<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission File Number: 0-27442
OMNIPOINT CORPORATION
(Exact Name of Registrant as specified in its charter)
DELAWARE 04-2969720
(State or other jurisdiction of (IRS employer
incorporation or organization) identification No.)
3 BETHESDA METRO CENTER 20814
BETHESDA, MARYLAND (Zip Code)
(Address of principal executive office)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (301) 951-2500
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class: on which Registered:
-------------------- --------------------
COMMON STOCK, PAR VALUE NASDAQ NATIONAL
$0.01 PER SHARE MARKET
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K [_].
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of April 27, 1998 was approximately $736,958,586.
The number of shares outstanding of the Registrant's Common Stock, as of
April 27, 1998 was 52,532,019 shares of Common Stock.
-2-
<PAGE>
PART II
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.
The following selected consolidated financial data should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in the Form 10-K for the fiscal
year-ended December 31, 1997. The selected consolidated financial data as of
December 31, 1996 and 1997, and for each of the three years in the period ended
December 31, 1997, have been derived from the Company's consolidated financial
statements included elsewhere in this Form 10-K which have been audited by
Coopers & Lybrand L.L.P., independent accountants, whose report thereon is also
included in the Form 10-K for the fiscal year-ended December 31, 1997. The
selected consolidated financial data as of December 31, 1993 and 1994 and for
the year ended December 31, 1993 has been derived from audited financial
statements of the Company not included in this Form 10-K.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1993 1994 1995 1996 1997
-------- --------- --------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................................. $ 1,618 $ 3,000 $ - $ 531 $ 51,950
Operating expenses:
Cost of service revenues and handset sales .......... - - - 3,230 108,335
Research and development............................. 4,593 7,018 14,345 34,975 23,932
Sales, general and administrative.................... 2,974 6,290 12,619 47,140 105,375
Depreciation and amortization........................ 246 1,125 11,038 15,587 52,644
------- -------- -------- ---------- ----------
Total operating expenses........................... 7,813 14,433 38,002 100,932 290,286
------- -------- -------- ---------- ----------
Loss from operations.................................. (6,195) (11,433) (38,002) (100,401) (238,336)
Interest income (expense), net........................ (32) (1,156) 232 (26,529) (76,083)
Miscellaneous income.................................. - 65 - - -
Gain on sale of subsidiary stock...................... - 3,194 - - -
------- -------- -------- ---------- ----------
Loss before extraordinary item........................ (6,227) (9,330) (37,770) (126,930) (314,419)
Extraordinary loss from early extinguishment of debt.. - - - - (6,591)
------- -------- -------- ---------- ----------
Net loss $(6,227) $ (9,330) $(37,770) $ (126,930) $ (321,010)
======= ======== ======== ========== ==========
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1993 1994 1995 1996 1997
------- -------- -------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............................. $ 9,055 $ 3,095 $ (1,410) $ 246,315 $ (92,165)
Total assets.......................................... 14,465 360,946 474,990 1,419,472 1,779,589
FCC license obligations............................... 347,518 347,518 709,853 758,590
Loan payable under financing agreement................ - - - - 513,766
Other long-term debt.................................. 1,688 48,349 477,503 478,086
Preferred stock....................................... 15,902 15,902 44,127 - -
Total stockholders' equity (deficit).................. (6,031) (7,416) (30,548) 133,774 (181,906)
</TABLE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of the members of the Board of Directors and the
executive officers of the Company and includes information regarding the
individual's age, principal occupation, other business experience and term of
service with the Company. The Board of Directors are elected at each annual
meeting. Officers serve at the discretion of the Board of Directors. There are
no family relationships among any of the members of the Board of Directors or
executive officers of the Company.
