<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
---------------
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.)
THREE BETHESDA METRO CENTER, SUITE 400 20814
BETHESDA, MD (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 MARKET
$0.01 PER SHARE
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 __
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 52,540,578 shares of common
---------------------------
stock were outstanding as of May 1,1998.
- ----------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Note 1)
OMNIPOINT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31,
1998 December 31,
(unaudited) 1997
--------- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 49,323 $ 63,581
Short term investments 3,259 15,009
Escrow deposit 25,614 51,230
Accounts receivable, net of allowances
of $5,687 and $5,746 as of March 31,
1998 and December 31, 1997, respectively 28,690 20,079
Inventory 29,134 39,962
Prepaid expenses and other current
assets 18,223 8,554
---------- ----------
Total current assets 154,243 198,415
Fixed assets, net
Network infrastructure equipment-in-
service 489,336 281,191
Construction in progress 253,420 274,575
Other fixed assets 78,689 76,110
Accumulated depreciation (60,915) (46,886)
Fixed assets, net 760,530 584,990
FCC licensing costs, net of accumulated
amortization of $33,541 and $28,854 as
of March 31, 1998 and December 31, 1997,
respectively 937,623 938,533
Investment in joint ventures 26,652 23,180
Deferred financing costs and other
intangible assets, net of accumulated
amortization of $3,689 and $2,814 as
of March 31, 1998 and December 31,
1997 35,989 27,534
Other long-term assets 7,074 6,937
---------- ----------
Total assets $1,922,111 $1,779,589
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses 148,535 150,135
Accrued interest payable 54,555 57,791
FCC license obligations 107,070 79,527
Loans payable under financing agreement 5,000 --
Deferred revenue 3,672 3,059
Capital lease obligations 51 68
---------- ----------
Total current liabilities 318,883 290,580
Loans payable under financing agreements 776,373 513,766
Senior notes 20,135 19,797
11 5/8% Senior and Series A Notes due
2006 458,138 458,289
FCC license obligations 654,265 679,063
Commitments and contingencies (Note 6)
Stockholders' deficit:
Common stock, par value, $.01 per
share; authorized 75,000,000 shares,
52,515,865 shares and 52,270,879
shares issued and outstanding at
March 31, 1998, and December 31,
1997 respectively 525 523
Additional paid-in capital 334,831 334,231
Accumulated deficit (632,223) (507,438)
Unearned compensation (6,693) (7,136)
Notes receivable (2,123) (2,086)
---------- ----------
Total stockholders deficit (305,683) (181,906)
---------- ----------
Total liabilities and
stockholders deficit $1,922,111 $1,779,589
========== ==========
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE>
OMNIPOINT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1998 1997
--------------- ------------
<S> <C> <C>
Revenues:
Service and handset revenues, net $ 33,328 $ 3,087
License fees and engineering services 740 4,500
--------------- ------------
Total revenues 34,068 7,587
Operating expenses:
Cost of service revenues and handset sales 53,196 13,204
Research and development 5,109 7,707
Sales, general, and administrative 45,638 14,686
Depreciation and amortization 19,879 10,419
--------------- ------------
Total operating expenses 123,822 46,016
Loss from operations (89,754) (38,429)
Other income (expense):
Losses on investment in joint ventures (2,023) -
Interest income 1,591 4,661
Interest expense (34,689) (18,595)
Other income (expense) 90 -
---------------- ------------
Net loss $(124,785) $(52,363)
================ ============
Net Loss per share basic and diluted $ (2.38) $ (1.02)
================ ============
Weighted average common shares outstanding--
basic and dilute 52,384 51,278
================ ============
</TABLE>
See notes to consolidated financial statements
Continued
-2-
<PAGE>
OMNIPOINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1998 1997
----------------- ------------
Cash flows used in operating activities:
<S> <C> <C>
Net loss $(124,785) $(52,363)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization and depreciation 19,879 10,419
Inventory writedown to replacement cost - 3,000
Compensation expense from stock grants 548 670
Accrued interest (3,236) 3,323
Interest expense with amortization
of discount, premium and issuance costs 3,202 1,915
Interest income associated with
restricted cash (541) (999)
Loss on investment in joint venture 2,023 -
Sales of trading securities 11,750 -
Changes in assets and liabilities:
(Increase) decrease in operating
assets:
Accounts receivable (8,611) (6,490)
Prepaid expenses and other assets (9,806) (1,847)
Inventory 10,827 762
Increase (decrease) in operating
liabilities:
Accounts payable and accrued expenses (1,600) (13,399)
Deferred revenue 612 189
----------------- ------------
Net cash used in operating activities (99,738) (54,820)
----------------- ------------
Cash flows used in investing activities:
Purchase of fixed assets (190,124) (78,349)
Down payments for FCC licenses - (28,851)
Refund of FCC deposit - 60,000
Capitalized interest on C and F Block
licenses (3,779) (9,964)
Purchase of investment securities (13,801)
Sales of investment securities - 16,516
Proceeds from held to maturity
investments and restricted cash 26,157 18,278
Investment in joint venture (5,495) -
----------------- ------------
Net cash used in investing activities (173,241) (36,171)
----------------- ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 460 557
Proceeds from vendor financing
agreements 92,607 73,775
Payments of obligations under capital
leases (16) -
Proceeds from permanent credit facility 500,000 -
Payments on interim facility (350,000) -
Proceeds from interim facility 25,000 -
Payment of deferred financing costs (9,330)
----------------- ------------
Net cash provided by financing activities 258,721 74,332
----------------- ------------
Net decrease in cash and cash equivalents (14,258) (16,659)
Cash and cash equivalents at beginning of
period 63,581 215,029
----------------- ------------
Cash and cash equivalents at end of period 49,323 $198,370
================= ============
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE>
OMNIPOINT CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For The Three Months Ended March 31, 1998
Common Stock Accumulated Unearned Notes
------------
Shares Amount Paid-in Capital Deficit Compensation Receivable
------ ------ --------------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 52,270,879 $523 $334,231 $(507,438) $(7,136) $(2,086)
Exercise of stock options 244,986 2 458 - - -
Issuance of options in form of
advanced compensation - - 365 - (365) -
Amortization of unearned
compensation - - - - 585 -
Cancellation of unearned
compensation - - (223) - 223 -
Interest on employee notes (37)
receivable - - - - -
Net loss - - - (124,785) - -
------------------------------------- ----------------------------- ----------
Balance, March 31, 1998 52,515,865 $525 $(334,831) $(632,223) $(6,693) $(2,123)
========== ====== ======== ============================= ==========
<CAPTION>
Total
Stockholders'
Deficit
------------------
<S> <C>
Balance, December 31, 1997 $(181,906)
Exercise of stock options 460
Issuance of options in form of
advanced compensation -
Amortization of unearned
compensation 585
Cancellation of unearned
compensation -
Interest on employee notes
receivable (37)
Net loss (124,785)
------------------
Balance, March 31, 1998 $ (305,683)
==================
</TABLE>
See notes to consolidated financial statements
Continued
-4-
<PAGE>
OMNIPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL:
--------
The consolidated financial statements have been prepared by Omnipoint
Corporation ("Omnipoint" or the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") and, in
the opinion of management, include all adjustments necessary for a fair
presentation of the financial information for each period shown. Certain
information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such SEC
rules and regulations. Management believes that the disclosures made are
adequate to make the information presented not misleading. The results for
interim periods are not necessarily indicative of the results for the full
year. These unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's 1997 Annual Report on Form 10-K.
Certain prior year amounts have been reclassified to conform to the three
month presentation.
2. LOSS PER COMMON SHARE
---------------------
The Company computes basic and diluted earnings per share in accordance with
Financial Accounting Standards No. 128, Earnings per Share, (SFAS 128) which
the Company adopted as of December 31, 1997. The following table reconciles
the numerator and denominator of the basic and diluted earnings per share
computations shown on the Consolidated Statement of Operations. As the
Company is in a loss position, both basic and diluted earnings per share are
the same amount.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
1998 1997
------------- -------------
<S> <C> <C>
Numerator:
Loss before extraordinary items $(124,785) $(52,363)
Denominator:
Common shares outstanding 52,384 51,278
Basic and diluted EPS $ (2.38) $ (1.02)
</TABLE>
Options and warrants to purchase 9,258,918 and 6,423,873 shares of common
stock outstanding as of March 31, 1998 and 1997, respectively, were excluded
from the calculation of diluted net loss per share as the effect of their
inclusion would have been anti-dilutive.
3. INVENTORY:
----------
Inventory consists of the following for March 31, 1998 (unaudited) and
December 31 1997:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- ------------
(in thousands)
<S> <C> <C>
Raw Materials 660 810
GSM Handsets 23,487 33,254
Accessories & SIM Cards 4,987 5,898
----------- ------------
$29,134 $39,962
=========== ============
</TABLE>
-5-
<PAGE>
4. FIXED ASSETS:
-------------
Fixed assets including equipment under capital leases consist of the
following at March 31, 1998 (unaudited) and December 31, 1997:
<TABLE>
<CAPTION>
March 31 December 31,
1998 1997
------------------------------
(In thousands)
<S> <C> <C>
Building and building improvements $ 18,060 $ 16,985
Machinery, office and computer equipment 60,019 58,635
Network infrastructure equipment 489,336 281,191
Vehicles 610 490
------------------------------
568,025 357,301
Less: accumulated depreciation (60,915) (46,886)
------------------------------
507,110 310,415
Construction in progress 253,420 274,575
$760,530 $584,990
=============================
</TABLE>
Depreciation expense for the three months ended March 31, 1998 and for the
year ended December 31, 1997 was $14.6 million and $39.9 million,
respectively. Approximately $4.8 million and $18.0 million of capitalized
interest has been included in network infrastructure equipment at March 31,
1998 and December 31, 1997, respectively.
5. OMNIPOINT MIDWEST FINANCING FACILITY:
-------------------------------------
On January 30, 1998, the Company, through an indirectly-held, wholly-owned
subsidiary, Omnipoint Midwest Holdings LLC ("OMWH"), entered into a credit
facility agreement with Northern Telecom Inc. ("NorTel") to provide financing
to OMWH for up to $400.0 million (the "Midwest Facility"). The credit facility
will finance the buildout of networks in certain Midwest markets including
Detroit, Indianapolis and certain other designated markets including Atlantic
City. The Midwest Facility provides that up to $85.0 million is available to
OMWH for any purpose, including an inter-company loan to the Parent Company.
The Company at its sole option can repay the $85.0 million portion of the loan
in cash or the Company's Common Stocks under certain conditions.
Under the terms of the Midwest Facility, OMWH is subject to certain financial
and operational covenants, including restrictions on OMH's ability to pay
dividends, level of indebtedness, and certain other financial maintenance
requirements. The Midwest Facility is collateralized by substantially all the
assets of OMWH and its license and operating subsidiaries and certain other
designated markets, including a pledge of all capital stock of each such
license and operating subsidiaries, as well as all capital stock of OMWH owned
by OPCS Two LLC.
The principal amount of a portion of the Midwest Facility which is available
to finance equipment purchases from NorTel and certain eligible third party
expenses is payable in installments beginning in 2002, with a final payment
due on December 31, 2006. Interest on such amount is payable quarterly with
regard to base rate loans and at the end of an applicable interest period with
regard to LIBOR rate loans. The $85.0 million portion of the Midwest Facility
which has no required amortization, matures on March 31, 2008. Interest on
such portion is payable semi-annually (which interest may be accreted until
March 31, 2004). The Midwest Facility was provided in conjunction with the
Amendment to the Northern Telecom Supply Agreement, wherein OMWH, together
with other affiliates of the Company, agreed to purchase up to $210.0 million
of equipment and services from Northern Telecom over a four-year period and to
purchase GSM PCS network equipment exclusively from Northern Telecom in the
Midwest markets.
Continued
-6-
<PAGE>
OMNIPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
6. $750 MILLION PERMANENT CREDIT FACILITY:
On February 17, 1998, Omnipoint Communications Inc. ("OCI") refinanced the
$516 million Interim Credit Facility with a $750.0 million credit facility
with DLJ and certain other parties (the "Permanent Credit Facility")
pursuant to (a) a $595 million credit facility agreement and (b) a $155
million note purchase agreement (the "Agreements"). The $595 million
credit facility agreement may be increased under certain circumstances. On
February 17, 1998, OCI borrowed $450.0 million (of which $295 million was
funded under the credit facility agreement and the entire $155 million was
funded under the note purchase agreement). A portion of the proceeds,
approximately $351.6 million, was used to fully repay outstanding borrowings
including accrued interest on the Interim Credit Facility. An additional
$50.0 million was borrowed under the facility in March 1998. Under the terms
of the Agreements, OCI and the Company are subject to certain financial and
operational covenants, including restrictions on the Company's ability to
pay dividends, level of indebtedness, and certain other financial
maintenance requirements. The Agreements are collateralized by substantially
all of the assets of OCI and its license subsidiary, including a pledge of
all capital stock and such license subsidiary, as well as 95.6% of the
capital stock of OCI. The obligations of OCI under the Agreements are
supported by guarantees by Omnipoint Holdings, Inc., Omnipoint Investments
Two, Inc. and Omnipoint PCS, Inc., each a directly held, wholly-owned
subsidiary of the Company, and secured by substantially all of their assets.
The principal amount of the Agreements are payable in installments beginning
June 30, 1998, with a final payment due on February 17, 2006. Interest on
such amount is payable quarterly in arrears or at the end of an applicable
interest period as provided in the Agreements.
7. COMMITMENTS AND CONTINGENCIES:
------------------------------
The Company, through its subsidiary Omnipoint Communication Services LLC is
in various stages of negotiation for infrastructure equipment, handsets,
accessories and services from various suppliers. These new contracts could
require minimum purchase commitments from the Company. Management believes
that the Company will fulfill these commitments in the normal course of
business.
8. SUBSEQUENT EVENTS:
------------------
C BLOCK RE-STRUCTURING
The FCC issued a reconsideration order which went into effect on April 8,
1998, allowing companies holding C Block Personal Communications Services
licenses several options to restructure their license holdings and
associated obligations. Two options the Company is planning to use are
amnesty and disaggregation. Under the amnesty option, a licensee can return
a license and either a) rebid on it in the re-auction, foregoing the
original 10 percent deposit; or b) forego the right to rebid on the license
in exchange for receiving a 70 percent credit of the original 10 percent
down payment. The 70 percent credit can then be applied to licenses retained
by the Company. Under the disaggregation option, a licensee can retain 15
MHz of its bandwidth and return 15 MHz (on which it cannot rebid in the re-
auction), in return for a 50 percent reduction of the outstanding debt on
those licenses. Both of these options preclude the Company from owning the
affected licenses for two years and are not expected to affect any plans for
markets in service or under construction. The election date for all C Block
licensees is June 8, 1998. The FCC has currently scheduled the re-auction of
all returned C Block licenses to begin in February 1999. The Company's
ability to make the above elections may be affected by any further
reconsideration of the order by the FCC, litigation regarding the order, or
other government actions. Accordingly, the Company is currently evaluating
its options and therefore can not determine the impact of its elections on
its financial statements.
-7-
<PAGE>
PREFERRED STOCK
On May 6, 1998, the Company completed the private placement of 6,500,000
Depositary Shares, each representing 1/20 of a share of 7% Cumulative
Convertible Preferred Stock (the "Offering"). Each Depositary Share has a
liquidation preference of $50, equivalent to $1,000 per share of Preferred
Stock. Net proceeds to the Company totaled approximately $251.9 million net
of offering costs and proceeds placed into a deposit account.
Simultaneously with the closing of the Offering, the purchasers of the
Depositary Shares deposited approximately $62.8 million into a deposit
account. The holder of each Depositary share is entitled to a quarterly
payment from the deposit account in an amount equal to $0.875 per Depositary
share. The quarterly payments (paid on February 1, May 1, August 1, and
November 1 of each year) will commence August 1, 1998 and continue until May
1, 2001. The Company, at its option, may instruct the Deposit Agent to
disburse the quarterly payment in the form of cash or shares of the Company's
Common Stock. The number of shares of Common Stock to be paid is calculated
by dividing the quarterly payment amount by 95% of the market value of the
Common Stock as of the date notice is given by the Company to the Deposit
Agent. Additionally, the Company, at its option, may elect to defer delivery
of the quarterly payment until the next quarterly payment date or any
subsequent quarterly payment date. However, the payment cannot be delayed
beyond May 1, 2001, the Deposit Expiration Date. As of the Deposit Expiration
Date, all remaining funds in the Deposit Account will be delivered to holders
of the Depository shares in the form of Common Stock or cash.
Holders of the Depositary shares are entitled to receive cumulative annual
dividends of 7% of the Liquidation Preference per Depositary Share. The
dividends are payable quarterly in arrears, when and if declared by the Board
of Directors, commencing August 1, 2001. Cumulative annual dividends begin to
accrue on the Depositary Shares beginning on May 2, 2001. If the Company
elects early termination of the Deposit Account, dividends will begin to
accrue immediately preceding the date of the early termination.
Each Depositary Share may be converted at any time at the option of the holder
into 1.6069 shares of Common Stock. The Depositary shares may not be redeemed
prior to May 1, 2001. On or after May 1, 2001 the Depositary Shares may be
redeemed, in whole or in part, at the option of the Company, in cash or Common
Stock or a combination thereof, plus all accrued and unpaid dividends to the
redemption date. The redemption price is $52 in 2001, declining to $50 in
2005 and thereafter.
