providing for payment within ninety (90) days of invoice) involving $1,000,000
or more in respect of which Borrower or any Guarantor is in any manner directly
or contingently obligated. The maximum principal or face amounts of the credits
in question, which are outstanding and which can be outstanding, are correctly
stated, and all Liens of any nature given or agreed to be given as security
therefor are correctly described or indicated in such Schedule.

       5.19 ACCURACY OF INFORMATION FURNISHED; COMPLETE DISCLOSURE. Neither this
Agreement nor any certificate, data, report, statement or other information
furnished to Lenders by or on behalf of Borrower or any Guarantor in connection
with the transactions contemplated hereby or by the other Credit Documents taken
as a whole contains any untrue statement of a


                                      25.
<PAGE>

material fact or omits or will omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. As of the Effective Date, there is no fact known to
Borrower or any Guarantor which would be reasonably likely to have a Material
Adverse Effect which has not been disclosed herein or in such other documents,
certificates and statements furnished to Lenders for use in connection with the
transaction contemplated hereby.

       5.20 OTHER REGULATORY COMPLIANCE. Neither Borrower nor any Guarantor is
an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. Borrower
is not engaged principally, or as one of the important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T and U of the Board of Governors of
the Federal Reserve System). Borrower has not violated any statutes, laws,
ordinances or rules applicable to them, violation of which would be reasonably
likely to have a Material Adverse Effect.

       5.21 EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS.

              (a) EMPLOYEE BENEFITS:

                     (i) Each employee benefit plan, if any, has been
maintained, operated and administered in accordance with its terms and with
applicable law, and all notices, filings and disclosures required by terms or
law have been timely made as of the date hereof, except when the failure to
maintain, operate, or administer, or to notify, file or disclose, could not
reasonably be expected to have a Material Adverse Effect. No proceeding with
respect to the administration or the investment of the assets of any employee
benefit plan (other than routine claims for benefits) that could reasonably be
expected to have a Material Adverse Effect or create any material Lien is
pending or threatened.

                     (ii) All obligations of the Borrower Group for payments
with respect to any and all mandatory and additional employee benefit plans
including, but not limited to, all IMSS, INFONAVIT, accrued payroll and payroll
taxes payments for their respective employees have been timely paid and properly
reported in the financial statements required to be delivered under SECTION
6.1(a) AND (b) in accordance with GAAP except where the failure to make such
payments could not reasonably be expected to have a Material Adverse Effect or
create any material Lien.

                     (iii) The Borrower Group has no liability for retiree
benefits.

              (b) EMPLOYMENT PRACTICES:

                     (i) prior to the date of any borrowing hereunder, the
Borrower Group has complied in all material respects with all applicable laws,
rules and regulations with respect to employment practices including, but not
limited to, applicable health and safety regulations and there is no charge or
complaint alleging such a violation against the Borrower pending or threatened,
or before any federal or local labor board, tribunal or CONSAR; and


                                      26.
<PAGE>

              (c) there is no labor strike, request for representation, slowdown
or stoppage actually pending or, to the knowledge of the Borrower Group,
threatened against or affecting it which could reasonably be expected to have an
Material Adverse Effect.

              (d) FILINGS: Each of the Borrower Group has filed all forms,
reports, statements, provider agreements, benefit plan descriptions, payor
agreements, beneficiary materials and other documents (including, without
limitation, those related to employee benefit plans) required to be filed by it
with any Governmental Entities, including without limitation state and federal
insurance and health regulatory authorities except where the failure to file
could not reasonably be expected to have a Material Adverse Effect or create a
material Lien.

       5.22 SOVEREIGN IMMUNITY. This Agreement, the other Credit Documents and
the Loans are of a commercial rather than the public or governmental nature and
Borrower is not entitled to claim immunity from legal proceedings with respect
to itself or any of its properties or assets on any grounds of sovereignty or
otherwise under any Mexican law. To the extent that Borrower or any of its
properties or assets has or hereafter may acquire any rights to immunity from
setoff, legal proceedings, attachment prior to judgment, other attachment or
execution of judgment of any grounds of sovereignty or otherwise (whether under
the laws of Mexico or any other jurisdiction), to the extent permitted by
applicable law Borrower hereby irrevocably waives such right to immunity for
itself and its properties and assets in respect of its obligations arising under
or relating to this Agreement or any other Credit Document.

SECTION 6. AFFIRMATIVE COVENANTS.

       By their execution of this Agreement, the Guaranty and the Pledge
Agreements, as applicable, each of Borrower and each Guarantor jointly and
severally covenants and agrees with respect to Borrower, each Guarantor, and
their respective Subsidiaries that for so long as this Agreement is in effect
and until the Commitments have terminated, and the Loans, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full:

       6.1 INFORMATION COVENANTS. Borrower will furnish to each Lender:

              (a) ANNUAL FINANCIAL STATEMENTS. Within 120 days after the close
of each fiscal year of Borrower, the audited combined balance sheet of Borrower
Group, as at the end of such fiscal year and the related combined statements of
income, of stockholders' equity and of cash flows for such fiscal year, in each
case setting forth comparative combined figures for the preceding fiscal year,
and reported on by Price Waterhouse or other independent certified public
accountants of recognized national standing whose opinion shall not be qualified
as to the scope of audit, together with a certificate of such accounting firm
stating that in the course of its regular audit of the business of Borrower
Group, which audit was conducted in accordance with generally accepted auditing
standards, such accounting firm has obtained no knowledge of any Event of
Default which has occurred and is continuing or, if in the opinion of such
accounting firm such a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof .

              (b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in
any event within 90 days after the close of each of the first three quarterly
accounting periods in each fiscal


                                      27.
<PAGE>

year, the unaudited combined balance sheet of Borrower Group, as at the end of
such quarterly period and the related unaudited combined statements of income
and of cash flows for such quarterly period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly period, and in each case
setting forth comparative combined figures for the related periods in the prior
fiscal year, all of which shall be certified by the chief financial officer or
controller of Borrower, subject to changes resulting from audit and normal
year-end audit adjustments.

              (c) BUSINESS PLAN. Promptly after completed and approved by
Holdings' Board of Directors, each update and revision to the Business Plan
(which update will be made no less frequently than once in any twelve (12) month
period).

              (d) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in SECTIONS 6.1(a) AND (b), a certificate of
the chief financial officer, controller or other Authorized Officer of Borrower
to the effect that no Default or Event of Default exists or, if any Default or
Event of Default does exist, specifying the nature and extent thereof, which
certificate shall set forth the calculations required to establish whether
Borrower Group was in compliance with the provisions of SECTION 7.10 as at the
end of such fiscal period.

              (e) NOTICE OF DEFAULT, LITIGATION OR ENVIRONMENTAL CLAIM.
Promptly, and in any event within three Business Days after any Responsible
Officer of Borrower obtains knowledge thereof, notice of (w) the occurrence of
any event which constitutes a Default or Event of Default (x) any default or
event of default under any contractual obligation of Borrower or any Guarantor
or any force majeure event which in either case is reasonably likely to have a
Material Adverse Effect or the termination of any of the Alcatel Procurement
Agreement or the QUALCOMM Procurement Agreements, (y) the commencement of, or
any significant development in, any litigation, governmental proceeding or
Environmental Claim pending against Borrower Group which is reasonably expected
to have a Material Adverse Effect and (z) any change in the ownership of
Holdings, Borrower or any Guarantor of which it has knowledge. Each notice
pursuant to this subsection shall specify the nature thereof, the period of
existence thereof and what action, if any, Borrower proposes to take with
respect thereto.

              (f) YEAR 2000 COMPLIANCE. Promptly notify Administrative Agent in
the event Borrower discovers or determines that any computer application
(including those of its material suppliers and vendors) that is material to its
or any of the Business will not be Year 2000 compliant on a timely basis, except
to the extent that such failure is not reasonably likely to have a Material
Adverse Effect.

              (g) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the SEC or any
comparable Mexican Governmental Entity by Holdings or any of its Subsidiaries,
(ii) copies of all financial statements, proxy statements, notices and reports
as Holdings or any of its Subsidiaries shall send generally to public
shareholders and (iii) with reasonable promptness, such other information or
documents (financial or otherwise) as Administrative Agent on behalf of Required
Lenders may reasonably request from time to time.


                                      28.
<PAGE>

       6.2 BOOKS, RECORDS AND INSPECTIONS. Holdings will, and will cause its
Subsidiaries to, keep and maintain accurate books of record and account in
accordance with GAAP consistently applied and permit, upon reasonable notice to
the chief financial officer, controller or any other Authorized Officer,
officers and designated representatives of Administrative Agent or Required
Lenders to visit and inspect any of the properties or assets of Holdings and any
of its Subsidiaries in whomsoever's possession, and to examine the books of
account of Holdings and any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings and of any of its Subsidiaries with, and be
advised as to the same by, its and their officers and independent accountants,
all at such reasonable times and intervals and to such reasonable extent as
Administrative Agent or Required Lenders may desire.

       6.3 INSURANCE. Holdings will, and will cause each of its Subsidiaries to,
at all times maintain in full force and effect insurance with responsible and
reputable insurance companies and associations in such amounts, covering such
risks and liabilities and with such deductibles or self-insured retentions as
are in accordance with normal industry practice in Mexico. Holdings will, and
will cause each of its Subsidiaries to, furnish to Administrative Agent on the
Additional Loans Closing Date and thereafter, upon request of Administrative
Agent and reasonable notice, a summary of the insurance carried together with
certificates of insurance and other evidence of such insurance, if any, naming
Collateral Agent as an additional insured and naming Collateral Agent, on behalf
of Secured Creditors, loss payee and providing that if at any time any such
insurance shall be canceled, or coverage be reduced in a way which materially
affects the interests of Lenders, Administrative Agent or Collateral Agent, such
cancellation or reduction shall not be effective as to Lenders, Administrative
Agent or Collateral Agent for thirty (30) days after receipt by Administrative
Agent and Collateral agent of written notice from such insurer of such
cancellation or reduction. In the event Required Lenders determine that the
requirements of this SECTION 6.3 have not been met, then Administrative Agent
shall provide notice of such determination to Borrower, whereupon Borrower and
Collateral Agent shall mutually agree upon an independent, internationally
recognized insurance consultant or broker and such consultant or brokers
determination as to compliance with this SECTION 6.3 shall be binding on the
parties.

       6.4 PAYMENT OF TAXES. Holdings will pay and discharge, and will cause
each of its Subsidiaries to pay and discharge, all taxes imposed upon it or upon
its income or profits, or upon any properties belonging to it, prior to the date
on which penalties attach thereto, provided that neither Holdings nor any
Subsidiary shall be required to pay any such tax which is being contested in
good faith and by proper proceedings if it has maintained adequate reserves with
respect thereto in accordance with GAAP.

       6.5 CORPORATE FRANCHISES. Holdings will do, and will cause each
Subsidiary to do, or cause to be done, all things reasonably necessary to
preserve and keep in full force and effect its existence and to preserve its
material rights and franchises, other than those the failure to preserve which
is not reasonably likely to have a Material Adverse Effect, provided that any
transaction permitted by SECTION 7.2 will not constitute a breach of this
SECTION 6.5.

       6.6 COMPLIANCE WITH STATUTES, ETC. Holdings will, and will cause each
Subsidiary to, comply with all applicable statutes, regulations and orders of,
and all applicable restrictions imposed by, all governmental entities, domestic
or foreign, in respect of the conduct of the


                                      29.
<PAGE>

Business and the ownership of its property (including, in any event, all
Environmental Laws) other than those the noncompliance with which is not likely
to have a Material Adverse Effect.

       6.7 GOOD REPAIR. Holdings will, and will cause each of its Subsidiaries
to, ensure that its material properties and equipment necessary in the operation
of its business are kept in generally good repair, working order and condition,
normal wear and tear excepted, and, subject to SECTION 7.5, that from time to
time there are made in such properties and equipment all needful and proper
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses in management's judgment.

       6.8 ALCATEL PROCUREMENT AGREEMENT AND ALCATEL CREDIT AGREEMENT. Prior to
December 31, 1998, Borrower shall have authorized, executed and delivered (i) an
agreement (the "Alcatel Procurement Agreement") with Alcatel Indetel Industria
de Telecomunicacion S.A. de CV (the "Alcatel Vendor") substantially similar to
the form most recently provided to QUALCOMM prior to the Effective Date hereof,
and (ii) a Credit Agreement (the "Alcatel Credit Agreement") with Alcatel
Alsthom or lender(s) arranged by such party ("Alcatel Lender"), which Alcatel
Credit Agreement provides that Alcatel Lender is committed to provide not less
than 100% of the financing for the equipment (other than towers and shelters)
and services provided under the Alcatel Procurement Agreement (plus amounts to
finance some portion of VAT payments required in connection therewith), copies
of each of which have been certified by an Authorized Officer as true and
complete, and shall have been delivered to Administrative Agent and each Lender,
and all conditions precedent to the making of initial loans under the Alcatel
Credit Agreement shall have occurred or been waived.

       6.9 SHAREHOLDER PLEDGE OF HOLDINGS STOCK. Borrower shall use its best
efforts to have delivered to Collateral Agent the Pledge Agreements in respect
of the pledge of 100% the capital stock of Holdings. Prior to October 31, 1998,
Borrower shall have caused to be obtained the undertaking of each shareholder of
Holdings in favor of Collateral Agent that no such shareholder will pledge its
shares in Holdings without the consent of Collateral Agent.

       6.10 INTRAGROUP SERVICE AGREEMENTS. Prior to October 31, 1998, the PCS
Services Agreement and the Personnel Co. Services Agreement shall have been duly
authorized, executed and delivered by the parties thereto, the same shall be in
form and substance reasonably satisfactory to QUALCOMM and, a copy thereof,
certified by an Authorized Officer of Borrower as true and complete, shall have
been delivered to Administrative Agent and each Lender. Borrower agrees not to
materially amend, supplement or modify any such agreement in any way which would
be reasonably likely have a negative impact on the interests of any Lender.

       6.11 BUSINESS PLAN. Prior to December 31, 1998, a Business Plan shall
have been finalized and a true and complete copy thereof shall have been
delivered to each Lender.

       6.12 ADDITIONAL SECURITY; FURTHER ASSURANCES.

              (a) Borrower will, and each other member of the Borrower Group
will, upon request of the Required Lenders grant to Collateral Agent security
interests and mortgages in any material personal or real property, whether
acquired before or after the Effective Date, as may be


                                      30.
<PAGE>

reasonably requested from time to time by Required Lenders. All such security
interests and mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to Administrative Agent and Collateral Agent
and shall constitute valid and enforceable Liens superior to and prior to the
rights of all third Persons and subject to no other Liens except as are
permitted by SECTION 7.3. The mortgages or instruments related thereto shall
have been duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in favor
of Collateral Agent required to be granted pursuant to such mortgages and
instruments and all taxes, fees and other charges payable in connection
therewith shall have been paid in full.

              (b) Each Credit Party will, at the expense of such Credit Party,
make, execute, endorse, acknowledge, file and/or deliver to Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to the collateral covered by any of the Security Documents as
Collateral Agent may reasonably require. Furthermore, Borrower shall cause to be
delivered to Collateral Agent such opinions of counsel and other related
documents as may be reasonably requested by Administrative Agent to assure
itself that this SECTION 6.12 has been complied with.

              (c) Each Credit Party will, at the expense of such Credit Party,
make, execute, endorse, acknowledge and/or deliver to Administrative Agent from
time to time such amendments hereto as shall be reasonably requested by
Administrative Agent or Required Lenders for the purposes of establishing and
maintaining efficient funds transfer, invoicing, interest collection and other
administrative procedures.

              (d) Each action required by this SECTION 6.12 shall be completed
as soon as possible, but in no event later than 60 days after such action is
requested to be taken by Administrative Agent, Collateral Agent or Required
Lenders, as the case may be, provided that in no event shall any Credit Party be
required to take any action, other than using its reasonable commercial efforts
without any material expenditure, to obtain consents from third parties with
respect to its compliance with this SECTION 6.12.

              (e) In addition to the obligations and documents which this
Agreement expressly requires Borrower or any Guarantor to execute, acknowledge,
deliver and perform, Borrower and each Guarantor shall execute and acknowledge
(or cause to be executed and acknowledged) and deliver to Administrative Agent
or Collateral Agent all documents, and take all actions, that may be reasonably
requested by Administrative Agent, Collateral Agent or Lenders from time to time
to confirm the rights created by the terms of any Credit Document to be covered
by the Collateral Documents, or otherwise to carry out the purposes of the
Credit Documents and the transactions contemplated hereunder and thereunder.

       6.13 CONSENTS, APPROVALS. From time to time obtain all material
governmental and third party consents, approvals and licenses required to be
obtained by such time in connection with the transactions contemplated by the
Alcatel Procurement Agreement, the QUALCOMM Procurement Agreements and the
Credit Documents and such consents, approvals and licenses shall be kept in
effect for so long as required, including, without limitation, (i) any required
consent of any Governmental Entity required to be obtained to permit the
assignment for security


                                      31.
<PAGE>

purposes of the License and all additional licenses granted to Borrower or its
Subsidiaries and (ii) all required consents from Borrower's, Holdings' any
Guarantor's or their Subsidiaries' contractual counterparties required to be
obtained to permit the assignment to Collateral Agent of the Collateral.

       6.14 MAINTENANCE OF LICENSES AND COMPLIANCE WITH REGULATIONS AND RELATED
AGREEMENTS.

              (i) Take any and all action necessary to maintain the Licenses;

              (ii) Not, without the prior written consent of Collateral Agent
and Required Lenders, sell, assign, transfer or partition the Licenses, and if
Administrative Agent and Lenders consent to such sale, assignment, transfer or
partition, Borrower and each Guarantor shall cause each purchaser, assignee,
transferee or partitionee to become a party to or otherwise specifically assume
Borrower's obligations under the Credit Documents;

              (iii) Not take any action which would violate any federal, state,
national, provincial or local statute, rule, regulation or order relating to the
Licenses;

              (iv) Not, without the prior written consent of Collateral Agent
and Requisite Lenders, materially modify or amend the Licenses;

              (v) Enter into all interconnection agreements required under or by
the Licenses, if any;

              (vi) Not take any action which would violate any License or any
agreement relating to the Licenses which might be reasonably likely to have a
Material Adverse Effect; or

              (vii) Not, without the prior written consent of Collateral Agent
and Required Lenders, pledge as collateral the License, nor subject the License
or any Other License to any claim, Lien, security interest or other encumbrance;

provided, however, that nothing in this SECTION 6.14 shall limit Borrower's
ability to sell or dispose of assets, including a portion of the Licenses or
Other Licenses, to the extent expressly permitted in SECTION 7.2(f).

       6.15 SITE ACQUISITION.

              (a) In connection with site acquisition for the placement or
installation of Intelligent Base Station Controllers ("BSCs"), Base Station
Transceivers ("BTSs"), Mobile Switching Centers ("MSCs") or other infrastructure
equipment, enter into a Site Lease Agreement with minor modifications as shall
be reasonably necessary to negotiate with particular landlords and, as to leases
not yet distributed to potential landlords, appropriate modifications to reflect
the fact that the Integral Assets will be entirely owned by Borrower; and

              (b) Concurrent with entering into any lease of real property in
connection with the placement or installation of BSCs, BTSs, MSCs or other
infrastructure equipment, whether or not in the form of a Site Lease Agreement,
deliver to Collateral Agent (i) a copy of such lease and (ii) if the lessor of
such real property is party to a lending arrangement with respect to such


                                      32.
<PAGE>

real property, a nondisturbance agreement, duly executed by the lessor's lender
in form suitable for recordation, or, in the case of each of items (a) or (b) of
this SECTION 6.15, other documentation reasonably satisfactory to Collateral
Agent.

       6.16 COMPLETION OF CONDITIONS PRECEDENT Borrower shall satisfy each and
every condition set forth in SECTION 4 hereof not later than October 31, 1998

       6.17 ADDITION OF OTHER SECURED CREDITORS. Within a reasonable time prior
to the execution of any credit agreement that would give rise to Pari Passu
Debt, Borrower shall notify Administrative Agent in writing that such credit
agreement will be signed. Notification shall be substantially in the form
attached hereto as Exhibit H. The Lenders and Borrower shall, within a
reasonable period following the latter of the date of execution of such credit
agreement and the date Borrower shall have provided to Administrative Agent a
certified Spanish translation of such credit agreement for notarization and
registration by a Notary Public, (i) enter into an amendment of the Mortgage
("ampliacion de hipoteca") which amendment shall set forth that the new lender
under the Pari-Passu Debt will participate with the Lenders on a first priority
perfected security interest in the Mortgage, (ii) enter into amendments of the
Pledge Agreements executed by the Lenders and the Credit Parties which amendment
shall set forth that the new lender under the Pari-Passu Debt will participate
with the Lenders on a first priority perfected security interest in the pledge
of the stock of Borrower and the Guarantors and (iii) enter into amendments of
the Collateral Assignment Agreements entered into by the Credit Parties and the
Lenders which amendment shall set forth that the new lender under the Pari-Passu
Debt will participate with the Lenders in a first priority perfected security
interest in the Collateral Assignment Agreements.

SECTION 7. NEGATIVE COVENANTS.

       By their execution of this Agreement, the Guaranty or the Pledge
Agreements, as applicable, each of Borrower, and each Guarantor jointly and
severally covenants and agrees with respect to Borrower, each Guarantor and
their Subsidiaries that for so long as this Agreement is in effect and until the
Commitments have terminated and the Loans, together with interest, Fees and all
other Obligations incurred hereunder, are paid in full:

       7.1 CHANGES IN BUSINESS. None of Borrower Group will engage in any
business but the Business and reasonable extensions thereof.

       7.2 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. None of
Holdings or Borrower Group will wind up, liquidate or dissolve its affairs, or
enter into any transaction of merger or consolidation, sell or otherwise dispose
of all or any part of its property or assets (other than sales and other
dispositions (including asset swaps and similar transactions) when no Event of
Default exists to the extent in the ordinary course of business), or purchase,
lease or otherwise acquire all or any part of the property or assets of any
Person (other than purchases or other acquisitions of inventory, leases,
materials and equipment in the ordinary course of business) or agree to do any
of the foregoing at any future time, except that the following shall be
permitted:


                                      33.
<PAGE>

              (a) any Subsidiary of a Credit Party (other than Borrower) may be
merged or consolidated with or into, or be liquidated into, another Subsidiary
that is a Credit Party (so long as a Credit Party is the surviving corporation),
or all or any part of its business, properties and assets may be conveyed,
leased, sold or transferred to any Credit Party, in each case to the extent no
detriment results with respect to the security interests and Liens created
pursuant to the Security Documents;

              (b) capital expenditures not exceeding $750,000,000 from the
Effective Date through December 31, 2000 and $200,000,000 per year thereafter;
provided, however, that if any such permitted capital expenditure is not made
within the designated period, such amount shall be available to be made as
capital expenditures in ensuing periods;

              (c) the investments permitted pursuant to SECTION 7.5;

              (d) each Credit Party may lease (as lessee) real or personal
property in the ordinary course of business (so long as such lease does not
create a Capitalized Lease Obligation not otherwise permitted by SECTION
7.4(c));

              (e) licenses or sublicenses by the Credit Parties of intellectual
property in the ordinary course of business of such Credit Parties, provided,
that such licenses or sublicenses shall not interfere with the Business;

              (f) sales of Licenses (to the extent such does not constitute an
Event of Default under SECTION 8.9) and other sales or dispositions of assets as
shall be mutually agreed by QUALCOMM and Borrower; and

              (g) the acquisitions of additional telecommunications business and
assets in Mexico to the extent not in excess of $50,000,000.

       7.3 LIENS. None of Holdings or Borrower Group will create, incur, assume
or suffer to exist any Lien upon or with respect to any property or assets of
any kind (real or personal, tangible or intangible) of such Person whether now
owned or hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to such
Person) or assign any right to receive income, except:

              (a) Liens for taxes not yet due or Liens for taxes, assessment or
governmental charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment of the
management of Holdings) have been established;

              (b) Liens in respect of property or assets of any of Borrower
Group imposed by law which were incurred in the ordinary course of business,
such as carriers', warehousemen's and mechanics' Liens, statutory landlords'
Liens, and other similar Liens arising in the ordinary course of business, and
(x) which do not in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of the
business of Borrower Group or (y) which are being contested in good faith by


                                      34.
<PAGE>

appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such Lien;

              (c) Liens created by or pursuant to this Agreement or the other
Credit Documents;

              (d) Liens created pursuant to Capital Leases permitted by SECTION
7.4(c);

              (e) Liens arising from judgments, decrees or attachments and Liens
securing appeal bonds arising from judgments, in each case in circumstances not
constituting an Event of Default under SECTION 8.9;

              (f) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business (exclusive of obligations in respect
of the payment for borrowed money);

              (g) leases, subleases or licenses granted to others not
interfering in any material respect with the Business;

              (h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the Business;

              (i) any interest or title of a lessor under any lease permitted by
this Agreement and Liens arising from financing statements regarding leases
permitted by this Agreement;

              (j) purchase money Liens securing payables arising from the
purchase by any of Borrower Group or any Guarantor of any equipment or goods in
the normal course of business, provided that such payables shall not constitute
Indebtedness;

              (k) Liens existing on, and to remain in effect after, the
Effective Date to the extent specified on SCHEDULE 7.3 hereto;

              (l) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness not constituting Pari Passu Debt or High-Yield
Debt representing the purchase price of assets acquired by any of Borrower Group
after the Effective Date, provided that any such Liens attach only to the assets
so acquired and that all Indebtedness secured by Liens created pursuant to this
clause (l) is permitted by SECTION 7.4(c);

              (m) Liens on property (other than capital stock) of any Person
that becomes a member of Borrower Group after the date hereof, provided that
such Liens are in existence at the time such Person becomes a member of Borrower
Group, were not created in anticipation thereof and do not attach to any
property of any other member of Borrower Group;


                                      35.
<PAGE>

              (n) Liens on amounts raised pursuant to the High-Yield Debt to
fund interest payments as required under the terms thereof; and

              (o) Liens created to secure Indebtedness permitted by SECTION
7.4(j); and

              (p) other Liens, in addition to the Liens permitted above,
provided that the aggregate amount of obligations secured by such Liens does not
at any time exceed the greater of (i) $10,000,000 or (ii) one percent (1%) of
the aggregate of Consolidated Debt and Consolidated Net Worth at the time of the
incurrence thereof; provided, further, that such Liens do not encumber any
Integral Assets.

       7.4 INDEBTEDNESS. None of Holdings or Borrower Group will contract,
create, incur, assume or suffer to exist any Indebtedness, except:

              (a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents, the QUALCOMM Procurement Documents and the Alcatel Procurement
Agreement;

              (b) Indebtedness owing by any of Borrower Group that is a Credit
Party to another member of Borrower Group that is a Credit Party;

              (c) Capitalized Lease Obligations of a member of Borrower Group
that is a Credit Party not constituting Pari Passu Debt and Indebtedness
incurred pursuant to purchase money mortgages or security interests permitted by
SECTION 7.3(l), provided that the aggregate of all such Capitalized Lease
Obligations under all Capital Leases entered into after the Effective Date plus
all principal Indebtedness secured by such purchase money mortgages or security
interests shall not exceed the greater of (i) $15,000,000 or (ii) two percent
(2%) of the sum of Consolidated Debt and Consolidated Net Worth at the time of
incurrence thereof;

              (d) Pari Passu Debt provided that after the incurrence thereof the
Leverage Ratio set forth in SECTION 7.10 (if applicable at such time) shall be
satisfied on the last day of the fiscal quarter most recently ended on a pro
forma basis as if such Pari Passu Debt was incurred on such last day;

              (e) other Indebtedness outstanding prior to, and to remain
outstanding after, the Effective Date to the extent specified in SCHEDULE 5.18
hereto;

              (f) Contingent Obligations of any of Borrower Group arising with
respect to customary indemnification obligations incurred in connection with
permitted asset dispositions and/or acquisitions;

              (g) unsecured Indebtedness of Borrower or Indebtedness secured by
a Lien permitted under SECTION 7.3(p); provided that after the incurrence
thereof the Leverage Ratio set forth in SECTION 7.10 (if applicable at such
time) shall be satisfied on the last day of the fiscal quarter most recently
ended on a pro forma basis calculated as if such Indebtedness was incurred on
such last day;


                                      36.
<PAGE>

              (h) Contingent Obligations not otherwise permitted by this SECTION
7.4 to the extent not exceeding in the aggregate at any time outstanding
$5,000,000;

              (i) High-Yield Debt; and

              (j) Indebtedness incurred in connection with obtaining financing
for wireless telecommunication handsets.

       7.5 ADVANCES, INVESTMENTS AND LOANS. None of Holdings or Borrower Group
will lend money or credit or make advances to any Person, or purchase or acquire
any stock, obligations or securities of, or any other interest in, or make any
capital contribution to any Person, except:

              (a) Holdings and Borrower Group may invest in cash and Cash
Equivalents;

              (b) any of Borrower Group may acquire and hold receivables owing
to them, if created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms;

              (c) the intercompany Indebtedness described in SECTION 7.4(b);

              (d) loans and advances to officers, directors and employees in the
ordinary course of business in an aggregate principal amount not to exceed
$5,000,000 (or the equivalent) at any time outstanding shall be permitted;

              (e) any of Borrower Group may acquire and own investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business;

              (f) any of Borrower Group may make investments in any other member
of Borrower Group that is a Credit Party; and

              (g) acquisitions permitted by SECTION 7.2(g).

       7.6 LIMITATION ON CREATION OF SUBSIDIARIES. None of Borrower Group will
establish, create or acquire any Subsidiary other than a Wholly-owned Subsidiary
(x) 100% of the capital stock of which is pledged pursuant to the Security
Documents and such pledge is perfected, (y) which executes a counterpart of the
Guaranty and appropriate Security Documents, in each case on the same basis (and
to the same extent) as such Subsidiary would have executed such Credit Documents
if it were a Credit Party on the Additional Loans Closing Date and (z) which
owns no Integral Assets.

       7.7 PREPAYMENTS; MODIFICATIONS. Holdings will not, and will not permit
any of its Subsidiaries to (i) make any voluntary or optional payment or
prepayment or redemption or acquisition for value of Indebtedness under the High
Yield Debt or the Alcatel Credit Agreement except, with respect to the Alcatel
Credit Agreement and any other vendor Indebtedness in excess of $50,000,000, if
such prepayment, redemption or acquisition is made pro rata among


                                      37.
<PAGE>

such lenders based on the applicable outstanding principal amounts on the date
of payment, or (ii) amend, modify or change (including early termination) in any
manner adverse to the interests of the Lenders any provisions of any
organizational documents of any Credit Party or any document governing
High-Yield Debt, the Joint Venture Agreement, the Alcatel Procurement Agreement
or the Alcatel Credit Agreement (provided that any change to such Credit
Agreement will not violate this Section if the Credit Parties have offered in
writing to make a corresponding change to this Agreement) or any organizational
document of any Credit Party.

       7.8 DIVIDENDS, ETC.

              (a) None of Borrower Group will declare or pay any dividends
(other than dividends payable solely in capital stock of such Person) or return
any capital to, its stockholders or authorize or make any other distribution,
payment or delivery of property or cash to its stockholders as such, or redeem,
retire, purchase or otherwise acquire, directly or indirectly, for a
consideration, any shares of any class of its capital stock now or hereafter
outstanding (or any warrants for or options or stock appreciation rights in
respect of any of such shares), or set aside any funds for any of the foregoing
purposes, or permit any of its Subsidiaries to purchase or otherwise acquire for
consideration any shares of any class of the capital stock of any other member
of Borrower Group or any other Subsidiary, as the case may be, now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued by
such Person with respect to its capital stock) (all of the foregoing
"Dividends"), except that any Subsidiary of Borrower, Pegaso PCS and Personnel
Co. may pay dividends to Borrower, Pegaso PCS and Personnel Co, as applicable,
and direct Subsidiaries of Holdings may pay dividends to Holdings (i) to permit
it to pay when due administrative costs, taxes relating to the Business and
Borrower Group, (ii) if no Event of Default exists, to pay interest and
scheduled principal amortization on any High-Yield Debt that Holdings may issue,
and (iii) at such time as the Debt to Cash Flow Ratio as of the end of any
fiscal quarter most recently ended for the Borrower Group is less 5:1 as
reflected on the financial statements delivered pursuant to SECTION 6.1(a) OR
(b), as applicable, then to the extent that Facility-1 and Facility-2 are, in
aggregate, prepaid in amounts equal to such Dividends, Dividends may be paid to
Holdings and Holdings may pay to its shareholders Dividends in such amount.

              (b) Holdings will not, and will not permit any of its Subsidiaries
to, create or otherwise cause or suffer to exist any encumbrance or restriction
which prohibits or otherwise restricts (i) the ability of any Credit Party to
(A) pay dividends or make other distributions or pay any Indebtedness owed to
any other Credit Party, (B) make loans or advances to another Credit Party (C)
transfer any of its properties or assets to another Credit Party or (ii) the
ability of any Guarantor to create, incur, assume or suffer to exist any Lien
upon its property or assets to secure the Obligations, other than prohibitions
or restrictions existing under or by reason of: this Agreement, the other Credit
Documents and the agreements governing other Pari Passu Debt; agreements
governing High-Yield Debt to the extent no more restrictive than those contained
herein; the terms of any of the Licenses; applicable law; customary
non-assignment provisions entered into in the ordinary course of business and
consistent with past practices; any restriction or encumbrance with respect to a
Subsidiary imposed pursuant to an agreement which has been entered into for the
sale or disposition of all or substantially all of the capital stock or assets
of such Subsidiary, so long as such sale or disposition is permitted under this
Agreement; and Liens permitted under SECTION 7.3(l) and any documents or
instruments governing the terms of any


                                      38.
<PAGE>

Indebtedness or other obligations secured by any such Liens, provided that such
prohibitions or restrictions apply only to the assets subject to such Liens.

       7.9 TRANSACTIONS WITH AFFILIATES. Holdings will not, and will not permit
any Subsidiary to, enter into any transaction or series of transactions after
the Effective Date whether or not in the ordinary course of business, with any
Affiliate other than on terms and conditions substantially as favorable to
Holdings or such Subsidiary as would be obtainable by Holdings or such
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than an Affiliate, provided that the foregoing restrictions shall not
apply to (i) transactions solely among the Credit Parties, (ii) employment
arrangements entered into in the ordinary course of business with officers of
Holdings and its Subsidiaries, (iii) customary fees paid to members of the Board
of Directors of Holdings, and (iv) any transaction expressly permitted by the
Joint Venture Agreement as in effect on the Effective Date.

       7.10 LEVERAGE RATIO. Borrower will not permit the Leverage Ratio to
exceed, as of the last day of any fiscal quarter, 1.5:1.0 with each component
thereof calculated in Mexican pesos for purposes of determining compliance with
this SECTION 7.10. Upon the Borrower Group achieving positive earnings before
interest, taxes, depreciation and amortization ("EBITDA") Borrower and Lenders
agree to negotiate in good faith to set an appropriate financial covenant to be
substituted for the foregoing financial covenant based on an agreed ratio of
total Consolidated Debt to 12 month EBITDA.

       7.11 MINIMUM ASSET OWNERSHIP CONCENTRATION. Borrower shall ensure that
the Asset Ownership Concentration shall not at any time be less than ninety-five
percent (95%).

       7.12 Limitation On Issuance Of Stock. Holdings will not permit any of its
Subsidiaries, directly or indirectly, to issue any shares of its capital stock
or other securities (or warrants, rights or options to acquire shares or other
equity securities), except (i) in favor of Holdings or another Credit Party that
is the parent company, (ii) for replacements of then outstanding shares of
capital stock, (iii) for stock splits, stock dividends and similar issuances
which do not decrease the percentage ownership of Holdings or Borrower Group in
any class of the capital stock of such Subsidiary, and (iv) for issuances by
newly created or acquired Subsidiaries in accordance with SECTION 7.6.

       7.13 COMPLIANCE WITH CERTAIN REGULATIONS. Neither Holdings nor any other
Credit Party shall become an "investment company" or a Person controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Loan for such purpose or
violate any law or regulation, in each case which violation would be reasonably
likely to have a Material Adverse Effect.

SECTION 8. EVENTS OF DEFAULT.