NAME POSITION
Douglas G. Smith Chairman of the Board, President,
Chief Executive Officer
George F. Schmitt Executive Vice President, Director
Evelyn Goldfine Chief Administrative Officer, Director
Kjell S. Andersson Executive Vice President
Gary D. Cuccio Chief Operating Officer
Bradley E. Sparks Chief Financial Officer
Harry Plonskier Vice President-Finance
Richard L. Fields Director
Paul J. Finnegan Director
Arjun Gupta Director
James N. Perry, Jr. Director
James J. Ross Director
Douglas G. Smith, age 44, founded the Company in June 1987 and has
continuously served as Chairman of the Board, President and Chief Executive
Officer. From 1985 to 1987, he was one of four professionals in a small venture
capital fund focusing on opportunities in the electronic information industry.
From 1980 to 1985, he founded and managed the Investment Data Systems Division
of Strategic Information (a division of Ziff-Davis Publishing). He received his
M.B.A. from the Harvard Business School, an M.A. from Oxford University and his
B.A. from Georgetown University.
George F. Schmitt, age 54, has served as President of Omnipoint
Communications Services, LLC, a subsidiary of the Company ("OCS"), since January
1997, when OCS was established, and President of Omnipoint Communications Inc.
("OCI"), also a subsidiary of the Company, Executive Vice President of the
Company and Director since October 1, 1995. Prior to joining Omnipoint, from
November 1994 to September 1995, Mr. Schmitt was President and Chief Executive
Officer of PCS PrimeCo, a personal communications service partnership formed by
AirTouch Communications, Inc. ("AirTouch"), Bell Atlantic Corporation, NYNEX
Corporation and US West Inc. From November 1993 to November 1994, Mr. Schmitt
was Executive Vice President, International Operations of AirTouch. From January
1990 to March 1994 he served as Vice President of Pacific Telesis Group, a
predecessor to AirTouch, and was given the responsibility of building and
operating the first digital cellular system in the world, the D2 GSM network in
Germany in 1990. Prior to January 1990, Mr. Schmitt held various management
positions with Pacific Telesis Group and Pacific Bell. Mr. Schmitt is a member
of the Board of Directors of Objective Systems Integrators, Inc. Mr. Schmitt
received his MSM degree from Stanford and a B.A. from St. Mary's College of
California.
Evelyn Goldfine, age 51, has served as Chief Administrative Officer of the
Omnipoint Corporation since 1994. Ms. Goldfine is a private venture investor who
joined the Company as Director of Administration in 1990. She is a certified
public accountant and holds a B.A. degree from the City University of New York
and an accounting degree from Bentley College. Ms. Goldfine has been a Director
of the Company since October 1991.
-3-
<PAGE>
Kjell S. Andersson, age 55, has served as Executive Vice President of
Omnipoint Corporation and President of the Technology Division since February
1997. Prior to joining the Company, he was Executive Vice President and General
Manager of Ericsson Radio Systems AB for five years. Before that, he was
President and CEO of Ericsson Radio Access AB, which designed, produced, and
distributed radio base stations. From 1982 to 1990, Mr. Andersson served in
various executive level positions with Ericsson Radar Electronics AB and prior
to that, spent nine years in engineering, marketing and general management
positions with SATT Electronics AB. Mr. Andersson holds an MSc degree in
Electronic Engineering from the Royal Institute of Technology in Stockholm.
Gary D. Cuccio, age 51, has served as Chief Operating Officer of OCS since
September 1996. Prior to joining the Company from May 1995 to September 1996, he
was Vice President of International Operations of AirTouch for Asia and Europe.
He managed AirTouch's wireless investments for several countries including
Spain, Sweden, Italy, Japan and India. From April 1994 to May 1995, Mr. Cuccio
was the Chief Operations Officer with Belgacom (Belgium) Mobile. Prior to that,
he was Vice President of Sales and Marketing of Pacific Bell. Mr. Cuccio holds a
B.A. degree from California State University Los Angeles, and an M.B.A. degree
from St. Mary's College.
Bradley E. Sparks, age 51, became the Chief Financial Officer of Omnipoint
Corporation in April 1995. Prior to that time, he was employed with MCI
Communications Corporation, an international telecommunications company where
from 1993 to 1995, he held the position of Vice President and Controller and,
from 1988 to 1993, served as Vice President and Treasurer. Prior to MCI, he
worked for Ryder System, Inc. for over twelve years in various financial
management positions. Mr. Sparks holds a B.S. degree from the U.S. Military
Academy at West Point and a M.S. degree in Management from the Alfred P. Sloan
School of Management at MIT. He is a certified public accountant.