9. RECENT ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income".
SFAS 130 requires the reporting of comprehensive income (loss) in addition to
net income (loss) from operations. Comprehensive income is a more inclusive
reporting methodology that includes disclosure of certain financial information
that historically has not been recognized in the calculation of net loss. The
adoption of SFAS 130 had no impact on the Company's net loss or stockholders'
deficit. As of March 31, 1998, there were no differences between the Company's
net loss, as reported, and comprehensive loss.
In March 1998, Statement of Position 98-1, "Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"), was
issued which provides guidance on applying generally accepted accounting
principles in addressing whether and under what conditions the costs of
internal-use software should be capitalized. SOP 98-1 is effective for all
transactions entered into in fiscal years beginning after December 15, 1998,
however earlier adoption is encouraged. The Company adopted the guidelines of
SOP 98-1 as of January 1, 1998, and the impact of such adoption was not material
to results of operations or cash flows for the quarter ended March 31, 1998.
Continued
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations contain forward-looking statements, which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in forward-looking statements. Factors that might cause such a
difference include, but are not limited to, the "Risk Factors" set forth in the
Company's Registration Statement on Form S-1 (File No. 333-03739).
OVERVIEW
Omnipoint reported a 1998 first quarter loss of $124.8 million or $2.38 per
share, an increase of 138.2%, or approximately $72.4 million, compared to the
same quarter in 1997. The 1997 first quarter loss was $52.4 million, or $1.02
per share.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31,
1997
Revenues for the three months ended March 31, 1998 were $34.1 million,
compared to $7.6 million in the the three months ended March 31, 1997. Service
revenues and handset sales increased by $30.2 million because of the increased
customer base. The larger customer base resulted from commercial operations in
the New York metro area, Philadelphia, and several other Pennsylvania markets.
The New York metro area has been operating for more than one year, while the
Philadelphia and other Pennsylvania markets began offering commercial service in
September 1997. Revenues for the first quarter of 1997 were generated from the
New York metro area exclusively. Additionally, the Company did not heavily
advertise in the New York metro market until February 1997. The Company's
Equipment Subsidiary had revenues of $0.7 million related to engineering
services in the first quarter of 1998, compared to $4.5 million from license
fees in the first quarter of 1997.
Cost of service revenues and handset sales increased by 303.0%, or
approximately $40.0 million to $53.2 million for the three months ended March
31, 1998, compared to $13.2 million for the three months ended March 31, 1997.
Key drivers for the increase are increased numbers of cell sites in operation
and under construction, expanded minutes of use, and higher subscriber additions
in the first quarter of 1998 compared to the first quarter of 1997. The
increase in these indicators result from the Company offering commercial service
in several markets in 1998, which were not operational in 1997. The Boston and
Miami markets were under construction in the first quarter of 1998, with no
activity in the first quarter of 1997. Additionally, the Company recognized
significant expenses associated with expanding and supplying its distribution
channels with handset inventory in the first quarter of 1998.
Research and development expenses decreased by 33.8%, or approximately $2.6
million, to $5.1 million for the three months ended March 31, 1998, compared to
$7.7 million for the three months ended March 31, 1997. The Companys technology
subsidiary is nearing completion of its work on the PCS Fixed Access System,
resulting in the expense reduction. The decrease was primarily due to a
decrease of $1.1 million in R&D components, and $0.4 million in equipment
purchases.
Sales, general and administrative expenses increased by 210.2%, or
approximately $30.9 million, to $45.6 million for the three months ended March
31, 1998, compared to $14.7 million for the three months ended March 31, 1997.
Of this increase, $7.4 million was due to payroll and payroll related expenses
associated with increases in headcount resulting from expansion of the Company's
operations. Activity in the first quarter of 1998 includes launching the Boston
and Miami markets, building of the midwest markets and expanding of its network
in New Jersey, Connecticut, and Pennsylvania. The remaining increase consists of
$9.6 million in advertising and promotion, $2.9 million in bad debt and other
expenses, $2.8 million in billing and other third party acquisition costs, and
$4.4 million in consulting and professional fees. The Company expects that such
expenses will continue to increase significantly during the remainder of 1998 as
the Company continues to expand its operations.
Depreciation and amortization increased by 91.3%, or approximately $9.5
million to $19.9 million for the three months ended March 31, 1998, compared to
$10.4 million for the three months ended March 31, 1997. The increase is due to
commencement of depreciation on the network infrastructure equipment and
amortization of FCC licenses placed into commercial service to date.
-9-
<PAGE>
Interest income decreased approximately $3.1 million, to $1.6 million for the
three months ended March 31, 1998 compared to $4.7 million for the three months
ended March 31, 1997. The decrease was due to lower cash and equivalents and
short-term investment balances, which result from the Company's continued
expansion and equipment purchases for new and existing markets.
Interest expense increased by 86.6%, or approximately $16.1 million, to
$34.7 million for the three months ended March 31, 1998 compared to $18.6
million for the three months ended March 31, 1997. The increase was due to $8.2
million of interest expense for the loans payable under financing agreements,
and $7.9 million for the FCC license obligations. The Company capitalized
interest of $8.6 million during the first quarter of 1998.
Net loss increased by 137.4%, or approximately $72.4 million to $124.8 million
for the three months ended March 31, 1998 compared to $52.4 million for the
three months ended March 31, 1997. This increase was primarily due to a general
increase in operating expenses, as well as an increase of $20.7 million in net
other expenses associated with an increasing customer base and expansion of
commercial operations in existing and new markets.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1998, the Company has financed its
operations and met its capital requirements primarily through its loans payable
under financing agreements. These financing activities provided net cash of
$258.7 million for the three months ended March 31, 1998 compared to $74.3
million for the three months ended March 31, 1997. Operating activities used
net cash of $99.7 million for the three months ended March 31, 1998, compared
to $54.8 million for the three months ended March 31, 1997. The increase
resulted from the Company's additional activity relating to operating the New
York MTA network, several Pennsylvania markets, preparations for the March 1998
launch of the Boston and Miami markets and buildout of the Company's core PCS
networks; and interest expense associated with the Company's related
obligations. Investing activities used net cash of $173.2 million for the three
months ended March 31, 1998, compared to $36.2 million for the three months
ended March 31, 1997. The increase in investing activities consists of $97.3
million for purchases of PCS network infrastructure related items and lab
equipment used in engineering and manufacturing, and $5.5 million for investment
in joint ventures; offset by cash provided of $16.9 million net from short and
long term investments, and $31.1 million deposits on FCC licenses net of
payments.
As of March 31, 1998, the Company had negative working capital of
approximately $164.6 million. The Company has available borrowing capacity from
its existing credit facilities and proceeds from the May Preferred Stock
offering totaling approximately $1,093.1 million, as of March 31 1998.
Approximately $107.1 million associated with the FCC obligations is now
classified as short term liabilities. The FCC issued a reconsideration order
which went into effect on April 8, 1998, allowing companies holding C Block
Personal Communications Services licenses several options to restructure their
license holdings and associated obligations. This order requires the Company to
begin making its regularly scheduled C & F Block payments in July 1998. As of
March 31, 1998, the Company had $43.4 million in accrued PCS interest payments.
These interest payments will be payable to the FCC in quarterly payments over
the next eight quarters. The amount of accrued interest payable to the FCC will
ultimately depend on the Company's final decisions on disaggregation and amnesty
of its C Block licenses. Also, credits associated with the disaggregation and
amnesty options will be used to offset a portion of the accrued interest.
Accordingly, the Company is currently evaluating its options and therefore can
not determine the impact of its elections on its financial statements. On
February 15, 1998, the Company used $26.2 million of proceeds from its
deposit account to pay interest on the 11 5/8% Senior and Series A Notes due
2006.
On August 4, 1997, Omnipoint MB Holdings, Inc. ("OMB"), an indirectly-held,
wholly-owned subsidiary of the Company, entered into a credit facility agreement
with Ericsson Inc. to provide financing to the Company for up to $352.5 million
for the purpose of financing the buildout of networks in the Boston and Miami
markets, (the "Ericsson MB Facility"). The Ericsson MB Facility finances
purchases and installations of telecommunications equipment, engineering
services, certain related construction costs, third-party equipment and other
expenses and up to $100.0 million for the unrestricted use of OMB, including
making a loan to the Company. The Ericsson MB Facility provides the immediate
availability of $202.5 million, of which $100.0 million was funded to OMB at
closing. The Company at its sole option can repay or prepay in whole or in part
interest or principal under the $100 million portion of the loan in cash or with
the Company's Common Stock under certain conditions. The remaining $150.0
million is dependent on a loan guarantee from a governmental agency. If the
loan guarantee is completed before June 30, 1998, the Company will
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<PAGE>
grant Ericsson a five-year exclusive right to supply network equipment for the
Boston and Miami markets. As of March 31, 1998, the Company had $206.1 million
outstanding under the Ericsson MB Facility.
Under the terms of the Ericsson MB Facility, OMB is subject to certain
financial and operational covenants including restrictions on OMB's ability to
pay dividends, restrictions on indebtedness and certain financial maintenance
requirements. Additionally, the Ericsson MB Facility provides that, among other
events, the failure of OMB to pay when due amounts owing to the FCC shall
constitute an event of default. The Ericsson MB Facility is collateralized by
substantially all of the assets of OMB and each of the license and operating
subsidiaries for the Boston and Miami markets, including a pledge of all capital
stock of each such license and operating subsidiaries as well as capital stock
of OMB.
The principal amount of portions of the Ericsson MB Facility financing
equipment purchases from Ericsson, and certain eligible third party provided
costs, is repayable in installments beginning 2001, with a final payment due on
August 4, 2006. Interest on such portion of the loan is payable quarterly (of
which portions of the loan proceeds are available to finance such interest
payments). The $100.0 million portion funded at closing has no required
principal amortization, and matures on August 4, 2007. Interest on such portion
is payable semi-annually (of which interest may be accreted until August 4,
2003).
On July 25, 1997, OPCS Philadelphia Holdings, LLC ("OPCS"), an indirectly-
held, wholly-owned subsidiary of the Company, entered into a credit facility
agreement with Ericsson to provide financing to OPCS for up to $120.0 million
for the purpose of financing the buildout of networks in the Philadelphia and
Dover markets (the "Ericsson Philadelphia Facility"). As of March 31, 1998, the
Company had approximately $60.8 million outstanding under the Ericsson
Philadelphia Facility.
Under the terms of the Ericsson Philadelphia Facility, OPCS is subject to
certain financial and operational covenants including restrictions on OPCS's
ability to pay dividends, restrictions on indebtedness and certain other
financial maintenance requirements. Additionally, the Ericsson Philadelphia
Facility provides that, among other events, the failure of OPCS to pay when due
amounts owing to the FCC shall constitute an event of default. The Ericsson
Philadelphia Facility is collateralized by substantially all of the assets of
OPCS and each of the license and operating subsidiaries for the Philadelphia and
Dover markets, including a pledge of all capital stock of each such license and
operating subsidiary as well as capital stock of OPCS.
The principal amount of the Ericsson Philadelphia Facility is payable in
twenty quarterly installments beginning in the year 2001, with a final payment
due on December 31, 2005. Interest on such amount is payable quarterly in
arrears with regard to base rate loans and at the end of an applicable interest
period with regard to LIBOR loans (of which a portion of the loan proceeds are
available to finance such interest payments).
On February 17, 1998, Omnipoint Communications Inc. ("OCI") refinanced the
Interim Credit Facility with a $750.0 million credit commitment with DLJ and
certain other parties (the "Permanent Credit Facility") pursuant to (a) a $595
million credit facility agreement and (b) a $155 million note purchase agreement
(the "Agreements"). The $595 million credit facility agreement may be increased
under certain circumstances. On February 17, 1998, OCI borrowed $450.0 million
(of which $295 million was funded under the credit facility agreement and the
entire $155 million was funded under the note purchase agreement), a portion of
the proceeds, approximately $351.6 million was used to fully repay outstanding
borrowings including accrued interest on the Interim Credit Facility. The
Company borrowed an additional $50.0 million in March 1998. Under the terms of
the Agreements, OCI and the Company are subject to certain financial and
operational covenants, including restrictions on the Company's ability to pay
dividends, level of indebtedness, and certain other financial maintenance
requirements. The Agreements are collateralized by substantially all of the
assets of OCI and its license subsidiary, including a pledge of all capital
stock and such license subsidiary, as well as 95.6% of the capital stock of OCI.
The obligations of OCI under the Agreements are supported by guarantees by
Omnipoint Holdings, Inc., Omnipoint Investments Two, Inc. and Omnipoint PCS,
Inc., each a directly held, wholly-owned subsidiary of the Company, and secured
by substantially all of their assets. The principal amount of the Agreements are
payable in installments beginning June 30, 1998, with a final payment due on
February 17, 2006. Interest on such amount is payable quarterly in arrears or at
the end of an applicable interest period as provided in the Agreements. As of
March 31, 1998, the Company had approximately $500.0 million outstanding under
the Permanent Credit Facility.
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<PAGE>
On January 30, 1998, Omnipoint Midwest Holdings, LLC ("OMWH"), an
indirectly-held, wholly-owned subsidiary of the Company, entered into a credit
facility agreement with Northern Telecom, Inc. to provide financing to the
Company for up to $400.0 million for the purpose of financing the buildout of
networks in certain midwest markets, including the Detroit and Indianapolis
markets as well as certain other designated markets including Atlantic City (the
"Midwest Facility") The Midwest Facility provides that up to $85.0 million is
available for any purpose, including a loan to the Company. As of March 31,
1998, the Company had approximately $14.4 million outstanding under the Midwest
Facility.
Under the terms of the Midwest Facility, OMWH is subject to certain
financial and operational covenants, including restrictions on OMWH's ability to
pay dividends, level of indebtedness, and certain other financial maintenance
requirements. The Midwest Facility is collateralized by substantially all the
assets of the OMWH and the license and operating subsidiaries for the Midwest
and certain other designated markets, including a pledge of all capital stock of
each such license and operating subsidiaries, as well as all the capital stock
of the Companys subsidiary, OMWH Holdings, LLC.
A portion of the Midwest Facility is available to finance equipment
purchases from Northern Telecom and certain eligible third party expenses and is
payable in installments beginning in 2002, with a final payment due on December
31, 2006. Interest on such amount is payable quarterly. The $85.0 million
portion of the Midwest Facility has no required amortization, and matures on
March 31, 2008. Interest on such portion is payable semi-annually (which
interest may be accreted until March 31, 2004). The Company at its sole option
can repay or prepay in whole or in part interest or principal under the $85.0
million portion of the loan in cash or the Company's Common Stock under certain
conditions. The Midwest Facility was provided in conjunction with the Amendment
to the Northern Telecom Supply Agreement, wherein the Company and its affiliates
agreed to purchase at least $210.0 million of equipment and services from
Northern Telecom over a four-year period and to purchase GSM PCS network
exclusively from Northern Telecom in the Midwest markets.
On May 6, 1998, the Company completed the private placement of 6,500,000
Depositary Shares, each representing 1/20 of a share of 7% Cumulative
convertible Preferred Stock. Each Depositary Share has a Liquidation Preference
of $50, equivalent to $1,000 per share of Preferred Stock. Net proceeds to the
Company totaled approximately $251.9 million net of offering costs and proceeds
placed into the Deposit Account.
The Company believes that access to capital and financial flexibility are
necessary to successfully implement its strategy. The Company believes the
Permanent Facility, the Ericsson MB Facility, the Ericsson Philadelphia
Facility, the Midwest Facility and the 1998 offering of Preferred Stock, will be
sufficient to fund operating losses, capital expenditures and working capital
necessary for the buildout of the Company's PCS networks for the next 12 months.
To the extent that the buildout of these networks is faster than expected, the
costs are greater than anticipated or the Company takes advantage of other
opportunities, including those that may arise through future FCC auctions, the
Company may require additional funding to implement its business strategy.
The Company's future capital requirements will depend upon many factors,
including the successful development of new markets, the extent and timing of
acceptance of the Company's services in the market, the progress of the
Company's research and development efforts, expansion of the Company's marketing
and sales efforts, the Company's results of operations and the status of
competitive products. The Company believes that cash and cash equivalents on
hand, anticipated revenues, loans payable under financing agreements and
additional strategic partnerships will be adequate to fund its operations and
its network buildout for the next 12 months. There can be no assurance, however,
that the Company will not require additional financing prior to such date to
fund its operations and network buildout. The Company believes that it will
require substantial amounts of additional capital over the next several years
and anticipates that this capital will be derived from a mix of public offerings
and private placements of debt or equity securities or both.
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<PAGE>
Part II Other Information
ITEM 5: OTHER INFORMATION
PREFERRED STOCK
On May 6, 1998, the Company completed the private placement of 6,500,000
Depositary Shares, each representing 1/20 of a share of 7% Cumulative
Convertible Preferred Stock (the "Offering"). Each Depositary Share has a
Liquidation Preference of $50, equivalent to $1,000 per share of Preferred
Stock. Net proceeds to the Company totaled approximately $251.9 million net
of offering costs and proceeds placed into a deposit account.
Simultaneously with the closing of the Offering, the purchasers of the
Depositary Shares deposited approximately $62.8 million into a deposit
account. The holder of each Depositary share is entitled to a quarterly
payment from the deposit account in an amount equal to $0.875 per Depositary
share. The quarterly payments (paid on February 1, May 1, August 1, and
November 1 of each year) will commence August 1, 1998 and continue until May
1, 2001. The Company, at its option, may instruct the Deposit Agent to
disburse the quarterly payment in the form of cash or shares of the Company's
Common Stock. The number of shares of Common Stock to be paid is calculated
by dividing the quarterly payment amount by 95% of the market value of the
Common Stock as of the date notice is given by the Company to the Deposit
Agent. Additionally, the Company, at its option, may elect to defer delivery
of the quarterly payment until the next quarterly payment date or any
subsequent quarterly payment date. However, the payment cannot be delayed
beyond May 1, 2001, the Deposit Expiration Date. As of the Deposit Expiration
Date, all remaining funds in the Deposit Account will be delivered to holders
of the Depository shares in the form of Common Stock or cash.