       Upon the occurrence of any of the following specified events (each, an
"Event of Default"):


                                      39.
<PAGE>

       8.1 PAYMENTS. Borrower shall (i) default in the payment when due of any
principal of the Loans or (ii) default, and such default shall continue for five
or more days, in the payment when due of any interest on the Loans or any Fees;
or

       8.2 REPRESENTATIONS, ETC. Any material representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove to be untrue in any material respect on the date
as of which made or deemed made; or

       8.3 COVENANTS. Any Credit Party shall (a) default in the due performance
or observance by it of any term, covenant or agreement contained in SECTION 6.8,
6.9, 6.10, 6.11, 6.12, 6.14, 6.16 or 7, or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in SECTION 8.1, 8.2 or clause (a) of this SECTION 8.3) contained in this
Agreement and such default shall continue unremedied for a period of at least 30
days after written notice to the defaulting party by Administrative Agent or
Required Lenders; or

       8.4 DEFAULT UNDER OTHER AGREEMENTS. Any Credit Party shall (i) default in
any payment with respect to any Indebtedness (other than the Obligations) beyond
the period of grace, if any, applicable thereto or (ii) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause any such Indebtedness to become due prior to its
stated maturity; or any such Indebtedness of any Credit Party shall be declared
to be due and payable prior to the stated maturity thereof, provided that it
shall not constitute an Event of Default pursuant to this SECTION 8.4 unless the
principal amount of such Indebtedness exceeds $25,000,000 individually or in the
aggregate at any one time; or

       8.5 BANKRUPTCY. (i) Any Credit Party shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or any Credit
Party shall make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against any Credit Party any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against any Credit Party any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Credit Party shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i),


                                      40.
<PAGE>

(ii) or (iii) above; or (v) any Credit Party shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or

       8.6 SECURITY DOCUMENTS.

              (a) The Liens created by the Security Documents shall at any time
not constitute a valid and perfected Lien on the collateral intended to be
covered thereby (to the extent perfection by filing, registration, recordation
or possession is required herein or therein) in favor of the Collateral Agent,
free and clear of all other Liens (other than Liens permitted under Section 7.3
hereof or under the respective Security Documents), or except for expiration in
accordance with its terms, any of the Security Documents shall for whatever
reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by the Borrower in writing; or

              (b) Any Credit Party shall default in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to any Security Document and such default shall
continue unremedied for a period of at least 30 days after written notice to the
defaulting party by Collateral Agent on behalf of Required Lenders; or

       8.7 GUARANTY. The Guaranty or any provision thereof shall cease to be in
full force and effect, or any Guarantor or any Person acting by or on behalf of
such Guarantor shall deny or disaffirm such Guarantor's obligations under the
Guaranty or any Guarantor shall default in the due performance or observance of
any material term, covenant or agreement on its part to be performed or observed
pursuant to the Guaranty and such default (other than a payment default) shall
continue unremedied for a period of at least 30 days after written notice to the
defaulting party by Administrative Agent; or

       8.8 JUDGMENTS. One or more judgments or decrees shall be entered against
any Credit Party involving a liability of $5,000,000 or more, individually or in
the aggregate for all such judgments and decrees for all Credit Parties (not
paid or to the extent not covered by insurance), and any such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within 60 days from the entry thereof; or

       8.9 LOST LICENSES. Borrower Group shall lose the ownership or use of,
there shall occur a revocation of, or there shall occur a failure to pay
required amounts under, any License or Licenses and as a result thereof Covered
Pops shall be reduced below 40,000,000;

       8.10 CHANGE OF CONTROL. A Change of Control has occurred and is
continuing; or

       8.11 FAILURE TO COMPLETE CONDITIONS. Borrower shall fail to satisfy the
closing conditions for making Additional Loans by the date set forth in SECTION
6.16; or

       8.12 OBJECTION TO PLEDGE. The Secretariat of Communications of Transport
shall, within the statutory period in which objections may be made, object to
the pledge of the capital stock of the Borrower pursuant to the Pledge Agreement
or the registration of such pledge in the share registry of the Borrower and (i)
the Borrower either does not appeal such objection within fifteen (15) days of
receipt of notice thereof or (ii) Borrower, after having appealed such


                                      41.
<PAGE>

objection within the fifteen (15) day period stipulated above, fails to cause
the objection to be rescinded within ninety (90) days of receipt of notice of
such objection; or

       8.13 MORTGAGE. The Borrower shall fail to deliver to the Administrative
Agent within forty five (45) days after the filing of the Mortgage, the first
testimony of the public deed evidencing the creation of the Mortgage, duly
recorded at the Public Registry of Commerce of the Federal District of Mexico;
or the Borrower shall fail to deliver to the Collateral Agent within ninety (90)
days after filing of the Mortgage, the first testimony of the public deed
evidencing the creation of the Mortgage, duly recorded at the Telecommunications
Registry and Public Registry of Commerce;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, Administrative Agent shall, upon the written request
of Required Lenders, by written notice to Borrower, take any or all of the
following actions, without prejudice to the rights of Administrative Agent or
any Lender to enforce its claims against any Guarantor or Borrower, except as
otherwise specifically provided for in this Agreement (provided that, if an
Event of Default specified in SECTION 8.5 shall occur with respect to Borrower,
the result which would occur upon the giving of written notice by Administrative
Agent as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Commitments to be
terminated, whereupon the Commitment of each Lender shall forthwith terminate
immediately and any Commitment Fee shall forthwith become due and payable
without any other notice of any kind; (ii) declare the principal of and any
accrued interest in respect of all Loans and all obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Credit Parties; and (iii) exercise its rights under the
Security Documents to cause Collateral Agent to enforce any or all of the Liens
and security interests created pursuant to the Security Documents. Upon the
occurrence and during the continuance, of any Default or Event of Default, the
obligation of Lenders to make any Loans under this Agreement or the other Credit
Documents shall be suspended.

SECTION 9. DEFINITIONS.

       As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this Agreement
shall include in the singular number the plural and in the plural the singular:

       "Additional Loans" shall mean Loans made after the Effective Date.

       "Additional Loans Closing Date" shall mean the date on which the initial
Additional Loans are made under this Agreement.

      "Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to Administrative
Agent appointed pursuant to SECTION 10.8.

       "Administrative Agent's Account" shall mean such account as is specified
in writing by Administrative Agent to Borrower and Lenders from time to time.


                                      42.
<PAGE>

       "Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person; provided, however, that neither of Vendors shall be
considered to be an "Affiliate" hereunder. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.

       "Agreement" shall mean this Credit Agreement, as the same may be from
time to time further modified, amended and/or supplemented.

       "Alcatel Costs" shall mean the cost of all equipment and services
delivered to Borrower under the Alcatel Procurement Agreement.

       "Alcatel Lender" shall have the meaning provided in SECTION 6.10.

       "Alcatel Procurement Agreement" shall have the meaning provided in
SECTION 6.9.

       "Alcatel Vendor" shall have the meaning provided in SECTION 6.9.

       "Applicable Margin" shall mean (i) for Eurodollar Loans (A) that are
Tranche A Loans, 1.50%, (B) that are Tranche B Loans, 4.50% and (C) that are
Tranche C Loans, 1.50% and (ii) for Base Rate Loans (A) that are Tranche A
Loans, 0.50%, (B) that are Tranche B Loans 3.50% and (C) that are Tranche C
Loans 0.50%, which margins with respect to Tranche B Loans will be reduced on
the first day Borrower incurs loans under a Senior Bank Financing with aggregate
commitments of at least $100,000,000 to the margin applicable to loans under
such Senior Bank Financing with an interest rate established by reference to the
Eurodollar Rate (or any other comparable LIBOR market rate) or Base Rate, as the
case may be.

       "Applicable VAT Margin" shall mean 1.50%.

       "Asset Ownership Concentration" shall mean, as of any date of
determination, that percentage of the assets of the Borrower Group which are
owned by, and are fully vested in, Borrower, valued on the same basis as such
assets are carried on the books of each member of the Borrower Group on a
consolidated basis.

       "Assignment Agreement" shall mean the Assignment and Acceptance Agreement
in the form of EXHIBIT F (appropriately completed).

       "Authorized Officer" shall mean any senior officer of Borrower designated
as such in writing to Administrative Agent by Borrower, in each case to the
extent acceptable to Administrative Agent and shall include in any event the
Chief Executive Officer and the Chief Financial Officer of Borrower.

       "Availability Period" shall mean the Facility-1 Availability Period or
the Facility-2 Availability Period, as applicable.


                                      43.
<PAGE>

       "Base Rate" shall mean the greater of (i) the rate of interest per annum
publicly announced by Administrative Agent at its headquarters from time to time
as its prime commercial lending rate, or, if Administrative Agent does not
establish its own prime commercial lending rate, that rate published on such day
(or if not a Business Day, on the last Business Day) in the Wall Street Journal
newspaper as the "Prime Rate," such rate to be adjusted automatically (without
notice) on the effective date of any change in such publicly announced rate and
(ii) the Federal Funds Effective Rate plus one-half of one percent (0.50%)
(rounded upwards, if necessary, to the next one-sixteenth of one percent (1/16
of 1%).

       "Base Rate Loan" means any Loan bearing interest at the Base Rate.

       "Base Financing Percentage" shall mean fifty percent (50%).

       "Borrower" shall have the meaning provided in the first paragraph of this
Agreement.

       "Borrower Group" shall mean Borrower, Holdings, Pegaso PCS, Personnel Co.
and their respective Subsidiaries.

       "Borrower's Account" shall mean, such account as shall be maintained by
Borrower and specified in writing by Borrower to Administrative Agent from time
to time.

       "Borrowing" shall mean the incurrence of Loans pursuant to a single
Facility by Borrower from all of the Lenders having Commitments with respect to
such Facility on a pro rata basis on a given date and having in the case of
Eurodollar Loans the same Interest Period.

       "Borrowing Date" shall mean each Business Day on which Loans are made or
required to be made.

       "Borrowing Notice" shall mean a written notice in the form of EXHIBIT B
hereto, signed by an Authorized Officer.

       "Borrowing Year" shall mean (i) the period from the Additional Loans
Closing Date through January 31, 2000 and (ii) each successive 12-month period
thereafter.

       "Business" shall mean the business of development, operation and use of
the Licenses (and other new licenses and/or concessions issued to any of
Borrower Group) and to operate and install terrestrial-based wireless
telecommunications systems and long distance telecommunication systems in
Mexico.

       "Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the City of New York a legal holiday or a day on which banking institutions
are authorized by law or other governmental actions to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Loans, any day which is a Business Day described in
clause (i) and which is also a day for trading by and between banks in U.S.
Dollar deposits in the inter-bank Eurodollar market.


                                      44.
<PAGE>

       "Business Plan" shall mean at any time the Business Plan of Holdings and
its Subsidiaries as the same shall be from time to time updated and approved by
Holdings' Board of Directors as provided to each Lender as contemplated in
SECTION 6.1(c).

       "Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.

       "Capitalized Lease Obligations" shall mean all obligations under Capital
Leases of any Credit Party in each case taken at the amount thereof accounted
for as liabilities in accordance with GAAP.

       "Cash Advance" shall have the meaning provided in SECTION 1.5(b)(i).

       "Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) Dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500,000,000 or (y) any bank (or the parent company of such bank) whose
short-term commercial paper rating from S&P is at least A-1 or the equivalent
thereof or from Moody's Investors Service, Inc. ("Moody's") is at least P-1 or
the equivalent thereof (any such bank, an "Approved Bank"), in each case with
maturities of not more than one year from the date of acquisition, (iii)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (ii) above, (iv) commercial paper
issued by any Approved Bank or by the parent company of any Approved Bank and
commercial paper issued by, or guaranteed by, any industrial or financial
company with a short-term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's,
or guaranteed by any industrial company with a long term unsecured debt rating
of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, as
the case may be, and in each case maturing within one year after the date of
acquisition and (v) investments in money market funds substantially all of whose
assets are comprised of securities of the type described in clauses (i) through
(iv) above.

       "Change of Control" shall mean, (i) the failure at any time prior to the
consummation of a Qualified IPO of (A) the Original Mexican Shareholders to own
at least 40% of the voting stock of Holdings or (B) SpinCo to own, directly or
indirectly through QUALCOMM Mexico and/or other wholly owned Subsidiaries, at
least 15% of the capital stock of Holdings except to the extent their
stockholdings are sold to any of the Original Mexican Shareholders or other
persons acceptable to Required Lenders, and (ii) at any time after the
consummation of a Qualified IPO any transaction or series of transactions
whereby (A) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of voting stock of Holdings (or other securities
convertible into such voting stock) representing 25% or more of the combined
voting power of all Voting Stock of Holdings; or (B) during any period of up to
18 consecutive months, commencing before or after the date of


                                      45.
<PAGE>

this Agreement, individuals who at the beginning of such 18-month period were
directors of Holdings, together with such directors as are approved by directors
who were directors at the beginning of such period, shall cease for any reason
to constitute a majority of the board of directors of Holdings; or (iii) any
Person or two or more Persons acting in concert shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence over the management or policies
of Holdings. Notwithstanding the foregoing, (y) any such transaction or series
of transactions described above involving QUALCOMM or any of its Affiliates
shall not constitute a Change of Control and (z) any such transaction or series
of transactions described in clause (ii) shall not constitute a change of
control if the Original Mexican Shareholders or their Subsidiaries and Spinco
continue to own, directly or indirectly, a greater percentage of the voting
stock of Holdings than any other Person or two or more Persons acting in
concert.

       "Collateral" shall mean all of the Collateral as defined in each of the
Security Documents.

       "Collateral Agent" shall mean such Person as may from time to time be
designated by Required Lenders as their collateral agent or collateral trustee
on behalf of Lenders and the other Secured Creditors; provided, however, that
until any such Person is so designated Collateral Agent shall refer to QUALCOMM;
provided, further, that Required Lenders shall have no obligation to designate a
Collateral Agent and the rights of Collateral Agent as specified herein may be
vested in Lenders as a group or individually, as Required Lenders shall from
time to time determine in their sole and absolute discretion.

       "Collateral Assignment Agreements" shall mean the following (i) the
collateral assignment agreement to be entered into by Borrower and Lenders in
connection with the conditional assignment in favor of Lenders of the PCS
Services Agreement, (ii) the collateral assignment agreement to be entered into
by Pegaso PCS and Lenders in connection with the conditional assignment of the
Personnel Co. Services Agreement in favor of Lenders, and (iii) the collateral
assignment agreement to be entered into by Pegaso PCS and the Lenders in
connection with the conditional assignment of the Site Lease Agreements in favor
of Lenders as each such agreement may be amended from time to time.

       "Commitment" shall mean, with respect to each Lender, such Lender's
Facility-1 Commitment, Facility-2 Commitment and VAT Loan Commitment.

       "Commitment Fee" shall have the meaning provided in SECTION 2.1(a).

       "Common Terms Agreement" shall have the meaning provided in SECTION 1.13.

       "Consolidated Debt" shall mean, as of any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of each of Borrower
Group on a combined basis as determined in accordance with GAAP plus (without
duplication) any Indebtedness for borrowed money of any other Person as to which
any of Borrower Group has created a guarantee or other Contingent Obligation.


                                      46.
<PAGE>

       "Consolidated Net Worth" shall mean, at any time for the determination
thereof, the aggregate amount of equity theretofore contributed to Holdings by
its shareholders.

       "Contingent Financing Percentage" shall mean such percentage as shall be
negotiated in good faith and agreed upon in writing from time to time by
Borrower and QUALCOMM which shall reflect the funding requirements of Borrower
and Guarantors as set forth in the Business Plan after giving full effect to all
funds raised by Borrower, and Guarantors after the date hereof provided,
however, that (i) prior to the earlier of any Senior Bank Financing or the
issuance of High-Yield Debt, the Contingent Financing Percentage shall be equal
to fifty percent (50%), (ii) the Contingent Financing Percentage for calendar
years 1998 and 1999 shall be fifty percent (50%) and (iii) at any time that
clause (i) or (ii) is not applicable, the Contingent Financing Percentage shall
be 50% until the Borrower and QUALCOMM otherwise agree in writing.

       "Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided, however, that
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.

       "Covered Pops" shall mean Pops for those areas for which Borrower has the
right under the Licenses to provide Wireless Services and has constructed or
intends to construct facilities to provide such Wireless Services.

       "Credit Advance" shall have the meaning provided in SECTION 1.5(b)(i).

       "Credit Documents" shall mean this Agreement, the Notes, the Pagares, the
Security Documents and the Guaranty.

       "Credit Party" shall mean Borrower, Holdings and Guarantors.

       "Debt to Cash Flow Ratio" shall mean as of any date of determination, the
ratio of Consolidated Debt (net of cash and Cash Equivalents) on such date to
(i) EBITDA for the period of two consecutive fiscal quarters last ended prior to
the date of the determination for which


                                      47.
<PAGE>

financial statements have been provided pursuant to SECTION 6.1 (a) or (b)
multiplied by (ii) two (2).

       "Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.

       "Dividends" shall have the meaning provided in SECTION 7.8.

       "Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.

       "EBITDA" shall have the meaning provided in SECTION 7.10.

       "Effective Date" shall have the meaning provided in SECTION 11.10.

       "Eligible Transferee" shall mean and include a commercial bank, financial
institution or other institutional "accredited investor" as defined in SEC
Regulation D.

       "Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation or proceedings relating in any way to any
Environmental Law or any permit issued under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief in connection with alleged injury or threat of injury to
health, safety or the environment due to the presence of Hazardous Materials.

       "Environmental Law" means any applicable federal, state or local statute,
law, rule, regulation, ordinance, code and rule of common law now or hereafter
in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to the environment or
Hazardous Materials.

       "Equipment Agreement" means that Equipment Purchase Agreement entered
into as of June 10, 1998 by and between Borrower and QUALCOMM as such shall from
time to time be amended, supplemented and restated.

       "Eurodollar Rate" shall mean, with respect to each Interest Period, the
rate of interest determined on the basis of the rate for deposits in Dollars for
a period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 a.m.,
London time, two Business Days prior to the beginning of such Interest Period.
In the event that such rate does not appear on Page 3750 of the Telerate screen
(or otherwise on such screen), the "Eurodollar Rate" shall be determined by
reference to such other publicly available service for displaying eurodollar
rates as may be agreed upon by Administrative Agent and Borrower or, in the
absence of such agreement, the "Eurodollar Rate" shall instead be the rate per
annum equal to the average (rounded upwards to the nearest 1/100th of 1%) of the
respective rates notified to Administrative Agent by such banks as shall be
agreed


                                      48.
<PAGE>

by Borrower and QUALCOMM prior to the Additional Loans Closing Date as the rate
at which such Persons is offered Dollar deposits in an amount approximately
equal to the amount of the requested Loan at or about 11:00 a.m., London time,
two Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Interest Period for the number of days
comprised therein.

       "Eurodollar Loan" means any Loan (other than VAT Loans) bearing interest
at the Eurodollar Rate.

       "Event of Default" shall have the meaning provided in SECTION 8.

       "EXIM Financing" shall mean each credit facility entered into by Borrower
to finance QUALCOMM Costs that are EXIM Qualified, together with eligible local
costs, under export credit political and commercial guarantees/insurance
provided by the Export Import Bank of the U.S.

       "EXIM Qualified" shall mean with respect to (i) QUALCOMM Costs and
eligible local costs, such costs that are eligible to be financed and/or
refinanced under an EXIM Financing and (ii) Loans, Loans that are incurred to
finance QUALCOMM Costs that are EXIM Qualified.

       "Existing VAT Loans" shall have the meaning ascribed to such term inside
the definition of "VAT Loans."

       "Facility" shall mean any of the credit facilities established under this
Agreement, i.e., Facility-1, Facility-2 and the VAT Facility.

       "Facility-1" shall mean the Facility evidenced by the Total Facility-1
Commitment.

       "Facility-1 Availability Period" shall mean the period commencing on the
Additional Loans Closing Date and ending on December 31, 2000.

       "Facility-1 Availability Period Costs" shall mean QUALCOMM Costs that are
EXIM Qualified and are payable during the Facility-1 Availability Period.

       "Facility-1 Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite its name on SCHEDULE 1.0 hereto under the
column entitled "Facility-1 Commitment," as the same may be (x) reduced or
terminated pursuant to SECTIONS 2.2, 2.3 and 8 or (y) adjusted as a result of
assignments to or from such Lender pursuant to SECTION 1.10 or 11.4.

       "Facility-1 EXIM Loans Closing Date" shall mean the date of the initial
borrowing under any EXIM Financing entered into to finance and/or refinance
Facility-1 Availability Period Costs.

       "Facility-1 Loan" shall have the meaning provided in SECTION 1.1.


                                      49.
<PAGE>

       "Facility-1 Refinancing Date" shall mean the earlier of (i) the first
anniversary of the Additional Loans Closing Date and (ii) the Facility-1 EXIM
Loans Closing Date.

       "Facility-2" shall mean the Facility evidenced by the Total Facility-2
Commitment.

       "Facility-2 Availability Period" shall mean the period commencing on
January 1, 2001 and ending on December 31, 2002.

       "Facility-2 Availability Period Costs" shall mean QUALCOMM Costs that are
EXIM Qualified and are payable during the Facility-2 Availability Period.

       "Facility-2 Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite its name on Annex I hereto under the column
entitled "Facility-2 Commitment," as the same may be (x) reduced or terminated
pursuant to SECTIONS 2.2, 2.3 and 8 or (y) adjusted as a result of assignments
to or from such Lender pursuant to SECTION 1.10 or 11.4.

       "Facility-2 EXIM Loans Closing Date" shall mean the date of the initial
borrowing under any EXIM Financing entered into to finance and/or refinance
Facility-2 Availability Period Costs.

       "Facility-2 Loan" shall have the meaning provided in SECTION 1.1.

       "Facility-2 Refinancing Date" shall mean the earlier of (i) January 1,
2002 and (ii) the Facility-2 EXIM Loans Closing Date.

       "Federal Funds Effective Rate" means, for any day, a fluctuating interest
rate per annum equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
Administrative Agent from three Federal funds brokers of recognized standing
selected by Administrative Agent.

       "Fees" shall mean all amounts payable pursuant to, or referred to in,
SECTION 2.1.

       "Frequency Band License" shall mean the Concessions for the Use,
Development and Operation of Radio-electric Spectrum Frequency Bands to Provide
Fixed or Mobile Wireless Access Services granted by the Secretariat of
Communications of Transport in favor of the Borrower by means of its decision
dated May 8, 1998 for the bands of frequencies of the radioelectric spectrum in
order to render wireless access services, as also further described in the Joint
Venture Agreement and Exhibit A thereto.

       "GAAP" shall mean generally accepted accounting principles in Mexico as
in effect on the date of this Agreement; it being understood and agreed that
determinations in accordance with GAAP for purposes of SECTIONS 6 AND 7,
including defined terms as used therein, are subject (to the extent provided
therein) to SECTION 11.7(a) and shall include U.S. GAAP reconciliations.


                                      50.
<PAGE>

       "Governmental Entity" shall have the meaning provided in SECTION 5.3.

       "Guarantor" shall mean Holdings, Pegaso PCS, Personnel Co. and each other
Person party to the Guaranty.

       "Guaranty" shall have the meaning provided in SECTION 4.1(d).

       "Hazardous Materials" shall mean (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or is reasonably likely to
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contains, electric fluid containing polychlorinated biphenyls
above 50 ppm, and radon gas and (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
waste," "hazardous materials," "extremely hazardous waste," "restricted
hazardous waste," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any applicable Environmental
Law.

       "High-Yield Debt" shall mean notes or bonds of Holdings, provided that
(i) after the issuance thereof by Borrower or Holdings the Leverage Ratio set
forth in SECTION 7.10 shall be satisfied on the last day of the last fiscal
quarter then ended on a pro forma basis as if such High-Yield Debt were issued
on such last day and (ii) any issue of such debt shall be unsecured, except to
the extent of amounts raised to fund scheduled interest payments, and not have a
maturity or provide for sinking fund payment or any scheduled prepayment prior
to December 31, 2005.

       "Holdings" shall mean Pegaso Telecomunicaciones, S.A. de C.V., a Mexican
corporation.

       "Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (vii) all net obligations of such Person
under Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of Borrower and/or its Subsidiaries to the extent such
guaranteed obligations do not constitute Indebtedness and are otherwise
permitted hereunder), provided that Indebtedness shall not include trade
payables and accrued expenses, in each case arising in the ordinary course of
business.

       "Integral Assets" shall mean the Licenses, all assets to be provided
under the QUALCOMM Procurement Agreements and the Alcatel Procurement Agreement,
all trademarks, trade names and other intellectual property associated with the
Business, all accounts receivable and the proceeds thereof related to the
Business, all real estate (other than real estate the use of which does not
derive from pure leasing arrangements)..


                                      51.
<PAGE>

       "Interest Payment Date" shall mean each date on which interest is payable
on the Loans, determined without regard to SECTION 1.5(b).

       "Interest Period" means, with respect to each Eurodollar, the period
commencing on the date of the making or continuation of or conversion to such
Eurodollar Loan and ending one, three or six months thereafter, as Borrower may
elect in the applicable Notice of Conversion/Continuation; provided that:

              (a) any Interest Period (other than an Interest Period determined
pursuant to clause (c) below) that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day;

              (b) any Interest Period applicable to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last Business
Day of a calendar month;

              (c) any Interest Period with respect to a Eurodollar Loan that
would otherwise end after the applicable the maturity date of such Loan shall
end on such maturity date;

              (d) no Interest Period with respect to a Eurodollar Loan which
begins before January 31 of any given year (except January 31 of 1999) shall
have a maturity extending beyond January 31 of such year;

              (e) no Interest Period applicable to any Eurodollar Loan shall
include a principal repayment date for Loans under the Facility under which such
Loan is made unless an aggregate principal amount of Loans under such Facility
at least equal to the principal amount due on such principal repayment date
shall be Base Rate Loans or other Eurodollar Loans having Interest Periods
ending on or before such date; and

              (f) notwithstanding clauses (c) (d) and (e) above, no Interest
Period applicable to a Eurodollar Loan shall have a duration of less than one
month, and if any Interest Period applicable to such Eurodollar Loan would be
for a shorter period, such Interest Period shall not be available hereunder.

       "Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect Borrower or any Subsidiary
against fluctuations in interest rates.

       "Joint Venture Agreement" shall mean the Joint Venture Agreement entered
into as of July 16, 1998 by and between QUALCOMM Mexico, the Original Mexican
Shareholders, Holdings and the New Shareholders listed therein, in the form
delivered to Administrative Agent on the Effective Date and as the same may be
subsequently amended or modified in compliance with the terms thereof and
hereof.

       "Law" shall have the meaning provided in SECTION 5.3.


                                      52.
<PAGE>

       "Lender" shall have the meaning provided in the first paragraph of this
Agreement.

       "Lender Register" shall have the meaning provided in SECTION 11.16.

       "Leverage Ratio" shall mean, at any date of determination, the ratio of
Consolidated Debt (net of cash and Cash Equivalents), to Consolidated Net Worth
on such date.

       "Licenses" shall mean the Frequency Band License and the Network License.

       "Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).

       "Loan" and "Loans" shall mean the loans provided in accordance with
SECTION 1.1 together with the existing loans described in SECTION 1.5(a).

       "Loan Request" has the meaning set forth in SECTION 1.5(b)(i) hereof.

       "Loan Request Review Period" has the meaning set forth in SECTION
1.5(b)(i) hereof.

       "Long-Term Facility" shall mean Facility-1 or Facility-2 and "Long-Term
Facilities" shall mean Facility-1 and Facility-2.

       "Long-Term Loans" shall mean Loans made under either Long-Term Facility.

       "Material Adverse Effect" shall mean a material adverse effect on (i) the
business, assets, liabilities, or operations or condition (financial or
otherwise) of the Borrower Group, taken as a whole, (ii) the ability of the
Borrower Group to pay its Obligations under the Credit Documents as they become
due and (iii) the validity or enforceability of the Guaranties or the Security
Documents.

       "Maturity" or "maturity" means the earlier of (i) the final maturity date
for any Loan as stated in SECTION 3.2 hereof and (ii) the date on which (A) the
Loans have been accelerated or (B) the Loans have been prepaid in full and the
Commitment terminated pursuant to this Agreement.

       "Mexico" shall mean the United Mexican States.

       "Minimum Borrowing Amount" shall mean (i) for Facility-1 and Facility-2,
$250,000 and (ii) for the VAT Facility, $25,000.

       "Mortgage" shall mean that industrial mortgage established under the
Mexican Telecommunications Law creating a mortgage on all assets of Borrower,
including the Licenses, as further described in SECTION 4.1(e)(i).

       "Network License" shall mean the license granted on June 23, 1998 by the
Secretariat of Communications of Transport in favor of the Borrower to install,
operate and exploit a public telecommunications network.


                                      53.
<PAGE>

       "Note" shall have the meaning provided in SECTION 1.6(d).

       "Notice of Conversion/Continuation" has the meaning set forth in SECTION
1.5(c) hereof.

       "Notice of Deemed Loan" has the meaning set forth in SECTION 1.5(b)(ii)
hereof.

       "Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing by
Borrower and/or any Guarantor to Administrative Agent, Collateral Agent or any
Lender pursuant to the terms of this Agreement or any other Credit Document.

       "Original Mexican Shareholders" shall mean Pegaso Comunicaciones y
Servicios, S.A. de C.V., Corporativo del Valle de Mexico S.A. de C.V. and
Alejandro Burillo Azcarraga.

       "Pagare" shall mean a promissory note heretofore or hereafter issued by
Borrower or Pegaso PCS in favor of a Lender in substantially the form attached
hereto as EXHIBIT B with appropriate insertions as to issue date, maturity date,
principal amount, and interest rate to finance VAT charges imposed by Mexico in
respect of the QUALCOMM Costs.

       "Pari Passu Debt" shall mean all Indebtedness of Borrower incurred to
finance the Business including Indebtedness under this Agreement, the Alcatel
Credit Agreement, the Pari Passu Bank Facilities and under Interest Rate
Agreements, but shall not include the High-Yield Debt, Capital Lease Obligations
and the Indebtedness secured by Liens permitted by SECTION 7.3(l); provided that
any such Indebtedness incurred in connection with the purchase of particular
equipment or services, including, without limitation, Indebtedness of Borrower
guaranteed by a vendor or any Affiliate of vendor to Borrower or any Affiliate
of a vendor or any Affiliate of a vendor to Borrower, shall have a weighted
average life of at least 3.8 years.

       "Pari Passu Bank Facilities" shall mean those loan facilities with a
syndicate of prime banks or financial institutions having a weighted average
life to maturity not less than the remaining weighted average life to maturity
of Facility-1 Tranche B Loans made in the first Borrowing Year.

       "Participating Lenders" shall mean, with respect to the making of any
Loans, those Lenders with Commitments to make such Loans.

       "PCS Services Agreement" shall mean the services agreement to be entered
into by the Borrower and Pegaso PCS under which the latter will provide services
to the Borrower.

       "Pegaso PCS" shall mean Pegaso PCS, S.A. de C.V., a Mexican corporation.

       "Percentage" shall mean at any time for each Lender with respect to the
Loans and/or Commitments under any Facility, the percentage obtained by dividing
such Lender's Commitment for such Facility by the aggregate Commitments of all
Lenders for such Facility, provided that if the Commitments of all Lenders for
such Facility have been terminated, the Percentage of each Lender for such
Facility shall be determined by dividing such Lender's Commitment for such
Facility immediately prior to such termination by the aggregate Commitments of
all Lenders for such Facility immediately prior to such termination.


                                      54.
<PAGE>

       "Permitted Liens" shall mean Liens described in SECTION 7.3.

       "Person" shall mean any individual, partnership, limited liability
company, joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.

       "Personnel Co." shall mean Pegaso Recursos Humanos S.A. de C.V., a
Mexican corporation.

       "Personnel Co. Services Agreement" shall mean the services agreement to
be entered into by PCS and Personnel Co. under which the latter will provide
services to Pegaso PCS.

       "Pledge Agreements" shall mean (i) the pledge agreement to be entered
into by Holdings, PCS, the Borrower and the Lenders under which the stock of
Pegaso PCS and Personnel Co. will be pledged in favor of Lenders, and (ii) the
pledge agreement to be entered into by the shareholders of Holdings, Pegaso PCS,
the Borrower and Lenders under which the stock of the Borrower and Holdings will
be pledged and under which the stock of Holdings is affirmatively and/or
negatively pledged in favor of Lenders.

       "Pops" shall mean population, as based on specific population estimates
of geographic areas.

       "QUALCOMM" shall mean QUALCOMM Incorporated, a Delaware corporation.

       "QUALCOMM Costs" shall mean the cost of all equipment and services
delivered to Borrower under the QUALCOMM Procurement Agreements, plus broker's
fees, export credit insurance premiums, transportation costs and import duties
payable in connection therewith, but in no event including the cost of any
Subscriber Units (as defined in the Equipment Agreement).

       "QUALCOMM Mexico" shall mean QUALCOMM PCS Mexico, Inc., a California
corporation.

       "QUALCOMM Fee Letter" means the side letter relating to arrangement fees
dated September 25, 1998, between Borrower and QUALCOMM.

       "QUALCOMM Procurement Agreements" shall mean either or both of the
Equipment Agreement or the Services Agreement.

       "Qualified IPO" shall mean a public offering of Holdings' common stock
for gross sale proceeds to Holdings of at least U.S.$50,000,000 (or the
equivalent) resulting in the trading of Holding's common stock on a national
securities exchange in the U.S. or Mexico or international exchange in the
European Economic Union.

       "Refinancing" shall have the meaning provided in SECTION 1.12.

       "Registered Financial Institution" shall mean the Registry of Foreign
Banks, Financing Entities, Pension Funds and Investments Funds or any successor
thereto.


                                      55.
<PAGE>

       "Required Lenders" shall mean Lenders holding at least fifty-one percent
(51%) of the then aggregate unpaid principal amount of all Loans then
outstanding or, if no Loans are then outstanding, Lenders having at least
fifty-one percent (51%) of the Commitments.

       "Responsible Officer" shall mean the President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer or General Counsel, or any
Person having a similar function.

       "S&P" shall mean Standard & Poor's Ratings Services, a division of
McGraw-Hill, Inc.

       "Scheduled Repayment" shall have the meaning provided in SECTION 3.2(b).

       "SEC" shall mean the Securities and Exchange Commission or any successor
thereto.

       "SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.

       "Secured Creditor" shall mean and include each holder of Pari Passu Debt.

       "Security Documents" shall have the meaning provided in SECTION 4.1(e).

       "Senior Bank Financing" shall mean any credit facility providing for
loans and/or advances to be made to Borrower that Borrower enters into with one
or more Lenders to the extent the Indebtedness arising thereunder shall
constitute Pari Passu Debt, provided that Senior Bank Financing shall not
include any EXIM Financing or financing under the Alcatel Credit Agreement.

       "Services Agreement" shall mean the Services Agreement entered into as of
June 10, 1998 by and between Borrower and QUALCOMM Wireless Services (Mexico),
S.A de C.V. as such may be from time to time amended, supplemented and
restated.

       "Site Lease Agreement" shall mean a Site Lease Agreement substantially in
the form of EXHIBIT G hereto; provided, however, that with respect to any Site
Lease Agreement which has not yet been forwarded to potential lessors as of the
Effective Date, the Site Lease Agreement shall reflect appropriate changes to
reflect ownership in Borrower of assets located at the leased sites.

       "SpinCo" shall mean Leap Wireless International, Inc., a Delaware
corporation.

       "Sponsors" shall mean the Original Mexican Shareholders, QUALCOMM and
SpinCo. acting directly or through QUALCOMM Mexico.

       "Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such


                                      56.
<PAGE>

Person directly or indirectly through Subsidiaries, has more than a 50% equity
interest at the time.

       "Syndication" shall have the meaning provided in SECTION 1.12.

       "System" shall have the meaning provided in the first WHEREAS clause of
this Agreement.

       "Total Commitment" shall mean $310,000,000; provided, however, that until
such time as QUALCOMM's Board of Directors shall have approved such amount and
QUALCOMM shall have given notice to Borrower and Administrative Agent of such
approval, the "Total Commitment" shall mean $250,000,000. QUALCOMM agrees to
request authorization for such increased amount promptly following the Effective
Date.

       "Total Facility-1 Commitment" shall mean the sum of the Facility-1
Commitments of all the Lenders.

       "Total Facility-2 Commitment" shall mean the sum of the Facility-2
Commitments of all the Lenders.

       "Total VAT Loan Commitment" shall mean the sum of the VAT Loan
Commitments of all of the Lenders.

       "Tranche A Loans" shall mean Loans under the Long-Term Facilities made as
Tranche A Loans pursuant to SECTION 1.1(a) or (b), as the case may be.

       "Tranche B Loans" shall mean Loans under the Long-Term Facilities made as
Tranche B Loans pursuant to SECTION 1.1(a) or (b), as the case may be.