Harry Plonskier, age 45, became Vice President, Finance of Omnipoint
Communications Inc. in July 1994, and Vice President, Finance of OCS since
January 1997. From 1986 to 1992 Mr. Plonskier served as Chief Financial Officer
of Cellular One of New York (the McCaw/LIN cellular system) and prior to that,
he served as Controller. Mr. Plonskier holds a B.A. and an M.B.A. from the
University of Michigan.
Richard L. Fields, age 41, has served as a Director of the Company since
September 1991. Since February 1994, Mr. Fields has been a Managing Director and
Executive Vice President of Allen & Company Incorporated ("Allen"), and prior to
such time he was a Vice President of Allen.
Paul J. Finnegan, age 45, has served as a Director of the Company since
August 1993. Since January 1993, Mr. Finnegan has been Vice President of Madison
Dearborn Partners, Inc., the general partner of the general partner of Madison
Dearborn Capital Partners, L.P. Previously, he served in various positions at
First Capital Corporation of Chicago and its affiliates. Mr. Finnegan currently
serves as a director of The Skyline Fund.
Arjun Gupta, age 37, has served as a Director of the Company since August
1995. Mr. Gupta is a partner of TeleSoft Partners, which he founded in January
1997. From August 1994 to December 1996, Mr. Gupta was a Vice President of
Chatterjee Management Company. From November 1993 to July 1994, Mr. Gupta was a
private consultant. Prior to that, from June 1993 he was with Kleiner Perkins
Caufield & Byers and from October 1989 through June 1993, Mr. Gupta was with
McKinsey & Company.
James N. Perry, Jr., age 37, has been a Director of the Company since
August 1993. In January 1993, he became Vice President of Madison Dearborn
Partners, Inc. Previously, Mr. Perry served in various positions at First
Capital Corporation of Chicago and its affiliates. Mr. Perry currently serves as
a director of Clearnet Communications, Inc.
James J. Ross, age 59, has been Vice-Chairman of the Board since 1989. Mr.
Ross is a private venture investor. Since February 1995, Mr. Ross has been Of
Counsel in the law firm of Becker Ross Stone DeStefano & Klein and prior to such
time, he was a partner at such firm.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the
-4-
<PAGE>
Securities and Exchange Commission (the "SEC"). Officers, directors and greater
than 10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file.
SEC rules require the Company to disclose all known delinquent Section
16(a) filings by its officers, directors and 10% stockholders. Based solely on
its review of the copies of reports received by it, or written representations
from certain reporting persons that no such reports were required for those
persons, the Company believes that, for the period beginning January 1, 1997
through December 31, 1997, all filing requirements applicable to its officers,
directors, and greater than 10% beneficial owners were complied with, except
that Mr. Andersson did not timely file a Form 4.
-5-
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain annual compensation information
for the Company's Chief Executive Officer and the other four most highly paid
executive officers of the Company whose annual salary exceeded $100,000 as of
December 31, 1997 (collectively, the "Named Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
-------------------------------------------------- ------------------------
Restricted Options
Name and Other Annual Stock (in number
Principal Position Year Salary Bonus(1) Compensation(2) Awards of shares)
------------------ ------- -------- -------- --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Douglas G. Smith.......................... 1997 $214,130 $147,615(3) $32,730 -- --
President and Chief Executive Officer... 1996 212,500 127,500 27,300 -- --
1995 175,625 100,350 28,928 -- --
George F. Schmitt......................... 1997 223,270 127,500 720 -- --
Executive Vice President and 1996 212,500 127,500 7,750 -- --
President of Omnipoint 1995 36,458(4) 50,000 -- $ 0(5) 1,062,500
Communications Services, LLC
Kjell S. Andersson........................ 1997 188,654(6) 54,000 92,678(7) -- 192,000
Executive Vice President 1996 -- -- -- -- --
and President of 1995 -- -- -- -- --
Omnipoint Technology, Inc.