Holders of the Depositary shares are entitled to receive cumulative annual
dividends of 7% of the Liquidation Preference per Depositary Share. The
dividends are payable quarterly in arrears, when and if declared by the Board
of Directors, commencing August 1, 2001. Cumulative annual dividends begin to
accrue on the Depositary Shares beginning on May 2, 2001. If the Company
elects early termination of the Deposit Account, dividends will begin to
accrue immediately preceding the date of the early termination.
Each Depositary Share may be converted at any time at the option of the holder
into 1.6069 shares of Common Stock. The Depositary shares may not be redeemed
prior to May 1, 2001. On or after May 1, 2001 the Depositary Shares may be
redeemed, in whole or in part, at the option of the Company, in cash or Common
Stock or a combination thereof, plus all accrued and unpaid dividends to the
redemption date. The redemption price is $52 in 2001, declining to $50 in
2005 and thereafter.
ITEM 6: EXHIBITS AND REPORTS ON FORM 10-Q
(a) Exhibits
Exhibit Number Description
-------------- -----------
3.1* Amended and Restated Certificate of Incorporation of the
Registrant.
3.2@@@ Amended and Restated Bylaws of the Registrant.
4.2 See Exhibit 3.1.
4.3 Certificate of Designation establishing the Voting
Powers, Designations, Preferences, Limitations,
Restrictions and Relative Rights of 7% Cumulative
Convertible Preferred Stock.
4.4 Registration Rights Agreement by and among the Company,
Donaldson, Lufkin & Jenrette Securities Corporation,
BancAmeric Robertson Stephens, Bear, Stearns & Co. Inc.
and Smith Barney Inc., dated May 6, 1998
4.5 Form of Depositary Share.
10.1@ Registrants Amended and Restated 1990 Stock Option Plan.
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<PAGE>
10.2@ Form of Incentive Stock Option Agreement under Registrant's
1990 Stock Option Plan.
10.3@ Form of Stock Option Agreement under Registrant's 1990 Stock
Option Plan for non-qualified options.
10.4@ Form of Stock Option Agreement outside scope of Registrant's
1990 Stock Option Plan for non-qualified options.
10.5@ Warrant Certificate, dated August 2, 1991, by and between the
Registrant and Allen & Company Incorporated.
10.6@ Warrant Certificate, dated August 2, 1991, by and between the
Registrant and Allen & Company Incorporated.
10.7@ Letter agreement, dated June 29, 1995, by and between the
Registrant and Allen & Company Incorporated (relating to
Exhibit 10.6).
10.8! Letter Agreement of Warrant Extension, dated November 1, 1996,
by and between the Registrant and Allen & Company
Incorporated (relating to Exhibit 10.6).
10.9@ Common Stock Purchase Warrant issued March 10, 1995, granted to
Madison Dearborn Capital Partners, L.P.
10.10@ Common Stock Purchase Warrant issued March 10, 1995, granted to
Madison Dearborn Capital Partners, L.P.
10.11@ Employment Agreement, effective October 1, 1995, by and between
the Registrant, Omnipoint Communications Inc. and George F.
Schmitt.
10.12@ Promissory Note, dated October 1, 1995, by George F. Schmitt.
10.13@ Stock Restriction Agreement, dated October 1, 1995, by and
between the Registrant and George F. Schmitt.
10.14@ Employment Agreement, dated April 17, 1995, by and between the
Registrant and Bradley E. Sparks.
10.15@ Promissory Note, dated April 17, 1995, by Bradley E. Sparks.
10.16@ Stock Restriction Agreement, dated April 17, 1995, by and
between the Registrant and Bradley E. Sparks.
10.17*** Employment Agreement, dated November 3, 1996, by and between
the Registrant and Kjell S. Andersson.
10.18*** Promissory Note, dated February 24, 1997, by Kjell S.
Andersson.
10.19*** Stock Restriction Agreement, dated February 24, 1997, by and
between the Registrant and Kjell S. Andersson.
10.20@ Series B Convertible Preferred Stock Purchase Agreement, dated
August 9, 1993, by and among the Registrant and Madison
Dearborn Capital Partners, L.P.
10.21@ Amendment No. 1 to Series B Convertible Preferred Stock
Purchase Agreement, dated June 29, 1995, by and between the
Registrant and Madison Dearborn Capital Partners, L.P.
10.22@ Series C Convertible Preferred Stock Purchase Agreement, dated
June 29, 1995, by and among the Registrant and the other
parties named therein.
10.23@ Amended and Restated Registration Rights Agreement, dated June
29, 1995, by and among the Registrant and the parties named
therein.
10.24@ First Amended and Restated Voting Agreement, dated June 29,
1995, by and among the Registrant and the other parties named
therein.
10.25@ OEM Supply Agreement for Omnipoint PCS (Personal Communication
Systems) Products, dated September 22, 1994, by and between
the Registrant and Northern Telecom Inc.
10.26@ Manufacturing License and Escrow Agreement for Personal
Communication Service Products, dated February 28, 1995, by
and between the Registrant and Northern Telecom Inc.
10.27@ Collaborative Development Agreement, dated March 1, 1995, by
and between the Registrant and Northern Telecom Inc.
10.28@ Reciprocal OEM Agreement Memorandum of Understanding, dated
March 30, 1995, by and between the Registrant and Northern
Telecom Inc.
10.29@ Supply Agreement, dated September 22, 1994, by and between
Omnipoint Communications Inc. and Northern Telecom Inc.
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<PAGE>
10.30@ Amendment No. 1 to Supply Agreement, dated July 21, 1995, by
and between Omnipoint Communications Inc. and Northern
Telecom Inc.
10.31! Amendment No. 2 to Supply Agreement, dated March 21, 1997, by
and between Omnipoint Communications Inc. and Northern
Telecom Inc.
10.32***+++ Amended and Restated Loan Agreement, dated August 7, 1996,
by and between Omnipoint Communications Inc. and Northern
Telecom Inc.
10.33***+++ Loan Agreement, dated August 7, 1996, by and between
Omnipoint Communications Inc. and Ericsson Inc., as amended.
10.34@ Memorandum of Understanding, dated April 21, 1995, by and
between the Registrant and Pacific Bell Mobile Services.
10.35@ Note and Warrant Purchase Agreement dated November 22, 1995,
between the Registrant and the purchasers named therein.
10.36@ Senior Note Due 2000 issued by the Registrant on November 22,
1995 to the holder identified therein.
10.37@ Senior Note Due 2000 issued by the Registrant on November 22,
1995 to the holder identified therein.
10.38@+ Memorandum of Understanding, dated November 22, 1995, by and
between the Registrant and Ericsson Inc.
10.39@ Letter Agreement, dated January 24, 1996, by and between the
Registrant and Ericsson Inc.
10.40@ Letter of Intent, dated October 26, 1995, by and between the
Registrant and BellSouth Personal Communications, Inc.
10.41@ Contract for Sale of Real Estate, dated August 30, 1995, by and
between F&R Bari Realty, Ltd., Inc. and Omnipoint
Communications Inc.
10.42@ Lease Agreement, dated October 15, 1995, by and between the
Registrant and Baetis Properties, Inc.
10.43**++ Acquisition Agreement for Ericsson CMS 40 Personal
Communications Systems (PCS) Infrastructure Equipment, dated
as of April 16, 1996, by and between Ericsson Inc. and
Omnipoint Communications.
10.44**++ Acquisition Supply and License Agreement for Omnipoint
Personal Communications Systems (PCS) Infrastructure
Equipment, dated as of April 16, 1996, by and between
Ericsson Inc. and the Registrant.
10.45**++ Agreement for Purchase and Sale of Ericsson Inc. Masko
Terminal Units, dated as of April 16, 1996, by and between
Ericsson, Inc. and Omnipoint Communications Inc.
10.46**++ Memorandum of Understanding, dated April 2, 1996, by and
between Orbitel Mobile Communications Inc. and the Registrant
10.47@@ Letter of Intent, dated November 20, 1995, by and between the
Registrant and Western Wireless Corporation
10.48@@ Letter of Intent, dated February 26, 1996, by and between
Omnipoint Communications Inc. and American Portable Telecom,
Inc.
10.49@@ Letter of Intent, dated March 22, 1996, by and between
Omnipoint Communications Inc. and American Personal
Communications.
10.50@@ Letter of Intent, dated May 13, 1996, by and between the
Registrant and InterCel, Inc.
10.51@@ License Agreement, dated March 22, 1996, by and between the
Registrant and Bender & Company, Inc.
10.52@@ Second License Agreement, dated April 17, 1996, by and between
Registrant and Bender & Company, Inc.
10.53@@ Lease Agreement, dated March 1, 1996, by and between Omniset
Corporation and Roots Stone Limited Partnership.
10.54*** Agreement dated as of February 24, 1997 between the Registrant
and Kjell S. Andersson, amending Employment Agreement dated
November 3, 1996.
10.55#! Loan Agreement by and among Omnipoint MB Holdings, Inc.,
Ericsson Inc. and certain other lenders named therein, dated
July 25, 1997.
10.56##!! Loan Agreement by and among OPCS Philadelphia Holdings, Inc.,
Ericsson Inc. and certain other lenders named therein, dated
July 25, 1997.
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<PAGE>
10.57##!! Loan Agreement by and among Omnipoint Midwest Holdings, LLC,
Northern Telecom Inc. and certain other lenders named
therein, dated January 30, 1998.
10.58##!! Loan Agreement by and among Omnipoint Corporation, Omnipoint
Communications Inc., DLJ Capital Funding Inc. and certain
other lenders named therein, dated February 17, 1998.
10.59##!! Note Purchase Agreement by and among Omnipoint Corporation,
Omnipoint Communications Inc., IBJ Schroder Bank & Trust
Company and certain other purchasers named therein, dated
February 17, 1998.
10.60 Purchase Agreement by and among the Company, Donaldson, Lufkin
& Jenrette Securities Corporation, BancAmeric Robertson
Stephens, Bear, Stearns & Co. Inc. and Smith Barney Inc.,
dated May 1, 1998.
10.61 Deposit Agreement by and among the Company, Marine Midland
Bank, and the holders from time to time of the Depositary
Shares, dated May 6, 1998.
10.62 Deposit Account Agreement by and between the Company and The
First National Bank of Maryland, dated May 6, 1998.
21.1@ Subsidiaries of the Registrant.
24.1 Power of Attorney (included in signature pages).
27 Financial Data Schedule.
99.1 Press Release, dated May 1, 1998.
______________
@ Incorporated herein by reference to the Company's Registration
Statement on Form S-1, No. 33-98360.
@@ Incorporated herein by reference to the Company's Registration
Statement on Form S-1, No. 33-03739.
@@@ Incorporated herein by reference to the Company's Registration
Statement on Form S-4, No. 333-19895.
* Incorporated herein by reference to Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.
** Incorporated herein by reference to the Company's Current Report on
Form 8-K, filed May 3, 1996.
*** Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996.
# Incorporated herein by reference to the Company's Current Report on
Form 8-K, filed August 28, 1997.
## Incorporated herein by reference to the Company's Current Report on
Form 8-K, filed March 26, 1998.
+ Portions of this Exhibit were omitted and have been filed
separately with the Secretary of the Commission pursuant to
the Registrant's Application Requesting Confidential
Treatment under Rule 406 of the Act, which application was
granted by the Commission.
++ Portions of this Exhibit were omitted and filed separately with the
Secretary of the Commission pursuant to the Registrant's
Application Requesting Confidential Treatment under Rule
24b-2 under the Exchange Act of 1934, filed May 3,1996.
+++ Portions of this Exhibit were omitted and filed separately with the
Secretary of the Commission pursuant to the Registrant's
Application Requesting Confidential Treatment under Rule
24b-2 under the Exchange Act of 1934, filed March 31,1997.
! Portions of this Exhibit were omitted and filed separately with the
Secretary of the Commission pursuant to the Registrant's
Application Requesting Confidential Treatment under Rule
24b-2 under the Exchange Act of 1934, filed August 28, 1997.
!! Portions of the Exhibit were omitted and filed separately with the
Secretary of the Commission pursuant to the Registrant's
Application Requesting Confidential Treatment under Rule 24b-
2 under the Exchange Act of 1934, filed March 26, 1998.
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<PAGE>
! Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 1997.
(b) REPORTS ON FORM 8-K
On March 26, 1998, a Form 8-K, Item 5, was filed relating to the Midwest
Facility, the Ericsson Philadelphia Facility and the Permanent Credit
Facility.
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<PAGE>
SIGNATURE
---------
Pursuant to the requirements 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.
OMNIPOINT CORPORATION
Date: May 14, 1998 /s/ Bradley E. Sparks
-------------------- -----------------------------
Bradley E. Sparks
Chief Financial Officer
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<PAGE>
EXHIBIT 4.3
OMNIPOINT CORPORATION
CERTIFICATE OF DESIGNATION
establishing the
Voting Powers, Designations, Preferences, Limitations,
Restrictions, and Relative Rights of
7% CUMULATIVE CONVERTIBLE PREFERRED STOCK
------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------------------
OMNIPOINT CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Issuer"), does hereby
certify that pursuant to authority conferred upon the Board of Directors of the
Issuer by its Amended and Restated Certificate of Incorporation and pursuant to
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, the following resolution establishing the Issuer's 7% Cumulative
Convertible Preferred Stock was duly adopted by the Board of Directors, on
April 30, 1998, which resolution remains in full force and effect. Certain
capitalized terms used herein are defined in Article 11.
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions
of Section Fourth (B) of the Amended and Restated Certificate of
Incorporation, as amended from time to time (the "Certificate of
Incorporation"), and pursuant to Section 151(g) of the General
Corporation Laws of the State of Delaware, there be from the 5,000,000
<PAGE>
shares of Preferred Stock, $0.01 par value, of the Corporation,
authorized to be issued pursuant to the Certificate of Incorporation,
a series of Preferred Stock, consisting of 325,000 shares of 7%
Cumulative Convertible Preferred Stock (referred to herein as the
"Preferred Stock"), having the number of shares and, to the extent
that the designations, powers, preferences and relative and other
special rights and the qualifications, limitations and restrictions of
such Preferred Stock are not stated and expressed in the Certificate
of Incorporation, the powers, preferences and relative and other
special rights and the qualifications, limitations and restrictions
thereof, as follows:
1. Designation and Number of Shares
1.1 The series will be known as the 7% Cumulative Convertible
Preferred Stock.
1.2 The Preferred Stock will be a series consisting of 325,000 shares
of the authorized but unissued preferred stock of the Issuer.
2. Dividends
2.1 Holders of Preferred Stock will be entitled to receive, when, as
and if declared by the Board of Directors, out of funds legally available
therefor, dividends on each outstanding share of Preferred Stock, payable
quarterly in arrears at a rate per annum equal to 7% of the liquidation
preference per share.
(a) All dividends will be cumulative, whether or not earned or
declared, on a quarterly basis on February 1, May 1, August 1, and November 1 of
each year (each such date being referred to herein as a "Dividend Payment
Date"), commencing August 1, 2001, unless the Issuer elects the early
termination of the Deposit Account, pursuant to the terms of the Deposit Account
Agreement, in which case payment of dividends will commence on the Dividend
Payment Date immediately following the date of such early termination.
Dividends will accumulate on a day to day basis from May 2, 2001 unless the
Issuer elects early termination of the Deposit Account, in which case dividends
will accumulate from the day after the Dividend Payment Date immediately
preceding the date of such early termination. Each distribution in the form of
a dividend shall be payable in arrears to Holders of record as they appear on
the stock books of the Issuer on each record date as established
2
<PAGE>
by the Board of Directors of the Issuer (the "Dividend Payment Record Date") not
more than 60 nor less than ten days preceding a Dividend Payment Date.
(i) Dividends payable on the Preferred Stock for each full
dividend period will be computed by dividing the annual dividend rate by
four. Dividends payable on the Preferred Stock for any period less than a
full dividend period will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(ii) The Preferred Stock will not be entitled to any dividend
whether payable in cash, property or securities, in excess of the full
cumulative dividends.
(iii) No interest, or sum of money in lieu of interest, will be
payable in respect of any accumulated and unpaid dividends which may be in
arrears.
(b) Dividends, to the extent declared by the Issuer's Board of
Directors may, at the option of the Issuer, be paid in cash, by delivery of
fully paid and nonassessable shares of Common Stock, or a combination thereof.
If the Issuer elects to pay dividends in shares of Common Stock, the number of
shares of Common Stock to be distributed will be calculated by dividing such
payment by 95% of the Market Value as of the Dividend Payment Record Date.
2.2 (a) No dividends or other distributions (other than a dividend
or distribution in Junior Securities) may be declared, made or paid or funds set
apart for payment on the Common Stock, Junior Securities or Parity Securities,
and no Common Stock, Junior Securities or any Parity Securities, including the
Preferred Stock, may be repurchased, exchanged, redeemed or otherwise acquired
for any consideration (or any money paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Issuer (except by
conversion into or exchange for Junior Securities), nor may funds be set apart
for payment with respect thereto, unless full cumulative dividends shall have
been or contemporaneously are paid or declared and a sum sufficient for the
payment thereof is set apart for such payment on all outstanding shares of
Preferred Stock for all Dividend Payment Dates on or prior to such declaration,
payment, redemption, purchase, exchange or acquisition.