       "Tranche C Loans" shall mean Loans under Facility-1 made as Tranche C
Loans pursuant to SECTION 1.1(a).

       "U.S." shall mean the United States of America.

       "U.S. GAAP" means generally accepted accounting principles in the United
States.

       "VAT" shall mean any value added tax associated with the sales of
equipment and services under the QUALCOMM Procurement Agreements or broker's
fees payable in connection therewith.

       "VAT Facility" shall mean the Facility evidenced by the Total VAT Loan
Commitment.

       "VAT Facility Availability Period" shall mean the period commencing on
the Additional Loans Closing Date and ending on December 31, 2002.

       "VAT Loan" shall have the meaning provided in SECTION 1.1(c) and shall
specifically include any advances made to Borrower or Pegaso PCS prior to the
Additional Loans Closing Date to finance VAT charges (the "Existing VAT Loans").

       "VAT Loan Advance" shall have the meaning provided in SECTION 1.2(a).


                                      57.
<PAGE>

       "VAT Loan Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite its name on SCHEDULE 1. hereto under the
column entitled "VAT Loan Commitment," as the same may be (x) reduced or
terminated pursuant to SECTIONS 2.2, 2.3 and 8 or (y) adjusted as a result of
assignments to or from such Lender pursuant to SECTION 1.10 or 11.4.

       "VAT Loan Maturity Date" shall mean, with respect to each VAT Loan, the
date which is 364 days after the date such VAT Loan is made.

       "Vendor" shall have the meaning provided in the first WHEREAS clause of
this Agreement.

       "Vendor's Account" shall mean such account as is specified in writing by
the Vendor to Administrative Agent and Borrower from time to time.

       "Wholly-owned Subsidiary" of any Person shall mean any Subsidiary of such
Person to the extent all of the capital stock or other ownership interests in
such Subsidiary, other than directors' qualifying shares, is owned directly or
indirectly by such Person.

       "Wireless Services" shall mean PCS (Personal Communications Systems)
and/or WLL (wireless local loop) services.

       "Written" or "in writing" shall mean any form of written communication or
a communication by means of telex, facsimile transmission, or electronic mail.

       9.2 OTHER INTERPRETIVE PROVISIONS.

              (a) All terms defined in this Agreement shall have their defined
meanings when used in the other Credit Documents and any certificate or other
document made or delivered pursuant hereto, unless the context clearly indicates
otherwise.

              (b) As used in this Agreement and the other Credit Documents and
any certificate or other document made or delivered pursuant hereto, accounting
terms relating to any Person not defined in SECTION 9.1 above, and accounting
terms partly defined in SECTION 9.1 above to the extent not defined, shall have
the respective meanings given to them under GAAP.

              (c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified. The term "including" is not limiting and means "including,
without limitation," and "including, but not limited to."

              (d) Whenever, from the context it appears appropriate, each term
stated in either the singular or the plural shall include the singular or the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter.

              (e) Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, and all Financial Statements required to be
delivered hereunder shall be prepared


                                      58.
<PAGE>

in accordance with GAAP. If any changes in GAAP from those used in the
preparation of the financial statements referred to in SECTION 5.8 hereof ("GAAP
Changes") hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or Mexico or
international equivalent thereof (or successors thereto or agencies with similar
functions) result in a change in the method of calculation of any of the
financial covenants, standards or other terms or conditions found in this
Agreement, the parties hereto agree to enter into negotiations to amend such
provisions so as to reflect equitably such GAAP Changes with the desired result
that the criteria for evaluating the financial condition and performance of any
Guarantor or Borrower and their Subsidiaries shall be the same after such GAAP
Changes as if such GAAP Changes had not been made.

SECTION 10. ADMINISTRATIVE AGENT.

       10.1 APPOINTMENT OF QUALCOMM AS ADMINISTRATIVE AGENT. Lenders hereby
designate and appoint QUALCOMM. as Administrative Agent to act in an
administrative function as specified under this Agreement and the other Credit
Documents and irrevocably authorizes Administrative Agent to take such action on
its behalf under and subject to the provisions of this Agreement and each other
Credit Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Credit
Document, together with such other powers, in the judgment of Administrative
Agent, as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement or any other Credit Document,
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein or therein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Credit
Document or otherwise exist against Administrative Agent.

       10.2 DELEGATION OF DUTIES BY ADMINISTRATIVE AGENT. Administrative Agent
may execute any of its duties under this Agreement by or through the
Administrative Agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.
Administrative Agent shall not be responsible for the negligence or misconduct
of any Administrative Agent or attorney-in-fact that it selects with reasonable
care.

       10.3 LIABILITY OF ADMINISTRATIVE AGENT. None of Administrative
Agent-Related Persons (defined below) shall (a) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Agreement
or any other Credit Document (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by Borrower or any Affiliate
of Borrower, or any officer thereof, contained in this Agreement or in any other
Credit Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by Administrative Agent under or in
connection with, this Agreement or any other Credit Document, or for the value
of any Collateral or the validity, priority, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any Credit Document, or for
any failure of Borrower or any other party to any Credit Document to perform its
obligations hereunder or thereunder. No Administrative Agent-Related Person
shall be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the


                                      59.
<PAGE>

agreements contained in, or conditions of, this Agreement or any other Credit
Document, or to inspect the Properties, books or records of Borrower or any of
Borrower's Affiliates. "Administrative Agent-Related Persons" shall mean
Administrative Agent and any successor Administrative Agent, together with their
respective Affiliates, and the employees, agents and attorneys-in-fact of such
persons.

       10.4 RELIANCE BY ADMINISTRATIVE AGENT.

              (a) Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower),
independent accountants and other experts selected by Administrative Agent.
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Credit Document unless it shall first
receive such advice or concurrence of Requisite Lenders as it deems appropriate
and indemnification for all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action, provided, however, that
Administrative Agent shall be justified in refusing to take action if such
action is in violation of law or the terms of this Agreement or any other Credit
Document, based on the advise of Administrative Agent's legal counsel.
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Credit Document in
accordance with a request or consent of Requisite Lenders and such request and
any action taken or failure to act pursuant thereto shall be binding upon all of
Lenders.

              (b) For purposes of determining compliance with the conditions
precedent specified in SECTION 4, each Lender that has executed this Agreement
or shall hereafter execute and deliver an Assignment Agreement shall be deemed
to have consented to, approved or accepted or to be satisfied with each document
or other matter either sent by Administrative Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to such Lender, unless an officer
of Administrative Agent responsible for the transactions contemplated by the
Credit Documents shall have received notice from such Lender prior to the
initial borrowing specifying its objection thereto and either such objection
shall not have been withdrawn by notice to Administrative Agent to that effect
or such Lender shall not have made available to Administrative Agent its ratable
portion of such borrowing.

       10.5 NOTICE OF DEFAULT. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to Administrative Agent on behalf and for the benefit of Lenders,
unless Administrative Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
Administrative Agent receives such a notice, Administrative Agent shall give
notice thereof to each Lender. Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be requested by Requisite
Lenders in accordance with SECTION 8; provided, however, that unless and until
Administrative Agent shall have received any such request, Administrative


                                      60.
<PAGE>

Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem in the best interest of Lenders.

       10.6 NON-RELIANCE BY LENDERS. Each Lender expressly acknowledges that
none of Administrative Agent-Related Persons has made any representation or
warranty to it and that no act by Administrative Agent hereafter taken,
including any review of the affairs of Borrower, shall be deemed to constitute
any representation or warranty by Administrative Agent to such Lender. Each
Lender confirms to Administrative Agent that it has not relied, and will not
rely hereafter, on Administrative Agent to check or inquire on such Lender's
behalf into the adequacy, accuracy or completeness of any information provided
by Borrower or any other Person under or in connection with the Credit Documents
or the transactions herein contemplated (whether or not the information has been
or is hereafter distributed to such Lender by Administrative Agent). Each Lender
represents to Administrative Agent that it has, independently and without
reliance upon Administrative Agent and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower, and all applicable regulatory laws relating to the
transactions contemplated thereby, and made its own decision to enter into this
Agreement and the other Credit Documents and extend credit to Borrower under and
pursuant to this Agreement. Each Lender also represents that it will,
independently and without reliance upon Administrative Agent and based on such
documents and appraisals and decisions in taking or not taking action under this
Agreement and the other Credit Documents, and to make such investigations as it
deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower. Except
for notices, reports and other documents expressly herein required to be
furnished to Lenders by Administrative Agent, Administrative Agent shall not
have any duty or responsibility to provide to any Lender any credit or other
information concerning the business, prospects, operations, Property, financial
and other condition or creditworthiness of Borrower which may come into the
possession of any Administrative Agent-Related Persons. Administrative Agent
shall not be responsible to any Lender for the execution, effectiveness,
priority, genuineness, validity, enforceability, collectability or sufficiency
of this Agreement the Credit Documents or for any representations or warranties,
recitals or statements made herein or therein or made in any written or oral
statements, or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made available by
Administrative Agent to Lenders or by or on behalf of Borrower to Administrative
Agent or any Lender in connection with the Credit Documents or the transactions
contemplated thereby or for the financial condition or business affairs of
Borrower or any Person liable for payment of the Obligations, nor shall
Administrative Agent be required to ascertain or inquire as to the performance
or observance of any of the terms, conditions, provisions, covenants or
agreements contained in any of the Credit Documents or as to the use of proceeds
of the Loans or as to the existence or possible existence of any Default or
Event of Default.

       10.7 INDEMNIFICATION. Whether or not the transactions contemplated hereby
are consummated, Lenders shall indemnify upon demand Administrative
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrower
and without limiting the obligation of Borrower to do so) ratably from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Loans or the


                                      61.
<PAGE>

termination or the resignation of the related Administrative Agent) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any of the other Credit Documents or the
transactions contemplated hereby or thereby or any action taken or omitted by
any such Person under or in connection with any of the foregoing; provided,
however, that no Lender shall be liable for the payment to Administrative
Agent-Related Persons of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse Administrative Agent
upon demand for its ratable share of any costs or other out-of-pocket expenses
(including reasonable attorneys' expenses and disbursements) incurred by
Administrative Agent in connection with the preparation, execution,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any other Credit Document to
the extent that Administrative Agent has not previously been reimbursed for such
expenses by or on behalf of Borrower. Without limiting the generality of the
foregoing, if any Governmental Entity or any Administrative Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), such Lender shall indemnify
Administrative Agent fully for all amounts paid, directly or indirectly, by
Administrative Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to
Administrative Agent under this SECTION 10.7, together with all costs and
expenses (including reasonable attorneys' expenses and disbursements). The
obligations of Lenders in this SECTION 10.7 shall survive the repayment of all
Obligations and the termination of the Credit Documents.

       10.8 SUCCESSOR ADMINISTRATIVE AGENT. Administrative Agent may, and at the
request of Requisite Lenders shall, resign as Administrative Agent upon 30 days'
notice to Lenders. If Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Credit Documents, then Requisite Lenders
shall appoint from among Lenders a successor Administrative Agent for Lenders.
If no successor Administrative Agent is appointed prior to the effective date of
the resignation of Administrative Agent, Administrative Agent may appoint, after
consulting with Lenders and Borrower, a successor Administrative Agent from
among Lenders. Upon the acceptance of its appointment as successor
Administrative Agent hereunder and under the other Credit Documents, such
successor Administrative Agent shall succeed to the rights, powers and duties of
Administrative Agent, the term "Administrative Agent" shall mean such successor
Administrative Agent effective upon its appointment, and the former
Administrative Agent's appointment, rights, powers and duties as Administrative
Agent shall be terminated. After any retiring Administrative Agent's resignation
as Administrative Agent, the provisions of this SECTION 10 and SECTION 11.1
shall continue to inure to its benefit as to actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement and the other
Credit Documents.


                                      62.
<PAGE>

SECTION 11. MISCELLANEOUS.

       11.1 PAYMENT OF EXPENSES, INDEMNIFICATION, ETC.

              (a) Borrower agrees to: (i) pay the costs and expense of
Administrative Agent and each Lender in connection with the enforcement of the
Credit Documents; and (ii) pay and hold each of the Lenders harmless from and
against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Lenders harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to such Lender) to pay such
taxes.

              (b) Borrower agrees to indemnify, save, and hold harmless
Administrative Agent, Lenders and their directors, officers, agents, attorneys
and employees (collectively, the "indemnitees") from and against: (i) any and
all claims, demands, actions, or causes of action that are asserted against any
indemnitee by any Person if the claim, demand, action, or cause of action arises
out of or relates to a claim, demand, action, or cause of action that the Person
asserts or may assert against Borrower, or any officer, director or shareholder
of Borrower in their capacity as such, (ii) any and all claims, demands, actions
or causes of action that are asserted against any indemnitee (other than by
Borrower or by another indemnitee) if the claim, demand, action or cause of
action arises out of or relates to the Loans, the use of proceeds of any Loans,
or the relationship of Borrower and Lenders under this Agreement or any
transaction contemplated pursuant to this Agreement, (iii) any administrative or
investigative proceeding by any governmental agency arising out of or related to
a claim, demand, action or cause of action described in clauses (i) or (ii)
above; and (iv) any and all liabilities, losses, costs, or expenses (including
outside attorneys' fees, in-house counsel fees and disbursements) that any
indemnitee suffers or incurs as a result of any of the foregoing; provided, that
Borrower shall have no obligation under this SECTION 11.1 to any Lender or
Administrative Agent with respect to any of the foregoing arising out of the
gross negligence or willful misconduct of such Lender or Administrative Agent.

       11.2 RIGHT OF SETOFF. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, if an Event of Default then exists, each Lender is hereby authorized at
any time or from time to time, without presentment, demand, protest or other
notice of any kind to any Credit Party or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special but other than payroll accounts) and any other
Indebtedness at any time held or owing by such Lender (including, without
limitation, by branches and agencies of such Lender wherever located) to or for
the credit or the account of any Credit Party against and on account of the
Obligations and liabilities of such Credit Party to such Lender under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations of such Credit Party purchased by such
Lender pursuant to SECTION 11.6(b), irrespective of whether or not such Lender
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured.

       11.3 NOTICES. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
telex, telecopier, facsimile


                                      63.
<PAGE>

or electronic mail) and mailed, telexed, telecopied, faxed, electronic mailed or
delivered, if to a Credit Party, at the address specified opposite its signature
below or in the other relevant Credit Documents, as the case may be; if to any
Lender, at its address specified for such Lender on the signature pages hereto;
or, at such other address as shall be designated by any party in a written
notice to the other parties hereto. All such notices and communications shall be
mailed, telexed, telecopied, or electronic mailed or sent by overnight courier,
and shall be effective when received.

       11.4 BENEFIT OF AGREEMENT.

              (a) This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns of the parties
hereto, provided that Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Lenders. Each
Lender may at any time grant participations in any of its rights hereunder or
under any of the Notes or Pagares to an Eligible Transferee, provided that in
the case of any such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the participant's
rights against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the participant
relating thereto) and all amounts payable by Borrower hereunder shall be
determined as if such Lender had not sold such participation, except that the
participant shall be entitled to the benefits of SECTIONS 1.9 and 3.4 of this
Agreement to the extent that such Lender would be entitled to such benefits if
the participation had not been entered into or sold, and, provided further that
no Lender shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan in which such
participant is participating (it being understood that any waiver of the
application of any prepayment or the method of any application of any prepayment
to, the amortization of the Loans shall not constitute an extension of the final
maturity date), or reduce the rate or extend the time of payment of interest or
Fees thereon (except in connection with a waiver of the applicability of any
post-default increase in interest rates), or reduce the principal amount
thereof, or increase such participant's participating interest in any Commitment
over the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Commitments, or a
mandatory prepayment, shall not constitute a change in the terms of any
Commitment), (ii) release all or substantially all of the Collateral or (iii)
consent to the assignment or transfer by Borrower of any of its rights and
obligations under this Agreement.

              (b) Notwithstanding the foregoing and subject to the limitations
on Syndications set forth in SECTION 1.12, (x) any Lender may assign all or a
portion of its outstanding Loans and/or Commitments and its rights and
obligations hereunder to one or more other Lenders, and (y) with the consent of
QUALCOMM, Administrative Agent and Borrower (which consents shall not be
unreasonably withheld) any Lender may assign all or a portion of its outstanding
Loans and/or Commitments and its rights and obligations hereunder to one or more
Eligible Transferees. No assignment pursuant to the immediately preceding
sentence shall to the extent such assignment represents an assignment to an
institution other than one or more Lenders hereunder, be in an aggregate amount
less than $5,000,000 (unless such assignee has agreed to purchase assignments of
interests under this Agreement is a series of transactions which, in the


                                      64.
<PAGE>

aggregate, will total an original amount not less than $5,000,000. If any Lender
so sells or assigns all or a part of its rights hereunder, any reference in this
Agreement to such assigning Lender shall thereafter refer to such Lender and to
the respective assignee to the extent of their respective interests and the
respective assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights and benefits as it would if it were
such assigning Lender. Each assignment pursuant to this SECTION 11.4(b) shall be
effected by the assigning Lender and the assignee Lender executing an Assignment
Agreement and giving Administrative Agent written notice thereof. At the time of
any such assignment, (i) either the assigning or the assignee Lender shall pay
to Administrative Agent a nonrefundable assignment fee of $1,500, (ii) SCHEDULE
1.0 shall be deemed to be amended to reflect the Commitments of the respective
assignee (which shall result in a direct reduction to the Commitments of the
assigning Lender) and of the other Lenders, and (iii) Borrower will, if
requested, issue new Notes or Pagares to the respective assignee and to the
assigning Lender. To the extent that an assignment pursuant to this SECTION
11.4(b) would, at the time of such assignment, result in increased costs under
SECTION 1.9 or 3.4 from those being charged by the respective assigning Lender
prior to such assignment, then Borrower shall not be obligated to pay such
increased costs (although Borrower shall be obligated to pay any other increased
costs of the type described above resulting from changes after the date of the
respective assignment). Each Lender and Borrower agree to execute such documents
(including without limitation amendments to this Agreement and the other Credit
Documents) as shall be necessary to effect the foregoing. Nothing in this clause
(b) shall prevent or prohibit any Lender from pledging its Notes or Pagares or
Loans to a Federal Reserve Bank in support of borrowings made by such Lender
from such Federal Reserve Bank.

              (c) Notwithstanding any other provisions of this SECTION 11.4, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require Borrower to file a registration statement with
the SEC or to qualify the Loans under the "Blue Sky" laws of any State.

              (d) Each Lender initially party to this Agreement hereby
represents, and each Person that became a Lender pursuant to an assignment
permitted by this SECTION 11.4 will, upon its becoming party to this Agreement,
represent that it is an Eligible Transferee which makes loans in the ordinary
course of its business and that it will make or acquire Loans for its own
account in the ordinary course of such business, provided that subject to the
preceding clauses (a) and (b), the disposition of any promissory notes or other
evidences of or interests in Indebtedness held by such Lender shall at all times
be within its exclusive control.

       11.5 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
Administrative Agent or any Lender in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and Administrative Agent or any Lender shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which Administrative
Agent or any Lender would otherwise have. No notice to or demand on any Credit
Party in any case shall


                                      65.
<PAGE>

entitle any Credit Party to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of Administrative Agent
or the Lenders to any other or further action in any circumstances without
notice or demand.

       11.6 PAYMENTS PRO RATA.

              (a) Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of any Credit Party in respect of any Obligations
of such Credit Party, it shall distribute such payment to the Lenders (other
than any Lender that has expressly waived its right to receive its pro rata
share thereof) pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.

              (b) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the respective Credit Party to such Lenders in such amount as
shall result in a proportional participation by all of the Lenders in such
amount, provided that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.

       11.7 CALCULATIONS; COMPUTATIONS.

              (a) The financial statements to be furnished to the Lenders
pursuant hereto shall be made and prepared in accordance with GAAP consistently
applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by Borrower to the Lenders),
provided that if at any time such computations utilize accounting principles
different from those utilized in the financial statements furnished to the
Lenders, such financial statements shall be accompanied by reconciliation
worksheets.

              (b) All computations of interest and Fees hereunder shall be made
on the actual number of days elapsed over a year of 360 days (365 or 366 days,
as the case may be, in the case of Fees and Base Rate Loans).

       11.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL.

              (a) This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, United States, without
reference to principles of conflicts of law (other than Section 5-1401 of the
General Obligations Laws of the State of New York); provided, however, that in
connection with any legal action or proceeding (other than an action to enforce
a judgment obtained in another jurisdiction) brought in respect to this
Agreement in the courts of Mexico or any political subdivision thereof, this
Agreement shall be deemed to be


                                      66.
<PAGE>

an instrument made under the laws of Mexico and for such purposes shall be
governed by, and construed in accordance with, the laws of the Federal District
of Mexico.

              (b) Each party hereto hereby agrees that any suit, action or
proceeding with respect to this Agreement or any judgment entered by any court
in respect thereof may be brought in the United States of America District Court
for the Southern District of New York, in the Supreme Court of the State of New
York sitting in New York County (including its Appellate Division), or in any
other appellate court in the State of New York or the competent courts of the
Federal District of Mexico, as the party commencing such suit, action or
proceeding may elect in its sole discretion; and each party hereto hereby
irrevocably submits to the jurisdiction of such courts for the purpose of any
such suit, action, proceeding or judgment. Each party hereto further submits,
for the purpose of any such suit, action, proceeding or judgment brought or
rendered against it, to the appropriate courts of the jurisdiction of its
domicile. Borrower hereby waives any rights to a specific jurisdiction it may
have by virtue of its present or any future domicile, or otherwise.

              (c) The Borrower hereby agrees that service of all writs, process
and summonses in any such suit, action or proceeding brought in the State of New
York may be made upon CT Corporation System, presently located at 1633 Broadway,
New York, New York 10019, U.S.A. (the "Process Agent"), and the Borrower hereby
confirms and agrees that the Process Agent has been duly and irrevocably
appointed as its agent and true and lawful attorney-in-fact in its name, place
and stead to accept such service of any and all such writs, process and
summonses, and agrees that the failure of the Process Agent to give any notice
of any such service of process to the Borrower shall not impair or affect the
validity of such service or of any judgment based thereon. The Borrower hereby
further irrevocably consents to the service of process in any suit, action or
proceeding in said courts by the mailing thereof by the Lender by registered or
certified mail, postage prepaid, at its address set forth beneath its signature
hereto.

              (d) Nothing herein shall in any way be deemed to limit the ability
of the Lenders to serve any such writs, process or summonses in any other manner
permitted by applicable law or to obtain jurisdiction over Borrower in such
other jurisdictions, and in such manner, as may be permitted by applicable law.

              (e) Borrower hereby irrevocably waives any objection that it may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Credit
Document brought in the Supreme Court of the State of New York, County of New
York, or in the United States of America District Court for the Southern
District of New York or the competent courts of the Federal District of Mexico,
and hereby further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.

              (f) The Borrower hereby agrees to cause the Process Agent to
execute and deliver to the Lender a letter from the Process Agent to the Lender
confirming Process Agent's acceptance of the appointment by Borrower prescribed
in SECTION 11.8(c).

       11.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and


                                      67.
<PAGE>

delivered shall be an original, but all of which shall together constitute one
and the same instrument. A set of counterparts executed by all the parties
hereto shall be lodged with Borrower and Administrative Agent.

       11.10 EFFECTIVENESS. This Agreement shall become effective on the date
(the "Effective Date") on which Borrower and each of the Lenders shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to Administrative Agent at its Notice Office or, in the case
of the Lenders, shall have given to Administrative Agent telephonic (confirmed
in writing), written telex or facsimile transmission notice (actually received)
at such office that the same has been signed and sent to it.

       11.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.

       11.12 AMENDMENT OR WAIVER. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the respective Credit Parties party thereto and Required Lenders,
provided that no such change, waiver, discharge or termination shall, without
the consent of each Lender directly affected thereby, (i) extend the final
scheduled maturity date of any Facility or any Note or Pagare, it being
understood that any waiver of any prepayment of, or the method of application of
any prepayment to the amortization of, the Loans shall not constitute any such
extension, or reduce the rate or extend the time of payment of interest (other
than as a result of waiving the applicability of any post-default increase in
interest rates) or Fees, or reduce the principal amount thereof, or increase the
Commitment of any Lender over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Commitments shall not constitute a change in the terms of any
Commitment of any Lender), (ii) amend, modify or waive any provision of this
SECTION 11.12, (iii) reduce the percentage specified in, or (except to give
effect to any additional facilities hereunder) otherwise modify, the definition
of Required Lenders, (iv) consent to the assignment or transfer by Borrower of
any of its rights and obligations under this Agreement, (v) establish any new
obligations for any Lender or (vi) release all or substantially all of the
Collateral; provided that no such change, waiver, discharge or termination
shall, without the consent of Administrative Agent, amend any provision of
SECTION 10.

       11.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in SECTION 1.9, 1.10, 3.4, 10.6 or 11.1 shall survive the execution
and delivery of this Agreement and the making and repayment of the Loans.

       11.14 DOMICILE OF LOANS. Each Lender may transfer and carry its Loans at,
to or for the account of any branch office, subsidiary or affiliate of such
Lender, provided that Borrower shall not be responsible for costs arising or
reimbursable under SECTION 1.9 or 3.4 resulting from any such transfer (other
than a transfer pursuant to SECTION 1.11) to the extent not otherwise applicable
to such Lender prior to such transfer.


                                      68.
<PAGE>

       11.15 CONFIDENTIALITY. Subject to SECTION 11.4, the Lenders shall hold
all nonpublic information obtained pursuant to the requirements of this
Agreement which has been identified as such by Borrower in accordance with its
customary procedure for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to its Affiliates, employees, auditors, advisors, or counsel or as
reasonably required by any bona fide transferee or participant in connection
with the contemplated transfer of any Loans or participation therein (so long as
such transferee or participant agrees to be bound by the provisions of this
SECTION 11.15) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Lender shall
notify Borrower of any request by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such nonpublic information prior to disclosure of such information, and
provided further that in no event shall any Lender be obligated or required to
return any materials furnished by any Credit Party.

       11.16 LENDER REGISTER. Borrower hereby designates Administrative Agent to
serve as its agent, solely for purposes of this SECTION 11.16, to maintain a
register (the "Lender Register") on which it will record the Commitments from
time to time of each of the Lenders, the Loans made by each of the Lenders and
each repayment in respect of the principal amount of the Loans of each Lender.
Failure to make any such recordation, or any error in such recordation, shall
not affect Borrower's obligations in respect of such Loans. With respect to any
Lender, the transfer of the Commitments of such Lender and the rights to the
principal of, and interest on, any Loan made pursuant to such Commitments shall
not be effective until such transfer is recorded on the Lender Register
maintained by Administrative Agent and prior to such recordation all amounts
owing to the transferor with respect to such Commitments and Loans shall remain
owing to the transferor. The registration of assignment or transfer of all or
part of any Commitments and Loans shall be recorded by Administrative Agent on
the Lender Register only upon the acceptance by Administrative Agent of a
properly executed and delivered Agreement pursuant to SECTION 11.4(b). Borrower
agrees to indemnify Administrative Agent from and against any and all losses,
claims, damages and liabilities of whatsoever nature which may be imposed on,
asserted against or incurred by Administrative Agent in performing its duties
under this SECTION 11.16 other than those resulting from Administrative Agent's
willful misconduct or gross negligence.

       11.17 JUDGMENT CURRENCY. Borrower agrees to indemnify QUALCOMM against
any loss incurred by it as a result of any judgment or order being given or made
for the payment of any amount due under any Pagare which is expressed and paid
in a currency (the "Judgment Currency") other than the currency in which such
amount was to be paid (the "Obligation Currency") and as a result of any
variation between (i) the rate of exchange at which the Obligation Currency
amount is converted into Judgment Currency for the purposes of such judgment or
order, and (ii) the rate of exchange at which QUALCOMM is able to purchase the
Obligation Currency with the amount of judgment currency actually received by
QUALCOMM. The foregoing indemnity shall constitute a separate and independent
obligation of Borrower and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of, or conversions into, the relevant currency.


                                      69.
<PAGE>

       11.18 ENTIRE AGREEMENT; CONSTRUCTION.

              (a) This Agreement, the Notes, the Pagares and the other Credit
Documents, taken together, constitute and contain the entire agreement among
Borrower, the Lenders, and Administrative Agent and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter
hereof.

              (b) To the extent of any inconsistency between this Agreement and
any Pagare, the terms and conditions contained in this Agreement shall govern.

       IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.

                                   PEGASO COMUNICACIONES Y SISTEMAS, S.A.
                                   DE C.V.

                                   By: /s/ [SIGNATURE ILLEGIBLE]
                                      ------------------------------------------
                                   Title:
                                         ---------------------------------------

                                   By: /s/ [SIGNATURE ILLEGIBLE]
                                      ------------------------------------------
                                   Title:
                                         ---------------------------------------

                                   Address:
                                           -------------------------------------

                                   ---------------------------------------------

                                   ---------------------------------------------



                                   QUALCOMM INCORPORATED
                                   Individually and as Administrative Agent

                                   By: /s/ [SIGNATURE ILLEGIBLE]
                                      ------------------------------------------
                                   Title:
                                         ---------------------------------------

                                   By: /s/ [SIGNATURE ILLEGIBLE]
                                      ------------------------------------------
                                   Title: VP FINANCE
                                         ---------------------------------------

                                   Address:
                                           -------------------------------------

                                   ---------------------------------------------

                                   ---------------------------------------------


                                      70.
<PAGE>

       11.18 ENTIRE AGREEMENT; CONSTRUCTION.

              (a) This Agreement, the Notes, the Pagares and the other Credit
Documents, taken together, constitute and contain the entire agreement among
Borrower, the Lenders, and Administrative Agent and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter
hereof.

              (b) To the extent of any inconsistency between this Agreement and
any Pagare, the terms and conditions contained in this Agreement shall govern.

       IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.

                                   PEGASO COMUNICACIONES Y SISTEMAS, S.A.
                                   DE C.V.

                                   By:
                                      ------------------------------------------
                                   Title:
                                         ---------------------------------------

                                   By:
                                      ------------------------------------------
                                   Title:
                                         ---------------------------------------

                                   Address:
                                           -------------------------------------

                                   ---------------------------------------------

                                   ---------------------------------------------



                                   QUALCOMM INCORPORATED
                                   Individually and as Administrative Agent

                                   By:
                                      ------------------------------------------
                                   Title:
                                         ---------------------------------------

                                   By:
                                      ------------------------------------------
                                   Title:
                                         ---------------------------------------

                                   Address:
                                           -------------------------------------

                                   ---------------------------------------------

                                   ---------------------------------------------


                                      70.
<PAGE>
                                    EXHIBITS

Exhibit A     --  Form of Note
Exhibit B     --  Form of Pagare
Exhibit C     --  Form of Loan Request
Exhibit D     --  Form of Notice of Deemed Loan
Exhibit E     --  Form of Notice of Conversion/Continuation
Exhibit F     --  Form of Assignment Agreement
Exhibit G     --  Form of Site Lease Agreement
Exhibit H     --  Form of Notice of Additional Pari-Passu Debt

                                    SCHEDULES

Schedule 1.0  --  Commitments
Schedule 1.5  --  Existing Loans
Schedule 5.3  --  Required Authorizations and Consents
Schedule 5.17 --  Liens
Schedule 5.18 --  Existing Indebtedness


<PAGE>

                                  SCHEDULE 1.0

                                   COMMITMENTS

LENDER      FACILITY-1 COMMITMENT    FACILITY-2 COMMITMENT  VAT LOAN COMMITMENT

QUALCOMM      $200,000,000.00           $90,000,000.00          $20,000,000
--------------------------------------------------------------------------------
Total:        $200,000,000.00           $90,000,000.00          $20,000,000

NOTE: The foregoing Commitments are subject to the maximum aggregate commitment
in the amount of the Total Commitment, an amount which is less than the sum of
the Commitments set forth above under the Total Commitment is increased by the
Board of Directors of QUALCOMM.


<PAGE>
                                  SCHEDULE 5.3

                     REQUIRED COVENANTS AND AUTHORIZATIONS



                                      None


<PAGE>
                                 SCHEDULE 5.17

                                     LIENS



                                      None


<PAGE>

                                  SCHEDULE 5.18

                              EXISTING INDEBTEDNESS


       Indebtedness by and among Borrower, Guarantors and the shareholders of
Holdings, all of which has been fully disclosed to Administrative Agent and
Lenders.


<PAGE>


                       ----------------------------------


                      AMENDED AND RESTATED CREDIT AGREEMENT

                          DATED AS OF DECEMBER 15, 1998


                      ------------------------------------

                                  BY AND AMONG

                 PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.

                            THE LENDERS PARTY HERETO

                                       AND

                               ABN AMRO BANK N.V.,

                             AS ADMINISTRATIVE AGENT


<PAGE>


                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           PAGE
                                                                                           ----
<S>                                                                                        <C>
SECTION 1.     AMOUNT AND TERMS OF CREDIT....................................................2

        1.1    Commitment....................................................................2

        1.2    Types of Long-Term Loans......................................................4

        1.3    Conversion and Continuation Elections.........................................4

        1.4    Duration of Interest Periods..................................................4

        1.5    Existing Loans and Notice and Manner of Making Additional Loans or
               Converting/Continuing Long-Term Loans.........................................5

               (a)    Existing Loans.........................................................5

               (b)    Notice and Manner of Making Additional Loans...........................5

               (c)    Conversions/Continuations of Loans.....................................7

        1.6    Evidence Of Debt..............................................................8

        1.7    Pro Rata Borrowings...........................................................9

        1.8    Interest......................................................................9

        1.9    Increased Costs, Illegality, Etc.............................................11

        1.10   Compensation.................................................................12

        1.11   Change Of Lending Office.....................................................13

        1.12   EXIM Financing, Etc..........................................................13

        1.13   Common Agreement.............................................................14

        1.14   No Net Payments..............................................................14

        1.15   Replacement of Lenders.......................................................15

SECTION 2.     FEES; COMMITMENTS............................................................15

        2.1    Fees.........................................................................15

        2.2    Voluntary Reduction Of Commitments...........................................16

        2.3    Mandatory Adjustments Of Commitments, Etc....................................16

SECTION 3.     PAYMENTS.....................................................................16

        3.1    Voluntary Prepayments........................................................16

        3.2    Mandatory Prepayments and Repayments.........................................17

        3.3    Method And Place Of Payment..................................................18

        3.4    Net Payments.................................................................18
</TABLE>


                                       i.

<PAGE>



                               TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                           PAGE
                                                                                           ----
<S>                                                                                        <C>
SECTION 4.     CONDITIONS PRECEDENT TO ADDITIONAL LOANS ON OR AFTER THE AMENDMENT
               EFFECTIVE DATE...............................................................19

        4.1    Conditions Precedent to the Initial Additional Loans on the Amendment
               Effective Date...............................................................19

               (a)    Effectiveness.........................................................19

               (b)    Satisfaction of Conditions Precedent in the Common Agreement..........19

               (c)    Other Agreements......................................................19

               (d)    Alcatel Procurement Agreement.........................................20

               (e)    Alcatel Credit Agreement; Alcatel Commitment Letter; Other Alcatel
                      Documents.............................................................20

        4.2    Conditions Precedent To All Additional Loans.................................20

               (a)    Loan Request..........................................................20

               (b)    Satisfaction of Conditions Precedent in the Common Agreement..........20

               (c)    Representations And Warranties........................................20

               (d)    Qualcomm Costs........................................................21

               (e)    Alcatel Procurement Agreement.........................................21

               (f)    Material Adverse Effect...............................................21

               (g)    Fees and Expenses.....................................................21

               (h)    Other Documents, Etc..................................................21

        4.3    Conditions Precedent to Additional Loans under Facility-2....................21

               (a)    Facility 2 Alcatel Credit Agreement...................................21

SECTION 5.     REPRESENTATIONS, WARRANTIES AND AGREEMENTS...................................22

        5.1    Senior Debt..................................................................22

        5.2    Approvals....................................................................22

SECTION 6.     AFFIRMATIVE COVENANTS........................................................22

SECTION 7.     NEGATIVE COVENANTS...........................................................23

SECTION 8.     EVENTS OF DEFAULT............................................................23

SECTION 9.     DEFINITIONS..................................................................23

SECTION 10.    ADMINISTRATIVE AGENT.........................................................31

        10.1   Appointment of ABN AMRO Bank N.V. as Administrative Agent....................31

        10.2   Delegation of Duties by Administrative Agent.................................31
</TABLE>


                                      ii.