Gary Cuccio............................... 1997 182,885 24,395 7,358(8) -- 95,000
Chief Operating Officer 1996 43,750(9) 39,710 -- -- --
of Omnipoint Communications 1995 -- -- -- -- --
Services, LLC
Bradley E. Sparks......................... 1997 170,230(10) 45,104 7,000 16,250 --
Chief Financial Officer 1996 154,896 40,000 19,875(11) -- --
1995 100,938 28,500 5,298 0(12) 100,000
</TABLE>
- ---------------------------
(1) The Company's executive officers are eligible for annual cash bonuses. Such
bonuses are generally based upon achievement of corporate and individual
performance objectives determined by the Compensation Committee; however,
certain bonuses are specified in employment agreements.
(2) Includes amounts reimbursed in connection with a supplemental benefit
program and premiums on life insurance.
(3) Includes bonus earned in 1996 based on performance goals and paid in 1997.
(4) Mr. Schmitt joined the Company in October 1995. His annual salary for
fiscal 1995 would have been $175,000 if he were with the Company for the
entire year.
(5) Represents 125,000 shares of Common Stock at a value of $6.00 per share on
the date of the restricted stock grant, net of $6.00 per share paid by the
Named Officer. The aggregate value of such shares at December 31, 1995,
based on a fair market value of $14.00 per share, net of consideration, was
$1 million.
(6) Mr. Andersson joined the Company in February 1997. His annual salary for
fiscal 1997 would have been $225,000 if he were with the Company for the
entire year.
(7) Includes $92,678 reimbursement for moving expenses.
(8) Includes $6,638 reimbursement for moving expenses.
(9) Mr. Cuccio joined the Company in September 1996. His annual salary for
fiscal 1996 would have been $175,000 if he were with the Company for the
entire year.
(10) Mr. Sparks received a salary increase in March 1998, which was retroactive
to April 1997. Such retroactive amounts are included as though actually
paid in 1997.
(11) Includes $16,275 for forgiveness of a loan in accordance with Mr. Sparks'
employment agreement. See "Item 11. - Executive Compensation - Employment
Agreements."
-6-
<PAGE>
(12) Represents 12,500 shares of Common Stock at a value of $6.00 per share on
the date of the restricted stock grant, net of $6.00 per share paid by the
Named Officer. Such shares vest in annual installments over five years,
beginning April 1996. The aggregate value of such shares at December 31,
1995, based on a fair market value of $14.00 per share, net of
consideration, was $100,000.
The following table contains further information concerning the stock option
grants made to each of the Named Officers during the fiscal year ended December
31, 1997.
Option Grants in Last Fiscal Year(1)
Individual Grants
-----------------
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Number of % of Total Stock Price Appreciation for
Securities Options granted Exercise or Option Term ($)(3)
Underlying to Employees in Base Price Expiration ----------------------------------
Name Options Granted (1) Fiscal Year (2) ($/Sh) Date 0% 5% 10%
- ---- ------------------- ---------------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Douglas G. Smith -- -- -- -- -- -- --
George Schmitt -- -- -- -- -- -- --
Kjell S. Andersson 80,000 $16.00 6/12/2007 -- $628,133 $1,620,275
112,000 7.3% 26.00 6/12/2007 -- -- 1,148,385
Gary D. Cuccio 40,000 16.00 5/29/2007 -- 223,904 673,094
45,000 26.00 9/16/2007 -- 487,982 1,350,057
10,000 3.6% 0.01 7/1/2007 $156,150 242,295 368,329
Bradley E. Sparks -- -- -- -- -- -- --
</TABLE>
- ---------------------
(1) Stock options vest over five years, 20% in the first year and on an annual
basis thereafter, provided that such officer remains continuously employed
by the Company.
(2) Based on options to purchase 2,674,636 shares granted in fiscal 1997.