3
<PAGE>
(b) Notwithstanding the provisions of Section 2.2(a), whether or not
full cumulative dividends have been or will be paid in cash on the shares of the
Preferred Stock, the Issuer shall be entitled to declare and pay cash dividends
on Parity Securities and Junior Securities to the extent that
(1) the funds for such cash dividend payments are derived,
directly or indirectly, from the proceeds of an offering of Parity
Securities or Junior Securities with respect to which such cash dividends
are to be paid (or a concurrent offering of related securities), and
(2) provided that in connection with such offering it is
disclosed to the purchasers of such Parity Securities or Junior Securities,
as the case may be, in an offering memorandum, prospectus, or similar
communication, that a portion of the proceeds thereof may be used for the
payment of cash dividends on such securities.
Notwithstanding the provisions of Section 2.2(a), whether or not full cumulative
dividends have been or will be paid in cash on the shares of the Preferred
Stock, the Issuer may repurchase, redeem or otherwise retire or set aside funds
for those purposes with respect to any Parity Securities or Junior Securities in
exchange for or out of the net proceeds of the substantially concurrent sale
(other than to a Subsidiary of the Issuer) of other Parity Securities or Junior
Securities, as the case may be, of the Issuer.
(c) Notwithstanding the foregoing, if full dividends have not been
declared and paid or set apart on the Preferred Stock and any other Parity
Securities, dividends may be declared and paid on the Preferred Stock and such
other Parity Securities so long as the dividends are declared and paid pro rata
so that the amounts of dividends declared per share on the Preferred Stock and
such other Parity Securities will in all cases bear to each other the same ratio
that accrued and unpaid dividends per share on the shares of the Preferred Stock
and such other Parity Securities bear to each other; provided, that if such
dividends are paid in cash on the other Parity Securities, dividends will also
be paid in cash on the Preferred Stock.
(d) (i) The Holders of shares of the Preferred Stock at the close of
business on a Dividend Payment Record Date will be entitled to receive the
dividend payment on those shares (except that Holders of shares called for
redemption
4
<PAGE>
on a Redemption Date between the Dividend Payment Record Date and the Dividend
Payment Date will be entitled to receive such dividend on such redemption date
as indicated in Section 5.1 hereof) on the corresponding Dividend Payment Date
notwithstanding the subsequent conversion thereof or the Issuer's default in
payment of the dividend due on that Dividend Payment Date.
(ii) Except as provided in clause (i) of this Section 2.2(d) and in
Section 4.2, the Issuer shall make no payment or allowance for unpaid dividends,
whether or not in arrears, on converted shares or for dividends on the shares of
Common Stock issued upon conversion.
3. Ranking
3.1 The Preferred Stock will, with respect to dividend distributions
and distributions upon the liquidation, winding up or dissolution of the Issuer,
rank:
(a) senior to all classes of Common Stock and to each series of
preferred stock existing on the date of this Certificate of Designation and each
other class of Capital Stock or series of preferred stock issued by the Issuer,
which is established after the date of this Certificate of Designation, the
terms of which do not expressly provide that such class or series will rank
senior to or on a parity with the Preferred Stock as to dividend distributions
and distributions upon the liquidation, winding up or dissolution of the Issuer
(collectively, with the Common Stock, referred to as the "Junior Securities");
(b) subject to certain conditions, on a parity with any class of
Capital Stock or series of preferred stock issued by the Issuer, which is
established after the date of this Certificate of Designation by the Board of
Directors, the terms of which expressly provide that such class or series will
rank on a parity with the Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding up or dissolution of the Issuer
(collectively referred to as "Parity Securities"); and
(c) subject to certain conditions, junior to each class of Capital
Stock or series of preferred stock issued by the Issuer, which is established
after the date of this Certificate of Designation by the Board of Directors, the
terms of which expressly provide that such class or series will rank senior to
the Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up or dissolution of the Issuer (collectively referred to
as "Senior Securities").
5
<PAGE>
3.2 Except as otherwise provided herein (including, without
limitation, Section 8.3 hereof), the Issuer is entitled to amend its Certificate
of Incorporation to authorize one or more additional series of preferred stock,
file certificates of designation, and issue without restriction from time to
time, any series of Junior Securities, Parity Securities, or Senior Securities.
4. Conversion
4.1 (a) Each Holder of Preferred Stock shall have the right, at its
option, at any time and from time to time to convert, subject to the terms and
provisions of this Article 4, any or all of such Holder's shares of Preferred
Stock. In such case, the shares of Preferred Stock shall be converted into such
whole number of fully paid and nonassessable shares of Common Stock as is equal,
subject to Section 4.6, to:
the product of the number of shares of Preferred Stock being so
converted multiplied by
the quotient of (i) the Liquidation Preference divided by (ii) the
Conversion Price then in effect,
except that with respect to any share which shall be called for redemption such
right shall terminate at the close of business on the Redemption Date unless the
Issuer shall default in making the payment due upon redemption thereof.
(b) The conversion right of a Holder of Preferred Stock shall be
exercised by the Holder by the surrender of the certificate representing shares
to be converted to the Issuer or to the Transfer Agent accompanied by the
Conversion Notice.
(i) Immediately prior to the close of business on the Conversion
Date, each converting Holder of Preferred Stock shall be deemed to be the
Holder of record of Common Stock issuable upon conversion of such Holder's
Preferred Stock notwithstanding that the share register of the Issuer shall
then be closed or that certificates representing such Common Stock shall
not then be actually delivered to such person.
6
<PAGE>
(ii) Upon notice from the Issuer, each Holder of Preferred Stock
so converted shall promptly surrender to the Issuer or the Transfer Agent
certificates representing the shares so converted (if not previously
delivered), duly endorsed in blank or accompanied by proper instruments of
transfer.
(iii) On any Conversion Date, all rights with respect to the
shares of Preferred Stock so converted, including the rights, if any, to
receive notices, will terminate, except the rights of Holders thereof to:
(1) receive certificates for the number of shares of Common Stock into
which such shares of Preferred Stock have been converted; (2) receive the
payment in cash or shares of Common Stock of any accumulated and unpaid
dividends accrued thereon pursuant to Section 4.2 hereof; and (3) exercise
the rights to which they are entitled as Holders of Common Stock.
(c) If the Conversion Date shall not be a Business Day, then such
conversion right shall be deemed exercised on the next Business Day.
4.2 When shares of Preferred Stock are converted pursuant to this
Section 4, unless converted between a Dividend Payment Record Date and a
Dividend Payment Date, all accumulated and unpaid dividends (whether or not in
arrears or currently payable) on the Preferred Stock so converted to (and not
including) the Conversion Date shall immediately be due and payable, at the
Issuer's option:
(a) in cash;
(b) in the whole number of fully paid and nonassessable shares of
Common Stock equal to the quotient of (i) the amount of accumulated and unpaid
dividends payable to the Holders of Preferred Stock hereunder, divided by (ii)
95% of the Market Value for the period ending on the Conversion Date; or
(c) a combination thereof.
4.3 The Conversion Price shall be subject to adjustment if any
Conversion Price Adjustment Event described in Section 4.3(a) occurs. The
adjustment will be accomplished from time to time as described in Section
4.3(b).
(a) In case the Issuer shall at any time or from time to time:
7
<PAGE>
(i) make a redemption payment or pay a dividend (or other
distribution) payable in shares of Common Stock to all Holders of any class
of Capital Stock of the Issuer (other than the issuance of shares of Common
Stock in connection with the payment in redemption for, of dividends on, or
the conversion of the Preferred Stock);
(ii) make any issuance to all Holders of shares of Common Stock
of rights, options or warrants entitling them to subscribe for or purchase
shares of Common Stock or securities convertible into or exchangeable for
shares of Common Stock at less than Market Value as of the date of
conversion or exchange; provided, however, that no adjustment shall be made
with respect to such a distribution to the extent the Holder of shares of
Preferred Stock would be entitled to receive such rights, options or
warrants upon conversion at any time of shares of Preferred Stock into
Common Stock, and provided further, that if such rights, options or
warrants are only exercisable upon the occurrence of certain triggering
events, then the Conversion Price will not be adjusted until such
triggering events occur;
(iii) any subdivision, combination or reclassification of any
class of Common Stock;
(iv) any distribution consisting exclusively of cash (excluding
any cash distribution upon a merger or consolidation to which Section 4.5
applies) to all Holders of shares of any class of Common Stock (which
distribution is not also being made to the holders of the Preferred Stock
based on the number of shares of Common Stock into which the Preferred
Stock is then convertible) in an aggregate amount that, combined together
with (1) all other such all-cash distributions made within the then-
preceding 12-months in respect of which no adjustment has been made and (2)
any cash and the fair market value of other consideration paid or payable
in respect of any tender offer by the Issuer or any of its Subsidiaries for
shares of any class of Common Stock concluded within the then-preceding 12-
months in respect of which no adjustment has been made, exceeds
8
<PAGE>
15% of the Issuer's Market Capitalization on the record date of such
distribution;
(v) the completion of a tender or exchange offer made by the
Issuer or any of its Subsidiaries for shares of any class of Common Stock
that involves an aggregate consideration that, together with (1) any cash
and other consideration payable in a tender or exchange offer by the Issuer
or any of its Subsidiaries for shares of any class of Common Stock expiring
within the then-preceding 12-months in respect of which no adjustment has
been made and (2) the aggregate amount of any such all-cash distributions
referred to in (iv) above to all Holders of shares of any class of Common
Stock within the then-preceding 12-months in respect of which no adjustment
has been made, exceeds 15% of the Issuer's Market Capitalization just prior
to the expiration of such tender offer; or
(vi) a distribution to all Holders of any class of Common Stock
(which distribution is not also being made to the holders of the Preferred
Stock based on the number of shares of Common Stock into which the
Preferred Stock is then convertible unless the Common Stock does not share
pro rata in such distribution) consisting of evidences of indebtedness,
shares of Capital Stock other than Common Stock of the Issuer or assets
(including securities, but excluding those dividends, rights, options,
warrants and distributions referred to above).
(b) If any Conversion Price Adjustment Event occurs, the Issuer will
calculate the adjustment to the Conversion Price as follows for each specific
event. In the following descriptions, the variables have the following
definitions:
C equals the total number of shares of Preferred Stock outstanding at the
time of the Conversion Price Adjustment Event;
U equals the number of shares of Common Stock underlying rights, options, or
warrants issued entitling the holders to subscribe for or purchase shares
of Common Stock or securities convertible into or exchangeable for shares
of Common Stock issued in the Conversion Price Adjustment Event;
9
<PAGE>
X equals the total number of shares of Common Stock outstanding immediately
prior to the Conversion Price Adjustment Event (not including unexercised
options, warrants, or rights);
Y equals the total number of shares of Common Stock outstanding immediately
after the Conversion Price Adjustment Event (not including unexercised
options, warrants, or rights);
Z equals the total number of shares of Common Stock outstanding at the time
of the Conversion Price Adjustment Event;
Cash equals any distribution consisting exclusively of cash (excluding any cash
distributed upon a merger or consolidation to which Section 4.5 applies) to
all Holders of shares of any class of Common Stock in an aggregate amount
that, combined together with (1) all other such all-cash distributions made
within the then-preceding 12-months in respect of which no adjustment has
been made and (2) any cash and the fair market value of other consideration
paid or payable in respect of any tender offer by the Issuer or any of its
Subsidiaries for shares of any class of Common Stock concluded within the
then-preceding 12 months in respect of which no adjustment has been made
pursuant to Section 4.3(a)(iv);
ExP equals the exercise or other consideration to be paid by the Holder upon
the exercise of or conversion of "U";
MC equals Market Capitalization;
MV equals Market Value per share of the Common Stock as of the date of
conversion or exchange of "U";
#Sh equals the number of shares in the class of Common Stock receiving the
distribution contemplated in Section 4.3(a)(vi) or subject to the tender
offer contemplated in Section 4.3(a)(v);
TOff equals the aggregate consideration that, together with (1) any cash and
other consideration payable in a tender or exchange offer by the Issuer or
any of its Subsidiaries for shares of any class of Common Stock expiring
within the then-preceding 12-months in respect of which no adjustment has
been made and (2) the aggregate amount of any such all-cash distributions
referred to in
10
<PAGE>
Section 4.3(a)(iv) to all Holders of shares of any class of Common Stock
within the then-preceding 12-months in respect of which no adjustment has
been made;
TOff/S equals the tender offer price, per share;
TPur equals the number of shares purchased in the tender offer;
Value equals the aggregate fair market value of the distribution described in
Section 4.3(a)(vi), as determined in good faith by the Board of Directors
of the Issuer;
CP equals the Conversion Price immediately prior to the Conversion Price
Adjustment Event;
ACP equals the Conversion Price immediately after the Conversion Price
Adjustment Event;
(i) In the case of an event described in Sections 4.3(a)(i) or
4.3(a)(iii), the Conversion Price in effect immediately before such event
shall be adjusted pursuant to the following formula: X/Y multiplied by
CP=ACP./1/
(ii) In the case of an event described in section 4.3(a)(ii), the
Conversion Price in effect immediately before such event shall be adjusted
pursuant to the following formula: X/(X+U ((MV-ExP)/MV)) multiplied by
CP=ACP./2/ If any options, warrants, convertible securities, or other
rights of the nature described in Section 4.3(a)(ii) ("Rights") expire
without exercise or conversion, the Conversion Price will be readjusted
to the Conversion Price which
- -----------------------
/1/ For example, where X=12 million shares, and 500,000 shares are being issued
in the Conversion Price Adjustment Event (Y=12,500,000), and CP is $32.00,
the Adjusted Conversion Price (ACP) is $30.72.
/2/ For example, where X=12 million shares, and U=500,000 shares, MV is $40,
ExP is $35, and CP is $32.00, the Adjusted Conversion Price (ACP) is
$31.83. If ExP is $0, the Adjusted Conversion Price (ACP) is $30.72.
11
<PAGE>
would otherwise be in effect had the adjustment made upon the issuance of
such Rights had been made on the basis of delivery of only the number of
shares of Common Stock actually delivered upon the exercise or conversion
of such Rights.
(iii) In the case of an event described in Section 4.3(a)(iv),
the Conversion Price in effect immediately before such event shall be
adjusted pursuant to the following formula: CP-((Cash-15% MC)/C)=ACP./3/
There will be no adjustment to the Conversion Price pursuant to Section
4.3(a)(iv) if (Cash-15% MC) is less than or equal to zero.
(iv) In the case of an event described in Section 4.3(a)(v), and
if the tender offer price or exchange offer price per share is greater than
Market Value, the Conversion Price in effect immediately before such event
shall be adjusted pursuant to the follow ing formula: CP-((TPur
multiplied by (TOff/S-MV))/(#Sh-TPur))=ACP./4/
There will be no adjustment to the Conversion Price pursuant to Clause
4.3(a)(v) if TOff/S is less than or equal to Market Value or if TPur
multiplied by TOff/S is less than 15% of MC.
(v) In the case of an event described in Section 4.3(a)(vi), the
Conversion Price in effect immediately before such
- --------------------
/3/ For example, where Cash distributed equals $20,000,000, Market
Capitalization equals $100,000,000 (15% MC=$15,000,000), CP equals $32.00
and there are 2,000,000 shares of Preferred Stock outstanding (C), the
Adjusted Conversion Price (ACP) is $29.50.
/4/ For example, where TOff/S is $45.00 at a time when MV is $35, CP equals
$32.00, 1,000,000 shares were purchased in the tender offer (TPur), and
there were 12,000,000 shares of the class outstanding (#SH), the Adjusted
Conversion Price (ACP) is $31.09.
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<PAGE>
event shall be adjusted pursuant to the following formula: CP-
(Value/#Sh)=ACP./5/
An adjustment made pursuant to this Section 4.3 shall become effective
retroactively: (x) in the case of a Conversion Price Adjustment Event described
in Section 4.3(a)(i), (ii), (iv), or (vi), immediately following the close of
business on the record date for the determination of Holders of Common Stock
entitled to participate in such event; or (y) in the case of a Conversion Price
Adjustment Event described in Section 4.3(a)(ii), the close of business on the
day upon which such corporate action becomes effective; or (z) in the case of a
Conversion Price Adjustment Event described in Section 4.3(a)(v), the close of
business on the day of the completion of such tender offer or exchange offer.
(c) Notwithstanding anything herein to the contrary, no adjustment
under this Section 4.3 need be made to the Conversion Price unless such
adjustment would require an increase or decrease of at least 1% of the
Conversion Price then in effect. Any lesser adjustment shall be carried forward
and shall be made at the time, if ever, of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least 1% of such
Conversion Price.
(d) Notwithstanding anything to the contrary contained in this
Certificate of Designation, no Conversion Price adjustment will be made as a
result of the issuance of Common Stock on conversion of the Preferred Stock.
(e) Each event requiring adjustment to the Conversion Price shall
require only a single adjustment even though more than one of the adjustment
clauses set forth in Section 4.3(a), Section 4.4 or Section 4.5, may be
applicable to such Conversion Price Adjustment Event.
(f) If the Issuer shall take a record of the Holders of any class of
its Capital Stock for the purpose of entitling them to receive a dividend or
other distribution which would otherwise constitute a Conversion Price
Adjustment Event, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no
- ------------------------
/5/ For example, where CP is $32.00, Value equals $1,500,000, and there were
12,000,000 shares of the class outstanding (#SH), ACP is $31.88.
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<PAGE>
adjustment in the Conversion Price then in effect shall be required by reason of
the taking of such record.
(g) Upon any increase or decrease in the Conversion Price, then, and
in each such case, the Issuer promptly shall deliver to each registered Holder
of Preferred Stock a certificate signed by an authorized officer of the Issuer,
setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the increased or
decreased Conversion Price then in effect following such adjustment.