<PAGE>


                               TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                           PAGE
                                                                                           ----
<S>                                                                                        <C>
        10.3   Liability of Administrative Agent............................................31

        10.4   Reliance by Administrative Agent.............................................32

        10.5   Notice of Default............................................................32

        10.6   Non-Reliance by Lenders......................................................33

        10.7   Indemnification..............................................................34

        10.8   Successor Administrative Agent...............................................34

SECTION 11.    MISCELLANEOUS................................................................35

        11.1   Payment Of Expenses, Indemnification, Etc....................................35

        11.2   Right Of Setoff..............................................................35

        11.3   Notices......................................................................36

        11.4   Benefit Of Agreement.........................................................36

        11.5   No Waiver; Remedies Cumulative...............................................38

        11.6   Payments Pro Rata............................................................38

        11.7   Calculations; Computations...................................................39

        11.8   Governing Law; Submission To Jurisdiction; Venue; Waiver Of Jury Trial.......39

        11.9   Counterparts.................................................................40

        11.10  Effectiveness................................................................40

        11.11  Headings Descriptive.........................................................40

        11.12  Amendment Or Waiver..........................................................40

        11.13  Survival.....................................................................41

        11.14  Domicile Of Loans............................................................41

        11.15  Confidentiality..............................................................41

        11.16  Lender Register..............................................................41

        11.17  Judgment Currency............................................................42

        11.18  Entire Agreement; Construction...............................................42
</TABLE>


                                      iii.

<PAGE>


                      AMENDED AND RESTATED CREDIT AGREEMENT

        This AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"), dated as
of December 15, 1998, among PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a
corporation organized under the laws of Mexico ("Borrower"), QUALCOMM
INCORPORATED, a corporation organized under the laws of Delaware, ("QUALCOMM"),
the lenders from time to time party hereto (each, a "Lender" and, collectively,
the "Lenders"), and ABN AMRO BANK N.V. as administrative agent for the Lenders
("Administrative Agent"). Unless otherwise defined herein, all capitalized terms
used herein shall have the meanings assigned to them in SECTION 9 hereof and the
Common Agreement (as hereinafter defined), including Appendix A thereto.

                               W I T N E S S E T H

        WHEREAS, Borrower Group intends to construct and operate a nationwide
wireless broadband PCS system (the "System") in Mexico;

        WHEREAS, (i) QUALCOMM and Borrower have entered into the Equipment
Purchase Agreement and the Software Maintenance Agreement, (ii) QUALCOMM
Wireless Services (Mexico), S.A. de C.V., a wholly-owned subsidiary of QUALCOMM,
and Borrower have entered into the Services Agreement (QUALCOMM and QUALCOMM
Wireless Services (Mexico), S.A. de C.V. each being a "Vendor" and collectively,
the "Vendors"), and (iii) Alcatel Indetel has entered into the Alcatel
Procurement Agreement in each case, pursuant to which Vendors and Alcatel
Indetel have agreed to supply to Borrower certain of the equipment and services
needed to complete and operate the System;

        WHEREAS, Borrower, QUALCOMM as a Lender, and QUALCOMM as administrative
agent entered into that certain Credit Agreement dated as of September 25, 1998
(the "Original Credit Agreement"), to finance certain of (i) the equipment and
services provided by the applicable Vendors under the QUALCOMM Procurement
Agreements and (ii) the VAT in connection therewith;

        WHEREAS, concurrent herewith, Borrower, the Alcatel Lenders and the
Alcatel Administrative Agent shall enter into the Alcatel Credit Agreement to
finance certain of (i) the equipment and services provided by Alcatel Indetel
under the Alcatel Procurement Agreement and (ii) the VAT in connection
therewith;

        WHEREAS, in the future, Borrower shall also be entering into various
other senior indebtedness agreements to further finance the costs of building,
developing and operating the System;

        WHEREAS, concurrent herewith, Borrower Group shall enter into the Common
Agreement containing certain representations, covenants, conditions and
undertakings for the common benefit of the lenders party to all senior
indebtedness agreements, including the Lenders hereunder and the Alcatel
Lenders;


                                       1.
<PAGE>

        WHEREAS, Borrower has requested that Lenders amend and restate the
Original Credit Agreement to make certain terms and provisions consistent with
the Alcatel Credit Agreement;

        WHEREAS, Lenders are willing to agree to such request on the terms and
conditions set forth herein and in the documents executed in connection
herewith;

        NOW, THEREFORE, IT IS AGREED:

SECTION 1. AMOUNT AND TERMS OF CREDIT.

        1.1 COMMITMENT. Subject to and upon the terms and conditions, and
subject to the limitations, herein set forth, each Lender severally agrees to
make Loans to Borrower, which Loans shall be drawn, to the extent such Lender
has a commitment under such Facility, under Facility-1, Facility-2 and the VAT
Facility, as set forth below:

                (a) Loans under Facility-1 (each, together with Facility-1 Loans
deemed made pursuant to SECTION 1.5(b), a "Facility-1 Loan" and, collectively,
the "Facility-1 Loans") shall (i) be made from time to time on a Business Day
during the Facility-1 Availability Period, (ii) constitute Tranche A Loans if
such Loans are EXIM Qualified and are made prior to the Facility-1 Refinancing
Date, (iii) constitute Tranche C Loans if such Loan are not EXIM Qualified and
do not exceed $55,000,000 in aggregate original principal amount, (iv)
constitute Tranche B Loans if such Loans are not Tranche A Loans or Tranche C
Loans, (v) not exceed in aggregate principal amount for any Lender with respect
to any incurrence thereof the Facility-1 Commitment of such Lender as in effect
on the date of such incurrence and (vi) to the extent made in any calendar year,
not exceed in the aggregate the sum of the Base Financing Percentage plus the
Contingent Financing Percentage, if any, for such calendar year of QUALCOMM
Costs required to be paid in such calendar year; provided that, with respect to
all of the foregoing, no Loans that are EXIM Qualified will be made under
Facility-1 after the Facility-1 EXIM Loans Closing Date. Once repaid, Facility-1
Loans may not be reborrowed.

                (b) Loans under Facility-2 (each a "Facility-2 Loan" and,
collectively, the "Facility-2 Loans") shall (i) be made from time to time on a
Business Day during the Facility-2 Availability Period, (ii) constitute (x)
Tranche A Loans if such Loans are EXIM Qualified and are made prior to the
Facility-2 Refinancing Date or (y) Tranche B if such Loans are not EXIM
Qualified or are made on and after the Facility-2 Refinancing Date, (iii) not
exceed in aggregate principal amount with respect to any incurrence thereof the
Facility-2 Commitment of such Lender as in effect on the date of such incurrence
and (iv) to the extent made in any calendar year, not exceed in the aggregate
the sum of the Base Financing Percentage plus the Contingent Financing
Percentage, if any, for such calendar year of QUALCOMM Costs required to be paid
in such calendar year; provided that, with respect to all of the foregoing, no
Loans that are EXIM Qualified will be made under Facility-2 after the Facility-2
EXIM Loans Closing Date. Once repaid, Facility-2 Loans may not be reborrowed.

                (c) Loans under the VAT Facility (each, a "VAT Loan" and,
collectively, the "VAT Loans") (i) shall, except for the Existing VAT Loans, be
made at any time and from time to time on a Business Day during the VAT Facility
Availability Period, (ii) may be repaid and reborrowed in accordance with the
provisions hereof and (iii) shall not exceed (inclusive of the


                                       2.
<PAGE>

Existing VAT Loans and giving effect to any incurrence) for any Lender in
aggregate principal amount at the time of the incurrence thereof the VAT Loan
Commitment of such Lender at such time.

                (d) Notwithstanding anything in this Agreement to the contrary,
no Lender shall be obligated to make any Loan, to the extent that the initial
aggregate principal amount of all Loans (other than Loans representing the
capitalization of interest pursuant to SECTION 1.8) made hereunder shall exceed
the Total Commitment.

                (e) Long-Term Loans which are incurred on or after the Original
Effective Date shall be allocated among Tranche A, Tranche B and Tranche C Loans
in the following priority:

        First, to Tranche A Loans to the extent of 85% of each Invoice for
        QUALCOMM Costs allocable to the sale of equipment and to the provision
        of services in the U.S.;

        Second, to Tranche C Loans to the extent of the availability thereof;
        and

        Third, to Tranche B Loans to the extent of the availability thereof;

        provided, however, that upon receiving confirmation satisfactory to
        QUALCOMM from the Export Import Bank of the U.S. that costs reflected in
        any Invoice are, or are not, EXIM Qualified, QUALCOMM may, but shall not
        be obligated to, redesignate Tranche A Loans, in whole or part, in order
        of priority according to availability, to be Tranche C Loans or Tranche
        B Loans and, upon written notice to Administrative Agent, with a copy
        thereof to Borrower, the interest accrued pursuant to each such
        redesignated Loan shall be retroactively adjusted from the date such
        redesignated Tranche A Loan was originally made and paid, or credited,
        as applicable, on the next succeeding Interest Payment Date; provided
        further, that if QUALCOMM shall arrange one or more EXIM Financings
        which are in the "best commercial interests" of Borrower as contemplated
        in SECTION 1.12 and Borrower shall not agree to such Refinancing, all
        Tranche A Loans shall be thereupon redesignated, in whole or part, in
        order of priority according to availability, to be Tranche C Loans or
        Tranche B Loans and, upon written notice to Administrative Agent, with a
        copy thereof to Borrower, the interest accrued pursuant to each such
        redesignated Loan shall be retroactively adjusted from the date such
        redesignated Tranche A Loan was originally made and paid, or credited,
        as applicable, on the next succeeding Interest Payment Date; provided,
        further, that if QUALCOMM provides notice that QUALCOMM has been advised
        by the Export Import Bank of the U.S. that EXIM Financings will for any
        reason not be available or, if available, are not available on terms
        determined in QUALCOMM's reasonable judgement to be commercially
        reasonable, in respect of any or all of the Tranche A Loans either
        outstanding or as permitted herein, together with such materials as
        shall reasonably evidence such position of the EXIM Bank of the U.S,
        then, for such period as EXIM Financings will be unavailable or are not
        available on commercially reasonable terms, all existing Tranche A Loans
        shall be redesignated, in whole or part, in order of priority according
        to availability, to be Tranche C Loans or Tranche B Loans, no further
        Tranche A Loans shall be made and, upon written notice to Administrative
        Agent, with a copy thereof to


                                       3.
<PAGE>

        Borrower, the interest accrued pursuant to each such redesignated Loan
        shall be retroactively adjusted from the date of such notice and paid,
        or credited, as applicable, on the next succeeding Interest Payment
        Date; provided, further, that with respect to Loans made under
        Facility-2, the foregoing references to Tranche C Loans, and designation
        and redesignation of Loans as Tranche C Loans shall be ignored.

        1.2 TYPES OF LONG-TERM LOANS. Each Long-Term Loan shall, in accordance
with the terms of this Agreement, be in the form of either a Base Rate Loan or a
Eurodollar Loan; provided, however, that, notwithstanding anything to the
contrary herein, each initial Borrowing of Long-Term Loans pursuant to SECTION
1.5(b) hereof shall be comprised solely of Base Rate Loans until the first
Business Day of the calendar month next succeeding the effective date of such
initial Borrowing of such Loans but may as of such Business Day be converted
into Eurodollar Loans and continued as provided in SECTION 1.3 hereof. At no
time may Borrower maintain Eurodollar Loans in more than six (6) separate
Interest Periods in respect of Facility-1 Loans and six (6) separate Interest
Periods in respect of Facility-2 Loans.

        1.3 CONVERSION AND CONTINUATION ELECTIONS. Borrower may, upon
irrevocable written notice to Administrative Agent, with reference to the
Long-Term Loans:

                (a) elect to convert on any Business Day, Base Rate Loans in an
amount equal to Two Million Five Hundred Thousand ($2,500,000) (or any integral
multiple of One Hundred Thousand Dollars ($100,000) in excess thereof) into
Eurodollar Loans; or

                (b) elect to convert any Eurodollar Loans into Base Rate Loans
on the last day of the Interest Period applicable to such Eurodollar Loans; or

                (c) elect to continue any Eurodollar Loans (or any part thereof
in an amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000) or
any integral multiple of One Hundred Thousand Dollars ($100,000) in excess
thereof) as Eurodollar Loans on the last day of the Interest Period applicable
to such Eurodollar Loans.

        1.4 DURATION OF INTEREST PERIODS.

                (a) Subject to the provisions of the definition of Interest
Period and SECTION 1.2 and SECTION 1.3 above, the duration of each Interest
Period applicable to a Eurodollar Loan shall be as specified in the applicable
Notice of Conversion/Continuation.

                (b) If Administrative Agent does not receive a Notice of
Conversion/Continuation with respect to a Borrowing of Eurodollar Loans pursuant
to SUBSECTION (a) above within the applicable time limits specified herein,
Borrower shall be deemed to have elected to make or convert such Loans in whole
into Eurodollar Loans with an Interest Period of one month on the last day of
the then current Interest Period with respect thereto. Notwithstanding anything
to the contrary herein, any and all Eurodollar Loans shall be converted in whole
into Base Rate Loans on the last day of the then existing Interest Period with
respect thereto if Administrative Agent shall have received notice from Borrower
or a Lender that an Event of Default exists and Administrative Agent, at the
direction of Required Lenders, shall have delivered to Borrower notice that such
conversion is required.


                                       4.
<PAGE>

        1.5 EXISTING LOANS AND NOTICE AND MANNER OF MAKING ADDITIONAL LOANS OR
CONVERTING/CONTINUING LONG-TERM LOANS.

                (a) EXISTING LOANS. Set forth on SCHEDULE 1.5 hereto is a
schedule of all amounts invoiced under the QUALCOMM Procurement Agreements
through and including the Amendment Effective Date, which amounts have been
financed under Facility-1. Each such amount shall be deemed to be Tranche A
Loans, Tranche B Loans or Tranche C Loans thereunder pursuant to SECTION 1.1(e),
and the principal amount of each tranche shall be evidenced by a Term Pagares as
set forth in SECTION 1.6(d). SCHEDULE 1.5 also sets forth a schedule of all VAT
Loans outstanding on the Amendment Effective Date which the parties have agreed
will be financed under the VAT Facility and shall continue to be outstanding on
the terms set forth therein and shall be treated as VAT Loans hereunder on and
after the Amendment Effective Date.

                (b) NOTICE AND MANNER OF MAKING ADDITIONAL LOANS.

                        (i) Not fewer than five (5) Business Days prior to the
date Borrower desires to borrow hereunder, Borrower shall deliver by electronic
facsimile transmission: (A) to each of Administrative Agent and the applicable
Vendor, written notice specifying (1) whether proceeds of the requested Loan
shall be paid directly to a party not a Lender on behalf of Borrower, or paid to
Borrower as reimbursement for a certain amount of QUALCOMM Costs paid
out-of-pocket by Borrower to a third party; provided that, with respect to such
reimbursement, Borrower shall have delivered to Administrative Agent and the
applicable Vendor such notice, together with the applicable receipt or other
evidence of payment by Borrower, within 30 calendar days of such payment by
Borrower (in each case, a "Cash Advance"), or paid to a Lender (that is a
vendor) (a "Credit Advance"), (2) the amount of such Borrowing which, in the
case of a Cash Advance under either Long-Term Facility shall not be less than
the Minimum Borrowing Amount, (3) with respect to requests of Cash Advances, the
Person to which such Cash Advance is requested to be made on behalf of Borrower,
together with the contact and wire transfer information for such Person and (4)
the effective date for such Borrowing of Loans (which for Credit Advances shall
be no earlier than the date on which payment is due under the applicable
QUALCOMM Procurement Agreement), which notice shall be substantially in the form
of EXHIBIT C to this Agreement (a "Loan Request"); and (B) to the applicable
Vendor, all invoices and any other supporting documentary information necessary
to evidence the QUALCOMM Costs and VAT, if applicable, giving rise to such Loan
Request (the "Invoices). After the date on which the applicable Vendor receives
each Loan Request and the accompanying Invoices, the applicable Vendor shall
have four (4) Business Days (the "Loan Request Review Period") during which to
acknowledge receipt of the same and transmit such to Administrative Agent.
Provided that the applicable Vendor has acknowledged receipt of such Loan
Request and such Invoices to Administrative Agent in writing or, if the
applicable Vendor has not so acknowledged within the Loan Request Review Period,
the effective date for such Borrowing of such Loans under Credit Advances shall
be the first (1st) Business Day after the final day of such Loan Request Review
Period and the applicable Invoice shall be deemed paid to the extent of such
Loan.

                        (ii) On each date prior to the end of the Facility-1
Availability Period or the Facility-2 Availability Period, as applicable, on
which payment under any QUALCOMM


                                       5.
<PAGE>

Procurement Agreement is due for which Borrower has received an Invoice, and
such payment has not been made or a Borrowing of Long-Term Loans has not been
requested by Borrower pursuant to SECTION 1.5(b)(i) hereof, either Vendor may
deliver to Administrative Agent by electronic facsimile transmission written
notice of such due date and the amount of such payment due under the applicable
QUALCOMM Procurement Agreement (less any amounts as to which the applicable
Vendor and the Administrative Agent have received written notice from Borrower
of any dispute with respect to such amount being due and payable), which notice
shall be substantially in the form of EXHIBIT D to this Agreement (a "Notice of
Deemed Loan"), and a Borrowing of Base Rate Loans (which Loans shall be Tranche
A Loans, Tranche B Loans or Tranche C Loans as shall be determined pursuant to
SECTION 1.1(e)) shall be deemed to have been made as of the date on which such
payment was due pursuant to the applicable QUALCOMM Procurement Agreement and
the amount of Long-Term Loans owing to each Lender shall automatically be
increased to add to the principal amount thereof the amount of such required
payment according to the Commitment of each Lender making such Long-Term Loan as
of such date as to the applicable Vendor which is a Lender and as of the date,
as to any other Lender, that such Lender remits funds in respect of such Loan to
the Administrative Agent; provided, however, that Borrower may thereafter elect
to convert such Long-Term Loans in whole or in part to Eurodollar Loans in
accordance with SECTION 1.5(c) below.

                        (iii) With regard to Long-Term Loans which are Credit
Advances: (A) to the extent that, with respect to any Lender, the amount equal
to such Lender's Percentage under the applicable Facility multiplied by the
aggregate amount required to be paid by Borrower at such time under the QUALCOMM
Procurement Agreements exceeds amounts owing to such Lender under the QUALCOMM
Procurement Agreements on such date, such Lender shall, by 12:00 noon New York
time on the effective date of any Loan Request or within 2 Business Days after
receiving a Notice of a Deemed Loan, remit by wire transfer such excess to
Administrative Agent; and (B) to the extent that, with respect to any Lender,
the amount equal to such Lender's Percentage under the applicable Facility
multiplied by the aggregate amount required to be paid by Borrower at such time
under the QUALCOMM Procurement Agreements is less than the amount reported by
the applicable Vendor to Administrative Agent as amounts owing to such Lender
under the QUALCOMM Procurement Agreements, Administrative Agent shall promptly
remit (from amounts received by Administrative Agent pursuant to (A) above) by
wire transfer such shortfall to such Lender.

                        (iv) With regard to Loans that are Cash Advances,
Administrative Agent shall promptly notify each Lender having a Commitment with
respect thereto as to the content of each Loan Request or Notice of Deemed Loan.
Provided that with respect to Loan Requests that the applicable Vendor has
acknowledged Borrower's Loan Request to Administrative Agent in writing, such
Lenders shall disburse to Administrative Agent in immediately available funds by
12:00 noon New York time on the effective date of any Loan Request or within 2
Business Days of receiving a Notice of Deemed Loan an amount equal to their
respective Percentages multiplied by the amount of the Borrowing requested in
such Loan Request, and Administrative Agent shall promptly disburse the
aggregate of such amounts in immediately available funds to the applicable
Vendor or, if not payable to a Vendor, such other Person designated by the
Borrower in the Loan Request.


                                       6.
<PAGE>

                        (v) Nothing herein shall limit the ability of a Vendor
to deliver a Notice of Deemed Loan after an Event of Default or otherwise;
provided, that if a Notice of Deemed Loan is delivered after an Event of Default
and any Lender elects, based on the existence of such Event of Default, not to
remit funds in respect of such Loan as provided above, then such Loan shall be
deemed to be a Loan hereunder in favor of such Vendor and, if at such time such
Vendor shall not otherwise be a Lender hereunder, such Vendor shall upon the
giving of such Notice of Deemed Loan become a Lender hereunder to the extent of
such Loan.

        (c) CONVERSIONS/CONTINUATIONS OF LOANS. On each date on which Borrower
desires, with respect to Long-Term Loans to (A) continue any such Long-Term
Loans that are Eurodollar Loans for another Interest Period, or (B) convert any
such outstanding Long-Term Loans into Long-Term Loans of another type provided
for in this Agreement, Borrower shall notify Administrative Agent (which notice
shall be irrevocable) in writing by electronic facsimile transmission received
no later than 1:00 p.m. New York time on the date one (1) Business Day before
the day on which such requested Long-Term Loans are to be converted into Base
Rate Loans, and received no later than 1:00 p.m. New York time on the date three
(3) Business Days before the date on which such requested Long-Term Loans are to
be continued for another Interest Period as or converted into Eurodollar Loans.
Such notice shall specify (i) the effective date and amount of such Long-Term
Loans or portion thereof to be continued or converted, subject to the
limitations set forth in SECTION 1.3 hereof, (ii) the interest rate option to be
applicable thereto, and (iii) the duration of the applicable Interest Period, if
any (subject to the provisions of the definition of Interest Period and SECTION
1.4) hereof. Each such notification (a "Notice of Conversion/Continuation")
shall be in the form of EXHIBIT E to this Agreement. The Borrower shall execute
and deliver to the Administrative Agent for the account of each Lender a Notice
of Conversion/Continuation and each such notice shall specify the amount of the
Long-Term Loans or portion thereof payable to the respective Lender to be
continued or converted, which notice shall evidence the joint and several
guarantee "avalado" by the Guarantors and shall be attached to the Term Pagare
which evidences such Loans by the Administrative Agent (if it holds possession
of the Term Pagare) and otherwise by the Lender.

        (d) Administrative Agent shall promptly notify each Lender as to the
content of each Loan Request, Notice of Deemed Loan, and Notice of
Conversion/Continuation.

        (e) Unless Administrative Agent shall have been notified by any Lender
no later than the Business Day prior to the respective funding date of any
Borrowing of Loans that such Lender does not intend to make available to
Administrative Agent immediately available funds equal to such Lender's
Percentage under the relevant Facility of the total principal amount of such
Borrowing, Administrative Agent may (in its sole and absolute discretion) assume
that such Lender has advanced funds in the amount of such Lender's relevant
Percentage of such Borrowing to Administrative Agent on the applicable funding
date and Administrative Agent may, in reliance upon such assumption, make
available to Borrower corresponding funds. Administrative Agent agrees to give
prompt notice to Borrower in the event it advances funds on behalf of a Lender
under this SECTION 1.5(e); provided that failure to give such notice shall in no
way limit, restrict or otherwise affect Borrower's obligations or Administrative
Agent's or any Lender's rights or remedies under this Agreement and the other
Financing Agreements. If Administrative Agent has made funds available to
Borrower based on such assumption and such Loan is not in fact made available to
Administrative Agent by such Lender, Administrative


                                       7.
<PAGE>

Agent shall be entitled to recover the corresponding amount of such Loan on
demand from such Lender. If such Lender does not promptly pay such corresponding
amount upon Administrative Agent's demand, Administrative Agent shall notify
Borrower and Borrower shall repay such Loan to Administrative Agent, together
with accrued interest thereon. Administrative Agent also shall be entitled to
recover from such Lender interest on such Loan in respect of each day from the
date such Loan was made by Administrative Agent to Borrower to the date such
corresponding amount is recovered by Administrative Agent at the Federal Funds
Effective Rate.

                (f) Nothing herein shall be deemed to relieve any Lender from
its obligation to fulfill its commitments hereunder or to prejudice any rights
which Borrower may have against any Lender as a result of any default by such
Lender hereunder.

        1.6 EVIDENCE OF DEBT.

                (a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of Borrower to such
Lender resulting from each Loan made by such Lender from time to time, including
the amounts of principal and interest payable and paid to such Lender from time
to time under this Agreement.

                (b) Administrative Agent shall maintain the Lender Register
pursuant to SECTION 11.16, and a subaccount therein for each Lender, in which
shall be recorded (i) the amount of each Loan made hereunder, and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from Borrower to each Lender hereunder
(including the amount of any capitalized interest under SECTION 1.8(e)) and
(iii) both the amount of any sum received by Administrative Agent hereunder from
Borrower and each Lender's share thereof.

                (c) The entries made in the Lender Register and the accounts of
each Lender maintained pursuant to SECTION 1.6(b) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of Borrower therein recorded; provided, that the failure of
Administrative Agent or any Lender to maintain the Lender Register or any such
account, or any error therein, shall not in any manner affect the obligation of
Borrower to repay (with applicable interest) the Loans of each Lender in
accordance with the terms of this Agreement.

                (d) With respect to each tranche of the Long-Term Loans made by
each Lender prior to the Amendment Effective Date, Borrower shall, as provided
in the Post-Closing Agreement, execute and deliver to Administrative Agent to
hold on behalf of such Lender a promissory note of Borrower payable to such
Lender substantially in the form of EXHIBIT A with appropriate insertions as to
issue date, principal repayment dates, principal amount, and Applicable Margin
(each, a "Term Pagare"), which promissory note shall be jointly and severally
guaranteed "avalado" by the Guarantors and shall be dated the date such
Long-Term Loan was made or deemed made. In addition, with respect to each
tranche of each Long-Term Loan made by a Lender on or after the Amendment
Effective Date, Borrower shall, within 5 Business Days of the day on which such
Loan is made or deemed made, execute and deliver to Administrative Agent to hold
on behalf of such Lender a Term Pagare for each tranche of such Long-Term Loan,
which promissory note shall be jointly and severally guaranteed "avalado" by


                                       8.
<PAGE>

the Guarantors and shall be dated the date such Loan is made or deemed made.
Notwithstanding anything to the contrary contained herein, upon the request of
the Administrative Agent at any time, Borrower shall promptly execute and
deliver to Administrative Agent to hold on behalf of such Lender a replacement
Term Pagare with respect to any Term Pagare theretofore issued in order to
conform the terms thereof to the terms of this Agreement, which replacement Term
Pagare shall be jointly and severally guaranteed "avalado" by the Guarantors and
shall be dated the date on which the replacement is to be effective.
Concurrently therewith, Administrative Agent or Lender, as the case may be,
shall return the replaced Term Pagare to Borrower.

                (e) With respect to VAT Loans (including any VAT Loans made
prior to the Amendment Effective Date not yet evidenced by a VAT Pagare),
Borrower agrees that Borrower will execute and deliver to each Lender making a
VAT Loan a VAT Pagare, which shall be jointly and severally guaranteed "avalado"
by the Guarantors, dated the date of issuance of such VAT Pagare evidencing the
VAT Loan made on that date. Thereafter, the VAT Loan evidenced by such VAT
Pagare and interest thereon shall at all times (including after assignment
pursuant to SECTION 11.4) be represented by such VAT Pagare in such form payable
to the order of the payee named therein. Borrower acknowledges that any VAT
Pagares issued prior to the Amendment Effective Date shall be treated as "VAT
Pagares" hereunder on and after such date.

                (f) Upon the written request of any Lender, Administrative Agent
shall forward to such Lender (i) all Pagares payable to such Lender received by
Administrative Agent on or prior to such date (the "Request Date") within ten
Business Days of receipt by Administrative Agent of such request, and (ii) all
Pagares payable to such Lender received by Administrative Agent after the
Request Date within ten Business Days of the receipt by Administrative Agent
thereof; provided, that any Lender requesting such delivery of its Pagares shall
reimburse Administrative Agent for all costs and expenses incurred by
Administrative Agent in the distribution thereof.

                (g) In the case of any conflict between the terms of this
Agreement and any Pagare, the terms of this Agreement shall control. Without
limiting the generality of the foregoing, all Loans made hereunder shall accrue
interest from the date such Loan is made and, to the extent not evidenced by a
Term Pagare, shall otherwise be treated as a Loan hereunder prior to Borrower's
execution of a Term Pagare evidencing such Loan.

        1.7 PRO RATA BORROWINGS. All Loans under this Agreement shall be made by
the Lenders pro rata on the basis of Commitments of the Lenders with a
Commitment under the Facility under which such Loan is being made. It is
understood that no Lender shall be responsible for any default by any other
Lender in its obligation to make Loans hereunder and that each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfill its commitments hereunder.

        1.8 INTEREST.

                (a) Except as provided in the next sentence with respect to VAT
Loans and as contemplated in SECTION 1.1(e), the outstanding principal amount of
each Loan shall bear interest from the date of the incurrence thereof until
payment maturity (whether by acceleration or otherwise) at a rate per annum
which shall at all times (i) in the case of Eurodollar Loans, and


                                       9.
<PAGE>

during each Interest Period applicable thereto, be the Eurodollar Rate for such
Interest Period plus the relevant Applicable Margin and (ii) in the case of Base
Rate Loans, be the Base Rate plus the relevant Applicable Margin. The
outstanding principal amount of each VAT Loan shall bear interest from the date
of the incurrence thereof until payment maturity (whether by acceleration or
otherwise) at a fixed rate per annum which shall at all times be the Applicable
VAT Margin plus the Eurodollar Rate in effect on the date of issuance of the VAT
Pagare associated with such VAT Loan (assuming an Interest Period of six months
commencing on such date).

                (b) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the rate otherwise
applicable thereto plus two percent (2%) per annum.

                (c) Except as provided in the next sentence with respect to VAT
Loans, interest shall accrue from and including the date of the incurrence of
Loans to but excluding the date of any repayment thereof and shall be payable
(i) in the case of Base Rate Loans, on the last Business Day of each calendar
quarter, and (ii) in the case of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in the case of all Loans, on any
prepayment (on the amount prepaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand. Interest shall accrue from and
including the date of the incurrence of each VAT Loan to but excluding the date
of any repayment thereof and shall be payable on any prepayment (on the amount
prepaid), at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.

                (d) All computations of interest hereunder shall be made in
accordance with SECTION 11.7(b).

                (e) Anything in this Agreement to the contrary notwithstanding,
and unless Borrower shall notify Administrative Agent that this SECTION 1.8(e)
shall not be applicable to any of the interest payments on the Tranche A Loans
or the Tranche C Loans otherwise covered hereby, (i) the interest that accrues
on Tranche A Loans shall not be required to be paid in cash on any Interest
Payment Date occurring prior to the Facility-1 Refinancing Date and (ii) the
interest that accrues on Tranche C Loans shall not be required to be paid in
cash on any Interest Payment Date occurring prior to the first anniversary of
the Original Effective Date, but, in each case, on each such Interest Payment
Date such accrued interest will be capitalized and added to the principal of the
Tranche A Loans or Tranche C Loans of each Lender as to which such interest
accrued.

                (f) Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Loans for any Interest Period shall promptly notify
Borrower and the Lenders thereof.

                (g) So long as no Default or Event of Default shall have
occurred and be continuing on such date on which Borrower executes and delivers
the first agreement following the Amendment Effective Date which agreement
evidences Additional Senior Indebtedness and if the Alternative Margin in
connection therewith is less than the Applicable Margin applicable


                                      10.
<PAGE>

to the Tranche B Loans, the Applicable Margin in respect of the Tranche B Loans
shall be adjusted (once and only once) based on the Alternative Margin as
follows: (i) the Applicable Margin for Eurodollar Loans shall become the
Alternative Margin and (ii) the Applicable Margin for Base Rate Loans shall be
reduced by the same amount as the Applicable Margin for Eurodollar Loans was
reduced by the Alternative Margin. In the event that the Alternative Margin is
to be utilized, Borrower shall furnish to the Administrative Agent all
appropriate documentation relating to the Alternative Facility at least ten (10)
Business Days prior to the date it becomes effective. With respect to Eurodollar
Loans under Tranche B, the Alternative Margin shall become effective for the
first Interest Period (and all subsequent Interest Periods) immediately
following the execution and delivery of agreements evidencing such Alternative
Facility, and with respect to Base Rate Loans under Tranche B, the Alternative
Margin shall become effective on the Business Day immediately following the
execution and delivery of the agreements evidencing such Alternative Facility.

        1.9 INCREASED COSTS, ILLEGALITY, ETC.

                (a) In the event that (x) in the case of clause (i) below,
Administrative Agent or (y) in the case of clauses (ii) and (iii) below, any
Lender shall have determined in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):

                        (i) on any date for determining the Eurodollar Rate for
any Interest Period that, by reason of any changes arising after the Original
Effective Date affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the basis
provided for in the definition of Eurodollar Rate; or

                        (ii) at any time, that such Lender shall incur increased
costs or reductions in the amounts received or receivable hereunder with respect
to any Eurodollar Loans (other than taxes covered by SECTION 3.4 and any
increased cost or reduction in the amount received or receivable resulting from
the imposition of or a change in the rate of taxes or similar charges) because
of (x) any change since the Original Effective Date in any applicable law,
governmental rule, regulation, guideline or order (or in the interpretation or
administration thereof and including the introduction of any new law or
governmental rule, regulation, guideline or order) (such as, for example, but
not limited to, a change in official reserve requirements) and/or (y) other
circumstances affecting the interbank Eurodollar market or the position of such
Lender in such market; or

                        (iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Lender in good faith
with any law, governmental rule, regulation or guideline introduced or changed
after the Original Effective Date;

then, and in any such event, such Lender (or Administrative Agent in the case of
clause (i) above) shall (x) on such date and (y) within ten Business Days of the
date on which such event no longer exists give notice (by telephone confirmed in
writing) to Borrower and to Administrative Agent of such determination (which
notice Administrative Agent shall promptly transmit to each of the other
Lenders). Thereafter (x) in the case of clause (i) above, until such time as
Administrative Agent notifies Borrower and the Lenders that the circumstances
giving


                                      11.
<PAGE>

rise to such notice by Administrative Agent no longer exist, all new Loans, and
all outstanding Loans as to which existing Interest Periods expire, shall bear
interest at a rate per annum equal to (A) the Base Rate plus (B) the Applicable
Margin, (y) in the case of clause (ii) above, Borrower shall pay to such Lender,
upon written demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating, interest or otherwise
as such Lender in its reasonable discretion shall determine after consultation
with Borrower) as shall be required to compensate such Lender for such increased
costs or reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Lender, describing the basis for such increased
costs and showing the calculation thereof, submitted to Borrower by such Lender
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) and (z) in the case of clause (iii) above, the obligations of
such Lender to make and maintain Loans hereunder under the respective Facilities
shall terminate and all of the outstanding Loans made by it shall be repaid.

                (b) If any Lender shall have determined that the adoption or
effectiveness after the Original Effective Date of any applicable law, rule or
regulation regarding capital adequacy, or any change therein after the Original
Effective Date, or any change after the Original Effective Date in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Lender or its parent corporation with any request
or directive made after the Original Effective Date regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's or its parent corporation's capital or assets as a consequence
of its commitments or obligations hereunder to a level below that which such
Lender or its parent corporation could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's or
its parent corporation's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by such Lender (with a copy to
Administrative Agent), Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender or its parent corporation for such
reduction. Each Lender, upon determining in good faith that any additional
amounts will be payable pursuant to this SECTION 1.9(b), will give prompt
written notice thereof to Borrower, which notice shall describe the basis for
such claim and set forth the calculation of such additional amounts, although
the failure to give any such notice shall not release or diminish any of
Borrower's obligations to pay additional amounts pursuant to this SECTION 1.9(b)
upon the subsequent receipt of such notice;

                (c) Notwithstanding the foregoing, a Lender shall not be
entitled to receive reimbursement for claimed costs pursuant to this SECTION 1.9
incurred more than 15 months prior to the date Lender provides notice of a claim
for reimbursement.

        1.10 COMPENSATION. Borrower shall compensate each Lender, upon its
written request (which request shall set forth the basis for requesting such
compensation), for all losses, expenses and liabilities (including, without
limitation, any loss, expense or liability incurred by reason of the liquidation
or reemployment of deposits or other funds required by such Lender to fund its
Eurodollar Loans but excluding in any event the loss of anticipated profits)
which such Lender may sustain: (i) if for any reason (other than a default by
such Lender or Administrative Agent) Eurodollar Loans are not incurred on a date
specified therefor in a Loan Request


                                      12.
<PAGE>

(whether or not withdrawn by Borrower); (ii) if any prepayment or repayment of
any of its Eurodollar Loans (other than VAT Loans) occurs on a date which is not
the last day of an Interest Period applicable thereto; (iii) if any prepayment
of any of its Eurodollar Loans (other than VAT Loans) is not made on any date
specified in a notice of prepayment given by Borrower; or (iv) as a consequence
of any other default by Borrower to repay its Eurodollar Loans when required by
the terms of this Agreement.