(3) These amounts are based on compounded annual rates of stock price
appreciation of five and ten percent over the 10-year term of the options,
are mandated by rules of the Securities and Exchange Commission and are not
indicative of expected stock performance. Actual gains, if any, on stock
option exercises are dependent on future performance of the Common Stock,
overall market conditions, as well as the option holders' continued
employment throughout the vesting period. The amounts reflected in this
table may not necessarily be achieved or may be exceeded. The indicated
amounts are net of the option exercise price but before taxes that may be
payable upon exercise.
-7-
<PAGE>
The following table sets forth certain information regarding options to
purchase Common Stock held as of December 31, 1997 by each of the Named
Officers.
Aggregated Option Exercises
In Last Fiscal Year and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-
Unexercised Options at Fiscal Money Options at
Shares Value Year End 1997 Fiscal Year End 1997 ($) (1)
Acquired Realized ------------------------------- ------------------------------
Name on Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas G. Smith - - - - - -
George F. Schmitt 33,330 $425,999 229,170 800,000 $2,806,307 $6,790,625
Kjell S. Andersson 0 0 0 192,000 0 580,000
Gary D. Cuccio 0 0 8,000 87,000 58,000 464,000
Bradley E. Sparks 0 0 53,300 46,700 919,425 805,575
</TABLE>
______________
(1) Calculated on the basis of $23.25 per share, the fair market value of the
Common Stock at December 31, 1997, less the exercise price payable for such
shares, multiplied by the number of shares underlying the option.
-8-
<PAGE>
Employment Agreements
- ---------------------
The Company entered into an employment agreement with Mr. Schmitt effective
October 1, 1995, which currently provides for an annual salary of $225,000.
Pursuant to the agreement, Mr. Schmitt serves as President of OCI and Executive
Vice President of the Company. Mr. Schmitt is eligible for an annual bonus of up
to $50,000 or such greater amount as determined by the Compensation Committee.
In the event the agreement is terminated without cause by the Company or upon
the occurrence of certain events, for a period of up to two years following
termination, Mr. Schmitt is entitled to receive severance compensation in the
amount of the base salary, bonus compensation and medical benefits for the most
recent 12-month period which would otherwise be payable to Mr. Schmitt. Mr.
Schmitt's employment agreement also provides for forgiveness of the principal
and interest payments due under a note from Mr. Schmitt to the Company for the
purchase of 125,000 shares of Common Stock. Mr. Schmitt's shares are subject to
a five year repurchase option (a "Five-Year Repurchase Option") by the Company
with respect to 60% of his shares that declines by 20% on each October 1
beginning in 1998. Mr. Schmitt's employment agreement provides that during the
employment period and for two years thereafter, Mr. Schmitt will not engage in
the business of providing wireless personal communication services anywhere in
the territory covering the New York MTA or other geographic regions covered by
licenses for which Mr. Schmitt has managerial responsibility.
The Company granted to Mr. Schmitt an option to purchase 437,500 shares at a
purchase price of $6.00 per share; an option to purchase 250,000 shares at a
purchase price of $16.00 per share; an option to purchase 250,000 shares at a
purchase price of $20.00 per share and an option to purchase 125,000 shares at a
purchase price of $24.00 per share. All options vest in annual installments over
a five year period except the 125,000 share option which vests as to 12,500
shares on the first anniversary of the grant, 25,000 shares on each of the next
four anniversaries and 12,500 shares on the sixth anniversary.
The Company entered into an employment agreement with Mr. Andersson effective
November 3, 1996, which currently provides for an annual salary of $225,000
(which shall be increased by a minimum of 5% each year), in addition to certain
other benefits. The term of employment under the agreement is five years which
commenced on February 2, 1997. Mr. Andersson is eligible for an annual bonus in
an amount up to 100% of his salary. In the event the agreement is terminated
without cause by the Company or upon the occurrence of certain events, for a
period of two years following termination, Mr. Andersson is entitled to receive
severance compensation in the amount of the base salary, bonus compensation and
medical benefits for the most recent 12-month period which would otherwise be
payable to Mr. Andersson. Mr. Andersson's employment agreement also provides
for the forgiveness of the principal and interest payments due under a note from
Mr. Andersson to the Company for the purchase of 60,000 shares of Common Stock.