(h) The Issuer reserves the right to make such reductions in the
Conversion Price in addition to those required in the foregoing provisions as it
considers to be advisable in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights will not be taxable to the
recipients. In the event the Issuer elects to make such a reduction in the
Conversion Price, the Issuer will comply with the requirements of Rule 14e-1
under the 1934 Act, and any other securities laws and regulations thereunder if
and to the extent that such laws and regulations are applicable in connection
with the reduction of the Conversion Price.
4.4 In the event the Issuer distributes rights or warrants (other
than those referred to in Section 4.3(a)(ii)) pro rata to all Holders of shares
of any class of Common Stock, so long as any such rights or warrants have not
expired or been redeemed by the Issuer, the Holders of any Preferred Stock
surrendered for conversion will, in the discretion of the Issuer and subject to
the last paragraph of this Section 4.4, be entitled to receive upon such
conversion, in addition to the shares of Common Stock then issuable upon such
conversion (the "Conversion Shares"), a number of rights or warrants to be
determined as follows:
(a) if such conversion occurs on or prior to the date for the
distribution to Holders of rights or warrants of separate certificates
evidencing such rights or warrants (the "Distribution Date"), the same number of
rights or warrants to which a Holder of a number of shares of Common Stock
equal to the number of Conversion Shares is entitled at the time of such
conversion in accordance with the terms and provisions applicable to the rights
or warrants, and
(b) if such conversion occurs after such Distribution Date, the same
number of rights or warrants to which a Holder of the number of shares of Common
Stock of the Issuer into which such Preferred Stock was convertible
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<PAGE>
immediately prior to such Distribution Date would have been entitled on such
Distribution Date in accordance with the terms and provisions of and applicable
to the rights or warrants.
In the event the Holders of the Preferred Stock are not entitled to
receive such rights or warrants pursuant to Section 4.4(a) or 4.4(b), the
Conversion Price will be subject to adjustment upon any declaration or
distribution of such rights or warrants pursuant to Section 4.3, above.
4.5 (a) In case of:
(i) any capital reorganization or reclassification or other
change of outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par
value), or
(ii) any consolidation or merger of the Issuer with or into
another Person (other than a consolidation or merger in which the Issuer is
the resulting or surviving Person and which does not result in any
reclassification or change of outstanding Common Stock), or
(iii) any sale, transfer or other conveyance to another Person
of all or substantially all of the assets of the Issuer computed on a
consolidated basis (other than the sale, transfer, assignment or
distribution of shares of Capital Stock or assets to a Subsidiary)
(any of the events described in Section 4.5(a) being referred to in this Section
4.5 as a "Transaction"), then the adjustment described in Section 4.5(b) will be
made.
(b) Each share of Preferred Stock then outstanding shall, without the
consent of any Holder of Preferred Stock, become convertible only into the kind
and amount of shares of stock or other securities (of the Issuer or another
issuer) or property or cash receivable upon such Transaction by a Holder of the
number of shares of Common Stock into which such share of Preferred Stock could
have been converted immediately prior to such Transaction after giving effect to
any adjustment event.
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<PAGE>
(c) The provisions of this Section 4.5 and any equivalent thereof in
any such certificate similarly shall apply to successive Transactions. The
provisions of this Section 4.5 shall be the sole right of Holders of Preferred
Stock in connection with any Transaction and such Holders shall have no separate
vote thereon.
4.6 In the case of any distribution by the Issuer to its stockholders
of substantially all of its assets, each Holder of Preferred Stock will
participate pro rata in such distribution based on the number of shares of
Common Stock into which such Holders' shares of Preferred Stock would have been
convertible immediately prior to such distribution, unless the amount of such
distribution would result in a payment less than the Liquidation Preference, in
which case the Liquidation Preference shall be paid.
4.7 If, as a result of any Conversion Price Adjustment Event, a
Holder of the Preferred Stock becomes entitled to receive upon conversion shares
of two or more classes of Capital Stock, the Issuer shall determine the
reasonable allocation of the adjusted Conversion Price between the classes of
Capital Stock. After such allocation, the Conversion Price of each class of
Capital Stock shall thereafter be subject to adjustment on terms applicable to
the Preferred Stock in this Article 4.
4.8 The Issuer shall at all times reserve and keep available for
issuance upon the conversion of the Preferred Stock, such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding shares of Preferred
Stock, and shall take all action required to increase the authorized number of
shares of Common Stock if at any time there shall be insufficient authorized
unissued shares of Common Stock to permit such reservation or to permit the
conversion of all outstanding shares of Preferred Stock.
4.9 The issuance or delivery of certificates for Common Stock upon
the conversion of shares of Preferred Stock shall be made without charge to the
converting Holder of shares of Preferred Stock for such certificates or for any
tax in respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued or
delivered in the respective names of, or in such names as may be directed by,
the Holders of the shares of Preferred Stock converted; provided, however, that
the Issuer shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery
16
<PAGE>
of any such certificate in a name other than that of the Holder of the shares of
Preferred Stock converted, and the Issuer shall not be required to issue or
deliver such certificate unless or until the Person or Persons requesting the
issuance or delivery thereof shall have paid to the Issuer the amount of such
tax or shall have established to the reasonable satisfaction of the Issuer that
such tax has been paid.
5. Optional Redemption of Preferred Stock
5.1 (a) Shares of the Preferred Stock will not be redeemable prior
to May 1, 2001.
(b) On or after May 1, 2001, the Preferred Stock may be redeemed, in
whole or in part, at the option of the Issuer, in cash, by delivery of fully
paid and nonassessable shares of Common Stock or a combination thereof, upon
Redemption Notice given not less than 20 days' notice nor more than 60 days'
prior to the Redemption Date, during the 12-month periods commencing on May 1 of
the years indicated below, at the following Redemption Prices per share, plus in
each case all accumulated and unpaid dividends to the Redemption Date:
<TABLE>
<CAPTION>
Redemption
----------
Year Price Per Share
- ---- ---------------
<S> <C>
2001................................................... $52.00
2002................................................... $51.50
2003................................................... $51.00
2004................................................... $50.50
2005 and thereafter.................................... $50.00
</TABLE>
(c) In the event that fewer than all the outstanding shares of the
Preferred Stock are to be redeemed, the shares to be redeemed will be determined
pro rata or by lot.
(d) If the Issuer elects to pay the Redemption Price in shares of
Common Stock, the number of shares of Common Stock to be distributed will be
calculated by dividing the aggregate Redemption Price payable to any Holder by
95% of the Market Value as of the Redemption Notice Date.
(e) From and after the applicable Redemption Date (unless the Issuer
shall be in default of payment of the Redemption Price), dividends on the shares
of the Preferred Stock to be redeemed on such Redemption Date shall cease to
17
<PAGE>
accumulate, such shares shall no longer be deemed to be outstanding, and all
rights of the Holders thereof as stockholders of the Issuer (except the right to
receive the Redemption Price) will cease.
5.2 If any dividends on the Preferred Stock are in arrears, no shares
of the Preferred Stock will be redeemed unless all outstanding shares of the
Preferred Stock are simultaneously redeemed.
5.3 In the event the Issuer shall elect to redeem shares of the
Preferred Stock pursuant to Section 5.1 hereof, the Issuer must provide the
Holders with the Redemption Notice as described in Section 5.1(b), and
(a) (i) On or before any Redemption Date, each Holder of shares of
Preferred Stock to be redeemed shall surrender the certificate or certificates
representing such shares of Preferred Stock (properly endorsed or assigned, or
transferred, if the Issuer shall so require and the Redemption Notice shall so
state) to the Issuer or the Redemption Agent (if appointed) in the manner and at
the place designated in the Redemption Notice.
(ii) On the first Business Day following the Redemption Date,
the Issuer or the Redemption Agent, as applicable, shall pay or deliver to
the Holder whose name appears on such certificate or certificates as the
owner thereof, the full Redemption Price due such Holder in cash, in fully
paid and nonassessable shares of Common Stock or in a combination thereof.
(iii) The shares represented by each certificate to be
surrendered shall be automatically (and without any further action of the
Issuer or the Holder) canceled as of the Redemption Date whether or not
certificates for such shares are returned to the Issuer and returned to
authorized but unissued shares of preferred stock of no series.
(iv) If fewer than all the shares represented by any such
certificate are to be redeemed, a new certificate shall be issued
representing the unredeemed shares, without cost to the Holder, together
with the amount of cash, if any, in lieu of fractional shares.
(b) If a Redemption Notice shall have been given as provided in
Section 5.1, dividends on the shares of Preferred Stock so called for redemption
18
<PAGE>
shall cease to accrue, such shares shall no longer be deemed to be outstanding,
and all rights of the Holders thereof as stockholders of the Issuer with respect
to shares so called for redemption (except for the right to receive from the
Issuer the Redemption Price) shall cease (including any right to receive any
dividends otherwise payable on any Dividend Payment Date that would have
occurred after the Redemption Date) either (i) from and after the Redemption
Date (unless the Issuer shall default in the payment of the Redemption Price, in
which case such rights shall not terminate at the Redemption Date) or (ii) if
the Issuer shall so elect and state in the Redemption Notice, from and after the
time and date (which date shall be the Redemption Date or an earlier date not
less than 20 days after the date of mailing of the Redemption Notice) on which
the Issuer shall irrevocably deposit in trust for the Holders of the shares to
be redeemed with a designated Redemption Agent as paying agent sufficient to pay
at the office of such paying agent, on the Redemption Date, the Redemption
Price. Any money or shares of Common Stock so deposited with such Redemption
Agent which shall not be required for such redemption shall be returned to the
Issuer forthwith. Subject to applicable escheat laws, any moneys or shares of
Common Stock so set aside by the Issuer and unclaimed at the end of one year
from the Redemption Date shall revert to the general funds of the Issuer, after
which reversion the Holders of such shares so called for redemption shall look
only to the general funds of the Issuer for the payment of the Redemption Price
without interest. Any interest accrued on funds held by the Redemption Agent
shall be paid to the Issuer from time to time.
(c) In the event that fewer than all the outstanding shares of the
Preferred Stock are to be redeemed, the shares to be redeemed shall be
determined pro rata or by lot, as determined by the Issuer, except that the
Issuer may redeem such shares held by any Holder of fewer than 100 shares (or
shares held by Holders who would hold fewer than 100 shares as a result of such
redemption), as may be determined by the Issuer.
6. Change of Control
6.1 (a) In the event of a Change of Control, Holders shall, if the
Market Value at such time is less than the Conversion Price, have a one time
option (the "Change of Control Option"), upon not less than 30 days' notice nor
more than 60 days' notice, to convert all of their outstanding shares of
Preferred Stock into shares of Common Stock at an adjusted Conversion Price
equal to the greater of:
19
<PAGE>
(i) the Market Value on the date on which the Change of Control
event occurred and
(ii) $17.18.
(b) In lieu of issuing the shares of Common Stock issuable upon
conversion in the event of a Change of Control, the Issuer may, at its option,
make a cash payment equal to the Market Value of such Common Stock otherwise
issuable.
6.2 In the event of a Change of Control, notice of such Change of
Control shall be given, within five Business Days of the Change of Control Date,
by the Issuer by first-class mail to each record Holder of shares of Preferred
Stock, at such Holder's address as the same appears on the books of the Issuer.
Each such notice shall state: (i) that a Change of Control has occurred; (ii)
the last day on which the Change of Control Option may be exercised (the
"Expiration Date"); (iii) the name and address of the paying agent; and (iv) the
procedures that Holders must follow to exercise the Change of Control Option.
6.3 On or before the Expiration Date, each Holder of shares of
Preferred Stock wishing to exercise the Change of Control Option shall surrender
the certificate or certificates representing the shares of Preferred Stock to be
converted, in the manner and at the place designated in the notice described in
Section 6.2, and on such date the cash or shares of Common Stock due to such
Holder shall be delivered to the person whose name appears on such certificate
or certificates as the owner thereof and each surrendered certificate shall be
returned to authorized but unissued shares. Upon surrender (in accordance with
the notice described in Section 6.2 of the certificate or certificates
representing any shares to be so converted (properly endorsed or assigned for
transfer, if the Issuer shall so require and the notice shall so state), such
shares shall be converted by the Issuer at the Conversion Price as adjusted.
6.4 The rights of Holders of Preferred Stock pursuant to this Article
6 are in addition to, and not in lieu of, the rights of holders of Preferred
Stock provided for in Article 4 hereof.
6.5 The foregoing provisions are not waivable by the Issuer.
20
<PAGE>
7. Liquidation Preference
7.1 Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Issuer, Holders of the Preferred Stock will be entitled to be
paid, out of assets of the Issuer available for distribution the Liquidation
Preference per share plus an amount in cash equal to all accumulated and unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding up
(including an amount equal to a prorated dividend for the period from the last
dividend payment date to the date fixed for liquidation, dissolution or winding
up), before any distribution is made on any Junior Securities, including,
without limitation, the Common Stock.
7.2 If, upon any voluntary of involuntary liquidation, dissolution or
winding-up of the Issuer, the amounts payable with respect to the Preferred
Stock and all other Parity Securities are not paid in full, the Holders of the
Preferred Stock and the Parity Securities will share equally and ratably in any
distribution of assets of the Issuer in proportion to the full Liquidation
Preference and accumulated and unpaid dividends to which each is entitled.
7.3 After payment of the full amount of the Liquidation Preference and
accumulated and unpaid dividends to which they are entitled, the Holders of
shares of the Preferred Stock will have no right or claim to any of the
remaining assets of the Issuer.
7.4 Neither the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property or business of the Issuer (other than in connection with the
winding up of its business), nor the merger or consolidation of the Issuer with
or into any other corporation, will be deemed to be a dissolution, liquidation,
or winding up, voluntary or involuntary, of the Issuer.
8. Voting Rights
8.1 Holders of the Preferred Stock have no voting rights with respect
to general corporate matters except as provided by law or as set forth herein.
8.2 (a) If dividends payable on the Preferred Stock are in arrears and
unpaid for six consecutive quarterly periods, the Holders of the Preferred Stock
voting separately as a class with the shares of any other preferred stock or
preference securities having similar voting rights (the "Voting Rights Class")
will be entitled at the next regular or special meeting of stockholders of the
Issuer to elect two directors of the Issuer to fill newly created directorships.
21
<PAGE>
(b) Such voting rights may be exercised at a special meeting of the
holders of the shares of the Voting Rights Class, called as hereinafter
provided, or at any annual meeting of stockholders held for the purpose of
electing directors, and thereafter at each such annual meeting until such time
as all dividends in arrears on the shares of Preferred Stock shall have been
paid in full, at which time or times such voting rights and the term of the
directors elected pursuant to Section 8.2(a) shall terminate.
(c) At any time when such voting rights shall have vested in holders
of shares of the Voting Rights Class described in Section 8.2(a), a proper
officer of the Issuer may call, and, upon the written request of the record
holders of shares representing twenty-five percent (25%) of the voting power of
the shares then outstanding of the Voting Rights Class, addressed to the
Secretary of the Issuer, shall call a special meeting of the holders of shares
of the Voting Rights Class. Such meeting shall be held at the earliest
practicable date upon the notice required for annual meetings of stockholders at
the place for holding annual meetings of stockholders of the Issuer, or, if
none, at a place designated by the Board of Directors. Not withstanding the
provisions of this Section 8.2(c), no such special meeting shall be called
during a period within the 60 days immediately preceding the date fixed for the
next annual meeting of stockholders, in which such case the election of
directors pursuant to Section 8.2(a) shall be held at such annual meeting of
stockholders.
(d) At any meeting held for the purpose of electing directors at which
the holders of the Voting Rights Class shall have the right to elect directors
as provided herein, the presence in person or by proxy of the holders of shares
representing more than fifty percent (50%) in voting power of the then
outstanding shares of the Voting Rights Class shall be required and shall be
sufficient to constitute a quorum of such class for the election of directors by
such class.
(e) Any director elected pursuant to the voting rights created under
this Section 8.2 shall hold office until the next annual meeting of stockholders
(unless such term has previously terminated pursuant to Section 8.2(b)) and any
vacancy in respect of any such director shall be filled only by vote of the
remaining director so elected by holders of the Voting Rights Class, or if there
be no such remaining director, by the holders of shares of the Voting Rights
Class at a special meeting called in accordance with the procedures set forth in
this Section 8.2, or, if no such special meeting is called, at the next annual
meeting of stockholders. Upon any
22
<PAGE>
termination of such voting rights, the term of office of all directors elected
pursuant to this Section 8 shall terminate.
8.3 The affirmative vote or consent of the Holders of at least 66-2/3%
of the outstanding Preferred Stock will be required for:
(a) the issuance of any class of Senior Securities (or security
convertible into Senior Securities or evidencing a right to purchase any shares
or any class or series of Senior Securities), and
(b) amendments to the Issuer's Certificate of Incorporation that would
affect adversely the rights of Holders of the Preferred Stock, including,
without limitation,
(i) any increase in the authorized number of shares of Preferred
Stock beyond 10,000,000 shares and
(ii) the issuance of any shares of Preferred Stock in excess of
the number of shares of such stock authorized in this Certificate of
Designation as of the date of the original issuance of the Preferred
Stock.
(c) In all such cases each share of Preferred Stock shall be
entitled to one vote.
8.4 Except as set forth in this Certificate of Designation, the
creation, authorization or issuance of any shares of Junior Securities or Parity
Securities or an increase or decrease in the amount of authorized Capital Stock
of any class, including any preferred stock, shall not require the consent of
the Holders of the Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of Holders of shares of the
Preferred Stock.