        1.11 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of SECTION 1.9(a)(ii) OR
(iii), 1.9(b) OR 3.4 with respect to such Lender, it will, if requested by
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Lender and
its lending office suffer no material economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this SECTION 1.11 shall
affect or postpone any of the obligations of Borrower or the right of any Lender
provided in SECTION 1.9, 1.10 or 3.

        1.12 EXIM FINANCING, ETC. QUALCOMM shall have the right to (i) attempt
to arrange and arrange at any time one or more EXIM Financings for each or both
Long-Term Facilities, with the entering into of such EXIM Financings to reduce
the respective Facility-1 Commitments and Facility-2 Commitments, as the case
may be, as provided for in SECTION 2.3; and/or (ii) attempt to arrange and
arrange for the Loans to be refinanced by other means, including a
subparticipation of the Commitments or a debt issue in the public markets (each
refinancing described in clause (i) or (ii), a "Refinancing"); provided,
however, that Borrower shall not be obligated to agree to any Refinancing if the
structure, costs, and other terms and conditions and other relevant factors
concerning the financing provided under any such Refinancing are not in the best
commercial interests of Borrower as compared to the structure, costs, and other
terms and conditions and other relevant factors concerning the financing
provided under this Agreement as they relate to the Loans and/or Commitments to
be refinanced; provided, further, that if Borrower and QUALCOMM disagree as to
whether the terms of any proposed Refinancing are in the best commercial
interests of Borrower, the parties shall submit the matter to an independent,
third party and internationally recognized investment banking firm mutually
agreeable to the parties for its determination, which determination shall be
binding on the parties hereto; and/or (iii) attempt to arrange and arrange for a
syndication that complies with the requirements of SECTION 11.4 of the
Commitments and Loans (a "Syndication"), it being agreed that Borrower and each
Credit Party will cooperate with QUALCOMM to negotiate in good faith any such
Refinancing and facilitate, as more fully described below, any such Syndication;
provided, however, that, within the 18 month period following the Original
Effective Date, (x) the Borrower shall not be obligated to, and QUALCOMM shall
not attempt to arrange, any refinancing of the type referred to in clause (ii)
above and (y) QUALCOMM shall not solicit any potential Lender in connection with
such Syndication which potential Lender is actively participating in the market
for transactions similar to the Senior Bank Financing or the High Yield Debt
financing; provided, further, that Borrower shall not be obligated to cooperate
in any such attempted Syndication by QUALCOMM more than three (3) times. Subject
to the terms of this SECTION 1.12, upon any Syndication attempt by QUALCOMM,
Borrower shall, at its expense, execute and deliver such documents, furnish such
information, attend such meetings, assist QUALCOMM and/or the Administrative
Agent, as the case may be, and take any and all


                                      13.
<PAGE>

actions as may be reasonably requested by QUALCOMM and/or the Administrative
Agent in connection with any such Syndication, and Borrower shall cause senior
management of Borrower to be available to assist with and accomplish any of the
foregoing. In connection with any such Refinancing or Syndication, Borrower may
request that proposed participants therein shall enter into the Common Agreement
and if so requested, it shall also be a condition of such Refinancing or
Syndication that such proposed participants enter Common Agreement.

        1.13 COMMON AGREEMENT. Concurrently herewith, each of the Agents and
each member of the Borrower Group shall enter into the Common Agreement.

        1.14 NO NET PAYMENTS. Borrower's obligation to make payments and perform
all other obligations hereunder, and the rights of Administrative Agent and
Lenders in and to such payments and performance, shall be absolute and
unconditional and shall not be subject to any abatement, reduction, set-off,
defense, counterclaim or recoupment for any reason whatsoever, including,
without limitation, abatements or reductions due to any present or future claims
of any Credit Party or their respective Affiliates against Administrative Agent,
any Lender, or any other Secured Party under this Agreement, the Common
Agreement, the QUALCOMM Procurement Agreements, the Alcatel Procurement
Agreement or any other Transaction Document or otherwise, against any vendor of
equipment or services used or planned to be used as part of the System, or
against any other Person for whatever reason. Except as otherwise expressly
provided herein, this Agreement shall not terminate, nor shall the obligations
of Borrower be affected, by reason of (a) any defect in or damage to, or any
loss or destruction of, any of the equipment or services provided pursuant to
the QUALCOMM Procurement Agreements or the Alcatel Procurement Agreement or
otherwise becoming part of the System from any cause whatsoever, (b) the
interference with the use of the System by Administrative Agent, any Lender, any
other Secured Party or any other Person, (c) any defect in title to the System
or any part thereof or any Lien on such title, or (d) any bankruptcy,
insolvency, reorganization or other proceeding relating to, or any action taken
by any trustee or receiver of, Administrative Agent, any Lender, any other
Secured Party or any other Person, or (e) for any other cause, whether similar
or dissimilar to the foregoing, any present or future law or regulation to the
contrary notwithstanding, whether or not such cause shall give rise to a claim
by any Credit Party or their respective Affiliates against any Lender under the
QUALCOMM Procurement Agreements or against Alcatel or any Alcatel Lender under
the Alcatel Credit Agreement or otherwise, it being the express intention of the
parties hereto that all amounts payable by Borrower hereunder shall be, and
continue to be, payable in all events unless the obligation to pay shall be
terminated pursuant to the express provisions of this Agreement. All payments
made by Borrower hereunder as required hereby shall be final, and Borrower shall
not seek to recover any such payment or any part thereof for any reason
whatsoever. Nothing in this Agreement shall, however, release or waive any claim
Borrower may have against Administrative Agent, any Lender or any other Person,
whether in connection with the QUALCOMM Procurement Agreements, this Agreement
or otherwise. If for any reason whatsoever this Agreement shall be terminated in
whole or in part by operation of law or otherwise, Borrower shall nonetheless,
to the extent permitted by applicable law, pay to Administrative Agent, on
behalf of Lenders, an amount equal to each payment payable hereunder at the time
and in the manner that such payment would have become due and payable under the
terms of this Agreement if it had not been terminated in whole or in part.


                                      14.
<PAGE>

        1.15 REPLACEMENT OF LENDERS Upon the occurrence of any event giving rise
to the operation of SECTION 1.9(b) or SECTION 3.4 with respect to any Lender
which results in such Lender charging to the Borrower increased costs in excess
of those being charged generally by the Lenders or if a Lender has defaulted on
its obligation to make Loans hereunder, Borrower shall have the right, if no
Default or Event of Default then exists, to replace such Lender (the "Replaced
Lender") with one or more replacement lenders (collectively, the "Replacement
Lender") reasonably acceptable to Administrative Agent, provided that (i) at the
time of any replacement pursuant to this SECTION 1.15, the Replacement Lender
shall enter into one or more Assignment Agreements pursuant TO SECTION 11.4(b)
(and with all fees payable pursuant to said SECTION 11.4(b) to be paid by the
Replacement Lender) pursuant to which the Replacement Lender shall acquire all
of the Commitments and outstanding Loans of the Replaced Lender and, in
connection therewith, shall pay to the Replaced Lender in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued but unpaid interest on, all outstanding Loans of the Replaced Lender and
(B) an amount equal to all accrued, but unpaid, Commitment Fees owing to the
Replaced Lender pursuant to SECTION 2.1, and (ii) all obligations of the
Borrower owing to the Replaced Lender (other than those specifically described
in clause (i) above in respect of which the assignment purchase price has been,
or is concurrently being, paid) shall be paid in full to such Replaced Lender
concurrently with such replacement. Upon the execution of the respective
Assignment Agreement, the payment of amounts referred to in clauses (i) and (ii)
above and, if so requested by the Replacement Lender, delivery to the
Replacement Lender of the appropriate Pagares executed by the Borrower, the
Replacement Lender shall become a Lender hereunder and the Replaced Lender shall
cease to constitute a Lender hereunder, except with respect to indemnification
provisions applicable to the Replaced Lender under this Agreement, which shall
survive as to such Replaced Lender.

SECTION 2. FEES; COMMITMENTS.

        2.1 FEES.

                (a) Borrower agrees to pay to Administrative Agent a commitment
fee ("Commitment Fee") (x) for the account of each Lender with a Facility-1
Commitment, for each day during the Facility-1 Availability Period computed at
the rate of .50% per annum on the average daily Facility-1 Commitment of such
Lender, (y) for the account of each Lender with a Facility-2 Commitment, for
each day during each of the Facility-1 Availability Period and the Facility-2
Availability Period computed at the rate of (i) .25% per annum during the
Facility-1 Availability Period on the daily average Facility-2 Commitment of
such Lender and (ii) .50% per annum during the Facility-2 Availability Period on
the daily average Facility-2 Commitment of such Lender, and (z) for the account
of each Lender with a VAT Loan Commitment, for each day during the VAT Facility
Availability Period, computed at the rate of .50% per annum on the daily average
unutilized VAT Loan Commitment of such Lender. All such Commitment Fees shall be
due and payable in arrears on the last Business Day of each March, June,
September and December.

                (b) Borrower shall pay to QUALCOMM, for its own account, such
fees as are set forth in the QUALCOMM Fee Letter when and as due.


                                      15.
<PAGE>

                (c) All computations of Fees shall be made in accordance with
SECTION 11.7(b).

        2.2 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least five (5) Business
Days' prior written notice (or telephonic notice confirmed in writing) to
Administrative Agent (which notice shall be deemed to be given on a certain day
only if given before 1:00 p.m. (New York time) on such day and shall be promptly
transmitted by Administrative Agent to each of the Lenders), Borrower shall have
the right, without premium or penalty, to terminate or partially reduce (x) the
Total Facility-1 Commitment and/or the Total Facility-2 Commitment, provided
that any such partial reduction shall apply to proportionately and permanently
reduce the Commitments of each Lender under the affected Facility and/or (y) the
unutilized Total VAT Loan Commitment. Any partial reduction pursuant to this
Section 2.2 shall be in the amount of at least $1,000,000.

        2.3 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC.

                (a) The Facility-1 Commitment and Facility-2 Commitment of each
Lender shall be permanently reduced upon the making of any Facility-1 Loan or
Facility-2 Loan, as the case may be, by such Lender in the principal amount of
such Facility-1 Loan or Facility-2 Loan, respectively.

                (b) The Total Facility-1 Commitment shall be reduced on each day
on which a borrowing is incurred by Borrower under any EXIM Financing entered
into to finance Facility-1 Availability Period Costs in the amount of such
borrowing, with any such reduction to be applied pro rata to the Facility-1
Commitment of each Lender.

                (c) The Total Facility-2 Commitment shall be reduced on each day
on which a borrowing is incurred by Borrower under any EXIM Financing entered
into to finance Facility-2 Availability Period Costs in the amount of such
borrowing, with any such reduction to be applied pro rata to the Facility-2
Commitment of each Lender.

                (d) The Total Facility-1 Commitment (and the Facility-1
Commitment of each Lender) shall terminate in its entirety on the last day of
the Facility-1 Availability Period.

                (e) The Total Facility-2 Commitment (and the Facility-2
Commitment of each Lender) shall terminate in its entirety on the last day of
the Facility-2 Availability Period.

                (f) The Total VAT Loan Commitment (and the VAT Loan Commitment
of each Lender) shall terminate in its entirety on the last day of the VAT
Facility Availability Period.

SECTION 3. PAYMENTS.

        3.1 VOLUNTARY PREPAYMENTS. Subject to the terms of SECTION 1.10,
Borrower shall have the right to prepay Loans in whole or in part, without
premium or penalty, from time to time on the following terms and conditions: (i)
Borrower shall give Administrative Agent written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay the Loans, whether such
Loans are Facility-1 Loans, Facility-2 Loans or VAT Loans, the amount of


                                      16.
<PAGE>

such prepayment and the specific Borrowing(s) pursuant to which made, which
notice shall be given by Borrower no later than 1:00 p.m. (New York time) three
(3) Business Days prior to the date of such prepayment, and which notice shall
promptly be transmitted by Administrative Agent to each of the Lenders; (ii)
each partial prepayment of any Borrowing shall be in an aggregate principal
amount of at least $1,000,000; provided that no partial prepayment of Loans made
pursuant to a Borrowing shall reduce the aggregate principal amount of the Loans
outstanding pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount applicable thereto; (iii) each prepayment of the Long-Term
Loans shall be applied pro rata among all Long-Term Loans under the Long Term
Facilities; and (iv) each prepayment of the Long-Term Loans pursuant to this
SECTION 3.1 shall be applied to reduce pro rata the amount of the then remaining
Scheduled Repayments under the Long-Term Facilities.

        3.2 MANDATORY PREPAYMENTS AND REPAYMENTS.

                (a) Borrower shall repay all Tranche A Loans which are
outstanding under Facility-1 and Facility-2, as the case may be, on the
Facility-1 EXIM Loans Closing Date and Facility-2 EXIM Loans Closing Date, as
the case may be, to the extent refinanced with the proceeds of EXIM Financing.
Any amount of Tranche A Loans not so refinanced shall be subject to SECTION
3.2(e).

                (b) Borrower shall repay Tranche B Loans made in any Borrowing
Year in three consecutive annual installments commencing on December 31 of the
calendar year that is two years following the calendar year in which such
Borrowing Year ends (each a "Scheduled Repayment"), with each Scheduled
Repayment being in an aggregate principal amount equal to the respective
percentages set forth below opposite such anniversaries of the aggregate
principal amount of Tranche B Loans made during such Borrowing Year:

<TABLE>
<CAPTION>
                           ANNUAL INSTALLMENT               PERCENTAGE
                           ------------------               ----------
<S>                        <C>                              <C>
                                  First                         20%
                                 Second                         30%
                                  Third                         50%
</TABLE>

For the purposes of this SECTION 3.2(b), any Tranche B Loan into which a Tranche
A Loan or Tranche C Loan has been converted shall be deemed to be a Tranche B
Loan which was made in the Borrowing Year that such converted Tranche A Loan or
Tranche C Loan was originally made.

                (c) All Tranche C Loans which are outstanding under Facility-1
on the first anniversary of the Original Effective Date (including any interest
capitalized in respect thereto) shall be automatically converted into Tranche B
Loans under such Facility on such date.

                (d) Borrower shall repay the aggregate outstanding principal
amount of each VAT Loan, including all accrued and unpaid interest thereon, on
the earlier of: (i) five (5) Business Days after the date the Secretariat of
Finance and Public Credit of Mexico reimburses all or any portion of the VAT
which was advanced on behalf of Borrower or Pegaso PCS by the Lenders in
connection with such VAT Loan; or (ii) the VAT Loan Maturity Date of such VAT
Loan.


                                      17.
<PAGE>

                (e) All Tranche A Loans which are outstanding under Facility-1
and Facility-2 on the Facility-1 Refinancing Date or the Facility-2 Refinancing
Date, as the case may be, shall be automatically converted into Tranche B Loans
under Facility-1 or Facility-2, as the case may be, on such date to the extent
not refinanced with the proceeds of EXIM Financing.

        3.3 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement or any Pagare shall be made
to Administrative Agent for the ratable account of the Lenders entitled thereto
at Administrative Agent's Account not later than 1:00 p.m. (New York time) on
the date when due and shall be made in immediately available funds and in lawful
money of the United States of America. Any payments under this Agreement or
under any Pagare which are made later than 1:00 p.m. (New York time) shall be
deemed to have been made on the next succeeding Business Day. Whenever any
payment to be made hereunder or under any Pagare shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.

        3.4 NET PAYMENTS.

                (a) All payments made by Borrower hereunder or under any Pagare
will be made without setoff, counterclaim or other defense. All such payments
will be made free and clear of, and without deduction or withholding for, any
present or future federal, state, or local income, payroll, withholding, social
security, sales, use, service, leasing excise, franchise, value added,
estimated, occupation, real and personal property, stamp, transfer, workers'
compensation, severance or other taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in the
third succeeding sentence, any tax imposed on or measured by the net income or
net profits of a Lender pursuant to the laws of the jurisdiction in which it is
organized or any jurisdiction in which such Lender maintains a place of business
or any subdivision thereof or therein) and all interest, penalties addition
thereto or similar liabilities with respect to such nonexcluded taxes, levies,
imposts, duties, fees, assessments or other charges (all such nonexcluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). In addition, Borrower shall pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Financing Agreement (hereinafter referred to as "Other
Taxes"). If any Taxes or Other Taxes are so levied or imposed, Borrower agrees
to pay the full amount of such Taxes or Other Taxes, and such additional amounts
as may be necessary so that every payment of all amounts due under this
Agreement or under any Pagare, after withholding or deduction for or on account
of any Taxes or Other Taxes, will not be less than the amount provided for
herein or in such Pagare. If any amounts are payable in respect of Taxes or
Other Taxes pursuant to the foregoing, Borrower agrees to reimburse such amounts
to each Lender, upon the written request of such Lender, such Taxes or Other
Taxes as are imposed on or measured by the net income or net profits of such
Lender pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Lender is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction


                                      18.
<PAGE>

in which the principal office or applicable lending office of such Lender is
located and for any withholding of taxes as such Lender shall determine are
payable by, or withheld from, such Lender, in each case in respect of such
amounts so paid to or on behalf of such Lender pursuant to the foregoing and in
respect of any amounts paid to or on behalf of such Lender pursuant to this
sentence. Borrower will furnish to Administrative Agent within 45 days (or as
soon thereafter as available) after the date the payment of any Taxes or Other
Taxes is due pursuant to applicable law certified copies of receipts evidencing
such payment by Borrower. Borrower agrees to indemnify and hold harmless each
Lender, and immediately reimburse such Lender upon its written request, for the
amount of any Taxes or Other Taxes so levied or imposed and paid by such Lender.

                (b) If Borrower pays any additional amount under this SECTION
3.4 to a Lender and such Lender, in such Lender's sole and absolute
determination, has received or realized in connection therewith any refund or
any reduction of, or credit against, its tax liabilities in or with respect to
the taxable year in which the additional amount is paid, such Lender shall pay
to Borrower an amount equal to the net benefit, after tax, which was obtained by
the Lender in such year as a consequence of such refund, reduction or credit.
Such amount shall be paid as soon as practicable after receipt or realization by
such Lender of such refund, reduction or credit.

                (c) Each Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions and subject to overall policy considerations
of such Lender) to file any certificate or document or to furnish any
information as reasonably requested by Borrower pursuant to any applicable
treaty, law or regulation, if the making of such filing or the furnishing of
such information would avoid the need for or reduce the amount of any amounts
payable by Borrower under SECTION 3.4(a); provided, however, that the failure of
any Lender to use such efforts shall not in any way diminish the obligations of
Borrower under this SECTION 3.4 or otherwise under this Agreement.

                (d) Notwithstanding anything in this SECTION 3.4 to the
contrary, Borrower shall have no obligation to make any payment of Taxes
pursuant to this SECTION 3.4 to any Lender, other than QUALCOMM, in excess of
such Gross Up Amounts which would be applicable in the case of payments to a
Registered Financial Institution.

SECTION 4. CONDITIONS PRECEDENT TO ADDITIONAL LOANS ON OR AFTER THE AMENDMENT
EFFECTIVE DATE.

        4.1 CONDITIONS PRECEDENT TO THE INITIAL ADDITIONAL LOANS ON THE
AMENDMENT EFFECTIVE DATE. The obligation of each Lender to make the first
Additional Loan on or after the Amendment Effective Date is subject to the
satisfaction of each of the following conditions:

                (a) EFFECTIVENESS. The Amendment Effective Date shall have
occurred.

                (b) SATISFACTION OF CONDITIONS PRECEDENT IN THE COMMON
AGREEMENT. The conditions precedent to Disbursements set forth in Section 3.01
of the Common Agreement shall have been satisfied (or waived as provided
herein).

                (c) OTHER AGREEMENTS. The Pegaso PCS Service Agreement and the
Personnel Co. Services Agreement shall have been authorized, executed and
delivered by the


                                      19.
<PAGE>

parties thereto and a copy thereof, certificated by an Authorized Officer of the
Borrower as true and complete, shall have been delivered to Administrative
Agent.

                (d) ALCATEL PROCUREMENT AGREEMENT. THE Alcatel Procurement
Agreement shall have been authorized, executed and delivered by the parties
thereto, a copy thereof, certified by an Authorized Officer as true and
complete, shall have been delivered to QUALCOMM and the terms (other than the
pricing terms) of the Alcatel Procurement Agreement shall be reasonably
satisfactory to QUALCOMM.

                (e) ALCATEL CREDIT AGREEMENT; ALCATEL COMMITMENT LETTER; OTHER
ALCATEL DOCUMENTS . The Alcatel Credit Agreement shall have been duly
authorized, executed and delivered by Borrower, the Alcatel Administrative Agent
and the lenders thereunder; a copy thereof, together with all side-letters and
other documentation evidencing the agreement among Alcatel and the Borrower
Group in connection with or related to the Alcatel Credit Agreement or the
Alcatel Procurement Agreement, certified by an Authorized Officer as true and
complete, shall have been delivered to the Administrative Agent; the initial
incurrence by Borrower of loans thereunder shall have occurred or shall occur
concurrently with the initial incurrence of Loans hereunder on or after the
Amendment Effective Date; the Alcatel Credit Agreement shall include a long-term
credit facility in the aggregate amount of $170,000,000 to finance all or a
portion of the Alcatel Costs, as set forth below, and a revolving credit
facility in an aggregate principal amount not less than $7,500,000, the proceeds
of which are to be used by Borrower for the payment of VAT payable in connection
with Alcatel Costs; QUALCOMM shall be reasonably satisfied that (i) all material
terms of the Alcatel Credit Agreement, including interest, amortization,
prepayment, security/collateral and fees are no more favorable to the lenders
therein than the terms of this Agreement are to the Lenders, (ii) the lenders
under the Alcatel Credit Agreement and the Alcatel Commitment Letter shall have
committed to provide financing to Borrower in an amount equal to 100% of the
Alcatel Costs; and Administrative Agent shall have received true, correct and
complete copies of all agreements, letters or other documents executed by any
member of the Borrower Group relating to any fee arrangements between (x) any
member of the Borrower Group and (y) Alcatel Indetel or the Alcatel
Administrative Agent.

        4.2 CONDITIONS PRECEDENT TO ALL ADDITIONAL LOANS. The obligation of each
Lender to make any Additional Loans (including the initial Additional Loan made
on or after the Amendment Effective Date) is subject at the time of each such
Loan, to the satisfaction of the following conditions:

                (a) LOAN REQUEST. Administrative Agent shall have received a
Loan Request meeting the requirements of SECTION 1.5.

                (b) SATISFACTION OF CONDITIONS PRECEDENT IN THE COMMON
AGREEMENT. The conditions precedent set forth in Section 3.02 of the Common
Agreement shall have been satisfied (or waived as provided herein).

                (c) REPRESENTATIONS AND WARRANTIES. At the time of the making of
each Loan and also after giving effect thereto, all representations and
warranties made in Section 5 hereof shall be true and correct in all material
respects with the same effect as though such


                                      20.
<PAGE>

representations and warranties had been made on and as of the date of such
Loans, except to the extent that such representations and warranties expressly
relate to an earlier date.

                (d) QUALCOMM COSTS. The proceeds of the Long-Term Loans shall be
needed for (and will be applied immediately to) the payment of QUALCOMM Costs
or, in the case of a VAT Loan, to pay VAT then due and payable and will be
applied within three Business Days to such payment.

                (e) ALCATEL PROCUREMENT AGREEMENT. The Alcatel Procurement
Agreement shall be in full force and effect, provided, however, that in the
event the Alcatel Procurement Agreement shall have been terminated prior to the
date of such Borrowing, Borrower shall have executed and delivered an agreement
with an internationally respected supplier of wireless telecommunication
equipment and services of the type provided under the Alcatel Procurement
Agreement and the material terms of such agreement shall be satisfactory to
QUALCOMM.

                (f) MATERIAL ADVERSE EFFECT. Since the date of the most recent
financial statements delivered by Borrower to Administrative Agent pursuant to
the Common Agreement, no event, circumstance or condition shall have occurred
which constitutes a Material Adverse Effect.

                (g) FEES AND EXPENSES. Borrower shall have paid or made
arrangements for payment (including, to the extent permitted, arrangement for
payment out of Disbursements) of all fees, expenses and other charges then
payable by it under this Agreement and any other Financing Agreement to the
Administrative Agent and shall have paid to QUALCOMM the fees set forth in the
Qualcomm Fee Letter.

                (h) OTHER DOCUMENTS, ETC. The Administrative Agent shall have
received such other statements, certificates, agreements, opinions, information,
documents and evidence with respect to matters relating to or affecting such
Disbursement as the Lenders may reasonably request.

        4.3 CONDITIONS PRECEDENT TO ADDITIONAL LOANS UNDER FACILITY-2. The
obligation of each Lender to make the initial Additional Loans under Facility-2
is subject, in addition to the conditions in SECTION 4.2, to the satisfaction of
the following condition:

                (a) FACILITY 2 ALCATEL CREDIT AGREEMENT. A credit agreement in
accordance with the terms of the Alcatel Commitment Letter (the "Facility 2
Alcatel Credit Agreement") shall have been duly authorized, executed and
delivered by Borrower, the administrative agent and the lenders thereunder; a
copy thereof, certified by an Authorized Officer as true and complete, shall
have been delivered to the Administrative Agent; the initial incurrence by
Borrower of loans thereunder shall have occurred or shall occur concurrently
with the initial incurrence of the Facility-2 Loans; the Facility 2 Alcatel
Credit Agreement shall include a long-term credit facility in the aggregate
principal amount of not less than $100,000,000 to finance all or a portion of
the Alcatel Costs, as set forth below, and a revolving credit facility in the
principal amount of $7,500,000, the proceeds of which are to be used by Borrower
for the payment of VAT payable in connection with Alcatel Costs; QUALCOMM shall
be reasonably satisfied that (i) all material terms of the Facility 2 Alcatel
Credit Agreement, including interest,


                                      21.
<PAGE>

amortization, prepayment, security/collateral and fees are no more favorable to
the lenders therein than the terms of this Agreement are to the Lenders, and
(ii) the lenders under the Facility-2 Alcatel Credit Agreement shall have
committed to provide financing to Borrower in an amount equal to 100% of the
Alcatel Costs.

        The acceptance of the benefits of each Loan shall constitute a
representation and warranty by Borrower to Administrative Agent and each of the
Lenders that all of the applicable conditions specified in SECTION 4.2 exist as
of that time. All of the certificates, legal opinions and other documents and
papers referred to in SECTION 4.1, unless otherwise specified, shall be
delivered to Administrative Agent for the account of each of the Lenders and,
except for the Pagares, in sufficient counterparts for each of the Lenders and
shall be reasonably satisfactory in form and substance to Administrative Agent.

SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Borrower confirms the
representations and warranties contained in Article 4 of the Common Agreement,
as if made as of the Amendment Effective Date, which representations and
warranties are incorporated herein by reference as if fully set forth in this
Agreement. Borrower further represents and warrants to the Lenders and the
Administrative Agent that:

        5.1 SENIOR DEBT. The Lenders are "Senior Lenders" and this Agreement is
a "Financing Agreement", as such terms are defined in the Common Agreement, and
the Loans hereunder, when made, and all other obligations of Borrower to the
Lenders and the Administrative Agent hereunder, will constitute "Senior
Indebtedness", as such term is defined in the Common Agreement. Accordingly, the
Loans and such other obligations hereunder are and shall be secured by and
entitled to the benefits of the Common Agreement and the Security Documents
referred to therein.

        5.2 APPROVALS. Other than the authorizations, approvals or consents from
governmental authorities in Mexico referred to in Section 4.05 of the Common
Agreement which relate to this Agreement, no authorizations, consents,
approvals, licenses, filings or registrations by or with any governmental
authority or administrative body of or in Mexico, and no notarization or other
formalities in Mexico, are required to be obtained or accomplished for the
execution, delivery or performance by Borrower of this Agreement or any other
Financing Agreement or for the validity and enforceability of this Agreement in
accordance with the terms of this Agreement or the other Financing Agreements.

SECTION 6. AFFIRMATIVE COVENANTS.

        Borrower agrees that, so long as any Lender has any Commitment hereunder
or any amount payable under this Agreement remains unpaid, it shall observe and
perform each of the covenants and agreements set forth in Article 5 of the
Common Agreement, which covenants and agreements are incorporated by reference
in this Agreement as if fully set forth herein, in accordance with their terms.
Borrower further covenants and agrees with the Administrative Agent and the
Lenders that so long as any Lender has any Commitment hereunder or any amount
payable under this Agreement remains unpaid, Borrower shall maintain in good
legal standing and validity all material licenses, permits, contracts and rights
necessary to comply in all respects with its obligations under this Agreement
and the Pagares.


                                      22.
<PAGE>

SECTION 7. NEGATIVE COVENANTS.

        Borrower agrees that, so long as any Lender has any Commitment hereunder
or any amount payable under this Agreement remains unpaid, it shall observe and
perform each of the covenants and agreements set forth in Article 6 of the
Common Agreement, which covenants and agreements are incorporated by reference
in this Agreement as if fully set forth herein, in accordance with their terms.
Borrower further covenants and agrees with the Administrative Agent and the
Lenders that so long as any Lender has any Commitment hereunder or any amount
payable under this Agreement remains unpaid, in addition to the other provisions
of Section 6.04(d) of the Common Agreement, no Additional Senior Indebtedness
(other than additional indebtedness under commitments under Credit Agreements in
effect at the time of such devaluation) shall be permitted if and to the extent
that there has been a Peso-Dollar Devaluation of 20% or more during any
three-month period subsequent to the Amendment Effective Date, or any
Peso-Dollar Devaluation of 30% or more during any six-month period subsequent to
the Amendment Effective Date, unless prior to the date of the incurrence of such
Additional Senior Indebtedness Borrower shall have obtained the prior written
approval of the Required Lenders.

SECTION 8. EVENTS OF DEFAULT.

        If any "Event of Default" under and as defined in the Common Agreement
shall occur and be continuing, then the Lenders shall have (in addition to any
and all other available remedies at law and in equity) each of the remedies to
which they are entitled as provided in Section 7.18 of the Common Agreement
(subject to the provisions of the Intercreditor Agreement).

SECTION 9. DEFINITIONS.

        As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this Agreement
shall include in the singular number the plural and in the plural the singular:

        "Additional Loans" shall mean Loans made after the Original Effective
Date.

        "Additional Loans Closing Date" shall mean the date on which the initial
Additional Loans were made under the Original Agreement.

        "Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to Administrative
Agent appointed pursuant to SECTION 10.8.

        "Administrative Agent's Account" shall mean such account as is specified
in writing by Administrative Agent to Borrower and Lenders from time to time.

        "Agreement" shall mean this Credit Agreement, as the same may be from
time to time further modified, amended and/or supplemented.

        "Amendment Effective Date" shall have the meaning assigned to it in
SECTION 11.10.


                                      23.
<PAGE>

        "Alternative Margin" when used in connection with Tranche B Loans shall
mean that margin (expressed in annual percentages or basis points) over the
Eurodollar Rate which is provided under a bona fide loan or credit facility
constituting Additional Senior Indebtedness (the "Alternative Facility") made
available to Borrower; provided, however, that no calculation of the Alternative
Margin (and no change in the interest rate payable in respect of Tranche B
Loans) shall be made unless (i) the Alternative Facility is made available to
Borrower by recognized financial institutions that have no equity interest in
Holdings or any other member of the Borrower Group (other than the Alternative
Facility itself), that are not a vendor of equipment or services to any member
of the Borrower Group, and that are not benefiting otherwise from the making of
the Alternative Facility, (ii) the base rate for the calculation of the interest
rate payable under the Alternative Facility is either the Eurodollar Rate or a
rate comparable to the Eurodollar Rate, (iii) the aggregate amount of the
commitment under the Alternative Facility, and the repayment thereof, is
calculated in Dollars, and the total amount of such commitment is at least
$100,000,000, (iv) the margin over the Eurodollar Rate applicable to such
Alternative Facility (other than margins applicable during any default period)
is predetermined and applicable for the entire period in which amounts
thereunder are outstanding, or, if such margin is established pursuant to a
grid, the "Alternative Margin" shall be the highest margin set forth in the
grid, (v) the required amortization of principal of the Alternative Facility is
such that the average life of such Alternative Facility is not less than 4.3
years and (vi) no collateral other than the Collateral will secure the
Alternative Facility and no third party will guarantee the obligations under the
Alternative Facility other than the Guarantors pursuant to the Guaranty
Agreements.

        "Applicable Margin" shall mean (i) for Eurodollar Loans (A) that are
Tranche A Loans, 1.50%, (B) that are Tranche B Loans, 4.50% and (C) that are
Tranche C Loans, 1.50% and (ii) for Base Rate Loans (A) that are Tranche A
Loans, 0.50%, (B) that are Tranche B Loans 3.50% and (C) that are Tranche C
Loans 0.50%, which margins with respect to Tranche B Loans will be subject to
adjustment based on the Alternative Margin as provided in SECTION 1.8(g).

        "Applicable VAT Margin" shall mean 4.50%.

        "Assignment Agreement" shall mean the Assignment and Acceptance
Agreement in the form of EXHIBIT F (appropriately completed).

        "Availability Period" shall mean the Facility-1 Availability Period or
the Facility-2 Availability Period, as applicable.

        "Base Rate" shall mean the greater of (i) the rate of interest per annum
published on such day (or if not a Business Day, on the last Business Day) in
the Wall Street Journal newspaper as the "Prime Rate," such rate to be adjusted
automatically (without notice) on the effective date of any change in such
publicly announced rate and (ii) the Federal Funds Effective Rate plus one-half
of one percent (0.50%) (rounded upwards, if necessary, to the next one-sixteenth
of one percent (1/16 of 1%).

        "Base Rate Loan" means any Loan bearing interest at the Base Rate.

        "Base Financing Percentage" shall mean fifty percent (50%).


                                      24.
<PAGE>

        "Borrower" shall have the meaning provided in the first paragraph of
this Agreement.

        "Borrower's Account" shall mean, such account as shall be maintained by
Borrower and specified in writing by Borrower to Administrative Agent from time
to time.

        "Borrowing" shall mean the incurrence of Loans pursuant to a single
Facility by Borrower from all of the Lenders having Commitments with respect to
such Facility on a pro rata basis on a given date and having in the case of
Eurodollar Loans the same Interest Period.

        "Borrowing Year" shall mean (i) the period from the Additional Loans
Closing Date through January 31, 2000 and (ii) each successive 12-month period
thereafter.

        "Cash Advance" shall have the meaning provided in SECTION 1.5(b)(i).

        "Commitment" shall mean, with respect to each Lender, such Lender's
Facility-1 Commitment, Facility-2 Commitment and VAT Loan Commitment.

        "Commitment Fee" shall have the meaning provided in SECTION 2.1(a).

        "Common Agreement" shall mean the Common Agreement dated as of the date
hereof among each member of the Borrower Group, the Collateral Agent, the
Intercreditor Agent, the Alcatel Administrative Agent, and the Administrative
Agent, as the same may be amended, supplemented or modified in accordance with
its terms and in effect from time to time.

        "Common Closing Date" shall mean the "Closing Date" as defined under the
Common Agreement.

        "Contingent Financing Percentage" shall mean such percentage as shall be
negotiated in good faith and agreed upon in writing from time to time by
Borrower and QUALCOMM which shall reflect the funding requirements of Borrower
and Guarantors as set forth in the Business Plan after giving full effect to all
funds raised by Borrower and Guarantors after the Original Effective Date;
provided, however, that (i) prior to the earlier of any Senior Bank Financing or
the issuance of High-Yield Debt, the Contingent Financing Percentage shall be
equal to fifty percent (50%), (ii) the Contingent Financing Percentage for
calendar years 1998 and 1999 shall be fifty percent (50%) and (iii) at any time
that clause (i) or (ii) is not applicable, the Contingent Financing Percentage
shall be 0% until the Borrower and QUALCOMM otherwise agree in writing.

        "Credit Advance" shall have the meaning provided in SECTION 1.5(b)(i).

        "Credit Documents" shall mean this Agreement and the Pagares.

        "Credit Party" shall mean Borrower, Holdings and Guarantors.

        "Equipment Agreement" means that Equipment Purchase Agreement entered
into as of June 10, 1998 by and between Borrower and QUALCOMM as such shall from
time to time be amended, supplemented and restated.


                                      25.
<PAGE>

        "Eurodollar Rate" shall mean, with respect to each Interest Period, the
rate of interest determined on the basis of the rate for deposits in Dollars for
a period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 a.m.,
London time, two Business Days prior to the beginning of such Interest Period.
In the event that such rate does not appear on Page 3750 of the Telerate screen
(or otherwise on such screen), the "Eurodollar Rate" shall be determined by
reference to such other publicly available service for displaying eurodollar
rates as may be agreed upon by Administrative Agent and Borrower or, in the
absence of such agreement, the "Eurodollar Rate" shall instead be the rate at
which Dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.