See "Item 13. -- Certain Relationships and Related Transactions." Mr.
Andersson's shares are subject to a Five-Year Repurchase Option by the Company.
The Company and OCS entered into an employment agreement with Mr. Cuccio
effective September 1, 1996, pursuant to which Mr. Cuccio serves as Chief
Operating Officer of OCS. The agreement currently provides for an annual salary
of $190,000, in addition to certain other benefits. Mr. Cuccio is entitled to
participate in all benefit programs that the Company establishes and makes
available to its full-time employees, subject to any eligibility requirements,
Mr. Cuccio may be terminated at any time by the Company with or without cause.
In 1997, Mr. Cuccio was granted an option to purchase 95,000 shares of the
Company's Common Stock. In the event Mr. Cuccio's employment agreement is
terminated without cause by the Company, the option held by Mr. Cuccio will vest
immediately upon such termination.
On April 17, 1995, Mr. Sparks entered into an employment agreement with the
Company, pursuant to which Mr. Sparks serves as Vice President, Finance and
Chief Financial Officer of the Company. The agreement currently provides for an
annual base salary of $174,000, in addition to certain other benefits. Mr.
Sparks participates in the Executive Bonus Plan whereby he is eligible for
annual bonus payments in an amount up to 20% of his base salary, at the
discretion of the Chief Executive Officer and the Board of Directors. See "Item
11 - Executive Compensation - Executive Bonus Plan." Upon termination of the
agreement by the Company without cause, Mr. Sparks is entitled to receive the
compensation and benefits which would otherwise be payable to Mr. Sparks for a
maximum of six months following such termination. Mr. Sparks' employment
agreement provides for annual forgiveness of the principal and interest payments
due under a note from Mr. Sparks to the Company for the purchase of 12,500
shares of Common Stock. Mr. Sparks' shares are subject to a Five-Year
Repurchase Option. The Company granted Mr. Sparks an option to purchase 100,000
shares at a purchase price
-9-
<PAGE>
of $6.00 per share, vesting over a five year period. Out of the 100,000 options,
Mr. Sparks has 80,030 options outstanding as of March 31, 1998.
Each of Messrs. Andersson's, Schmitt's, Cuccio's, and Sparks' employment
agreements provides that the agreement may be terminated by the employee upon 30
days prior written notice, or by the Company upon seven days prior written
notice. Additionally, Mr. Andersson's employment agreement contains a general
noncompete provision applicable during the employment period and for two years
thereafter, which prohibits him from engaging in any business anywhere in the
world that provides equipment or services that are being provided by or are
under development by OTI at the time he ceases employment with the Company. Mr.
Schmitt's agreement provides in addition to the two year non-compete described
above, a 180 day general non-compete. Mr. Cuccio's and Sparks' employment
agreement contains a one year general noncompete provision, which prohibits the
employee from directly or indirectly engaging in the business of the Company,
and from soliciting the employees, clients or customers of the Company. Such
noncompetition provision is not violated by the employee's ownership of less
than 1% of the outstanding stock of a publicly held corporation.
Executive Bonus Plan
- --------------------
Senior managers of the Company are eligible to receive an annual cash bonus
award, targeted at an average of 20% of annual base compensation. Each eligible
manager is measured against individually established goals and objectives that
will determine the award.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Compensation Committee was formed in October 1995, and the members of the
committee are Messrs. Perry, Fields and Gupta. None of the members was at any
time during the fiscal year ended December 31, 1997, or at any other time, an
officer or employee of the Company. No executive officer of the Company serves
as a member of the board of directors or compensation committee of any entity
that has one or more executive officers serving as members of the Company's
Board of Directors or Compensation Committee.