9. Amendment, Supplement and Waiver
9.1 Without the consent of any Holder of the Preferred Stock, the
Issuer may amend or supplement this Certificate of Designation to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Preferred
Stock in addition to or in place of certificated Preferred Stock, to provide for
the assumption of the
23
<PAGE>
Issuer's obligations to Holders of the Preferred Stock in the case of a merger
or consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Preferred Stock or that does not adversely affect
the legal rights under this Certificate of Designation of any such Holder.
10. Certain Definitions
Set forth below are certain defined terms used in this Certificate of
Designation.
10.1 "Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities, by agreement of or
otherwise.
10.2 "Business Day" means any day other than a Legal Holiday.
10.3 "Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock or partnership or membership interests, whether common or preferred.
10.4 "Change of Control" means: (a) the sale, lease, transfer,
convey ance or other disposition of all or substantially all of the assets of
the Issuer to any "person" or "group" (within the meaning of Sections 13(d)(3)
and 14(d)(2) of the Exchange Act or any successor provision to either of the
foregoing, including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act) other than Existing Shareholders (except in connection with a
liquidation or dissolution of the Issuer that does not constitute a Change of
Control under clause (b) below), (b) the approval by the requisite shareholders
of the Issuer of a plan of liquidation or statutory dissolution (which shall not
be construed to include a plan or merger or consolidation) of the Issuer, unless
Existing Shareholders "beneficially own" (as defined in Rule 13d-3 under the
Exchange Act) at least the same percentage of voting power after the
consummation of such plan as before or otherwise retain the right or ability, by
voting power, to control the Person that acquire the proceeds of such
liquidation or dissolution,
24
<PAGE>
(c) any "person" or "group" (within a meaning of Sections 13(d)(3)
and 14(d)(2) of the Exchange Act or any successor provision to either of the
foregoing, including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than Existing Shareholders, becomes the "beneficial
owner" (as so defined) of more than thirty-five percent (35%) of the total
voting power of all classes of the Voting Stock of the Issuer or a successor
and/or warrants or options to acquire such Voting Stock, calculated on a fully
diluted basis, provided that Existing Shareholders "beneficially own" (as so
defined) in the aggregate a percentage of such Voting Stock or warrants having a
lesser percentage of voting power than such other "person" or "group" and do not
have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Issuer's Board of Directors, or (d)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Issuer's Board of Directors (together with any new
directors whose election or appointment by such board or whose nomination for
election by the stockholders of the Issuer was approved by a vote of the
Existing Shareholders or a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Issuer's Board of Directors then in office.
Notwithstanding clause (c) above, (i) the acquisition by a Qualified Investor of
forty-nine percent (49%) or less of the Voting Stock of the Issuer shall not
constitute a Change of Control, and (ii) a merger or consolidation that would
otherwise constitute a Change of Control hereunder shall not constitute a Change
of Control if at least ninety percent (90%) of the consideration consists of
common stock that is, or upon issuance, will be traded on a United States
national securities exchange or quoted on the Nasdaq National Market.
10.5 "Common Stock" means the Issuer's authorized $.01 par value
Common Stock.
10.6 The "Conversion Date" shall be the date the Issuer or the
Transfer Agent receives the Conversion Notice.
10.7 The "Conversion Notice" is written notice from the Holder to
the Issuer stating that the Holder elects to convert all or a portion of the
shares of Preferred Stock represented by certificates delivered to the Issuer or
the Transfer Agent contemporaneously. The Conversion Notice will specify or
include:
25
<PAGE>
(i) The number of shares of Preferred Stock being converted by
the Holder,
(ii) The name or names (with address and taxpayer identification
number) in which a certificate or certificates for shares of Common Stock
are to be issued,
(iii) A written instrument or instruments of transfer in form
reasonably satisfactory to the Issuer or the Transfer Agent, duly executed
by the Holder or its duly authorized legal representative, or in blank, and
(iv) Transfer tax stamps or funds thereof, if required pursuant
to Section 4.9.
10.8 The "Conversion Price" shall initially be $31.115, subject to
adjustments as set forth in Section 4.3.
10.9 "Conversion Price Adjustment Events" are any of those events
specified in Section 4.3(a).
10.10 "Deposit Account" means the account created pursuant to the
Deposit Account Agreement.
10.11 "Deposit Account Agreement" means the Deposit Account Agreement
dated May 6, 1998 between the Company and The First National Bank of Maryland,
as deposit agent.
10.12 "Dividend Payment Date" is as defined in Section 2.1, above.
10.13 "Dividend Payment Record Date" is as defined in Section 2.1,
above.
10.14 "Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
26
<PAGE>
10.15 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
10.16 "Existing Shareholders" means Douglas G. Smith, Madison
Dearborn Capital Partners, L.P. and Allen & Company Incorporated and their
respective Affiliates at May 1, 1998.
10.17 "Holder" means a Person in whose name shares of Capital Stock
is registered.
10.18 "Issuer" means Omnipoint Corporation, a Delaware corporation.
10.19 "Junior Security" is as defined in Section 3.1.
10.20 "Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place payment is to be
received are authorized by law, regulation or executive order to remain closed.
If a payment date is Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
10.21 "Liquidation Preference" means $1,000 per share of Preferred
Stock.
10.22 "Market Capitalization" means the product of the then-current
Market Value times the total number of shares of Common Stock then outstanding.
10.23 "Market Value" means, as of any date, the average of the daily
closing price for the five consecutive trading days ending on such date. The
closing price for each day shall be the last sales price or in case no such
reported sales take place on such day, the average of the last reported bid and
asked price, in either case, on the principal national securities exchange on
which the shares of Common Stock are admitted to trading or listed, or if not
listed or admitted to trading on such exchange, the representative closing bid
price as reported by the Nasdaq National Market, or other similar organization
if the Nasdaq National Market is no longer reporting such information, or if not
so available, the fair market price as determined, in good faith, by the Board
of Directors of the Issuer.
27
<PAGE>
10.24 "Parity Security" is as defined in Section 3.1.
10.25 "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock issuer, interest, trust or unincorporated
organization (including any subdivision or ongoing business of any such entity
or substantially all of the assets of any such entity, subdivision or business).
10.26 "Preferred Stock" means the Preferred Stock authorized in this
Certificate of Designation.
10.27 "Qualified Investor" means an investor approved by the Board of
Directors of the Company, which has debt securities rated by a nationally
recognized statistical rating organization in one of its four highest generic
rating categories and either (i) is in the telecommunications industry or (ii)
engages in a business which will benefit from strategic synergies from an
investment in the Company.
10.28 "Redemption Agent" means that Person, if any, appointed by the
Issuer to hold funds deposited by the Issuer in trust to pay to the Holders of
shares to be redeemed.
10.29 "Redemption Date" means that certain date set forth in the
Redemption Notice on which date the redemption of the Preferred Stock is
completed.
10.30 "Redemption Notice" means that notice to be given by the Issuer
to the Holders notifying the Holders as to the redemption, in whole or in part,
of the Preferred Stock pursuant to Article 5 hereof. The Redemption Notice
shall include the following information: (i) the Redemption Date and the time
of day on such date; (ii) the total number of shares of Preferred Stock to be
redeemed and, if fewer than all the shares held by such Holder are to be
redeemed, the number of such shares to be redeemed from such Holder; (iii) the
Redemption Price (whether to be paid in cash or shares of Common Stock); (iv)
the place or places where certificates for such shares are to be surrendered for
payment of the Redemption Price and delivery of certificates representing shares
of Common Stock (if the Issuer so chooses); (v) that dividends on the shares to
be redeemed will cease to accrue on such Redemption Date unless the Issuer
defaults in the payment of the Redemption Price; and (vi) the name of any bank
or trust company, if any, performing the duties of
28
<PAGE>
Redemption Agent. Redemption Notice may be given (i) by publication in a
newspaper of general circulation in the Borough of Manhattan, City and State of
New York (if such publication shall be required by applicable law, rule,
regulation or securities exchange requirement) or (ii) by first-class mail to
each record Holder of the shares to be redeemed, at such holder's address as the
same appears on the books of the Company.
10.31 "Redemption Notice Date" means the date the Redemption Notice
is first mailed or delivered to any Holder.
10.32 "Redemption Price" means that price established for redemption
of the Preferred Stock established in Section 5.1(b) hereof.
10.33 "Senior Securities" is as defined in Section 3.1.
10.34 "Subsidiary" means, with respect to any person, any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such person or one or more of the other Subsidiaries of such person or a
combination thereof.
10.35 The "Transfer Agent" shall be as established pursuant to
Article 11 hereof.
10.36 "Voting Stock" means with respect to any Person, Capital Stock
of any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
11. Transfer Agent and Registrar
The duly appointed Transfer Agent and registrar for the Preferred Stock
shall be Marine Midland Bank. The Issuer may, in its sole discretion, remove
the Transfer Agent in accordance with the agreement between the Issuer and the
Transfer Agent; provided that the Issuer shall appoint a successor transfer
agent who shall accept such appointment prior to the effectiveness of such
removal.
29
<PAGE>
12. Other Provisions
12.1 With respect to any notice to a Holder of shares of the
Preferred Stock required to be provided hereunder, neither failure to mail such
notice, nor any defect therein or in the mailing thereof, to any particular
Holder shall affect the sufficiency of the notice or the validity of the
proceedings referred to in such notice with respect to the other Holders or
affect the legality or validity of any distribution, rights, warrant,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any such action. Any notice which
was mailed in the manner herein provided shall be conclusively presumed to have
been duly given whether or not the Holder receives the notice.
12.2 Shares of Preferred Stock issued and reacquired will be retired
and canceled promptly after reacquisition thereof and, upon compliance with the
applicable requirements of Delaware law, have the status of authorized but
unissued shares of preferred stock of the Issuer undesignated as to series and
may with any and all other authorized but unissued shares of preferred stock of
the Issuer be designated or redesignated and issued or reissued, as the case may
be, as part of any series of preferred stock of the Issuer except that any
issuance or reissuance of shares of Preferred Stock must be in compliance with
this Certificate of Designation.
12.3 In the Issuer's discretion, no fractional shares of Common
Stock or securities representing fractional shares of Common Stock will be
issued upon conversion, redemption, or as dividends payable in the Preferred
Stock. Any fractional interest in a share of Common Stock resulting from
conversion, redemption, or dividend payment will be paid in cash based on the
last reported sale price of the Common Stock on the Nasdaq National Market (or
any national securities exchange or authorized quotation system on which the
Common Stock is then listed) at the close of business on the trading day next
preceding the date of conversion or such later time as the Issuer is legally and
contractually able to pay for such fractional shares.
12.4 The shares of Preferred Stock shall be issuable in whole
shares.
12.5 All notices periods referred to herein shall commence on the
date of the mailing of the applicable notice.
30
<PAGE>
IN WITNESS WHEREOF, Omnipoint Corporation caused this Certificate to
be signed and attested by this 5th day of May, 1998.
OMNIPOINT CORPORATION
By: /s/ Bradley E. Sparks
-------------------------------
Name: Bradley E. Sparks
Title: Vice President and
Chief Financial Officer
Attest:
/s/ Edwin M. Martin, Jr.
- ---------------------------
Name: Edwin M. Martin, Jr.
Title: Secretary
31
<PAGE>
EXHIBIT 4.4
DEPOSITARY SHARES
AND
7% CUMULATIVE CONVERTIBLE
PREFERRED STOCK
REGISTRATION RIGHTS AGREEMENT
Dated as of May 6, 1998
by and among
Omnipoint Corporation
and
Donaldson, Lufkin & Jenrette Securities Corporation
BancAmerica Robertson Stephens
Bear, Stearns & Co. Inc.
Smith Barney Inc.
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and entered
---------
into as of May 6, 1998, by and among Omnipoint Corporation, a Delaware
corporation (the "COMPANY"), and Donaldson, Lufkin & Jenrette Securities
-------
Corporation, BancAmerica Robertson Stephens, Bear, Stearns & Co. Inc. and
Smith Barney Inc., as representatives of the several initial purchasers (each
an "INITIAL PURCHASER" and, collectively, the "INITIAL PURCHASERS"), each of
------- --------- ------------------
whom has agreed to purchase the Company's 7% Cumulative Convertible Preferred
Stock (the "PREFERRED STOCK") and related Depositary Shares (the "DEPOSITARY
---------------- ---------
SHARES") pursuant to the Purchase Agreement (as defined below).
- ------
This Agreement is made pursuant to the Purchase Agreement, dated May 1,
1998, (the "PURCHASE AGREEMENT"), by and among the Company and the Initial
------------------
Purchasers. In order to induce the Initial Purchasers to purchase the
Depositary Shares, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 9(i)
of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
<TABLE>
<S> <C>
ACT: The Securities Act of 1933, as amended.
---
AFFILIATE: As defined in Rule 144 of the Act.
---------
CLOSING DATE: The date hereof.
------------
COMMON STOCK: Common Stock, $.01 par value per share,
------------ of the Company.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
COMMISSION: The Securities and Exchange Commission.
----------
DEPOSITARY SHARES: The up to 6,325,000 Depositary Shares
----------------- being issued pursuant to the Purchase
Agreement.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) hereof.
----------------------
EXCHANGE ACT: The Securities Exchange Act of 1934,
------------ as amended.
EXEMPT RESALES: The transactions in which the Initial
-------------- Purchasers propose to sell the
Depositary Shares to certain "qualified
institutional buyers," as such term is
defined in Rule 144A under the Act.
FILING DEADLINE: As defined in Section 3(a) hereof.
---------------
HOLDERS: As defined in Section 2 hereof.
-------
PREFERRED STOCK: The 325,000 shares of 7% Cumulative
--------------- Convertible Preferred Stock being issued
pursuant to the Purchase Agreement.
PROSPECTUS: The prospectus included in a
---------- Registration Statement at the time such
Registration Statement is declared
effective, as amended or supplemented
by any prospectus supplement and by all
other amendments thereto, including
post-effective amendments, all material
incorporated by reference into such
Prospectus and any information
previously omitted in reliance upon
Rule 430A of the Act.
RECOMMENCEMENT DATE: As defined in Section 5(b) hereof.
-------------------
REGISTRATION DEFAULT: As defined in Section 4 hereof.
--------------------
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
RULE 144: Rule 144 promulgated under the Act.
--------
SHELF REGISTRATION STATEMENT: As defined in Section 3 hereof.
----------------------------
SUSPENSION NOTICE: As defined in Section 5(b) hereof.
-----------------
</TABLE>
TRANSFER RESTRICTED SECURITIES: The Depositary Shares, shares of
------------------------------
Preferred Stock and the shares of Common Stock issued upon conversion thereof,
upon redemption thereof, as payment of dividends thereon or upon purchase from
the deposit account under the Deposit Account Agreement (as defined in the
Offering Memorandum), upon original issuance thereof, and at all times
subsequent thereto, until, in the case of any such shares of Preferred Stock or
shares of Common Stock, (a) the date on which such shares of Preferred Stock or
shares of Common Stock have been disposed of in accordance with a Shelf
Registration Statement, (b) the date on which such Depositary Shares, shares of
Preferred Stock or shares of Common Stock are distributed to the public pursuant
to Rule 144 or are saleable pursuant to Rule 144(k) (or similar provisions then
in effect) under the Act or (c) the date on which such Depositary Shares, shares
of Preferred Stock, or shares of Common Stock cease to be outstanding.
SECTION 2. HOLDERS
A person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER") whenever such person owns Transfer Restricted Securities.
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SECTION 3. SHELF REGISTRATION
(a) Shelf Registration. As soon as practicable after the Closing Date but
------------------
in no event later than 60 days after the Closing Date (the such 60th day,
"FILING DEADLINE"), the Company shall file with the Commission a shelf
- ----------------
registration statement pursuant to Rule 415 under the Act (the "SHELF
-----
REGISTRATION STATEMENT"), relating to all Transfer Restricted Securities, and
- ----------------------
shall use its reasonable best efforts to cause such Shelf Registration Statement
to become effective on or prior to 120 days after the Closing Date (such 120th
day, the "EFFECTIVENESS DEADLINE").
-----------------------
The Company shall use its best efforts to keep any Shelf Registration
Statement required by this Section 3(a) continuously effective, supplemented
and amended as required by and subject to the provisions of Section 5(a) hereof
to the extent necessary to ensure that it is available for sales of Transfer
Restricted Securities by the Holders thereof entitled to the benefit of this
Section 3(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for the shorter of (i) two years (as extended
pursuant to Section 5(b) following
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<PAGE>
the Closing Date) or (ii) the date on which all Transfer Restricted Securities
covered by such Shelf Registration Statement have been sold pursuant thereto or
(iii) the date on which there are no outstanding Transfer Restricted Securities.