        "Eurodollar Loan" means any Loan (other than VAT Loans) bearing interest
at the Eurodollar Rate.

        "EXIM Financing" shall mean each credit facility entered into by
Borrower to finance QUALCOMM Costs that are EXIM Qualified, together with
eligible local costs, under export credit political and commercial
guarantees/insurance provided by the Export Import Bank of the U.S.

        "EXIM Qualified" shall mean with respect to (i) QUALCOMM Costs and
eligible local costs, such costs that are eligible to be financed and/or
refinanced under an EXIM Financing and (ii) Loans, Loans that are incurred to
finance QUALCOMM Costs that are EXIM Qualified.

        "Existing VAT Loans" shall have the meaning ascribed to such term inside
the definition of "VAT Loans."

        "Facility" shall mean any of the credit facilities established under
this Agreement, i.e., Facility-1, Facility-2 and the VAT Facility.

        "Facility-1" shall mean the Facility evidenced by the Total Facility-1
Commitment.

        "Facility-1 Availability Period" shall mean the period commencing on the
Additional Loans Closing Date and ending on December 31, 2000.

        "Facility-1 Availability Period Costs" shall mean QUALCOMM Costs that
are EXIM Qualified and are payable during the Facility-1 Availability Period.

        "Facility-1 Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite its name on SCHEDULE 1.0 hereto under the
column entitled "Facility-1 Commitment," as the same may be (x) reduced or
terminated pursuant to SECTIONS 2.2, 2.3 and 8 or (y) adjusted as a result of
assignments to or from such Lender pursuant to SECTION 1.10 or 11.4.

        "Facility-1 EXIM Loans Closing Date" shall mean the date of the initial
borrowing under any EXIM Financing entered into to finance and/or refinance
Facility-1 Availability Period Costs.


                                      26.
<PAGE>

        "Facility-1 Loan" shall have the meaning provided in SECTION 1.1.

        "Facility-1 Refinancing Date" shall mean the earlier of (i) the first
anniversary of the Additional Loans Closing Date and (ii) the Facility-1 EXIM
Loans Closing Date.

        "Facility-2" shall mean the Facility evidenced by the Total Facility-2
Commitment.

        "Facility-2 Availability Period" shall mean the period commencing on
January 1, 2001 and ending on December 31, 2002.

        "Facility-2 Availability Period Costs" shall mean QUALCOMM Costs that
are EXIM Qualified and are payable during the Facility-2 Availability Period.

        "Facility-2 Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite its name on Annex I hereto under the column
entitled "Facility-2 Commitment," as the same may be (x) reduced or terminated
pursuant to SECTIONS 2.2, 2.3 and 8 or (y) adjusted as a result of assignments
to or from such Lender pursuant to SECTION 1.10 or 11.4.

        "Facility-2 EXIM Loans Closing Date" shall mean the date of the initial
borrowing under any EXIM Financing entered into to finance and/or refinance
Facility-2 Availability Period Costs.

        "Facility-2 Loan" shall have the meaning provided in SECTION 1.1.

        "Facility-2 Refinancing Date" shall mean the earlier of (i) January 1,
2002 and (ii) the Facility-2 EXIM Loans Closing Date.

        "Federal Funds Effective Rate" means, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
Administrative Agent from three Federal funds brokers of recognized standing
selected by Administrative Agent.

        "Fees" shall mean all amounts payable pursuant to, or referred to in,
SECTION 2.1.

        "Interest Payment Date" shall mean each date on which interest is
payable on the Loans.

        "Interest Period" means, with respect to each Eurodollar Loan, the
period commencing on the date of the making or continuation of or conversion to
such Eurodollar Loan and ending one, three or six months thereafter, as Borrower
may elect in the applicable Notice of Conversion/Continuation; provided that:

                (a) any Interest Period (other than an Interest Period
determined pursuant to clause (c) below) that would otherwise end on a day that
is not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day;


                                      27.
<PAGE>

                (b) any Interest Period applicable to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last Business
Day of a calendar month;

                (c) any Interest Period with respect to a Eurodollar Loan that
would otherwise end after the applicable the maturity date of such Loan shall
end on such maturity date;

                (d) no Interest Period with respect to a Eurodollar Loan which
begins before January 31 of any given year (except January 31 of 1999) shall
have a maturity extending beyond January 31 of such year;

                (e) no Interest Period applicable to any Eurodollar Loan shall
include a principal repayment date for Loans under the Facility under which such
Loan is made unless an aggregate principal amount of Loans under such Facility
at least equal to the principal amount due on such principal repayment date
shall be Base Rate Loans or other Eurodollar Loans having Interest Periods
ending on or before such date; and

                (f) notwithstanding clauses (c) (d) and (e) above, no Interest
Period applicable to a Eurodollar Loan shall have a duration of less than one
month, and if any Interest Period applicable to such Eurodollar Loan would be
for a shorter period, such Interest Period shall not be available hereunder.

        "Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect Borrower or any Subsidiary
against fluctuations in interest rates.

        "Lender" shall have the meaning provided in the first paragraph of this
Agreement.

        "Lender Register" shall have the meaning provided in SECTION 11.16.

        "Loan" and "Loans" shall mean the loans provided in accordance with
SECTION 1.1 together with the existing loans described in SECTION 1.5(a).

        "Loan Request" has the meaning set forth in SECTION 1.5(b)(i) hereof.

        "Loan Request Review Period" has the meaning set forth in SECTION
1.5(b)(i) hereof.

        "Long-Term Facility" shall mean Facility-1 or Facility-2 and "Long-Term
Facilities" shall mean Facility-1 and Facility-2.

        "Long-Term Loans" shall mean Loans made under either Long-Term Facility.

        "Maturity" or "maturity" means the earlier of (i) the final maturity
date for any Loan as stated in SECTION 3.2 hereof and (ii) the date on which (A)
the Loans have been accelerated or (B) the Loans have been prepaid in full and
the Commitment terminated pursuant to this Agreement.


                                      28.
<PAGE>

        "Minimum Borrowing Amount" shall mean (i) for Facility-1 and Facility-2,
$250,000 and (ii) for the VAT Facility, $25,000, unless otherwise agreed to by
the Lenders.

        "Notice of Conversion/Continuation" has the meaning set forth in SECTION
1.5(c) hereof.

        "Notice of Deemed Loan" has the meaning set forth in SECTION 1.5(b)(ii)
hereof.

        "Original Effective Date" shall have the meaning provided in SECTION
11.10.

        "Pagare" or "Pagares" shall mean, individually, any Term Pagare or VAT
Pagare, or collectively, the Term Pagares and the VAT Pagares.

        "Percentage" shall mean at any time for each Lender with respect to the
Loans and/or Commitments under any Facility, the percentage obtained by dividing
such Lender's Commitment for such Facility by the aggregate Commitments of all
Lenders for such Facility, provided that if the Commitments of all Lenders for
such Facility have been terminated, the Percentage of each Lender for such
Facility shall be determined by dividing such Lender's Commitment for such
Facility immediately prior to such termination by the aggregate Commitments of
all Lenders for such Facility immediately prior to such termination.

        "QUALCOMM Fee Letter" means the side letter relating to arrangement fees
dated September 25, 1998, between Borrower and QUALCOMM.

        "Refinancing" shall have the meaning provided in SECTION 1.12.

        "Registered Financial Institution" shall mean the Registry of Foreign
Banks of Mexico, Financing Entities, Pension Funds and Investments Funds or any
successor thereto.

        "Required Lenders" shall mean Lenders holding at least fifty-one percent
(51%) of the then aggregate outstanding principal amount of all Loans then
outstanding or, if no Loans are then outstanding, Lenders having at least
fifty-one percent (51%) of the Commitments.

        "Scheduled Repayment" shall have the meaning provided in SECTION 3.2(b).

        "SEC" shall mean the Securities and Exchange Commission or any successor
thereto.

        "SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.

        "Senior Bank Financing" shall mean any credit facility providing for
loans and/or advances to be made to Borrower that Borrower enters into with one
or more Lenders to the extent the Indebtedness arising thereunder shall
constitute Additional Senior Indebtedness, provided that Senior Bank Financing
shall not include any EXIM Financing or financing under the Alcatel Credit
Agreement.

        "Services Agreement" shall mean the Services Agreement entered into as
of June 10, 1998 by and between Borrower and QUALCOMM Wireless Services
(Mexico), S.A de C.V., as such may be from time to time amended, supplemented
and restated.


                                      29.
<PAGE>

        "Software Maintenance Agreement" shall mean the Software Maintenance
Agreement dated as of June 10, 1998 between Borrower and QUALCOMM, which form of
agreement was attached as Exhibit D to the Equipment Purchase Agreement and
separately executed therefrom.

        "Syndication" shall have the meaning provided in SECTION 1.12.

        "Term Pagare" shall have the meaning assigned to it in SECTION 1.6(d).

        "Total Commitment" shall mean $300,000,000.

        "Total Facility-1 Commitment" shall mean the sum of the Facility-1
Commitments of all the Lenders.

        "Total Facility-2 Commitment" shall mean the sum of the Facility-2
Commitments of all the Lenders.

        "Total VAT Loan Commitment" shall mean the sum of the VAT Loan
Commitments of all of the Lenders.

        "Tranche A Loans" shall mean Loans under the Long-Term Facilities made
as Tranche A Loans pursuant to SECTION 1.1(a) or (b), as the case may be.

        "Tranche B Loans" shall mean Loans under the Long-Term Facilities made
as Tranche B Loans pursuant to SECTION 1.1(a) or (b), as the case may be.

        "Tranche C Loans" shall mean Loans under Facility-1 made as Tranche C
Loans pursuant to SECTION 1.1(a).

        "U.S." shall mean the United States of America.

        "U.S. GAAP" means generally accepted accounting principles in the United
States.

        "VAT Facility" shall mean the Facility evidenced by the Total VAT Loan
Commitment.

        "VAT Facility Availability Period" shall mean the period commencing on
the Additional Loans Closing Date and ending on December 31, 2002.

        "VAT Loan" shall have the meaning provided in SECTION 1.1(c) and shall
specifically include any advances made to Borrower or Pegaso PCS prior to the
Additional Loans Closing Date to finance VAT charges (the "Existing VAT Loans").

        "VAT Loan Advance" shall have the meaning provided in SECTION 1.2(a).

        "VAT Loan Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite its name on SCHEDULE 1.0 hereto under the
column entitled "VAT Loan Commitment," as the same may be (x) reduced or
terminated pursuant to SECTIONS 2.2, 2.3 and 8 or (y) adjusted as a result of
assignments to or from such Lender pursuant to SECTION 1.10 or 11.4.


                                      30.
<PAGE>

        "VAT Loan Maturity Date" shall mean, with respect to each VAT Loan, the
date which is 364 days after the date such VAT Loan is made.

        "VAT Pagare" shall mean a promissory note heretofore or hereafter issued
by Borrower or Pegaso PCS in favor of a Lender in substantially the form
attached hereto as EXHIBIT B with appropriate insertions as to issue date,
maturity date, principal amount, and interest rate to finance VAT charges
imposed by Mexico in respect of the QUALCOMM Costs.

        "Vendor" shall have the meaning provided in the first WHEREAS clause of
this Agreement.

        "Vendor's Account" shall mean such account as is specified in writing by
the Vendors under the Qualcomm Procurement Agreements to Administrative Agent
and Borrower from time to time.

SECTION 10. ADMINISTRATIVE AGENT.

        10.1 APPOINTMENT OF ABN AMRO BANK N.V. AS ADMINISTRATIVE AGENT. Lenders
hereby designate and appoint ABN AMRO Bank N.V. as Administrative Agent to act
in an administrative function as specified under this Agreement and the other
Financing Agreements and irrevocably authorizes Administrative Agent to take
such action on its behalf under and subject to the provisions of this Agreement
and each other Financing Agreement and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement or any
other Financing Agreement, together with such other powers, in the judgment of
Administrative Agent, as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement or any other Financing
Agreement, Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein or therein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Financing Agreement or otherwise exist against
Administrative Agent.

        10.2 DELEGATION OF DUTIES BY ADMINISTRATIVE AGENT. Administrative Agent
may execute any of its duties under this Agreement by or through the agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Administrative Agent shall not
be responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.

        10.3 LIABILITY OF ADMINISTRATIVE AGENT. None of Administrative
Agent-Related Persons (defined below) shall (a) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Agreement
or any other Financing Agreement (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by Borrower, any other
member of the Borrower Group or any Affiliate of any member of the Borrower
Group, or any officer thereof, contained in this Agreement or in any other
Financing Agreement, or in any certificate, report, statement or other document
referred to or provided for in, or received by Administrative Agent under or in
connection with, this Agreement or any other Financing Agreement, or for the
value of any Collateral or the validity, priority, effectiveness, genuineness,


                                      31.
<PAGE>

enforceability or sufficiency of this Agreement or any Financing Agreement, or
for any failure of Borrower, any other member of the Borrower Group or any other
party to any Financing Agreement to perform its obligations hereunder or
thereunder. No Administrative Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Financing Agreement, or to inspect the properties, books or records of
Borrower or any of Borrower's Affiliates. "Administrative Agent-Related Persons"
shall mean Administrative Agent and any successor Administrative Agent, together
with their respective Affiliates, and the employees, agents and
attorneys-in-fact of such persons.

        10.4 RELIANCE BY ADMINISTRATIVE AGENT.

                (a) Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower),
independent accountants and other experts selected by Administrative Agent.
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Financing Agreement unless it shall
first receive such advice or concurrence of Requisite Lenders as it deems
appropriate and indemnification for all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action,
provided, however, that Administrative Agent shall be justified in refusing to
take action if such action is in violation of law or the terms of this Agreement
or any other Financing Agreement, based on the advise of Administrative Agent's
legal counsel. Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Financing Agreement in accordance with a request or consent of Requisite Lenders
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of Lenders.

                (b) For purposes of determining compliance with the conditions
precedent specified in SECTION 4 of this Agreement and Section 3 of the Common
Agreement, each Lender that has executed this Agreement or shall hereafter
execute and deliver an Assignment Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or other matter
either sent by Administrative Agent to such Lender for consent, approval,
acceptance or satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to such Lender, unless an officer of
Administrative Agent responsible for the transactions contemplated by the
Financing Agreements shall have received written notice from such Lender prior
to the initial Borrowing specifying its objection thereto and either such
objection shall not have been withdrawn by notice to Administrative Agent to
that effect or such Lender shall not have made available to Administrative Agent
its ratable portion of such Borrowing.

        10.5 NOTICE OF DEFAULT. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to Administrative Agent on behalf and for the benefit of Lenders,
unless Administrative Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of


                                      32.
<PAGE>

Default and stating that such notice is a "notice of default." In the event that
Administrative Agent receives such a notice, Administrative Agent shall give
notice thereof to each Lender. Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be requested by Requisite
Lenders in accordance with SECTION 8; provided, however, that unless and until
Administrative Agent shall have received any such request, Administrative Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
in the best interest of Lenders.

        10.6 NON-RELIANCE BY LENDERS. Each Lender expressly acknowledges that
none of Administrative Agent-Related Persons has made any representation or
warranty to it and that no act by Administrative Agent hereafter taken,
including any review of the affairs of Borrower, shall be deemed to constitute
any representation or warranty by Administrative Agent to such Lender. Each
Lender confirms to Administrative Agent that it has not relied, and will not
rely hereafter, on Administrative Agent to check or inquire on such Lender's
behalf into the adequacy, accuracy or completeness of any information provided
by Borrower or any other Person under or in connection with the Financing
Agreements or the transactions herein contemplated (whether or not the
information has been or is hereafter distributed to such Lender by
Administrative Agent). Each Lender represents to Administrative Agent that it
has, independently and without reliance upon Administrative Agent and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower, and
all applicable regulatory laws relating to the transactions contemplated
thereby, and made its own decision to enter into this Agreement and the other
Financing Agreements and extend credit to Borrower under and pursuant to this
Agreement. Each Lender also represents that it will, independently and without
reliance upon Administrative Agent and based on such documents and appraisals
and decisions in taking or not taking action under this Agreement and the other
Financing Agreements, and to make such investigations as it deems necessary to
inform itself as to the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower. Except for notices, reports
and other documents expressly herein required to be furnished to Lenders by
Administrative Agent, Administrative Agent shall not have any duty or
responsibility to provide to any Lender any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrower which may come into the possession of
any Administrative Agent-Related Persons. Administrative Agent shall not be
responsible to any Lender for the execution, effectiveness, priority,
genuineness, validity, enforceability, collectability or sufficiency of this
Agreement, the Financing Agreements or for any representations or warranties,
recitals or statements made herein or therein or made in any written or oral
statements, or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made available by
Administrative Agent to Lenders or by or on behalf of Borrower to Administrative
Agent or any Lender in connection with the Financing Agreements or the
transactions contemplated thereby or for the financial condition or business
affairs of Borrower or any Person liable for payment of the Obligations, nor
shall Administrative Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Financing Agreements or as to the use of
proceeds of the Loans or as to the existence or possible existence of any
Default or Event of Default.


                                      33.
<PAGE>

        10.7 INDEMNIFICATION. Whether or not the transactions contemplated
hereby are consummated, Lenders shall indemnify upon demand Administrative
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrower
and without limiting the obligation of Borrower to do so) ratably from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Loans or the termination or the resignation of the related Administrative
Agent) be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any of the other Transaction
Documents or the transactions contemplated hereby or thereby or any action taken
or omitted by any such Person under or in connection with any of the foregoing;
provided, however, that no Lender shall be liable for the payment to
Administrative Agent-Related Persons of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender shall
reimburse Administrative Agent upon demand for its ratable share of any costs or
other out-of-pocket expenses (including reasonable attorneys' expenses and
disbursements) incurred by Administrative Agent in connection with the
preparation, execution, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement or any
other Transaction Document to the extent that Administrative Agent has not
previously been reimbursed for such expenses by or on behalf of Borrower.
Without limiting the generality of the foregoing, if any Governmental Authority
or any Administrative Agent did not properly withhold tax from amounts paid to
or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
Administrative Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason),
such Lender shall indemnify Administrative Agent fully for all amounts paid,
directly or indirectly, by Administrative Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to Administrative Agent under this SECTION 10.7, together
with all costs and expenses (including reasonable attorneys' expenses and
disbursements). The obligations of Lenders in this SECTION 10.7 shall survive
the repayment of all Obligations and the termination of the Transaction
Documents.

        10.8 SUCCESSOR ADMINISTRATIVE AGENT. Administrative Agent may, and at
the request of Requisite Lenders shall, resign as Administrative Agent upon 30
days' notice to Lenders. If Administrative Agent shall resign as Administrative
Agent under this Agreement and the other Financing Agreements, then Requisite
Lenders shall appoint from among Lenders a successor Administrative Agent for
Lenders. If no successor Administrative Agent is appointed prior to the
effective date of the resignation of Administrative Agent, Administrative Agent
may appoint, after consulting with Lenders and Borrower, a successor
Administrative Agent from among Lenders. Upon the acceptance of its appointment
as successor Administrative Agent hereunder and under the other Financing
Agreements, such successor Administrative Agent shall succeed to the rights,
powers and duties of Administrative Agent, the term "Administrative Agent" shall
mean such successor Administrative Agent effective upon its appointment, and the
former Administrative Agent's appointment, rights, powers and duties as
Administrative Agent shall be terminated. After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of this SECTION 10
and SECTION 11.1 shall continue to inure to its benefit as to actions


                                      34.
<PAGE>

taken or omitted to be taken by it while it was Administrative Agent under this
Agreement and the other Financing Agreements.

SECTION 11. MISCELLANEOUS.

        11.1 PAYMENT OF EXPENSES, INDEMNIFICATION, ETC.

               (a) (i) Borrower agrees to pay, or cause to be paid, to the
Administrative Agent and each Lender (A) all reasonable out-of-pocket costs and
expenses (including, without limitation, the reasonable fees and expenses of one
common New York counsel and one common Mexican counsel to the Senior Lenders
(including the Lenders) and counsel for the Administrative Agent), in connection
with any amendment, modification, supplement or waiver of any other terms of the
Common Agreement, the Security Documents, this Agreement, the Pagares or the
other documents contemplated hereby and thereby; and (B) all reasonable costs
and expenses (including, without limitation, the reasonable fees and expenses of
one common New York and one common Mexican counsel to the Senior Lenders
(including the Lenders) and counsel for the Administrative Agent) in connection
with (X) any Default or Event of Default and any enforcement or collection
proceedings resulting therefrom or in connection with the negotiation of any
restructuring or "work-out" (whether or not consummated ) of the obligations of
Borrower hereunder and under the Pagares and (Y) the enforcement of this Section
11.1, in each case as evidenced in reasonable detail to the satisfaction of
Borrower, and (iii) pay and hold each of the Lenders harmless from and against
any and all present and future stamp and other similar taxes with respect to the
foregoing matters and save each of the Lenders harmless from and against any and
all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Lender) to pay such taxes.

               (b) Borrower agrees to indemnify, save, and hold harmless
Administrative Agent, Lenders and their directors, officers, agents, attorneys
and employees (collectively, the "indemnitees") from and against: (i) any and
all claims, demands, actions, or causes of action that are asserted against any
indemnitee by any Person if the claim, demand, action, or cause of action arises
out of or relates to a claim, demand, action, or cause of action that the Person
asserts or may assert against Borrower, or any officer, director or shareholder
of Borrower in their capacity as such, (ii) any and all claims, demands, actions
or causes of action that are asserted against any indemnitee (other than by
Borrower or by another indemnitee) if the claim, demand, action or cause of
action arises out of or relates to the Loans, the use of proceeds of any Loans,
or the relationship of Borrower and Lenders under this Agreement or any
transaction contemplated pursuant to this Agreement, (iii) any administrative or
investigative proceeding by any governmental agency arising out of or related to
a claim, demand, action or cause of action described in clauses (i) or (ii)
above; and (iv) any and all liabilities, losses, costs, or expenses (including
outside attorneys' fees, in-house counsel fees and disbursements) that any
indemnitee suffers or incurs as a result of any of the foregoing; provided, that
Borrower shall have no obligation under this SECTION 11.1 to any Lender or
Administrative Agent with respect to any of the foregoing arising out of the
gross negligence or willful misconduct of such Lender or Administrative Agent.

        11.2 RIGHT OF SETOFF. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, if an Event of


                                      35.
<PAGE>

Default then exists, each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to any
Credit Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special but other than payroll accounts) and any other Indebtedness at any time
held or owing by such Lender (including, without limitation, by branches and
agencies of such Lender wherever located) to or for the credit or the account of
any Credit Party against and on account of the Obligations and liabilities of
such Credit Party to such Lender under this Agreement or under any of the other
Financing Agreements, including, without limitation, all interests in
Obligations of such Credit Party purchased by such Lender pursuant to SECTION
11.6(b), irrespective of whether or not such Lender shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.

        11.3 NOTICES. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
telex, telecopier, facsimile or electronic mail) and mailed, telexed,
telecopied, faxed, electronic mailed or delivered, if to a Credit Party, at the
address specified opposite its signature below or in the other relevant
Financing Agreements, as the case may be; if to any Lender, at its address
specified for such Lender on the signature pages hereto; or, at such other
address as shall be designated by any party in a written notice to the other
parties hereto. All such notices and communications shall be mailed, telexed,
telecopied, or electronic mailed or sent by overnight courier, and shall be
effective when received.

        11.4 BENEFIT OF AGREEMENT.

                (a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto, provided that Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of the
Lenders. Each Lender may at any time grant participations in any of its rights
hereunder or under any of the Pagares to one or more entities or institutions,
provided that in the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Financing Agreements
(the participant's rights against such Lender in respect of such participation
to be those set forth in the agreement executed by such Lender in favor of the
participant relating thereto) and all amounts payable by Borrower hereunder
shall be determined as if such Lender had not sold such participation, except
that the participant shall be entitled to the benefits of SECTIONS 1.9 and 3.4
of this Agreement to the extent that such Lender would be entitled to such
benefits if the participation had not been entered into or sold, and, provided
further that no Lender shall transfer, grant or assign any participation under
which the participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Financing Agreement except to the extent such
amendment or waiver would (i) extend the final scheduled maturity of any Loan in
which such participant is participating (it being understood that any waiver of
the application of any prepayment or the method of any application of any
prepayment to the amortization of the Loans shall not constitute an extension of
the final maturity date), or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Commitment over the amount thereof then in


                                      36.
<PAGE>

effect (it being understood that a waiver of any Default or Event of Default or
of a mandatory reduction in the Commitments, or a mandatory prepayment, shall
not constitute a change in the terms of any Commitment), (ii) release all or
substantially all of the Collateral or (iii) consent to the assignment or
transfer by Borrower of any of its rights and obligations under this Agreement.

                (b) Notwithstanding the foregoing and subject to the limitations
on Syndications set forth in SECTION 1.12, (x) any Lender may assign all or a
portion of its outstanding Loans and/or Commitments and its rights and
obligations hereunder to one or more other Lenders, and (y) with the consent of
QUALCOMM and Borrower (which consents shall not be unreasonably withheld) any
Lender may assign all or a portion of its outstanding Loans and/or Commitments
and its rights and obligations hereunder to one or more other entities or
institutions. No assignment pursuant to the immediately preceding sentence shall
to the extent such assignment represents an assignment to an institution other
than one or more Lenders hereunder, be in an aggregate amount less than the
lesser of (A) $5,000,000 (unless such assignee has agreed to purchase
assignments of interests under this Agreement in a series of transactions which,
in the aggregate, will total an original amount not less than $5,000,000) and
(B) if the amount of any Lender's outstanding Loans or Commitment shall be less
than $5,000,000, one hundred percent (100%) of such Lender's outstanding Loans
or Commitment. If any Lender so sells or assigns all or a part of its rights
hereunder, any reference in this Agreement to such assigning Lender shall
thereafter refer to such Lender and to the respective assignee to the extent of
their respective interests and the respective assignee shall have, to the extent
of such assignment (unless otherwise provided therein), the same rights and
benefits as it would if it were such assigning Lender. Each assignment pursuant
to this SECTION 11.4(b) shall be effected by the assigning Lender and the
assignee Lender executing an Assignment Agreement and giving Administrative
Agent written notice thereof. At the time of any such assignment, (i) either the
assigning or the assignee Lender shall pay to Administrative Agent a
nonrefundable assignment fee of $3,500; provided, that if the assignee has
agreed to purchase assignments of interests in a series of transactions, such
assignment fee shall be payable upon the first assignment of such series and
payable only once with respect to such entire series of transactions and no fee
shall be due in respect of any assignment to Qualcomm or any of its Affiliates,
(ii) SCHEDULE 1.0 shall be deemed to be amended to reflect the Commitments of
the respective assignee (which shall result in a direct reduction to the
Commitments of the assigning Lender) and of the other Lenders, and (iii)
Borrower will, if requested, issue new Pagares to the respective assignee and to
the assigning Lender. To the extent that an assignment pursuant to this SECTION
11.4(b) would, at the time of such assignment, result in increased costs under
SECTION 1.9 or 3.4 from those being charged by the respective assigning Lender
prior to such assignment, then Borrower shall not be obligated to pay such
increased costs (although Borrower shall be obligated to pay any other increased
costs of the type described above resulting from changes after the date of the
respective assignment). Each Lender and Borrower agree to execute such documents
(including without limitation amendments to this Agreement and the other
Financing Agreements) as shall be necessary to effect the foregoing. Nothing in
this clause (b) shall prevent or prohibit any Lender from pledging its Pagares
or Loans to a Federal Reserve Bank in support of borrowings made by such Lender
from such Federal Reserve Bank.

                (c) Notwithstanding any other provisions of this SECTION 11.4,
no transfer or assignment of the interests or obligations of any Lender
hereunder or any grant of participation therein shall be permitted if such
transfer, assignment or grant would require Borrower to file a


                                      37.
<PAGE>

registration statement with the SEC or to qualify the Loans under the "Blue Sky"
laws of any State.

                (d) Each Lender initially party to this Agreement hereby
represents, and each Person that became a Lender pursuant to an assignment
permitted by this SECTION 11.4 will, upon its becoming party to this Agreement,
represents that it makes loans in the ordinary course of its business and that
it will make or acquire Loans for its own account in the ordinary course of such
business, provided that subject to the preceding clauses (a) and (b), the
disposition of any promissory notes or other evidences of or interests in
Indebtedness held by such Lender shall at all times be within its exclusive
control.

        11.5 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
Administrative Agent or any Lender in exercising any right, power or privilege
hereunder or under any other Financing Agreement and no course of dealing
between any Credit Party and Administrative Agent or any Lender shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Financing Agreement preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies herein expressly
provided are cumulative and not exclusive of any rights or remedies which
Administrative Agent or any Lender would otherwise have. No notice to or demand
on any Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of Administrative Agent or the Lenders to any other or
further action in any circumstances without notice or demand.

        11.6 PAYMENTS PRO RATA.

                (a) Administrative Agent agrees that promptly after its receipt
of each payment from or on behalf of any Credit Party in respect of any
Obligations of such Credit Party, it shall distribute such payment to the
Lenders (other than any Lender that has expressly waived its right to receive
its pro rata share thereof) pro rata based upon their respective shares, if any,
of the Obligations with respect to which such payment was received.

                (b) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Financing Agreements, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the respective Credit Party to such Lenders in such amount as
shall result in a proportional participation by all of the Lenders in such
amount, provided that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.


                                      38.
<PAGE>

        11.7 CALCULATIONS; COMPUTATIONS. All computations of interest and Fees
hereunder shall be made on the actual number of days elapsed over a year of 360
days (365 or 366 days, as the case may be, in the case of Fees and Base Rate
Loans).

        11.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL.

                (a) This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, United States, without
reference to principles of conflicts of law (other than Section 5-1401 of the
General Obligations Laws of the State of New York); provided, however, that in
connection with any legal action or proceeding (other than an action to enforce
a judgment obtained in another jurisdiction) brought in respect to this
Agreement in the courts of Mexico or any political subdivision thereof, this
Agreement shall be deemed to be an instrument made under the laws of Mexico and
for such purposes shall be governed by, and construed in accordance with, the
laws of the Federal District of Mexico.

                (b) Each party hereto hereby agrees that any suit, action or
proceeding with respect to this Agreement or any judgment entered by any court
in respect thereof may be brought in the United States of America District Court
for the Southern District of New York, in the Supreme Court of the State of New
York sitting in New York County (including its Appellate Division), or in any
other appellate court in the State of New York or the competent courts of the
Federal District of Mexico, as the party commencing such suit, action or
proceeding may elect in its sole discretion; and each party hereto hereby
irrevocably submits to the jurisdiction of such courts for the purpose of any
such suit, action, proceeding or judgment. Each party hereto further submits,
for the purpose of any such suit, action, proceeding or judgment brought or
rendered against it, to the appropriate courts of the jurisdiction of its
domicile. Borrower hereby waives any rights to a specific jurisdiction it may
have by virtue of its present or any future domicile, or otherwise.

                (c) The Borrower hereby agrees that service of all writs,
process and summonses in any such suit, action or proceeding brought in the
State of New York may be made upon CT Corporation System, presently located at
1633 Broadway, New York, New York 10019, U.S.A. (the "Process Agent"), and the
Borrower hereby confirms and agrees that the Process Agent has been duly and
irrevocably appointed as its agent and true and lawful attorney-in-fact in its
name, place and stead to accept such service of any and all such writs, process
and summonses, and agrees that the failure of the Process Agent to give any
notice of any such service of process to the Borrower shall not impair or affect
the validity of such service or of any judgment based thereon. The Borrower
hereby further irrevocably consents to the service of process in any suit,
action or proceeding in said courts by the mailing thereof by the Lender by
registered or certified mail, postage prepaid, at its address set forth beneath
its signature hereto.

                (d) Nothing herein shall in any way be deemed to limit the
ability of the Lenders to serve any such writs, process or summonses in any
other manner permitted by applicable law or to obtain jurisdiction over Borrower
in such other jurisdictions, and in such manner, as may be permitted by
applicable law.

                (e) Borrower hereby irrevocably waives any objection that it may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or


                                      39.
<PAGE>

relating to this Agreement or any other Financing Agreement brought in the
Supreme Court of the State of New York, County of New York, or in the United
States of America District Court for the Southern District of New York or the
competent courts of the Federal District of Mexico, and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.

                (f) The Borrower hereby agrees to cause the Process Agent to
execute and deliver to the Lender a letter from the Process Agent to the Lender
confirming Process Agent's acceptance of the appointment by Borrower prescribed
in SECTION 11.8(c).

        11.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with Borrower and
Administrative Agent.

        11.10 EFFECTIVENESS. The Original Credit Agreement became effective on
September 25, 1998 (the "Original Effective Date"). This Agreement shall become
effective on the date (the "Amendment Effective Date") on which all of the
following shall have occurred: (i) Borrower and each of the Lenders shall have
signed a copy of this Agreement, (ii) each member of the Borrower Group and each
Agent shall have signed a copy of the Common Agreement (in each case whether the
same or different copies), (iii) the Common Closing Date shall have occurred,
and (iv) the Borrower Group shall have delivered executed copies of this
Agreement and the Common Agreement to Administrative Agent at its Notice Office
or, in the case of the Lenders, shall have given to Administrative Agent
telephonic (confirmed in writing), written telex or facsimile transmission
notice (actually received) at such office that the same has been signed and sent
to such Lender.

        11.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.

        11.12 AMENDMENT OR WAIVER. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the respective Credit Parties party thereto and Required Lenders,
provided that no such change, waiver, discharge or termination shall, without
the consent of each Lender directly affected thereby, (i) extend the final
scheduled maturity date of any Facility or any Pagare, it being understood that
any waiver of any prepayment of, or the method of application of any prepayment
to the amortization of, the Loans shall not constitute any such extension, or
reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any post-default increase in interest
rates) or Fees, or reduce the principal amount thereof, or increase the
Commitment of any Lender over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Commitments shall not constitute a change in the terms of any
Commitment of any Lender), (ii) amend, modify or waive any provision of this
SECTION 11.12, (iii) reduce the percentage specified in, or (except to give
effect to any additional facilities hereunder) otherwise modify, the definition
of Required Lenders, (iv) consent to the


                                      40.
<PAGE>

assignment or transfer by Borrower of any of its rights and obligations under
this Agreement, (v) establish any new obligations for any Lender or (vi) release
all or substantially all of the Collateral; provided that no such change,
waiver, discharge or termination shall, without the consent of Administrative
Agent, amend any provision of SECTION 10.

        11.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in SECTION 1.9, 1.10, 3.4, 10.6 or 11.1 shall survive the execution
and delivery of this Agreement and the making and repayment of the Loans.

        11.14 DOMICILE OF LOANS. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Lender, provided that Borrower shall not be responsible for costs arising or
reimbursable under SECTION 1.9 or 3.4 resulting from any such transfer (other
than a transfer pursuant to SECTION 1.11) to the extent not otherwise applicable
to such Lender prior to such transfer.

        11.15 CONFIDENTIALITY. Subject to SECTION 11.4, the Lenders shall hold
all nonpublic information obtained pursuant to the requirements of this
Agreement which has been identified as such by Borrower in accordance with its
customary procedure for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to its Affiliates, employees, auditors, advisors, or counsel or as
reasonably required by any bona fide transferee or participant in connection
with the contemplated transfer of any Loans or participation therein (so long as
such transferee or participant agrees to be bound by the provisions of this
SECTION 11.15) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Lender shall
notify Borrower of any request by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such nonpublic information prior to disclosure of such information, and
provided further that in no event shall any Lender be obligated or required to
return any materials furnished by any Credit Party.

        11.16 LENDER REGISTER. Borrower hereby designates Administrative Agent
to serve as its agent, solely for purposes of this SECTION 11.16, to maintain a
register (the "Lender Register") on which it will record the Commitments from
time to time of each of the Lenders, the Loans made by each of the Lenders and
each repayment in respect of the principal amount of the Loans of each Lender.
Failure to make any such recordation, or any error in such recordation, shall
not affect Borrower's obligations in respect of such Loans. With respect to any
Lender, the transfer of the Commitments of such Lender and the rights to the
principal of, and interest on, any Loan made pursuant to such Commitments shall
not be effective until such transfer is recorded on the Lender Register
maintained by Administrative Agent and prior to such recordation all amounts
owing to the transferor with respect to such Commitments and Loans shall remain
owing to the transferor. The registration of assignment or transfer of all or
part of any Commitments and Loans shall be recorded by Administrative Agent on
the Lender Register only upon the acceptance by Administrative Agent of a
properly executed and delivered Agreement pursuant to SECTION 11.4(b). Borrower
agrees to indemnify Administrative Agent from and against any and all losses,
claims, damages and liabilities of whatsoever nature which may be imposed on,
asserted against or incurred by Administrative Agent in performing its duties
under this SECTION


                                      41.
<PAGE>
11.16 other than those resulting from Administrative Agent's willful misconduct
or gross negligence.