-10-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of March 31, 1998, by: (i) each person who is
known by the Company to own beneficially more than 5% of the Common Stock; (ii)
each of the Company's directors; (iii) each of the Named Officers; and (iv) all
current officers and directors as a group. Unless otherwise indicated, each
person has sole voting power and investment power with respect to the shares
attributed to them.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned
as of
March 31, 1998(1)
--------------------
Number of
Beneficial Owner Shares Percent
- ---------------- ---------- -------
<S> <C> <C>
Avance Capital (2)........................................ 7,771,011 14.80%
Madison Dearborn Capital Partners, L.P. (3)............... 6,190,156 11.74
Allen & Company Incorporated (4).......................... 3,835,717 7.13
Ark Asset Management Co., Inc. (5)........................ 4,025,000 7.66
Kjell S. Andersson (6)(16)................................ 103,400 *
Gary D. Cuccio (7)(16).................................... 9,220 *
Richard Fields (8)........................................ 4,276,835 7.92
Paul J. Finnegan (9)...................................... 6,190,156 11.74
Evelyn R. Goldfine (10)(16)............................... 336,007 *
Arjun Gupta............................................... 0 *
James N. Perry, Jr. (11).................................. 6,190,156 11.74
James J. Ross (12)........................................ 1,714,420 3.21
George F. Schmitt (13)(16)................................ 394,578 *
Douglas G. Smith (14)(16)................................. 10,146,011 19.32
Bradley Sparks (15)(16)................................... 42,023 *
All officers and directors as a group (12 persons) (17)... 23,254,634 41.99
- -------
</TABLE>
- ---------------------
* Less than one percent.
(1) As of March 31, 1998, the Company had outstanding 52,516,273 shares of
Common Stock. Amounts include outstanding options or warrants which are
exercisable within 60 days of March 31, 1998.
(2) Avance Capital is a sole proprietorship. Mr. Smith has voting and
investment power with respect to these shares. Its address is 3 Bethesda
Metro Center, Suite 400, Bethesda, MD 20814.
(3) Includes 229,167 shares of Common Stock issuable upon exercise of
outstanding warrants. All of such shares are held of record by Madison
Dearborn Capital Partners, L.P. ("MDCP"). MDCP is a limited partnership.
Madison Dearborn Partners, L.P. ("MDP") is the general partner of MDCP.
Investment and voting control over securities owned by MDCP is shared by a
committee of the limited partners of MDP (the "L.P. Committee"). Madison
Dearborn Partners Inc. ("MDP Inc.") is the general partner of MDP and
exercises voting control over securities owned directly or indirectly by
MDP. The address of MDCP is Three First National Plaza, Suite 1330,
Chicago, Illinois 60602.
(4) Includes 1,300,603 shares of Common Stock issuable upon exercise of
outstanding warrants. Allen& Company Incorporated ("Allen") disclaims
beneficial ownership of 317,368 shares and 123,750 shares issuable upon
exercise of options which are beneficially owned by certain officers of
Allen and related persons. Allen's address is 711 Fifth Avenue, New York,
NY 10022.
(5) The address of Ark Asset management Co., Inc. is One New York Plaza, New
York, NY 10004.
(6) Includes 38,400 shares of Common Stock issuable upon exercise of
outstanding options.
(7) Includes 8,000 shares of Common Stock issuable upon exercise of outstanding
options.
(8) Includes 3,835,717 shares owned by Allen (including shares issuable upon
exercise of outstanding warrants as described in Note 4) and 123,750 shares
of Common Stock issuable upon exercise of outstanding options. Mr. Fields
is a Managing Director of Allen. Of such amounts, Mr. Fields does not
exercise voting or investment power over, and disclaims beneficial
ownership of, the 2,535,114 shares and 1,300,603 shares issuable upon
exercise of outstanding warrants which are held by Allen.
(9) All of such shares are held of record by MDCP. Mr. Finnegan is a member of
the L.P. Committee. Mr. Finnegan may therefore be deemed to share
investment control with respect to the shares of Common Stock owned by MDCP
and may therefore be
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<PAGE>
deemed to have beneficial ownership of shares of Common Stock owned by
MDCP. The business address of Mr. Finnegan is c/o MDP Inc., Three First
National Plaza, Suite 1330, Chicago, Illinois 60602.