(b) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
- ----------------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 4 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 4. LIQUIDATED DAMAGES
If (i) the Shelf Registration Statement is not filed with the Commission on
or prior to the Filing Deadline, (ii) such Shelf Registration Statement has not
been declared effective by the Commission on or prior to the Effectiveness
Deadline, or (iii) such Shelf Registration Statement required by this Agreement
is filed and declared effective but shall thereafter cease to be effective or
the Prospectus contained therein fails to be usable for its intended purpose
(without being succeeded immediately by a post-effective amendment to such Shelf
Registration Statement that cures such failure and that is itself declared
effective) for a period of time which shall exceed 45 days in any 12 month
period (each such event referred to in clauses (i) through (iii), a
"REGISTRATION DEFAULT"), then the Company hereby agrees to pay to each Holder of
- ---------------------
Transfer Restricted Securities affected thereby liquidated damages in an amount
equal to $2.50 per year per share of Preferred Stock (equivalent to $0.125 per
Depositary Share) or, if applicable, in an amount equal to $2.50 per year
(equivalent to $0.125 per Depositary Share) per the number of shares of Common
Stock constituting Transfer Restricted Securities held by such holder into which
each share of Preferred Stock or Depositary Share, respectively, was converted
(subject to adjustment in the event of stock splits, stock recombinations, stock
dividends and the like, as provided for in the certificate of designation for
the Preferred Stock) for the first 45-day period immediately following the
occurrence of such Registration Default. The amount of the liquidated damages
shall increase by an additional $2.50 per year per share of Preferred Stock
(equivalent to $0.125 per Depositary Share) or $2.50 per year (equivalent to
$0.125 per Depositary Share) per the number of shares of Common Stock
constituting Transfer Restricted Securities held by such holder into which each
share of Preferred Stock or Depositary Share, respectively, was converted,
with respect to each subsequent 45-day period until all Registration
5
<PAGE>
Defaults have been cured, up to a maximum amount of liquidated damages of $25.00
per year per share of Preferred Stock (equivalent to $1.25 per Depositary Share)
or $25.00 per year (equivalent to $1.25 per Depositary Share) per the number of
shares of Common Stock constituting Transfer Restricted Securities held by such
holder into which each share of Preferred Stock or Depositary Share,
respectively, was converted; provided that the Company shall in no event be
required to pay liquidated damages for more than one Registration Default at any
given time. Notwithstanding anything to the contrary set forth herein, (1) upon
filing of the Shelf Registration Statement, in the case of (i) above, (2) upon
the effectiveness of this Shelf Registration Statement, in the case of (ii)
above, or (3) upon the filing of a post-effective amendment to the Shelf
Registration Statement that causes the Shelf Registration Statement to again be
declared effective or made usable, in the case of (iii) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), or (iii), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of dividends on the Preferred
Stock on each quarterly payment date.
SECTION 5. SHELF REGISTRATION PROCEDURES
(a) Procedures. In connection with the Shelf Registration Statement, the
----------
Company shall:
(i) use its best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 3(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Shelf Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale
of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof (including, without limitation,
one or more underwritten offerings) within the time periods and otherwise
in accordance with the provisions hereof.
(ii) use its best efforts to obtain consent from those parties
named in Schedule E attached to the Purchase Agreement not to exercise
their right to require the Company to include their securities in the Shelf
Registration Statement.
(iii) use its best efforts to contact all Holders of Transfer
Restricted Securities and notify each Holder of its right to
6
<PAGE>
include its Transfer Restricted Securities in such Shelf Registration
Statement.
(iv) use its best efforts to keep such Shelf Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 of this Agreement. Upon
the occurrence of any event that would cause any such Shelf Registration
Statement or the Prospectus contained therein (A) to contain an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading or (B) not to be effective
and usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company shall file promptly an appropriate
amendment to such Shelf Registration Statement curing such defect, and, if
Commission review is required, use its best efforts to cause such amendment
to be declared effective as soon as practicable.
(v) prepare and file with the Commission such amendments and post-
effective amendments to the Shelf Registration Statement as may be
necessary to keep such Shelf Registration Statement effective for the
applicable period set forth in Section 3 hereof, cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
Rules 424, 430A and 462, as applicable, under the Act in a timely manner;
and comply with the provisions of the Act with respect to the disposition
of all Transfer Restricted Securities covered by such Shelf Registration
Statement during the applicable period in accordance with the intended
method or methods of distribution by the sellers thereof set forth in such
Shelf Registration Statement or supplement to the Prospectus;
(vi) advise the Holders and underwriters, if any, promptly and, if
requested by such persons, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B)
of any request by the Commission for amendments to the Shelf Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of any
stop order suspending the effectiveness of the Shelf Registration Statement
under the Act or of the suspension by any state securities commission of
the qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any of
the preceding purposes, and (D) of the existence of any
7
<PAGE>
fact or the happening of any event that makes any statement of a material
fact made in the Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Shelf Registration Statement in order to make the statements therein
not misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. If at any
time the Commission shall issue any stop order suspending the effectiveness
of the Shelf Registration Statement, or any state securities commission or
other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company shall use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(vii) subject to Section 5(a)(iii), if any fact or event
contemplated by Section 5(v)(D) above shall exist or have occurred, prepare
a supplement or post-effective amendment to the Shelf Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(viii) furnish to each Holder named in any Shelf Registration
Statement or Prospectus and underwriter, if any, in connection with such
sale before filing with the Commission, copies of any Shelf Registration
Statement or any Prospectus included therein or any amendments or
supplements to any such Shelf Registration Statement or Prospectus
(including all documents incorporated by reference after the initial filing
of such Shelf Registration Statement), which documents will be subject to
the review and comment of such persons in connection with such sale, if
any, for a period of at least three Business Days, and the Company will not
file any such Shelf Registration Statement or Prospectus or any amendment
or supplement to any such Shelf Registration Statement or Prospectus
(including all such documents incorporated by reference) to which such
persons shall reasonably object within five Business Days after the receipt
thereof. Any such person shall be deemed to have reasonably objected to
such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be
8
<PAGE>
filed, contains an untrue statement of a material fact or omits to state
any material fact necessary to make the statements therein not misleading
or fails to comply with the applicable requirements of the Act;
(ix) make available at reasonable times for inspection by the
Holders and underwriters, if any any document that is to be incorporated
by reference into a Shelf Registration Statement or Prospectus, and make
the Company's representatives available for discussion of such document and
other customary due diligence matters;
(x) make available at reasonable times for inspection by the
Holders and underwriters, if any, and any attorney or accountant retained
by such Holders, or underwriters, if any, all financial and other records,
pertinent corporate documents of the Company and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriters, if any, attorney or accountant
in connection with such Shelf Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(xi) if requested by any Holders or underwriters, if any, in
connection with such sale, promptly include in any Shelf Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such Holders or underwriters,
if any, may reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable
after the Company is notified of the matters to be included in such
Prospectus supplement or post-effective amendment;
(xii) furnish to each Holder and underwriter, if any, without
charge, at least one copy of the Shelf Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(xiii) deliver to each Holder and underwriter, if any, without
charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such persons
reasonably may request; the Company hereby consents to the use (in
accordance with law) of the Prospectus and any amendment or supplement
thereto by each Holder and each underwriter, if
9
<PAGE>
any, in connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(xiv) upon the request of any Holder or underwriter, if any,
enter into such agreements (including underwriting agreements) and make
such representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to any Shelf Registration
Statement contemplated by this Agreement as may be reasonably requested by
such person in connection with any sale or resale pursuant to any
applicable Shelf Registration Statement and in such connection, the Company
shall:
(A) upon request of any Holder or underwriter, if any,
furnish (or in the case of paragraphs (2) and (3) below, use its best
efforts to cause to be furnished) to each Holder or underwriter, if
any, upon the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated such date, signed on behalf of the
Company by (x) the President or any Vice President and (y) a principal
financial or accounting officer of the Company, confirming, as of the
date thereof, the matters set forth in Sections 6(v), 9(a) and 9(b) of the
Purchase Agreement and such other similar matters as the Holders may
reasonably request;
(2) an opinion, dated the date effectiveness of the Shelf
Registration Statement, of counsel for the Company covering matters similar
to those set forth in paragraph (e) of Section 9 of the Purchase Agreement
and such other matter as the selling Holders may reasonably request, and in
any event including a statement to the effect that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the
Company and have considered the matters required to be stated therein and
the statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on the basis of the
foregoing no facts came to such counsel's attention that caused such
counsel to believe that the Shelf Registration Statement, at the time such
Shelf Registration Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
10
<PAGE>
to make the statements therein not misleading, or that the Prospectus
contained in such Shelf Registration Statement as of its date, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Without limiting
the foregoing, such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the accuracy,
completeness or fairness of the financial statements, notes and schedules
and other financial data included in any Registration Statement
contemplated by this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement from the Company's
independent accountants, in the customary form and covering matters of the
type customarily covered in comfort letters to underwriters in connection
with underwritten offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Section 9(g) of the Purchase
Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the Holders and underwriters, if any, to
evidence compliance with the matters set forth in clause (A) above and
with any customary conditions contained in any agreement entered into
by the Company pursuant to this clause (m);
(xv) prior to any public offering of Transfer Restricted
Securities, cooperate with the Holders, underwriters, if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as such persons may request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation where
it is not now so qualified or to take any action that would subject it to
the service of process in suits or to taxation, other than as to matters
and transactions relating to the Shelf Registration Statement, in any
jurisdiction where it is not now so subject;
(xvi) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
11
<PAGE>
Transfer Restricted Securities, cooperate with the Holders to facilitate
the timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive legends;
and to register such Transfer Restricted Securities in such denomina tions
and such names as the Holders may request at least two Business Days prior
to settlement of such sale of Transfer Restricted Securities;
(xvii) (A) list all Shares of Common Stock covered by such Shelf
Registration Statement on any securities exchange on which the Common Stock
is then listed or (B) authorize for quotation on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or the National
Market System of NASDAQ all Shares of Common Stock covered by such Shelf
Registration Statement if the Common Stock is then so authorized for
quotation.
(xviii) use its best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Shelf Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xiv) above;
(xix) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Shelf Registration
Statement covering such Transfer Restricted Securities and provide the
transfer agent with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the Depository
Trust Company;
(xx) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders with regard to any applicable Registration Statement,
as soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) covering a twelve-
month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act);
(xxi) if underwritten, make appropriate officers of the Company
available to the underwriters for meetings with prospective purchasers of
the Transfer Restricted Securities and prepare and present to potential
investors customary "road show"
12
<PAGE>
material in a manner consistent with other new issuances of other
securities similar to the Transfer Restricted Securities; and
(xxii) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(b) Restrictions on Holders. Each Holder agrees by acquisition of a
-----------------------
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 5(a)(v)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 5(a)(v)(D) hereof (in each case, a "SUSPENSION
----------
NOTICE"), such Holder will forthwith discontinue disposition of Transfer
- ------
Restricted Securities pursuant to the applicable Registration Statement until
(i) such Holder's has received copies of the supplemented or amended Prospectus
contemplated by Section 5(a)(vi) hereof, or (ii) such Holder is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
--------------
DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will
- ----
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of the Shelf Registration Statement set forth in
Section 3 hereof, shall be extended by a number of days equal to the number of
days in the period from and including the date of delivery of the Suspension
Notice to the Recommencement Date.
SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Shelf Registration Statement required by this Agreement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses; (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Common Stock to be issued upon
conversion of the Depositary Shares or Preferred Stock and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company; (v) all application and filing fees in
connection with listing the Common Stock on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
13
<PAGE>
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any person, including special experts, retained by the
Company.
SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder, its
directors, its officers and each person, if any, who controls such Holder
(within the meaning of Section 15 of the Act and Section 20 of the Exchange
Act), from and against any and all losses, claims, damages, liabilities,
judgments, (including without limitation, any legal or other expenses incurred
in connection with investigating or defending any matter, including any action
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Shelf Registration Statement, preliminary
prospectus or Prospectus (or any amendment or supplement thereto) provided by
the Company to any Holder or any prospective purchaser of registered Depositary
Shares or Preferred Stock or registered shares of Common Stock or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not mislead ing,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by an untrue statement or omission or alleged untrue statement or
omission that is based upon information relating to any of the Holders furnished
in writing to the Company by any of the Holders.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company and its directors
and officers, and each person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Company, to the
same extent as the foregoing indemnity from the Company set forth in Section
7(a) above, but only with reference to information relating to such Holder
furnished in writing to the Company by such Holder expressly for use in any
Registration Statement. In no event shall any Holder, its directors, its
officers or any person, if any, who controls such Holder be liable or
responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Re stricted
Securities pursuant to a Shelf Registration Statement exceeds (i) the amount
paid by such Holder for such Transfer Restricted Securities and (ii) the amount
of any damages that such Holder, its directors, its officers or any person, if
any, who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
- ------------------
14
<PAGE>
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
------------------
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 7(a) and 7(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 7(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 7(a), and by
the Company, in the case of parties indemnified pursuant to Section 7(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement
15
<PAGE>
as to or an admission of fault, culpability or a failure to act, by or on behalf
of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 7 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company, on
the one hand, and the Holders, on the other hand, from their sale of Transfer
Restricted Securities or (ii) if the allocation provided by clause 7(d)(i) is
not permitted by applicable law, in such proportion as is appropri ate to
reflect not only the relative benefits referred to in clause 7(d)(i) above but
also the relative fault of the Company on the one hand, and of the Holders, on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative fault of the Company, on the
one hand, and of the Holders, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or by the
Holders, on the other hand, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action that
could have given rise to such losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 7, no Holder or its related
indemnified parties shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of its Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant
to this Section 7(d) are several in proportion to the
16
<PAGE>
respective number of shares of Transfer Restricted Securities held by each of
the Holders hereunder and not joint.
SECTION 8. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144.
SECTION 9. UNDERWRITTEN REGISTRATIONS
(a) If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in amount
of such Transfer Restricted Securities included in such offering, subject to the
consent of the Company (which will not be unreasonably withheld or delayed).
No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder unless such Holder (i) agrees to sell its
Transfer Restricted Securities on the basis reasonably provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees, if requested
(pursuant to a timely written notice) by the managing underwriters in an
underwritten offering made pursuant to a Shelf Registration Statement, not to
effect any private sale or distribution (including a sale pursuant to Rule
144(k) and Rule 144A, but excluding non-public sales to any of its affiliates,
officers, directors, employees and controlling persons) of any of Depositary
Shares or shares of Preferred Stock in the case of an underwritten offering of
Depositary Shares or shares of Preferred Stock, or any shares of Common Stock,
in the case of an underwritten offering of shares of Common Stock constituting
Transfer Restricted Securities, during the period beginning 10 days prior to,
and ending 90 days after, the closing date of such underwritten offering.
17
<PAGE>
The foregoing provisions of Section 9(b) shall not apply to any Holder
of Transfer Restricted Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement.
(c) If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the underwriters, their
controlling persons and their respective officers, directors, employees,
represen tatives and agents shall be entitled to indemnity (substantially
similar to the indemnity set forth in Section 7 of the Agreement) from the
Company and the Holders, which indemnity may be set forth in an underwriting
agreement.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure by
--------
the Company to comply with its obligations under Section 3 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Section 3 hereof. The
Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the
--------------------------
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement (which has not expired or been terminated) granting
any registration rights with respect to its securities to any person, except for
the parties set forth in Schedule E to the Purchase Agreement. The Company
agrees to use its best efforts to obtain consent from these parties not to
exercise their right to require the Company to include their securities with the
Shares registered pursuant to any Shelf Registration Statement. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) No Piggybacks on Shelf Registration Statement. The Company shall
---------------------------------------------
not grant to any of its security holders (other than the holders of Transfer
Restricted Securities in such capacity) the right to include any of its
securities in any Shelf Registration Statement provided for in this Agreement
other than the Transfer Restricted Securities.
(d) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents
18
<PAGE>
to or departures from the provisions hereof may not be given unless (i) in the
case of Section 4 hereof and this Section 10(d)(i), the Company has obtained the
written consent of Holders of all outstanding Transfer Restricted Securities and
(ii) in the case of all other provisions hereof, the Company has obtained the
written consent of Holders of a majority of the outstanding shares of Transfer
Restricted Securities voting as one class, with each Depositary Share having one
vote, and the shares of Common Stock having the vote associated with the number
of Depositary Shares converted (excluding Transfer Restricted Securities held by
the Company or its Affiliates).
(e) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(f) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the transfer agent with a copy to the transfer agent; and
(ii) if to the Company:
Omnipoint Corporation
3 Bethesda Metro Center, Suite 400
Bethesda, Maryland 20814
Telecopier No.: 301-951-2580
Attention: Bradley E. Sparks
With a copy to:
Piper & Marbury L.L.P.
1200 19th St. N.W.
Washington, D.C. 20036
Telecopier No.: 202-861-6317
Attention: Edwin M. Martin
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
19
<PAGE>
Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee at the
address specified in the Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subse quent Holders of Transfer Restricted Securities; provided, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Transfer Restricted Securities in violation of the terms hereof or of the
Purchase Agreement or the Transfer Restricted Securities. If any transferee of
any Holder shall acquire Transfer Restricted Securities in any manner, whether
by operation of law or otherwise, such Transfer Restricted Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Transfer Restricted Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.
(h) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(k) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(l) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted
20
<PAGE>
Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
21
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
OMNIPOINT CORPORATION
By: /s/ Bradley E. Sparks
-------------------------
Name: Bradley E. Sparks
Title: Vice President and
and Chief Financial Officer
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCAMERICA ROBERTSON STEPHENS
BEAR, STEARNS & CO. INC.
SMITH BARNEY INC.
As representatives of the several Initial Purchasers
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By: /s/ Robert A. Moore
--------------------------
Name: Robert A. Moore
Title: Managing Director
22
<PAGE>
EXHIBIT 4.5
This security (or its predecessor) has not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), and, accordingly, may not be
offered, sold, pledged or otherwise transferred, except as set forth in the next
sentence hereof. By its acquisition hereof or of a beneficial interest herein,
the holder: (1) represents that it is a "Qualified Institutional Buyer" (as
defined in Rule 144A under the Securities Act) (a "QIB"), (2) agrees that it
will not resell or otherwise transfer this security except (a) to the Company or
any of its subsidiaries, (b) to a person whom the seller reasonably believes is
a QIB purchasing for its own account or for the account of a QIB in a
transaction meeting the requirements of Rule 144A, (c) in an offshore
transaction meeting the requirements of Rule 904 of the Securities Act, (d) in a
transaction meeting the requirements of Rule 144 under the Securities Act, (e)
in accordance with another exemption from the registration requirements of the
Securities Act (and based upon opinion of counsel acceptable to the Company) or
(f) pursuant to an effective registration statement and, in each case, in
accordance with the applicable securities laws of any state of the United States
or any other applicable jurisdiction and (3) agrees that it will deliver to each
person to whom this security or an interest herein is transferred a notice
substantially to the effect of this legend.