        11.17 JUDGMENT CURRENCY. Borrower agrees to indemnify QUALCOMM against
any loss incurred by it as a result of any judgment or order being given or made
for the payment of any amount due under any Pagare which is expressed and paid
in a currency (the "Judgment Currency") other than the currency in which such
amount was to be paid (the "Obligation Currency") and as a result of any
variation between (i) the rate of exchange at which the Obligation Currency
amount is converted into Judgment Currency for the purposes of such judgment or
order, and (ii) the rate of exchange at which QUALCOMM is able to purchase the
Obligation Currency with the amount of judgment currency actually received by
QUALCOMM. The foregoing indemnity shall constitute a separate and independent
obligation of Borrower and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of, or conversions into, the relevant currency.

        11.18 ENTIRE AGREEMENT; CONSTRUCTION.

                (a) This Agreement, the Pagares and the other Financing
Agreements, taken together, constitute and contain the entire agreement among
Borrower, the Lenders, and Administrative Agent and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter
hereof.

                (b) To the extent of any inconsistency between this Agreement
and any Pagare, the terms and conditions contained in this Agreement shall
govern.


                                      42.
<PAGE>

        IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.

                                            PEGASO COMUNICACIONES Y SISTEMAS,
                                            S.A. DE C.V.

                                            By:
                                               ---------------------------------
                                            Printed Name:
                                                         -----------------------
                                            Title:
                                                  ------------------------------

                                            By:
                                               ---------------------------------
                                            Printed Name:
                                                         -----------------------
                                            Title:
                                                  ------------------------------

                                            Notice Address:

                                            Pegaso Comunicaciones y Sistemas,
                                            S.A. de C.V.
                                            Paseo de los Tamarindos 400-A,
                                            4th floor
                                            Bosques de las Lomas
                                            Mexico, D.F. 05120
                                            Fax No.:  011-525-261-6290
                                            Phone No.:  011-525-261-6243


                                            ABN AMRO BANK N.V.,
                                            as Administrative Agent

                                            By:
                                               ---------------------------------
                                            Printed Name:
                                                         -----------------------
                                            Title:
                                                  ------------------------------

                                            By:
                                               ---------------------------------
                                            Printed Name:
                                                         -----------------------
                                            Title:
                                                  ------------------------------

                                            Notice Address:

                                            ABN AMRO Bank N.V.
                                            Agency Services
                                            1325 Avenue of the Americas,
                                            9th Floor
                                            New York, New York  10019
                                            Attention:  Linda Boardman,
                                            Vice President and Director
                                            Fax No.:  (212) 314-1711
                                            Phone No.:  (212) 314-1724


                                      43.
<PAGE>

                                            with a copy to:

                                            ABN AMRO Bank N.V.
                                            Los Angeles Branch
                                            300 South Grand Avenue
                                            Suite 2650
                                            Los Angeles, CA 90071
                                            Attention:  Credit Administration
                                            Fax No.: (213) 687-2390

                                            QUALCOMM INCORPORATED
                                            as a Lender

                                            By:
                                               ---------------------------------
                                               Paul Fiskness
                                               Vice President of Project Finance
                                               and Direct Investments

                                            Notice Address:

                                            Qualcomm Incorporated
                                            6455 Lusk Boulevard
                                            San Diego, CA
                                            Attention:
                                            Fax No.:
                                            Phone No.:


                                      44.
<PAGE>

                                    EXHIBITS

Exhibit A    -- Form of Term Pagare
Exhibit B    -- Form of VAT Pagare
Exhibit C    -- Form of Loan Request
Exhibit D    -- Form of Notice of Deemed Loan
Exhibit E    -- Form of Notice of Conversion/Continuation
Exhibit F    -- Form of Assignment Agreement

                                  SCHEDULES

Schedule 1.0 -- Commitments
Schedule 1.5 -- Existing Loans


<PAGE>


                                  SCHEDULE 1.0

                                   COMMITMENTS

<TABLE>
<CAPTION>
LENDER         FACILITY-1 COMMITMENT        FACILITY-2 COMMITMENT          VAT LOAN COMMITMENT
------         ---------------------        ---------------------          -------------------
<S>            <C>                          <C>                            <C>
QUALCOMM       $200,000,000.00              $90,000,000.00                 $20,000,000

Total:         $200,000,000.00              $90,000,000.00                 $20,000,000
</TABLE>

NOTE: The foregoing Commitments are subject to the maximum aggregate commitment
in the amount of the Total Commitment, an amount which is less than the sum of
the Commitments set forth above.


<PAGE>


                                  SCHEDULE 1.5

                                 EXISTING LOANS


<PAGE>

                               AMENDMENT NO. 1 TO
                      AMENDED AND RESTATED CREDIT AGREEMENT

       THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of May [___], 1998 (this "Amendment"), is entered into among PEGASO
COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a corporation organized under the laws
of Mexico ("Borrower"), QUALCOMM INCORPORATED, a corporation organized under the
laws of Delaware, ("QUALCOMM"), the lenders from time to time party to the
Amended and Restated Credit Agreement (each, a "Lender" and, collectively,
"Lenders"), and ABN AMRO BANK N.V. as administrative agent for the Lenders
("Administrative Agent").

                                    RECITALS

       WHEREAS, Borrower has entered into (i) that Amended and Restated Credit
Agreement dated as of December 15, 1998 (the "Credit Agreement"), by and among
Borrower, Lenders and Administrative Agent, and (ii) that Common Agreement,
dated as of December 15, 1998, as the same may be amended, supplemented,
modified or restated from time to time (the "Common Agreement"), by and among
each member of Borrower Group, the Collateral Agent, the Intercreditor Agent,
the Alcatel Administrative Agent (each as defined in the Common Agreement), and
Administrative Agent,.

       WHEREAS, Lenders have extended credit to Borrower for the purposes
permitted in the Credit Agreement and the Common Agreement in the form of Loans
(as defined below) advanced to Borrower.

       WHEREAS, the parties to the Credit Agreement desire to amend the Credit
Agreement to (i) create a capitalized interest facility, (ii) clarify the deemed
loan mechanism, and (iii) revise Schedule 1.5 attached thereto, all in
accordance with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.

                                    AGREEMENT

       NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

       SECTION 1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meanings given to them in the Credit Agreement, as
amended by this Amendment, the Common Agreement and Annex A thereto.


                                       1.
<PAGE>

       SECTION 2. AMENDMENTS TO CREDIT AGREEMENT.

              2.1 SECTION 9 (DEFINITIONS). Section 9 is amended as follows:

                     (a) DEFINITION OF "ADDITIONAL LOANS" The definition of
"Additional Loans" is amended by adding the parenthetical "(other than
Capitalized Interest Loans)" immediately after the word "Loans."

                     (b) DEFINITION OF "CAPITALIZED APPLICABLE MARGIN" A new
definition of "Capitalized Applicable Margin" shall be added in appropriate
alphabetical order to read as follows:

                     "Capitalized Applicable Margin" shall mean, with respect to
       any Capitalized Interest Loan, the Applicable Margin that is applicable
       to the Long-Term Loan with respect to which the Capitalized Interest Loan
       was made.

                     (c) DEFINITION OF "CAPITALIZED INTEREST COMMITMENT" A new
definition of "Capitalized Interest Commitment" shall be added in appropriate
alphabetical order to read as follows:

                     "Capitalized Interest Commitment" shall mean with respect
       to each Lender, the aggregate amount required for Capitalized Interest
       Loans pursuant to SECTIONS 1.1(f) AND 1.2(b) to finance the regularly
       scheduled interest payments of Tranche A Loans and Tranche C Loans made
       by such Lender under Facility-1, and the capitalized interest thereon
       pursuant to SECTION 1.8(e).

                     (d) DEFINITION OF "CAPITALIZED INTEREST FACILITY" A new
definition of "Capitalized Interest Facility" shall be added in appropriate
alphabetical order to read as follows:

                     "Capitalized Interest Facility" shall mean the credit
       facility under this Agreement as evidenced by the Capitalized Interest
       Loans.

                     (e) DEFINITION OF "CAPITALIZED INTEREST LOAN" A new
definition of "Capitalized Interest Loan" shall be added in appropriate
alphabetical order to read as follows:

                     "Capitalized Interest Loan" shall have the meaning provided
       in SECTION 1.1(f).

                     (f) DEFINITION OF "CAPITALIZED INTEREST RATE" A new
definition of "Capitalized Interest Rate" shall be added in appropriate
alphabetical order to read as follows:

                     "Capitalized Interest Rate" shall mean, as determined on
       the last Business Day of each calendar month, a rate per annum equal to
       the Eurodollar Rate (set pursuant to the definition thereof) with a three
       month Interest Period, which rate shall be adjusted automatically on the
       last Business Day of each calendar month.


                                       2.
<PAGE>

                     (g) DEFINITION OF "COMMITMENT" The definition of
"Commitment" is amended by adding the term Capitalized Interest Commitment
immediately after the term "Facility-2 Commitment."

                     (h) DEFINITION OF "EURODOLLAR LOANS" The definition of
"Eurodollar Loans" is amended by adding inside the parenthetical thereof the
phrase "or Capitalized Interest Loans" immediately after the phrase "other than
VAT Loans."

                     (i) DEFINITION OF "FACILITY" The definition of "Facility"
is amended by adding the term "Capitalized Interest Facility" immediately after
the term "Facility-2."

                     (j) DEFINITION OF "PERCENTAGE" The definition of
"Percentage" is deleted in its entirety and the following is substituted
therefor:

              "Percentage" shall mean at any time for each Lender with respect
       to the Loans and/or Commitments under any Facility, the percentage
       obtained by dividing such Lender's Commitment for such Facility by the
       aggregate Commitments of all Lenders for such Facility, provided that (i)
       with respect to the making of any Loans under such Facility on any date
       on or after May [___], 1999, unless otherwise agreed among all of the
       Lenders in writing, written notice of which shall be delivered to
       Administrative Agent prior to the end of the Loan Request Review Period
       or at the time of delivery of Notice of Deemed Loan, as applicable with
       respect to such Loans, the Percentage of each Lender for such Facility
       shall be determined by dividing the amount of such Lender's unused
       Commitment by the aggregate amount of unused Commitments of all Lenders
       for such Facility as of the date such Loans are to be made; (ii) if the
       Commitments of all Lenders for such Facility have been terminated, the
       Percentage of each Lender for such Facility shall be determined by
       dividing such Lender's Commitment for such Facility immediately prior to
       such termination by the aggregate Commitments of all Lenders for such
       Facility immediately prior to such termination.

                     (k) DEFINITION OF "VENDOR" The definition of "Vendor" is
deleted in its entirety and the following is substituted therefor:

              "Vendor" shall not have the meaning set forth in the Recitals, but
       shall mean QUALCOMM, QUALCOMM Wireless Services (Mexico), S.A. de C.V. or
       their permitted assignees, as applicable, in respect of the QUALCOMM
       Procurement Agreements.

              2.2 SECTION 1.1 (COMMITMENT).

                     (a) The introductory clause to SECTION 1.1 which appears
before clause "(a)" is amended by inserting the phrase ", the Capitalized
Interest Facility" immediately after the reference to "Facility-2."

                     (b) SECTION 1.1(d) is deleted in its entirety and the
following is substituted therefor:


                                       3.
<PAGE>

       (d) Notwithstanding anything in this Agreement to the contrary, no Lender
       shall be obligated to make any Loan (other than Capitalized Interest
       Loans) to the extent that the initial aggregate principal amount of all
       Loans (other than Capitalized Interest Loans) made hereunder shall exceed
       the Total Commitment.

                     (c) In SECTION 1.1(e), a new sentence is added at the end
thereof to read as follows:

       To the extent that any Tranche A or Tranche C Loan under Facility-1 is
       redesignated pursuant to this SECTION 1.1(e), the principal and interest
       amounts (including the Capitalized Applicable Margin) of any Capitalized
       Interest Loan related to such resdesignated Tranche A or Tranche C Loan
       shall be adjusted to be consistent with the terms of such redesignation.

                     (d) A new SECTION 1.1(f) is added in appropriate
alphabetical order to read as follows:

              (f) Loans under the Capitalized Interest Facility (each a
              "Capitalized Interest Loan" and, collectively, the "Capitalized
              Interest Loans") shall be made from time to time to finance the
              interest that accrues on certain Long-Term Loans as follows: (i)
              to finance the interest on each Tranche A Loan under Facility-1,
              Capitalized Interest Loans shall be made on the regularly
              scheduled Interest Payment Dates occurring prior to the Facility-1
              Refinancing Date; and (ii) to finance the interest on each Tranche
              C Loan under Facility-1, Capitalized Interest Loans shall be made
              on the regularly scheduled Interest Payment Dates occurring prior
              to the first anniversary of the Original Effective Date. With
              respect to each Lender, each Loan shall be in an amount equal to
              the amount of interest due and payable on such Interest Payment
              Date with respect to such Lender's then outstanding Tranche A
              Loans and Tranche C Loans, as applicable.

              2.3 SECTION 1.2 (TYPES OF LOANS). SECTION 1.2 is amended as
follows:

                     (a) The heading of SECTION 1.2 is deleted in its entirety
and replaced with a heading that reads "TYPES OF LOANS."

                     (b) A subsection reference "(a)" is inserted immediately
before the first sentence, and a new subsection "(b)" is added immediately after
the end of the second sentence to read as follows:

                            (b) Each initial Borrowing of Capitalized Interest
              Loans pursuant to SECTION 1.5(b)(vi) shall be comprised of
              Capitalized Interest Loans bearing interest at the Capitalized
              Interest Rate plus the relevant Capitalized Applicable Margin.


                                       4.
<PAGE>

              2.4 SECTION 1.5 (EXISTING LOANS, NOTICE AND MANNER OF MAKING LOANS
OR CONVERTING/CONTINUING LONG-TERM LOANS). SECTION 1.5 is amended as follows:

                     (a) The headings of SECTION 1.5 and SECTION 1.5(b) are
amended by deleting the word "Additional" before the word "Loans" in each
heading.

                     (b) SECTION 1.5(a) is amended by adding a two new sentences
at the end thereof to read as follows:

                     (a) Notwithstanding anything contained herein to the
contrary, (i) each Loan described on Schedule 1.5 shall be deemed to have been
incurred on, and have an effective date of, the date set forth on Schedule 1.5
for such Loan, (ii) each Loan described on Schedule 1.5 and each Loan incurred
during the period from December 15, 1998 through May [___], 1999 (individually,
a "Pre-Amendment Loan") shall be deemed to have been a Base Rate Loan until the
first Business Day of the calendar month immediately succeeding the effective
date of such Loan and, subject to the immediately subsequent sentence, during
the period from such Business Day through and including May 31, 1999 (the
"Retroactive Eurodollar Period"), such Loan shall be deemed to have been
converted to a Eurodollar Loan with a one month Interest Period and serially
continued as a Eurodollar Loan with a one month Interest Period until the end of
the Retroactive Eurodollar Period, and (iii) on June 1, 1999, and thereafter,
each Pre-Amendment Loan shall be subject to SECTIONS 1.3 and 1.4 hereof. Clauses
(i) and (ii) of the immediately preceding sentence shall apply only if Borrower
delivers to Administrative Agent, with respect to each Pre-Amendment Loan, a
Notice of Conversion/Continuation for each Interest Period during the
Retroactive Eurodollar Period, which notices shall evidence the joint and
several guarantee "avalado" by the Guarantors and shall be attached by the
Administrative Agent (if it holds possession of the applicable Pagare) and
otherwise by the Lender to the respective Pagares that evidence such Loans.

                     (c) In SECTION 1.5(b)(i),

                            (i) the introductory language of CLAUSE (A) thereof
is deleted in its entirety and the following is substituted therefor:

       (A) to each of Administrative Agent, the applicable Vendor and QUALCOMM,
       written notice specifying

                            (ii) CLAUSE (B) thereof is deleted in its entirety
and the following is substituted therefor:

       (B) to the applicable Vendor and QUALCOMM, all invoices and any other
       supporting documentary information necessary to evidence the QUALCOMM
       Costs and VAT, if applicable, giving rise to such Loan Request (the
       "Invoices").

                     (d) SECTION 1.5(b)(ii) is deleted in its entirety and the
following is substituted therefor:

              (ii) On each date prior to the end of the VAT Facility
       Availability Period, the Facility-1 Availability Period or the Facility-2
       Availability Period, as applicable, on


                                       5.
<PAGE>

       which payment for any VAT or under any QUALCOMM Procurement Agreement, as
       applicable, is due for which Borrower has received an Invoice, or on
       which cash payment for any VAT or QUALCOMM Costs has been made by
       QUALCOMM for Borrower's account with respect to the importation of goods
       into Mexico, and such payment has not been made or a Borrowing of VAT
       Loans or Long-Term Loans, as applicable, has not been requested by
       Borrower pursuant to SECTION 1.5(b)(i) hereof, either Vendor may deliver
       to Administrative Agent by electronic facsimile transmission written
       notice of such due date and the amount of such payment due under the
       applicable QUALCOMM Procurement Agreement or in connection with such
       importation of goods into Mexico (less any amounts as to which the
       applicable Vendor and the Administrative Agent have received written
       notice from Borrower of any dispute with respect to such amount being due
       and payable), which notice shall be substantially in the form of EXHIBIT
       D to this Agreement (a "Notice of Deemed Loan"), and a Borrowing of Base
       Rate Loans (which Loans shall be VAT Loans, or Tranche A Loans, Tranche B
       Loans or Tranche C Loans as shall be determined pursuant to SECTION
       1.1(e)) shall be deemed to have been made (A) as of the date on which
       such payment was due for any VAT or under the applicable QUALCOMM
       Procurement Agreement for which Borrower has received an invoice and (B)
       as of the date on which cash payment was made to the customs broker or
       other applicable party in the case of any VAT or QUALCOMM Costs paid in
       connection with the importation of goods into Mexico, and the amount of
       VAT Loans or Long-Term Loans, as applicable, owing to each Lender shall
       automatically be increased to add to the principal amount thereof the
       amount of such required payment according to the Commitment of each
       Lender making such VAT Loan or Long-Term Loan, as applicable, as of the
       date of such Notice of Deemed Loan, as to the applicable Vendor which is
       a Lender, and as to any other Lender, as of the date that such Lender
       remits funds in respect of such Loan to the Administrative Agent;
       provided, however, that Borrower may thereafter elect to convert such VAT
       Loans or Long-Term Loans in whole or in part to Eurodollar Loans in
       accordance with SECTION 1.5(c) below.

                     (e) A new SECTION 1.5(b)(vi) is added in appropriate
alpha-numeric order to read as follows:

              (vi) Notwithstanding anything in this Agreement to the contrary,
       (i) unless Borrower shall notify Administrative Agent at least Two (2)
       Business Days prior to the next succeeding regularly scheduled Interest
       Payment Date that this SECTION 1.5(b)(vi) shall not be applicable to any
       of the interest payments on the Tranche A or C Loans otherwise eligible
       for financing under the Capitalized Interest Facility pursuant to SECTION
       1.1(f), a Capitalized Interest Loan Request shall be deemed to have been
       made on such date (a "Deemed Capitalized Interest Loan Request") for a
       Capitalized Interest Loan as set forth in SECTION 1.2(b), with respect to
       such eligible interest payments as set forth in SECTION 1.1(f), in the
       amount of the interest payment to become due and payable on such Tranche
       A Loans or Tranche C Loans, as applicable, on such Interest Payment Date.

                     (f) In SECTION 1.5(d), the term "Deemed Capitalized
Interest Loan Request" is inserted immediately after the term "Notice of Deemed
Loan."


                                       6.
<PAGE>

              2.5 SECTION 1.8 (INTEREST). SECTION 1.8 is amended as follows:

                     (a) In the first sentence of SECTION 1.8(a), a new clause
(iii) is added to read as follows:

       and (iii) in the case of Capitalized Interest Loans, be the Capitalized
       Interest Rate plus the relevant Capitalized Applicable Margin.

                     (b) In SECTION 1.8(c) clause (iii) is renumbered as clause
(iv) and a new clause (iii) is added to read as follows:

       (iii) in the case of Capitalized Interest Loans, on the last Business Day
       of each calendar month, and

                     (c) SECTION 1.8(e) is deleted in its entirety and following
is substituted therefor:

              (e) Anything in this Agreement to the contrary notwithstanding,
       and unless Borrower shall notify Administrative Agent that this SECTION
       1.8(e) shall not be applicable to any of the interest payments on the
       Capitalized Interest Loans, the interest that accrues on the Capitalized
       Interest Loans shall not be required to be paid in cash on any Interest
       Payment Date occurring prior to the Facility-1 Refinancing Date (as to
       Capitalized Interest Loans made on Tranche A Loans under Facility-1) or
       prior to the first anniversary of the Original Effective Date (as to the
       Capitalized Interest Loans made on Tranche C Loans under Facility-1), but
       on each such Interest Payment Date relating to a Capitalized Interest
       Loan, such accrued interest will be capitalized and added, as a new
       Capitalized Interest Loan, to the principal of the Capitalized Interest
       Loans of each Lender with respect to which such interest accrued.

              2.6 SECTION 1.9(a) (INCREASED COSTS, ILLEGALITY, ETC). Clause (z)
at the end of SECTION 1.9(a) is deleted in its entirety and the following is
substituted therefor:

       (z) in the case of CLAUSE (iii) above, (A) the obligations of such Lender
       to make and maintain Eurodollar Loans under the respective Facilities
       shall terminate and all of the outstanding Eurodollar Loans made by such
       Lender shall, at the option of Borrower, either be repaid or converted to
       Base Rate Loans, and (B) all Capitalized Interest Loans to be made by
       such Lender thereafter shall be made as Base Rate Loans, and all
       outstanding Capitalized Interest Loans already made by such Lender shall,
       at the option of Borrower, be repaid or converted to Base Rate Loans.

              2.7 SECTION 3.2 (MANDATORY PREPAYMENTS AND REPAYMENTS). Section
3.2 is amended as follows:

                     (a) SECTION 3.2(a) is deleted in its entirety and the
following is substituted therefor:

                     (a) Borrower shall repay all Tranche A Loans, and all
       Capitalized Interest Loans made with respect thereto, as applicable,
       which are outstanding under


                                       7.
<PAGE>

       Facility-1 and Facility-2, as applicable, on the Facility-1 EXIM Loans
       Closing Date and Facility-2 EXIM Loans Closing Date, as applicable, to
       the extent refinanced with the proceeds of EXIM Financing. Any amount of
       Tranche A Loans and such related Capitalized Interest Loans not so
       refinanced shall be subject to SECTION 3.2(e).

                     (b) SECTION 3.2(c) is deleted in its entirety and the
following is substituted therefor:

              (c) All Tranche C Loans, and all Capitalized Interest Loans made
with respect thereto, which are outstanding under Facility-1 on the first
anniversary of the Original Effective Date shall be automatically converted into
Tranche B Loans under such Facility on such date.

                     (c) SECTION 3.2(e) is deleted in its entirety and the
following is substituted therefor:

                     (e) All Tranche A Loans, and all Capitalized Interest Loans
       made with respect thereto, as applicable, which are outstanding under
       Facility-1 and Facility-2 on the Facility-1 Refinancing Date or the
       Facility-2 Refinancing Date, as applicable, shall be automatically
       converted into Tranche B Loans under Facility-1 or Facility-2, as
       applicable, on such date to the extent not refinanced with the proceeds
       of EXIM Financing.

              2.8 A new SECTION 4.4 is added to read as follows:

                     4.2 CONDITIONS PRECEDENT TO CAPITALIZED INTEREST LOANS.
Notwithstanding anything to the contrary herein, the obligation of each Lender
to make any Capitalized Interest Loan is subject only to the satisfaction of the
following conditions:

                            (a) NO BANKRUPTCY OR INSOLVENCY PROCEEDINGS. No
Event of Default under Section 7.05, 7.06 or 7.07 of the Common Agreement shall
have occurred.

                            (b) NO ACCELERATION OF THE LOANS. Lenders shall not
have accelerated the Loans pursuant to Section 7.17(b) of the Common Agreement.

              2.9 SCHEDULE 1.5. Schedule 1.5 attached to the Credit Agreement is
hereby replaced in its entirety by Schedule 1.5 attached to this Amendment.

       SECTION 3. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND OTHER
FINANCING AGREEMENTS.

                     (a) Upon the effectiveness of this Amendment, on after the
date hereof, each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby and each reference in the
Financing Agreements to the QUALCOMM Credit Agreement shall also mean and be a
reference to the Credit Agreement as amended by this Amendment.


                                       8.
<PAGE>

                     (b) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of Administrative Agent or Lenders under the Credit
Agreement, the Common Agreement or any of the Financing Agreements, nor
constitute a waiver of any provision of the Credit Agreement, the Common
Agreement or any of the Financing Agreements.

       SECTION 4. REAFFIRMATION OF TERMS. This Amendment shall be construed in
connection with and as part of the Financing Agreements and all terms,
conditions, representations, warranties, covenants and agreements set forth in
the Financing Agreements, except as herein waived or amended, are hereby
ratified and confirmed and shall remain in full force and effect.

       SECTION 5. ACKNOWLEDGMENTS AND WAIVERS. Each member of the Borrower Group
hereby ratifies and reaffirms the validity and enforceability of all of the
Liens and security interests heretofore granted to the Collateral Agent pursuant
to the Security Documents, for the benefit of the Lenders, as collateral
security for the Obligations, and acknowledges that all of such Liens and
security interests, and all Collateral heretofore pledged as security for the
Obligations, continues to be and remain collateral for the Obligations from and
after the date hereof.

       SECTION 6. RELEASE AND WAIVER.

                     (a) Each member of the Borrower Group hereby acknowledges
and agrees that: (i) it has no claim or cause of action against Administrative
Agent, any Lender or any other Affiliate thereof, or any of their officers,
directors, employees, attorneys or other representatives or agents (all of which
parties being, collectively, "SECURED PARTIES' AGENTS") under the Financing
Agreements (including, without limitation, in respect of the Senior Loans
thereunder but excluding under or in respect of the Vendor
Agreements)(collectively, the "Financing Transactions"), with respect to any
condition, act, omission, event, contract, liability, obligation, indebtedness,
claim, cause of action, defense, circumstance or matter of any kind whatsoever
which existed, arose or occurred at any time prior to the execution and delivery
of this Amendment or which could arise concurrently with the effectiveness of
this Amendment ("Claims"); (ii) it has no offset or defense against any of its
respective obligations, indebtedness or contracts in favor of Administrative
Agent or any Lender on account of any Claims and (iii) it recognizes that
Administrative Agent and each Lender has heretofore properly performed and
satisfied in a timely manner all of its obligations to and contracts with each
member of the Borrower Group relating to the Financing Transactions.

                     (b) Although Administrative Agent and Lenders regard their
conduct as proper and do not believe any member of the Borrower Group to have
any claim, cause of action, offset or defense against Administrative Agent, any
Lender or any of Secured Parties' Agents in connection with the Financing
Transactions, Administrative Agent and Lenders wish, and each member of the
Borrower Group agrees, to eliminate any possibility that any past conditions,
acts, omissions, events, circumstances or matters could impair or otherwise
affect any rights, interests, contracts or remedies of Administrative Agent or
any Lender. Therefore, each member of the Borrower Group unconditionally
releases and waives as to Administrative Agent or any Lender in its capacity as
a Secured Party under the Financing Agreements (and not in any other capacity,
including, without limitation, in its capacity as a Vendor) (1) any and all


                                       9.
<PAGE>

liabilities, indebtedness and obligations, whether known or unknown, of any kind
of Administrative Agent or any Lender or of any of Secured Parties' Agents to
any member of the Borrower Group arising under the Financing transactions and
which exist on the date hereof, except the obligations remaining to be performed
by Administrative Agent and Lenders as expressly stated in the Financing
Agreements executed by Administrative Agent and Lenders; (2) any legal,
equitable or other obligations or duties, whether known or unknown, of
Administrative Agent or any Lender or of any of Secured Parties' Agents to any
member of the Borrower Group (and any rights of any member of the Borrower Group
against Administrative Agent or any Lender) arising under the Financing
Transactions and which exist on the date hereof besides those expressly stated
in any of the Financing Agreements; (3) any and all claims under any oral or
implied agreement, obligation or understanding with Administrative Agent or any
Lender or any of Secured Parties' Agents, whether known or unknown, arising
under the Financing transactions and which exist on the date hereof and are
different from or in addition to the express terms of any of the other Financing
Agreements; and (4) all other claims, causes of action or defenses of any kind
whatsoever (if any), whether known or unknown, which any member of the Borrower
Group might otherwise have against Administrative Agent or any Lender or any of
Secured Parties' Agents, on account of any Claims.

                     (c) EACH MEMBER OF THE BORROWER GROUP AGREES TO ASSUME THE
RISK OF ANY AND ALL UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD DEFENSES, CLAIMS,
CAUSES OF ACTION, CONTRACTS, LIABILITIES, INDEBTEDNESS AND OBLIGATIONS WHICH ARE
RELEASED BY THIS AMENDMENT IN FAVOR OF ADMINISTRATIVE AGENT AND EACH LENDER AND
SECURED PARTIES' AGENTS, AND EACH MEMBER OF THE BORROWER GROUP HEREBY WAIVES AND
RELEASES ALL RIGHTS AND BENEFITS WHICH IT MIGHT OTHERWISE HAVE UNDER THE LAW OF
THE STATE OF NEW YORK AND THE LAW OF THE FEDERAL DISTRICT OF MEXICO WITH REGARD
TO THE RELEASE OF SUCH UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD DEFENSES, CLAIMS,
CAUSES OF ACTION, CONTRACTS, LIABILITIES, INDEBTEDNESS AND OBLIGATIONS. TO THE
EXTENT (IF ANY) WHICH ANY SUCH LAWS MAY BE APPLICABLE, EACH MEMBER OF THE
BORROWER GROUP WAIVES AND RELEASES (TO THE MAXIMUM EXTENT PERMITTED BY LAW) ANY
RIGHT OR DEFENSE WHICH IT MIGHT OTHERWISE HAVE UNDER ANY OTHER LAW OF ANY
APPLICABLE JURISDICTION WHICH MIGHT LIMIT OR RESTRICT THE EFFECTIVENESS OR SCOPE
OF ANY OF ITS WAIVERS OR RELEASES UNDER THIS AMENDMENT.

       SECTION 7. REPRESENTATIONS AND WARRANTIES. In order to induce
Administrative Agent and Lenders to enter into this Amendment, each member of
the Borrower Group hereby represents and warrants to each Lender and
Administrative Agent as follows:

              7.1 Immediately after giving effect to this Amendment (i) the
representations and warranties contained in the Financing Agreements (other than
those which expressly relate to a different date) are true, accurate and
complete in all material respects as of the date hereof and (ii) no Default or
Event of Default has occurred and is continuing;


                                      10.
<PAGE>

              7.2 The Charter Documents of each member of the Borrower Group
delivered to Administrative Agent on the Closing Date remain true, accurate and
complete and have not been amended, supplemented or restated and are and
continue to be in full force and effect;

       SECTION 8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.

       SECTION 9. EFFECTIVENESS. This Amendment shall be deemed effective upon
the satisfaction of all of the following conditions precedent :

              9.1 AMENDMENT. Each member of the Borrower Group and each Lender
shall have duly executed and delivered this Amendment to Administrative Agent.

              9.2 ACKNOWLEDGMENT OF AMENDMENT AND REAFFIRMATION OF GUARANTY.
Administrative Agent shall have received the Acknowledgment of Amendment and
Reaffirmation of Guaranty, duly executed and delivered by each Guarantor.

              9.3 CERTIFIED RESOLUTIONS. Administrative Agent shall have
received for each member of the Borrower Group a certificate of the appropriate
officers of such member of the Borrower Group dated the date hereof certifying
(i) the names and true signatures of the incumbent officers of such member of
the Borrower Group authorized to sign the this Amendment, (ii) the resolutions
of such member's Board of Directors approving and authorizing the execution,
delivery and performance of this Amendment, and (iii) that there have been no
changes in the Charter Documents of such member of the Borrower Group since the
date of certification thereof to Administrative Agent in connection with the
Closing of the Financing Agreements.

              9.4 PAYMENT OF REIMBURSEMENT AND INDEMNIFICATION OBLIGATIONS. Each
member of the Borrower Group shall have paid to Administrative Agent and the
Lenders all of their reimbursement and indemnification obligations owing under
SECTION 11.1 of the Credit Agreement and Section 8.01 of the Common Agreement,
including its obligation to pay all attorneys' fees and costs and other
disbursements incurred by Administrative Agent and Lenders in connection with
the negotiation, implementation, execution and enforcement of this Amendment and
any acts contemplated hereby.

              9.5 The conditions precedent for the initial Syndicated Working
Capital Loans (as defined in the Bridge Loan Agreement (the "Bridge Loan
Agreement") dated as of the date hereof by and among each member of the Borrower
Group, the lenders party thereto and Citibank, N.A., as administrative agent)
under Section 5.1 of the Bridge Loan Agreement shall have been satisfied or
waived.

       SECTION 10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York, United States,
without reference to principles of conflicts of law (other than Section 5-1401
of the General Obligations Laws of the State of New York); provided, however,
that in connection with any legal action or proceeding (other than an action to
enforce a judgment obtained in another jurisdiction) brought in respect to this
Agreement in the courts of Mexico or any political subdivision thereof, this
Agreement shall be


                                      11.
<PAGE>

deemed to be an instrument made under the laws of Mexico and for such purposes
shall be governed by, and construed in accordance with, the laws of the Federal
District of Mexico.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      12.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.


PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.


By:
     ---------------------------------------

     Name:
          ----------------------------------

     Title:
           ---------------------------------


PEGASO TELECOMUNICACIONES, S.A. DE C.V.

By:
     ---------------------------------------

     Name:
          ----------------------------------

     Title:
           ---------------------------------


PEGASO PCS, S.A. DE C.V.

By:
     ---------------------------------------

     Name:
          ----------------------------------

     Title:
           ---------------------------------


PEGASO RECURSOS HUMANOS, S.A. DE C.V.

By:
     ---------------------------------------

     Name:
          ----------------------------------

     Title:
           ---------------------------------


                                      13.
<PAGE>

ABN AMRO BANK N.V., as QUALCOMM Administrative Agent

By:
     ---------------------------------------

     Name:
          ----------------------------------

     Title:
           ---------------------------------


By:
     ---------------------------------------

     Name:
          ----------------------------------

     Title:
           ---------------------------------


QUALCOMM INCORPORATED

By:
     ---------------------------------------

     Name:
          ----------------------------------

     Title:
           ---------------------------------


TELEFONAKTIEBOLAGET L.M. ERICSSON (PUBL)

By:
     ---------------------------------------

     Name:
          ----------------------------------

     Title:
           ---------------------------------


                                      14.
<PAGE>

                          ACKNOWLEDGEMENT OF AMENDMENT
                         AND REAFFIRMATION OF GUARANTY

Capitalized terms used but not defined in this Acknowledgment of Amendment and
Reaffirmation of Guaranty shall have the meanings given to them in the Credit
Agreement.

       SECTION 1. Each of the undersigned Guarantors hereby acknowledges and
confirms that it has reviewed and approved the terms and conditions of the
Amendment No. 1 to Amended and Restated Agreement dated as of even date herewith
(the "Amendment").

       SECTION 2. Each of the Guarantors hereby consents to the Amendment and
agrees that the Pegaso Guaranty Agreement relating to the Obligations of
Borrower under the Financing Agreements shall continue in full force and effect,
shall be valid and enforceable and shall not be impaired or otherwise affected
by the execution of the Amendment or any other document or instrument delivered
in connection herewith.

       SECTION 3. Each of the Guarantors severally represents and warrants that,
after giving effect to the Amendment, all representations and warranties
contained in the Pegaso Guaranty Agreement are true, accurate and complete as if
made the date hereof.

       SECTION 4. Each of the Guarantors hereby ratifies and reaffirms the
validity and enforceability of all of the Liens and security interests
heretofore granted, pursuant to the Security Documents to the Collateral Agent,
for itself and on behalf of the Lenders, as collateral security for the
Obligations, and acknowledges that all of such Liens and security interests, and
all Collateral heretofore pledged as security for the Obligations, continues to
be and remain collateral for the Obligations from and after the date hereof.