(10) Includes 250,924 shares of Common Stock issuable upon exercise of
outstanding options; 1,250 shares held in a family trust; and 78,025 shares
held in a family limited partnership. Ms. Goldfine is the general partner
in such partnership and has sole voting and investment power with regard to
the 78,025 shares so held.
(11) All of such shares are held of record by MDCP. Mr. Perry is a member of
the L.P. Committee. Mr. Perry may therefore be deemed to share investment
control with respect to the shares of Common Stock owned by MDCP and may
therefore be deemed to have beneficial ownership of shares of Common Stock
owned by MDCP. The business address of Mr. Perry is c/o MDP Inc., Three
First National Plaza, Suite 1330, Chicago, Illinois 60602.
(12) Includes 840,875 shares of Common Stock issuable upon exercise of
outstanding options held by Mr. Ross and 286,100 shares held in trust for
Mr. Ross' children. With respect to shares held in trust for his children,
Mr. Ross has sole voting and investment power. As a result, Mr. Ross may be
deemed to be the beneficial owner of such shares. Mr. Ross' address is c/o
Becker Ross Stone DeStefano & Klein, 317 Madison Avenue, New York, NY
10017.
(13) Includes 229, 170 shares of Common Stock issuable upon exercise of
outstanding options.
(14) Includes 31,720 shares owned by Mr. Smith's minor children, 7,771,011
shares held by Avance Capital, a sole proprietorship, and 937,341 shares
held in a trust. Mr. Smith does not exercise voting or investment power
over, and disclaims beneficial ownership of, the shares held in the trust.
Mr. Smith has voting and investment power with respect to the other shares.
(15) Includes 400 shares held as custodian for Mr. Sparks' minor child and
33,600 shares of Common Stock issuable upon exercise of outstanding
options.
(16) The address of each of Mr. Andersson, Mr. Cuccio, Ms. Goldfine, Mr.
Schmitt, Mr. Smith and Mr. Sparks, is c/o Omnipoint Corporation, 3 Bethesda
Metro Center, Suite 400, Bethesda, MD 20814.
(17) Includes 2,863,019 shares issuable upon exercise of outstanding options and
warrants.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Andersson executed a five-year balloon promissory note on February 24,
1997 in the original principal amount of $1,087,500, plus interest on the unpaid
principal balance from time to time outstanding at the rate of 6.6% per year, as
consideration for the purchase of 60,000 shares of Common Stock at $26.00 per
share. The principal and interest payment due under the note may be forgiven
pursuant to Mr. Andersson's employment agreement, provided that he has been
continuously employed by the Company at the time such payment is due. The note
is immediately due and payable upon default or the termination of employment
with the Company. See "Item 11. Executive Compensation -- Employment
Agreements."
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Amendment No. 1 to the Company's Annual Report on Form 10-K has
been signed below by the following persons on behalf of the Company in the
capacities and on the date indicated.
OMNIPOINT CORPORATION
By: *
-------------------------------------
Douglas G. Smith
President and Chief Executive Officer
Signature TITLE DATE
--------- ----- ----
* President, Chief Executive April 29, 1998
- -------------------- Officer, Chairman of the
Douglas G. Smith Board and Director (Principal
Executive Officer)
* Executive Vice President and April 29, 1998
- -------------------- Director; President of
George F. Schmitt Omnipoint Communications Inc.
* Chief Financial Officer April 29, 1998
- -------------------- (Principal Financial and
Bradley E. Sparks Accounting Officer)
* Director and Vice Chairman April 29, 1998
- -------------------- of the Board
James J. Ross
* Director April 29, 1998
- --------------------
Evelyn Goldfine
* Director April 29, 1998
- --------------------
Richard L. Fields
* Director April 29, 1998
- --------------------
Paul J. Finnegan
* Director April 29, 1998
- --------------------
James N. Perry, Jr.
* Director April 29, 1998
- --------------------
Arjun Gupta
*/s/ Edwin M Martin, Jr. April 29, 1998
- -------------------------
Edwin M. Martin, Jr.
Attorney-in-Fact
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