Dated:  May [___], 1999

PEGASO TELECOMUNICACIONES, S.A. DE C.V.

By:
     -----------------------------------

     Name:
          ------------------------------

     Title:
            ----------------------------


<PAGE>

PEGASO PCS, S.A. DE C.V.

By:
     -----------------------------------

     Name:
          ------------------------------

     Title:
           -----------------------------


PEGASO RECURSOS HUMANOS, S.A. DE C.V.

By:
     -----------------------------------

     Name:
          ------------------------------

     Title:
           -----------------------------


CITIBANK, N.A., as Intercreditor Agent

By:
     -----------------------------------

     Name:
          ------------------------------

     Title:
           -----------------------------

<PAGE>
                           AMENDMENT NO. 2 TO AMENDED

                         AND RESTATED CREDIT AGREEMENT

     THIS AMENDMENT NO. 2 TO THE AMENDED AND RESTATED CREDIT AGREEMENT, dated
as of November 28, 2000 (this "Amendment"), among PEGASO COMUNICACIONES Y
SISTEMAS, S.A. DE C.V.,  a corporation organized under the laws of Mexico
("Borrower"), QUALCOMM INCORPORATED, a corporation organized under the laws of
Delaware, ("QUALCOMM"), the lenders (each, a "Lender" and, collectively, the
"Lenders") from time to time party to the Amended and Restated Credit Agreement
(as defined below), and ABN AMRO BANK N.V. as administrative agent for the
Lenders ("Administrative Agent").

                                    RECITALS

     WHEREAS, the Borrower has entered into that certain Amended and Restated
Credit Agreement, dated as of December 15, 1998, by and among the Borrower,
QUALCOMM, the Lenders and the Administrative Agent, as amended by that certain
Amendment No. 1 to Amended and Restated Credit Agreement dated as of May 27,
1999 (as so amended, the "Credit Agreement").

     WHEREAS, the parties to the Credit Agreement desire to further amend the
Credit Agreement as provided below, all in accordance with the terms, subject
to the conditions and in reliance upon the representations and warranties set
forth below.

                                   AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

     SECTION 1. DEFINITIONS. Unless defined herein, all capitalized terms used
herein shall have the meanings given to them in the Credit Agreement.

     SECTION 2. AMENDMENT TO CREDIT AGREEMENT.

          2.1  SECTION 9 (DEFINITIONS). Section 9 of the Credit Agreement is
hereby amended by deleting the definition of Facility-2 Availability Period in
its entirety, and inserting the following in lieu thereof:

          "Facility-2 Availability Period" shall mean the period commencing on
        November 28, 2000 and ending on December 31, 2002.

     SECTION 3. REFERENCE TO AND EFFECT ON CREDIT AGREEMENT AND OTHER FINANCING
AGREEMENTS.

                                       1.
<PAGE>
          (a)  Upon the effectiveness of this Amendment, on and after the date
hereof, each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import shall mean and be a
reference to the Credit Agreement as amended by this Amendment and each
reference in the Financing Agreements to the Credit Agreement shall also mean
and be a reference to the Credit Agreement as amended by this Amendment.

          (b)  The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Administrative Agent or the Lenders under the
Credit Agreement or any of the Financing Agreements, nor constitute a waiver of
any provision of the Credit Agreement or any of the Financing Agreements.

     SECTION 4. REAFFIRMATION OF TERMS. This Amendment shall be construed in
connection with and as part of the Financing Agreements and all terms,
conditions, representations, warranties, covenants and agreements set forth in
the Financing Agreements, except as herein waived or amended, are hereby
ratified and confirmed and shall remain in full force and effect.

     SECTION 5. ACKNOWLEDGMENTS AND WAIVERS. Borrower hereby ratified and
reaffirms the validity and enforceability of all of the Liens and security
interests heretofore granted pursuant to the Common Agreement and the Security
Documents referred to therein, for the benefit of the Lenders, as collateral
security for the Senior Indebtedness, and acknowledges that all of such Liens
and security interests, and all collateral pledged as security for the Senior
Indebtedness, continues to be and remain collateral for the Senior Indebtedness
from and after the date hereof.

     SECTION 6. RELEASE AND WAIVER.

          (a)  Borrower hereby acknowledges and agrees that: (i) it has no
claim or cause of action against any Lender or the Administrative Agent, or any
of their officers, directors, employees, attorneys or other representatives or
agents under the Financing Agreements with respect to any condition, act,
omission, event, contract, liability, obligation, indebtedness, claim, cause of
action, defense, circumstance or matter of any kind whatsoever which existed,
arose or occurred at any time prior to the execution and delivery of this
Amendment or which could arise concurrently with the effectiveness of this
Amendment ("CLAIMS"); (ii) it has no offset or defense against any of its
respective obligations, indebtedness or contracts in favor of any Lender or the
Administrative Agent on account of any Claims; and (iii) it recognizes that
each Lender and the Administrative Agent has heretofore properly performed and
satisfied in a timely manner all of its obligations to and contracts with the
Borrower relating to the Financing Agreements.

          (b)  Although the Administrative Agent and Lenders regard their
conduct as proper and do not believe the Borrower to have any claim, cause of
action, offset or defense against any Lender or the Administrative Agent in
connection with the Financing Agreements, Lenders and the Administrative Agent
wish, and the Borrower agrees, to eliminate any possibility that any past
conditions, acts, omissions, events, circumstances or matters could impair or
otherwise affect any rights, interests, contracts or remedies of any Lender or
the Administrative Agent. Therefore, the Borrower unconditionally releases and
waives as to all

                                       2.



<PAGE>
Lenders and the Administrative Agent (1) any and all liabilities, indebtedness
and obligations, whether known or unknown, of any kind of any Lender or the
Administrative Agent to the Borrower arising under the Financing Agreements and
which exist on the date hereof, except the obligations remaining to be performed
by the Lenders as expressly stated in the Financing Agreements; (2) any legal,
equitable or other obligations or duties, whether known or unknown, of the
Lenders or of the Administrative Agent to the Borrower (and any rights of the
Borrower against any Lender or the Administrative Agent) arising under the
Financing Agreements and which exist on the date hereof besides those expressly
stated in the Financing Agreements; (3) any and all claims under any oral or
implied agreement, obligation or understanding with any Lender or the
Administrative Agent, whether known or unknown, arising under the Financing
Agreements and which exist on the date hereof; and (4) all other claims, causes
of action or defenses of any kind whatsoever (if any), whether known or unknown,
which the Borrower might otherwise have against any Lender or the Administrative
Agent, on account of any Claims.

          (c)  THE BORROWER AGREES TO ASSUME THE RISK OF ANY AND ALL UNKNOWN,
UNANTICIPATED OR MISUNDERSTOOD DEFENSES, CLAIMS, CAUSES OF ACTION, CONTRACTS,
LIABILITIES, INDEBTEDNESS AND OBLIGATIONS WHICH ARE RELEASED BY THIS AMENDMENT
IN FAVOR OF ANY LENDER OR THE ADMINISTRATIVE AGENT, AND THE BORROWER HEREBY
WAIVES AND RELEASES ALL RIGHTS AND BENEFITS WHICH IT MIGHT OTHERWISE HAVE UNDER
THE LAW OF THE STATE OF NEW YORK AND THE LAW OF THE FEDERAL DISTRICT OF MEXICO
WITH REGARD TO THE RELEASE OF SUCH UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD
DEFENSES, CLAIMS, CAUSES OF ACTION, CONTRACTS, LIABILITIES, INDEBTEDNESS AND
OBLIGATIONS. TO THE EXTENT (IF ANY) WHICH ANY SUCH LAWS MAY BE APPLICABLE, THE
BORROWER WAIVES AND RELEASES (TO THE MAXIMUM EXTENT PERMITTED BY LAW) ANY RIGHT
OR DEFENSE WHICH IT MIGHT OTHERWISE HAVE UNDER ANY OTHER LAW OF ANY APPLICABLE
JURISDICTION WHICH MIGHT LIMIT OR RESTRICT THE EFFECTIVENESS OR SCOPE OF ANY OF
ITS WAIVERS OR RELEASES UNDER THIS AMENDMENT.

     SECTION 7. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders
and the Administrative Agent to enter into this Amendment, the Borrower hereby
represents, warrants and covenants to the Lenders and the Administrative Agent
as follows:

          7.1  Immediately after giving effect to this Amendment (i) the
representations and warranties contained in the Financing Agreements (other
than those which expressly relate to a different date) are true, accurate and
complete in all material respects as of the date hereof and (ii) no Default or
Event of Default has occurred and is continuing;

          7.2  Pegaso shall deliver to the Administrative Agent, simultaneous
with the execution of this Amendment No. 2, the Charter Documents of the
Borrower as amended and restated effective April 2000. Such Charter Documents,
as so amended and restated, remain true, accurate and complete and have not
been amended, supplemented or restated subsequent to such date and are and
continue to be in full force and effect;

                                       3.



<PAGE>
     SECTION 8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.

     SECTION 9. EFFECTIVENESS. This Amendment shall be deemed effective upon
the satisfaction of all of the following conditions precedent:

          9.1  AMENDMENT. Borrower shall have duly executed and delivered this
Amendment to the Administrative Agent.

          9.2  ACKNOWLEDGMENT OF AMENDMENT AND REAFFIRMATION OF GUARANTY. The
Administrative Agent shall have received the Acknowledgment of Amendment and
Reaffirmation of Guaranty, duly executed and delivered by each Guarantor.

          9.3  PAYMENT OF REIMBURSEMENT AND INDEMNIFICATION OBLIGATIONS.
Borrower shall have paid to the Lenders and the Administrative Agent all of its
reimbursement and indemnification obligations owing under Section 11.1 of the
Credit Agreement, including its obligation to pay all attorneys' fees and costs
and other disbursements incurred by the Lenders or the Administrative Agent in
connection with the negotiation, implementation, execution and enforcement of
this Amendment and any acts contemplated hereby.

     SECTION 10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York, United States,
without reference to principles of conflicts of law (other than Section 5-1401
of the General Obligations Laws of the State of New York); provided, however,
that in connection with any legal action or proceeding (other than an action to
enforce a judgment obtained in another jurisdiction) brought in respect to this
Agreement in the courts of Mexico or any political subdivision thereof, this
Agreement shall be deemed to be an instrument made under the laws of Mexico and
for such purposes shall be governed by, and construed in accordance with, the
laws of the Federal District of Mexico.

                                       4.
<PAGE>
                          ACKNOWLEDGEMENT OF AMENDMENT
                         AND REAFFIRMATION OF GUARANTY

Capitalized terms used but not defined in this Acknowledgement of Amendment and
Reaffirmation of Guaranty shall have the meanings given to them in the Credit
Agreement.

     SECTION 1. Each of the undersigned Guarantors hereby acknowledges and
confirms that it has reviewed and approved the terms and conditions of the
Amendment No. 1 to Credit Agreement dated as of even date herewith (the
"Amendment").

     SECTION 2. Each of the Guarantors hereby consents to the Amendment and
agrees that the Pegaso Guaranty Agreement relating to the Senior Indebtedness
of the Borrower under the Credit Agreement shall continue in full force and
effect, shall be valid and enforceable and shall not be impaired or otherwise
affected by the execution of the Amendment or any other document or instrument
delivered in connection herewith.

     SECTION 3. Each of the Guarantors severally represents and warrants that,
after giving effect to the Amendment, all representations and warranties
contained in the Pegaso Guaranty Agreement are true, accurate and complete as
if made the date hereof.

     SECTION 4. Each of the Guarantors hereby ratifies and reaffirms the
validity and enforceability of all of the Liens and security interests
heretofore granted by it, pursuant to the Security Documents to the
Administrative Agent, for itself and on behalf of the Senior Lenders, as
collateral security for the Senior Indebtedness, and acknowledges that all of
such Liens and security interests, and all Collateral heretofore pledged by it
as security for the Senior Indebtedness, continues to be and remain collateral
for the Senior Indebtedness from and after the date hereof.

Dated: November 28, 2000

PEGASO TELECOMUNICACIONES, S.A., DE C.V.

BY:  /s/ [SIGNATURE ILLEGIBLE]
    _______________________________

     Name: _________________________

     Title: ________________________


                                       1.
<PAGE>

     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.

                            PEGASO COMUNICACIONES Y SISTEMAS, S.A.
                            DE C.V.

                            By:     /s/ [SIGNATURE ILLEGIBLE]
                                 ------------------------------------------

                            Printed Name:
                                          ---------------------------------

                            Title:
                                   ----------------------------------------


                            ABN AMRO BANK N.V.,
                            as Administrative Agent

                            By:    /s/ Mary C. Casey    /s/ Milena Sopcic
                                -------------------------------------------

                            Printed Name:  Mary C. Casey     Milena Sopcic
                                          ---------------------------------

                            Title:
                                   Vice President  Assistant Vice President
                                   ----------------------------------------


                            QUALCOMM INCORPORATED
                            as a Lender

                            By:    /s/ Paul Fiskness
                                -------------------------------------------
                                   Paul Fiskness
                                   Vice President of Project Finance and
                                   Direct Investments


                            TELEFONAKTIEBOLAGET L.M. ERICSSON (PUBL)
                            as a Lender

                            By:/s/[SIGNATURE ILLEGIBLE] /s/[SIGNATURE ILLEGIBLE]
                               -------------------------------------------

                            Printed Name:
                                          ---------------------------------

                            Title:
                                   ----------------------------------------


                                  5.
<PAGE>
                                 PEGASO PCS, S.A. DE C.V.

                                 By:   /s/ [SIGNATURE ILLEGIBLE]
                                      ------------------------------------------

                                 Printed Name:
                                               ---------------------------------

                                 Title:
                                        ----------------------------------------


                                 PEGASO RECURSOS HUMANOS, S.A. DE C.V.

                                 By:    /s/ [SIGNATURE ILLEGIBLE]
                                     -------------------------------------------

                                 Printed Name:
                                               ---------------------------------

                                 Title:
                                        ----------------------------------------


                                 ABN AMRO BANK N.V.,
                                 as Administrative Agent

                                 By:    /s/ Mary C. Casey    /s/ Milena Sopcic
                                     -------------------------------------------

                                 Printed Name:  Mary C. Casey     Milena Sopcic
                                               ---------------------------------

                                 Title: Vice President  Assistant Vice President
                                        ----------------------------------------




                                       2.
<PAGE>
                                                        PEGASO PCS, S.A. DE C.V.
                                               Paseo de los Tamarindos No. 400-A
[PEGASO LOGO]                                          Col. Bosques de las Lomas
                                                              Mexico, D.F. 05120
                                                   Tel: 5261-6600 Fax: 5261-6780


                                                                 January 3, 2001


RICHARD BERWICK
C/O QUALCOMM INC.
5775 MOOREHOUSE DRIVE
SAN DIEGO, CA 92121-1714

Dear Mr. Berwick,

Enclosed please find copy signed of the Amendment No. 2 to Amended and Restated
Credit Agreement, these have the original signatures of all parties.

If you have any question, please call me at 011-52-5261-6757.

Regards,


/s/ FERNANDA LUNA

Fernanda Luna
Technical Contracts Assistant
<PAGE>
                                                                  EXECUTION COPY

                           AMENDMENT NO. 3 TO AMENDED
                         AND RESTATED CREDIT AGREEMENT

              THIS AMENDMENT NO. 3 TO THE AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of October 10, 2001 (this "Amendment"), is entered into by and among
PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a corporation organized under
the laws of Mexico ("Borrower"), the other members of the BORROWER GROUP,
QUALCOMM INCORPORATED, a corporation organized under the laws of Delaware
("QUALCOMM"), TELEFONAKTIEBOLAGET L.M. ERICSSON (PUBL), a limited liability
company organized under the laws of Sweden ("Ericsson"), the lenders from time
to time party to the Credit Agreement (as defined below) (together with QUALCOMM
and Ericsson, each a "Lender," and, collectively, the "Lenders"), and ABN AMRO
BANK N.V. as administrative agent for the Lenders ("Administrative Agent").

                                    RECITALS

              WHEREAS, Borrower has entered into that certain Amended and
Restated Credit Agreement, dated as of December 15, 1998, by and among Borrower,
QUALCOMM, the Lenders and the Administrative Agent, as amended by that certain
Amendment No. 1 to Amended and Restated Credit Agreement dated as of May 27,
1999, and that certain Amendment No. 2 to Amended and Restated Credit Agreement,
dated as of November 28, 2000 (as so amended, the "Credit Agreement").

              WHEREAS, Borrower has entered into that certain Common Agreement,
dated as of December 15, 1998, as the same may be amended, supplemented,
modified or restated from time to time ("Common Agreement").

              WHEREAS, Borrower acknowledges, recognizes, certifies and
represents to the Lenders and the Administrative Agent, that, as of the date of
execution of this Amendment, the outstanding amount of principal plus accrued
interest owed by Borrower as of the date hereof to (i) QUALCOMM under the Credit
Agreement is US$268,565,648.30 and (ii) Ericsson under the Credit Agreement is
US$39,446,198.70.

              WHEREAS, the shareholders of Holdings, Telefonica S.A. and
Telefonica Moviles S.A. have entered into negotiations regarding the possible
acquisition by Telefonica S.A. or an affiliate thereof ("Telefonica") of a
majority of the outstanding capital stock of Holdings or substantially all of
the assets of Holdings, a possible business combination involving Telefonica and
Holdings or a possible strategic investment by Telefonica in Holdings (any of
the foregoing, the "Telefonica Transaction").

              WHEREAS, Borrower has requested QUALCOMM and Ericsson to provide
additional Facility-2 Commitments and QUALCOMM and Ericsson have agreed to
provide additional Facility-2 Commitments to Borrower in the aggregate amount of
US $150,000,000.

              WHEREAS, the parties to the Credit Agreement desire to amend the
Credit Agreement to (i) amend the definition of "Total Commitment" by increasing
the Facility-2 Commitments by $150,000,000 and (ii) revise Schedule 1.0 attached
thereto to reflect QUALCOMM's additional Facility-2 Commitment of US $96,000,000
and Ericsson's additional


                                       1
<PAGE>

Facility-2 Commitment of US $54,000,000, all in accordance with the terms,
subject to the conditions and in reliance upon the representations and
warranties set forth below.

              WHEREAS, Borrower intends to enter into a credit agreement (the
"Facility 2 Alcatel Credit Agreement") subject to the terms and conditions of
the Alcatel Commitment Letter.

              NOW, THEREFORE, in consideration of the foregoing recitals and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, and intending to be legally bound, the parties hereto agree
as follows:

       SECTION 1. DEFINITIONS. Unless defined herein, all capitalized terms used
herein shall have the meanings given to them in the Credit Agreement and the
Common Agreement.

       SECTION 2. AMENDMENTS TO CREDIT AGREEMENT

              2.1 SECTION 9 (DEFINITIONS). Section 9 is amended as follows:


                     (a) The introductory paragraph of Section 9 is amended by
deleting such introductory paragraph with the following new introductory
paragraph:

       "As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Unless defined herein, all
capitalized terms used herein shall have the meanings give to them in the Common
Agreement. Defined terms in this Agreement shall include in the singular number
the plural and in the plural the singular:"

                     (b) The definition of Total Commitment is amended by
deleting the number "$300,000,000" and inserting in its place "$460,000,000."

              2.2 SCHEDULE 1.0. Schedule 1.0 attached to the Credit Agreement is
hereby replaced in its entirety by Schedule 1.0 attached to this Amendment in
order to reflect the increase in Facility-2 Commitments by QUALCOMM in the
amount of US $96,000,000 (the "QUALCOMM Additional Commitment") and Ericsson in
the amount of US $54,000,000 (the "Ericsson Additional Commitment").

       SECTION 3. COMMITMENTS AND AVAILABILITY OF VAT LOANS. Subject to and upon
the terms and conditions set forth herein, the Credit Agreement and the
Financing Agreements, Ericsson agrees to provide Borrower the Ericsson
Additional Commitment and QUALCOMM agrees to provide Borrower the QUALCOMM
Additional Commitment as follows:

              3.1 ERICSSON ADDITIONAL COMMITMENT. The Ericsson Additional
Commitment shall be available upon (a) the occurrence of the Effective Date (as
defined in Section 10 herein) and (b) the approval by Ericsson's board of
directors of the Ericsson Additional Commitment and thereafter for a period of
four (4) months.

              3.2 QUALCOMM ADDITIONAL COMMITMENT. The QUALCOMM Additional
Commitment shall be available upon (i) receipt by QUALCOMM of duly executed
definitive


                                       2
<PAGE>

agreements relating to the Telefonica Transaction in form and substance
reasonably satisfactory to QUALCOMM (the "Definitive Agreements"), (ii) the
occurrence of the Effective Date and (iii) the full utilization by Borrower of
the Ericsson Additional Commitment. QUALCOMM shall provide Loans to Borrower
under the QUALCOMM Additional Commitment only upon receipt of a Loan Request and
the supporting invoices in the manner and in accordance with the terms and
conditions set forth in Section 1.5(b)(i) of the Credit Agreement.

              3.3 AVAILABILITY OF VAT LOANS. Notwithstanding anything to the
contrary in Section 1.1(b) of the Credit Agreement and the definition of "VAT
Facility Availability Period", the Lenders shall not be obligated to provide to
Borrower VAT Loans until the Lenders shall have received executed copies of the
Definitive Agreements.

              3.4 APPLICATION OF LOAN PROCEEDS. Borrower shall apply the
proceeds from any Loans made under the Ericsson Additional Commitment and the
Qualcomm Additional Commitment to pay any and all invoices which are now
outstanding and due or may become outstanding and due from (i) Ericsson Radio
Systems S.A. de C.V. ("ERS"), (ii) Ericsson Telecom, S.A. de C.V. ("Ericsson
Telecom") and (iii) Ericsson Wireless Communications, Inc. ("Ericsson Wireless",
and together with ERS and Ericsson Telecom, the "Ericsson Sellers") arising in
connection with sales made by the Ericsson Sellers to Borrower of cdmaone
infrastructure equipment, CDMA2000 infrastructure equipment and HDR
infrastructure equipment, including without limitation radio base stations, base
station controllers, mobile switching centers, HLRs, jambala platforms and the
applications related thereto together with the provision of associated services
thereto made by the Ericsson Sellers to Borrower pursuant to the: (A) Amended
and Restated Equipment Purchase Agreement, as amended, in effect as of the
Effective Date and executed originally between QUALCOMM and Borrower on May 24,
1999 and which agreement was assigned by QUALCOMM to ERS on May 24, 1999 which
then was subsequently assigned by ERS to Ericsson Wireless on October 5, 1999,
and (B) Amended and Restated Services Agreement, as amended, in effect as of the
Effective Date and executed originally between QUALCOMM Wireless Services
(Mexico), S.A. de C.V ("QWS") and Borrower on May 24, 1999 and which agreement
was assigned by QWS to ERS on May 24, 1999 which then was subsequently assigned
by ERS to Ericsson Telecom.

       SECTION 4. REFERENCE TO AND EFFECT ON CREDIT AGREEMENT AND OTHER
FINANCING AGREEMENTS

                     (a) On the Effective Date, each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import shall mean and be a reference to the Credit Agreement as amended by this
Amendment and each reference in the Financing Agreements to the Credit Agreement
shall also mean and be a reference to the Credit Agreement as amended by this
Amendment.

                     (b) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of the Administrative Agent or the Lenders under the
Credit Agreement or any of the Financing Agreements, nor constitute a waiver of
any provision of the Credit Agreement or any of the Financing Agreements.


                                       3
<PAGE>

       SECTION 5. REAFFIRMATION OF TERMS. This Amendment shall be construed in
connection with and as part of the Financing Agreements and all terms,
conditions, representations, warranties, covenants and agreements set forth in
the Financing Agreements, except as herein waived or amended, are hereby
ratified and confirmed and shall remain in full force and effect.

       SECTION 6. ACKNOWLEDGMENTS AND WAIVERS. Each member of the Borrower Group
hereby ratifies and reaffirms the validity and enforceability of all of the
Liens and security interests heretofore granted pursuant to the Common Agreement
and the Security Documents referred to therein, for the benefit of the Lenders,
as collateral security for the Senior Indebtedness, and acknowledges that all of
such Liens and security interests, and all collateral pledged as security for
the Senior Indebtedness, continue to be and remain collateral for the Senior
Indebtedness from and after the date hereof.

       SECTION 7. RELEASE AND WAIVER.

                     (a) Each member of the Borrower Group hereby acknowledges
and agrees that: (i) it has no claim or cause of action against any Lender or
the Administrative Agent, or any of their officers, directors, employees,
attorneys or other representatives or agents under the Financing Agreements with
respect to any condition, act, omission, event, contract, liability, obligation,
indebtedness, claim, cause of action, defense, circumstance or matter of any
kind whatsoever which existed, arose or occurred at any time prior to the
execution and delivery of this Amendment or which could arise concurrently with
the effectiveness of this Amendment ("Claims"); (ii) it has no offset or defense
against any of its respective obligations, indebtedness or contracts in favor of
any Lender or the Administrative Agent on account of any Claims; and (iii) it
recognizes that each Lender and the Administrative Agent has heretofore properly
performed and satisfied in a timely manner all of its obligations to and
contracts with each member of the Borrower Group relating to the Financing
Agreements.

                     (b) Although the Administrative Agent and Lenders regard
their conduct as proper and do not believe any member of the Borrower Group to
have any claim, cause of action, offset or defense against any Lender or the
Administrative Agent in connection with the Financing Agreements, Lenders and
the Administrative Agent wish, and each member of the Borrower Group agrees, to
eliminate any possibility that any past conditions, acts, omissions, events,
circumstances or matters could impair or otherwise affect any rights, interests,
contracts or remedies of any Lender or the Administrative Agent. Therefore, each
member of the Borrower Group unconditionally releases and waives as to all
Lenders and the Administrative Agent (1) any and all liabilities, indebtedness
and obligations, whether known or unknown, of any kind of any Lender or the
Administrative Agent to any member of the Borrower Group arising under the
Financing Agreements and which exist on the date hereof, except the obligations
remaining to be performed by the Lenders as expressly stated in the Financing
Agreements; (2) any legal, equitable or other obligations or duties, whether
known or unknown, of the Lenders or of the Administrative Agent to any member of
the Borrower Group (and any rights of any member of the Borrower Group against
any Lender or the Administrative Agent) arising under the Financing Agreements
and which exist on the date hereof besides those expressly stated in the
Financing Agreements; (3) any and all claims under any oral or implied
agreement, obligation or understanding with any Lender or the Administrative
Agent, whether known or unknown, arising

                                       4
<PAGE>

under the Financing Agreements and which exist on the date hereof; and (4) all
other claims, causes of action or defenses of any kind whatsoever (if any),
whether known or unknown, which any member of the Borrower Group might otherwise
have against any Lender or the Administrative Agent on account of any Claims.

                     (c) EACH MEMBER OF THE BORROWER GROUP AGREES TO ASSUME THE
RISK OF ANY AND ALL UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD DEFENSES, CLAIMS,
CAUSES OF ACTION, CONTRACTS, LIABILITIES, INDEBTEDNESS AND OBLIGATIONS WHICH ARE
RELEASED BY THIS AMENDMENT IN FAVOR OF ANY LENDER OR THE ADMINISTRATIVE AGENT,
AND EACH MEMBER OF THE BORROWER GROUP HEREBY WAIVES AND RELEASES ALL RIGHTS AND
BENEFITS WHICH IT MIGHT OTHERWISE HAVE UNDER THE LAW OF THE STATE OF NEW YORK
AND THE LAW OF THE FEDERAL DISTRICT OF MEXICO WITH REGARD TO THE RELEASE OF SUCH
UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD DEFENSES, CLAIMS, CAUSES OF ACTION,
CONTRACTS, LIABILITIES, INDEBTEDNESS AND OBLIGATIONS, TO THE EXTENT (IF ANY)
WHICH ANY SUCH LAWS MAY BE APPLICABLE, EACH MEMBER OF THE BORROWER GROUP WAIVES
AND RELEASES (TO THE MAXIMUM EXTENT PERMITTED BY LAW) ANY RIGHT OR DEFENSE WHICH
IT MIGHT OTHERWISE HAVE UNDER ANY OTHER LAW OF ANY APPLICABLE JURISDICTION WHICH
MIGHT LIMIT OR RESTRICT THE EFFECTIVENESS OR SCOPE OF ANY OF ITS WAIVERS OR
RELEASES UNDER THIS AMENDMENT.

       SECTION 8. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders
and the Administrative Agent to enter into this Amendment, each member of the
Borrower Group hereby represents, warrants and covenants to the Lenders and the
Administrative Agent as follows:

              8.1 Immediately after giving effect to this Amendment (i) the
representations and warranties contained in the Financing Agreements (other than
those which expressly relate to a different date) are true, accurate and
complete in all material respects as if made as of the Effective Date, (ii)
other than to the extent expressly waived in writing by the Lenders, no Default
or Event of Default has occurred and is continuing and (iii) all references to
the Credit Agreement in the Financing Agreements shall be deemed to be
references to the Credit Agreement as amended by this Amendment;

              8.2 The Charter Documents of (i) Borrower delivered to the
Administrative Agent remain true, accurate and complete and have not been
amended, supplemented or restated subsequent to October, 2001 and continue to be
in full force and effect, and (ii) each other member of the Borrower Group
delivered to the Administrative Agent on the Closing Date remain true, accurate
and complete and have not been amended, supplemented or restated subsequent to
such date and continue to be in full force and effect.

              8.3 The execution, delivery and the performance of obligations of
this Amendment by each member of the Borrower Group has been duly authorized by
all requisite corporate action. This Amendment, as of the Effective Date,
constitutes the valid and binding obligations of each member of the Borrower
Group, enforceable in accordance with the terms herein.


                                       5
<PAGE>


              8.4 The execution, delivery and performance of this Amendment do
not and will not (i) violate or conflict with the certificate of incorporation
or by-laws of any member of the Borrower Group, (ii) conflict with or violate
any Applicable Law, or (iii) result in any breach of, or constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Lien on any of the material assets or properties of any member of the Borrower
Group pursuant to, any contract or other instrument relating to such assets or
properties to which a member of the Borrower Group is a party or by which any of
such assets or properties is bound or affected, except as would not,
individually or in the aggregate, materially impair the ability of the member
Borrower to consummate the transactions contemplated by this Amendment.

       SECTION 9. COUNTERPARTS. This Amendment may he executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.

       SECTION 10. EFFECTIVENESS. This Amendment shall be deemed effective upon
the satisfaction of all of the following conditions precedent ("Effective
Date"):

              10.1 AMENDMENT. Each member of the Borrower Group and each Lender
shall have duly executed and delivered this Amendment to the Administrative
Agent.

              10.2 ACKNOWLEDGMENT OF AMENDMENT AND REAFFIRMATION OF GUARANTY.
The Administrative Agent shall have received the Acknowledgment of Amendment and
Reaffirmation of Guaranty (in English and Spanish), duly executed and delivered
by each Guarantor.

              10.3 CERTIFIED RESOLUTIONS. The Administrative Agent shall have
received for each member of the Borrower Group a certificate of the appropriate
officers of such member of the Borrower Group dated as of the date hereof and as
of the Effective Date certifying (i) the names and true signatures of the
incumbent officers of such member of the Borrower Group authorized to sign this
Amendment, (ii) the resolutions of such member's Board of Directors approving
and authorizing the execution, delivery and performance of this Amendment, and
(iii) that there have been no changes in the Charter Documents of (A) Borrower
since October 2001 and (B) each other member of the Borrower Group since the
date of certification thereof to Administrative Agent in connection with the
closing of the Financing Agreements.

              10.4 PAYMENT OF REIMBURSEMENT AND INDEMNIFICATION OBLIGATIONS.
Each member of the Borrower Group shall have paid to the Lenders and the
Administrative Agent all of its reimbursement and indemnification obligations
owing under Section 11.1 of the Credit Agreement, including its obligation to
pay all attorneys' fees and costs and other disbursements incurred by the
Lenders or the Administrative Agent in connection with the negotiation,
implementation, execution and enforcement of this Amendment and any acts
contemplated thereby.

              10.5 EXECUTION AND DELIVERY OF FACILITY 2 ALCATEL CREDIT
AGREEMENT. Borrower shall have duly executed and delivered to the Administrative
Agent and each Lender


                                       6
<PAGE>

the Facility 2 Alcatel Credit Agreement pursuant to Section 4.3(a) of the Credit
Agreement and all conditions to the effectiveness of the Facility 2 Alcatel
Credit Agreement shall have been satisfied or waived by the Lenders thereunder.

              10.6 OTHER DOCUMENTS AND ACTIONS. Borrower shall have duly
executed and delivered to the Administrative Agent any other documents
(including opinions and certificates) or taken any other actions as may be
reasonably requested by the Lenders or the Administrative Agent for purposes
related to this Amendment.

       SECTION 11. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the law of the State of New York, United States,
without reference to principles of conflicts of law (other than Section 5-1401
of the General Obligations Laws of the State of New York); provided, however,
that in connection with any legal action or proceeding (other than an action to
enforce a judgment obtained in another jurisdiction) brought in respect to this
Amendment in the courts of Mexico or any political subdivision thereof, this
Amendment shall be deemed to be an instrument made under the laws of Mexico and
for such purposes shall be governed by, and construed in accordance with, the
laws of the Federal District of Mexico.

                             [SIGNATURES TO FOLLOW]


                                       7
<PAGE>

              IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.

                    PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.

                    By:
                       ------------------------------------------
                    Printed Name:
                                 --------------------------------
                    Title:
                          ---------------------------------------


                    PEGASO TELECOMUNICACIONES Y SISTEMAS, S.A. DE C.V.

                    By:
                       ------------------------------------------
                    Printed Name:
                                 --------------------------------
                    Title:
                          ---------------------------------------


                    PEGASO PCS, S.A. DE C.V.

                    By:
                       ------------------------------------------
                    Printed Name:
                                 --------------------------------
                    Title:
                          ---------------------------------------


                    PEGASO RECURSOS HUMANOS, S.A. DE C.V.

                    By:
                       ------------------------------------------
                    Printed Name:
                                 --------------------------------
                    Title:
                          ---------------------------------------


<PAGE>

                    ABN AMRO BANK N.V.
                    as Administrative Agent

                    By:
                       ------------------------------------------
                    Printed Name:
                                 --------------------------------
                    Title:
                          ---------------------------------------


                    By:
                       ------------------------------------------
                    Printed Name:
                                 --------------------------------
                    Title:
                          ---------------------------------------


                    QUALCOMM INCORPORATED
                    as a Lender

                    By:
                       ------------------------------------------
                    Printed Name:
                                 --------------------------------
                    Title:
                          ---------------------------------------


                    TELEFONAKTIEBOLAGET L.M. ERICSSON (PUBL)
                    as a Lender

                    By:
                       ------------------------------------------
                    Printed Name:
                                 --------------------------------
                    Title:
                          ---------------------------------------


<PAGE>

                                  SCHEDULE 1.0

                                   COMMITMENTS


<TABLE>
<CAPTION>
LENDER              FACILITY-1            FACILITY-2           VAT LOAN                 TOTAL
---------------------------------------------------------------------------------------------------
<S>                 <C>                   <C>                  <C>                  <C>
QUALCOMM            $180,601,616.00       $167,353,153.24      $17,045,230.76       $365,000,000.00

Ericsson            $ 19,398,384.00       $ 72,646,846.76      $ 2,954,769.24       $ 95,000,000.00

---------------------------------------------------------------------------------------------------
TOTAL:              $200,000,000.00       $240,000,000.00      $20,000,000.00       $460,000,000.00
                                                                                    ===============
</TABLE>

NOTE: The foregoing Commitments are subject to the maximum aggregate commitment
in the amount of the Total Commitment, an amount which is less than the sum of
the Commitments set forth above.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>6
<FILENAME>a76829ex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>
<PAGE>
                                  EXHIBIT 23.1


                       CONSENT OF INDEPENDENT ACCOUNTANTS

   We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 and in the Form S-3 Prospectus contained therein (No.
33-46343), in the Registration Statements on Form S-3 (No. 333-26069 and No.
333-32926) and in the Registration Statements on Form S-8 (No. 333-60484, No.
33-45083, No. 33-78158, No. 33-78150, No. 33-32013, No. 333-69457, No.
333-95291, No. 333-32924 and No. 333-42286) of QUALCOMM Incorporated of our
report dated November 5, 2001 relating to the consolidated financial
statements and financial statement schedule, which appears in this Form 10-K.





PRICEWATERHOUSECOOPERS LLP

San Diego, California
November 9, 2001


</TEXT>
</DOCUMENT>
</SUBMISSION>