Unless this certificate is presented by an authorized representative of The
Depositary Trust Company, a New York corporation ("DTC"), to the agent
authorized by the issuer for the registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co. has an interest herein.
Number DEPOSITARY SHARES
(each representing
1/20th of one share
7% Cumulative Convertible Preferred Stock)
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES
REPRESENTING 7% CUMULATIVE CONVERTIBLE PREFERRED STOCK OF
OMNIPOINT CORPORATION 68212D 30 0
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN
DEFINITIONS AND INFORMATION
Marine Midland Bank, as Depositary
(the "Depositary"), hereby certifies that Cede & Co.
is the registered owner of DEPOSITARY SHARES,
("Depositary Shares"), each Depositary Share representing one twentieth of one
share of 7% Cumulative Convertible Preferred Stock, par value $0.01, of
Omnipoint Corporation, a Delaware corporation (the "Corporation"), on deposit
with the Depositary, subject to the terms and entitled to the benefits of the
Deposit Agreement dated as of May 6, 1998 (the "Deposit Agreement"), between the
Corporation and the Depositary. By accepting this Depositary Receipt the holder
hereof becomes a party to and agrees to be bound by all the terms and conditions
of the Deposit Agreement. This Depositary Receipt shall not be valid or
obligatory for any purpose or entitled to any benefits under the Deposit
Agreement unless it shall have been executed by the Depositary by the manual
signature of a duly authorized officer or, if executed in facsimile by the
Depositary, countersigned by a
<PAGE>
Registrar in respect of the Depositary Receipts by the manual signature of a
duly authorized officer thereof.
All Depositary Shares evidenced by this Depositary Receipt and all increases and
decreases of the number of Depositary Shares and the respective dates thereof
shall be endorsed by the holder or any appointed custodian hereof on the
schedule attached hereto and made a part hereof, or on a continuation thereof
which shall be attached hereto and made a part hereof.
Dated: May 6, 1998
Marine Midland Bank
Depositary
By
THE ADDRESS OF THE PRINCIPAL CORPORATE TRUST OFFICE
OF THE DEPOSITARY IS 140 BROADWAY, 12TH FLOOR,
NEW YORK, NEW YORK 10005
2
<PAGE>
OMNIPOINT CORPORATION
OMNIPOINT CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH RECEIPTHOLDER
WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A STATEMENT OR SUMMARY OF
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF WHICH THE
CORPORATION IS AUTHORIZED TO ISSUE AND OF THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. ANY SUCH REQUEST IS TO BE
ADDRESSED TO THE DEPOSITARY NAMED AND AT THE ADDRESS SET FORTH ON THE FACE OF
THIS RECEIPT.
____________________________________________
The following abbreviations when used in the instruc tions on the
face of this receipt shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenant in common UNIF GIFT MIN ACT -______Custodian ________
(Cust) (Minor)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors Act
JT TEN - as joint tenants with right of
survivorship and not as _____________________________
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
Depositary Shares represented by the within Receipt, and do hereby
irrevocably constitute and appoint ____________________________ Attorney to
transfer the said Depositary Shares on the books of the within named Depositary
with full power of substitution in the premises.
Dated:_________________
- --------------------------------------------------------------------------------
NOTICE: The signature to the assignment must correspond with the name as written
upon the face of this Receipt in every particular, without alteration or
enlargement or any change whatever.
NOTICE OF CONVERSION
The undersigned holder of this Receipt hereby irrevocably exercises the option
to convert _____ shares of 7% Cumulative Convertible Preferred Stock represented
by this Receipt into shares of Common Stock (and any other applicable securities
or property) of the Company. In accordance with the terms of and conditions of
the 7% Cumulative Convertible Preferred Stock and further as provided in the
Deposit Agreement, and directs that the shares of
3
<PAGE>
Common Stock deliverable upon such conversion be registered in the name of and
delivered, together with a check in payment for any fractional share and any
other property deliverable upon such conversion, to the undersigned unless a
different name has been indicated below. If securities are to be registered in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. If the number of shares of 7%
Cumulative Convertible Preferred Stock indicated above is less than the number
of shares of 7% Cumulative Convertible Preferred Stock on deposit in respect of
this Receipt the undersigned directs that the Depositary issue to the
undersigned, unless a different name is indicated below, a new Receipt
evidencing the 7% Cumulative Convertible Preferred Stock for the balance of the
shares of 7% Cumulative Convertible Preferred Stock not to be converted.
Dated:___________________
Signature:_________________________________
NOTE: The above signature should correspond
exactly with the name on the face of this
Receipt or with the name of the assignee
appearing in the assignment form
(Please print name and address of registered holder)
Name:___________________________________________________________________________
Address:________________________________________________________________________
(Please indicate other delivery instructions, if applicable)
Name:___________________________________________________________________________
Address:________________________________________________________________________
4
<PAGE>
SCHEDULE OF EXCHANGES/CONVERSIONS OF DEPOSITARY SHARES
The following exchanges or conversions of a part of this Depositary Receipt
have been made:
<TABLE>
<CAPTION>
Number of Depositary Number of
Shares Exchanged for 7% Depositary Number of Signature of
Date of Cumulative Convertible Shares Converted to Depositary Authorized
Exchange/Conversion Preferred Stock Common Stock Shares Remaining Signatory of Custodian
- --------------------- ------------------------ --------------------- ------------------ ------------------------
<S> <C> <C> <C> <C>
- --------------------- ------------------------ --------------------- ------------------ ------------------------
- --------------------- ------------------------ --------------------- ------------------ ------------------------
- --------------------- ------------------------ --------------------- ------------------ ------------------------
- --------------------- ------------------------ --------------------- ------------------ ------------------------
- --------------------- ------------------------ --------------------- ------------------ ------------------------
</TABLE>
5
<PAGE>
EXHIBIT 10.60
OMNIPOINT CORPORATION
6,500,000 Shares
Depository Shares Each Representing 1/20 of a Share of
7% Cumulative Convertible Preferred Stock
Purchase Agreement
May 1, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCAMERICA ROBERTSON STEPHENS
BEAR, STEARNS & CO. INC.
SMITH BARNEY INC.
<PAGE>
6,500,000 Shares
Depository Shares Representing 1/20 of a Share of
7% Cumulative Convertible Preferred Stock
of Omnipoint Corporation
PURCHASE AGREEMENT
May 1, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCAMERICA ROBERTSON STEPHENS
BEAR, STEARNS & CO. INC.
SMITH BARNEY INC.
As representatives of the several Initial Purchasers
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Omnipoint Corporation, a Delaware corporation (the "COMPANY") proposes to
-------
issue and sell 325,000 shares of its 7% Cumulative Convertible Preferred Stock,
par value $.01 per share (the "CUMULATIVE PREFERRED STOCK").
--------------------------
The Preferred Stock will, when issued, be deposited by the Company against
delivery of Depositary Receipts ("DEPOSITARY RECEIPTS") to be issued by Marine
-------------------
Midland Bank, as depositary (the "DEPOSITARY"), under a Deposit Agreement date
----------
as of May 6, 1998 (the "DEPOSIT AGREEMENT") between the Company and the
-----------------
Depositary. Each Depositary Receipt will evidence one or more Depositary Shares
(the "SHARES"), and each Depositary Share will represent ownership of one-
------
twentieth of a share of Preferred Stock.
The Preferred Stock is to be issued pursuant to the provisions of the
Company's 7% Cumulative Convertible Preferred Stock Certificate of Designation
(the "CERTIFICATE"), pursuant to which the Preferred Stock, as provided therein,
-----------
will be convertible at the option of the holders thereof into shares of the
Company's common stock, par value $.01 per share (the "COMMON STOCK"). The
------------
Shares, the Preferred Stock and the Common Stock issuable upon conversion
thereof are herein collectively referred to as the "SECURITIES". The Securities
----------
and the Certificate are more fully described in the Offering Memorandum (as
hereinafter defined).
<PAGE>
The Company, proposes to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), BancAmerica Robertson Stephens, Bear, Stearns &
---
Co. Inc., Smith Barney Inc. and the several initial purchases set forth on
Exhibit A hereto (each an "INITIAL PURCHASER" and, collectively, the "INITIAL
----------------- -------
PURCHASERS") an aggregate of 6,500,000 Shares.
- ----------
1. OFFERING MEMORANDUM. The Shares will be offered and sold to the
-------------------
Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "ACT"). The
---
Company has prepared a preliminary offering memorandum, dated April 22, 1998
(the "PRELIMINARY OFFERING MEMORANDUM") and a final offering memorandum, dated
-------------------------------
May 1 (the "OFFERING MEMORANDUM"), relating to the Shares.
-------------------
Upon original issuance thereof, and until such time as the same is no
longer required, the Shares (and all securities issued in exchange therefor, in
substitution thereof or upon conversion thereof) shall bear the following
legend:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED,
EXCEPT AS SET FORTH IN THE NEXT SENTENCE HEREOF. BY ITS ACQUISITION HEREOF
OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations,
-------------------------------
warranties and covenants contained in this Agreement, and subject to the terms
and conditions contained herein, the Company agrees to issue and sell to the
Initial Purchasers, and the Initial Purchasers agree, severally and not jointly,
to purchase from the Company, the number of Shares set forth opposite its name
as set forth on Schedule A hereto at a purchase price equal to $38.84 (the
"PURCHASE PRICE").
- ---------------
3. TERMS OF OFFERING. The Initial Purchasers have advised the Company
-----------------
that the Initial Purchasers will make offers (the "EXEMPT RESALES") of the
--------------
Shares purchased hereunder on the terms set forth in the Offering Memorandum, as
amended or supplemented, solely to persons whom the Initial Purchaser reasonably
believe to be "qualified institutional buyers" as defined in Rule 144A under the
Act
2
<PAGE>
("QIBS"). The Initial Purchasers will offer the Shares to QIBs initially at a
price equal to $50. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Securities will have
the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in substantially
- ------------------------------
the form of Exhibit A hereto, for so long as such Securities constitute
"TRANSFER RESTRICTED SECURITIES" (as defined in the Registration Rights
- -------------------------------
Agreement). Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the "COMMISSION")
----------
under the circumstances set forth therein, a shelf registration statement
pursuant to Rule 415 under the Securities Act of 1933, as amended (the "ACT")
---
(the "REGISTRATION STATEMENT") relating to the resale by certain holders of the
----------------------
Securities and to use its best efforts to cause such Registration Statements to
be declared and remain effective and usable for the periods specified in the
Registration Rights Agreement. This Agreement, the Deposit Agreement, the
Deposit Account Agreement (as defined in the Offering Memorandum), the
Certificate and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the "OPERATIVE DOCUMENTS".
-------------------
4. DELIVERY AND PAYMENT.
--------------------
(a) Delivery of, and payment of the Purchase Price for, the Firm
Shares shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
1440 New York Avenue, N.W., Washington D.C. or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 9:00 a.m. New
York City time, on May 6 or at such other time on the same date or such other
date as shall be agreed upon in writing by the Initial Purchasers and the
Company. The time and date of such delivery and the payment for the Shares are
herein called the "CLOSING DATE".
------------
(b) Shares in definitive global form, registered in the name of
Cede & Co., as nominee of the Depository Trust Company ("DTC"), in aggregate
---
number corresponding to the aggregate number of the Shares (collectively, the
"GLOBAL SECURITIES"), shall be delivered by the Company to the Initial
-----------------
Purchasers (or as the Initial Purchasers direct) in each case with any transfer
taxes thereon duly paid by the Company against payment by the Initial Purchasers
of the Purchase Price thereof by wire transfer in same day funds to the order of
the Company. The Global Securities shall be made available to the Initial
Purchasers for inspection not later than 9:30 a.m., New York City time, on the
business day immediately preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY. The Company hereby agrees with the Initial
-------------------------
Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by
the Initial Purchasers, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Shares for offering or sale in any
jurisdiction designated by the Initial Purchasers pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein not misleading. The Company shall use its
best efforts to prevent the issuance of any stop order or order suspending the
3
<PAGE>
qualification or exemption of any Shares under any state securities or Blue Sky
laws and, if at any time any state securities commission or other federal or
state regulatory authority shall issue an order suspending the qualification or
exemption of any Shares under any state securities or Blue Sky laws, the Company
shall use its best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Company as many copies of the Preliminary Offering
Memorandum and the Offering Memorandum, any documents incorporated by reference
therein, and any amendments or supplements thereto, as the Initial Purchasers
may reasonably request for the time period specified in Section 5(c). Subject to
the Initial Purchasers' compliance with its representations and warranties and
agreements set forth in Section 7 hereof, the Company consents to the use of the
Preliminary Offering Memorandum and the Offering Memorandum, any documents
incorporated by reference therein, and any amendments and supplements thereto
required pursuant hereto, by the Initial Purchasers in connection with Exempt
Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers (i) not to make any
amendment or supplement to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object after being so advised and (ii) to prepare
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering Memorandum which may be necessary or advisable in
connection with such Exempt Resales.
(d) If, during the period referred to in Section 5(c) above, any
event shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel for the
Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Shares pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchasers and counsel to the
Initial Purchasers in connection with the registration or qualification of the
Shares for offer and sale to the Initial Purchasers and pursuant to Exempt
Resales under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may request and to continue such registration or
qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided, however, that the
Company shall not be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation other than as to matters and transactions relating to the Preliminary
Offering Memorandum, the Offering Memorandum or Exempt Resales, in any
jurisdiction in which it is not now so subject.
4
<PAGE>
(f) So long as the Shares are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Shares a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
(g) So long as the Shares are outstanding, to furnish to the Initial
Purchasers as soon as available, copies of all reports or other communications
furnished by the Company to its security holders or furnished to or filed with
the Commission or any national securities exchange on which any class of
securities of the Company is listed and such other publicly available
information concerning the Company and/or its subsidiaries as the Initial
Purchasers may reasonably request.
(h) So long as any of the Transfer Restricted Securities remain
outstanding and during any period in which the Company is not subject to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
--------
ACT"), to make available to any holder of Securities in connection with any sale
- ---
thereof and any prospective purchaser of such Securities from such holder, the
information ("RULE 144A INFORMATION") required by Rule 144A(d)(4) under the Act.
---------------------
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company under
this Agreement, including: (i) the fees, disbursements and expenses of counsel
to the Company and accountants of the Company in connection with the sale and
delivery of the Shares to the Initial Purchasers and pursuant to Exempt Resales,
and all other fees and expenses in connection with the preparation, printing,
filing and distribution of the Preliminary Offering Memorandum, the Offering
Memorandum, any documents incorporated by reference and all amendments and
supplements to any of the foregoing (including financial statements), including
the mailing and delivering of copies thereof to the Initial Purchasers and
persons designated by them in the quantities specified herein, (ii) all costs
and expenses related to the transfer and delivery of the Shares to the Initial
Purchasers and pursuant to Exempt Resales, including any transfer or other taxes
payable thereon, (iii) all costs of printing or producing this Agreement, the
other Operative Documents and any other agreements or documents in connection
with the offering, purchase, sale or delivery of the Securities, (iv) all
expenses in connection with the registration or qualification of the Securities
for offer and sale under the securities or Blue Sky laws of the several states
and all costs of printing or producing any preliminary and supplemental Blue Sky
memoranda in connection therewith (including the filing fees and fees and
disbursements of counsel for the Initial Purchasers in connection with such
registration or qualification and memoranda relating thereto), (v) the cost of
printing certificates representing the Securities, (vi) all expenses and listing
fees in connection with the application for quotation of the Shares in the
National Association of Securities Dealers, Inc. ("NASD") Automated Quotation
----
System - PORTAL ("PORTAL"), (vii) the costs and charges of any transfer agent,
------
registrar, deposit agent and/or depositary
5
<PAGE>
(including DTC), (viii) all costs and expenses of the Registration Statement, as
set forth in the Registration Rights Agreement, (ix) all expenses and listing
fees in connection with the application for listing the Common Stock on the
NASDAQ National Market and (x) and all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section.
(j) To use its best efforts to effect the inclusion of the Shares in
PORTAL and to maintain the listing of the Shares on PORTAL for so long as the
Shares are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer of the
Shares, and to comply with all of its agreements set forth in the representation
letters of the Company to DTC relating to the approval of the Shares by DTC for
"book-entry" transfer.
(l) To cause the Common Stock issuable upon conversion of the Shares,
redemption thereof, payment of dividends thereon and purchase with funds from
the Deposit Account to be duly included for quotation on the Nasdaq Stock
Market's National Market (the "NASDAQ NATIONAL MARKET") prior to the Firm
----------------------
Closing Date subject to notice of official issuance. The Company will ensure
that such Common Stock remains included for quotation on the Nasdaq National
Market or any other national securities exchange following the Firm Closing Date
for so long as any shares of Common Stock remain registered under the Exchange
Act.
(m) The Company shall not (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise), except to the Initial Purchasers pursuant to this Agreement,
for a period of 90 days after the Closing Date without the prior written consent
of Donaldson, Lufkin & Jenrette Securities Corporation. Notwithstanding the
foregoing, during such period (i) the Company may grant stock options pursuant
to the Company's existing stock option plan and (ii) the Company may issue
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof. The Company also
agrees not to file any registration statement with respect to any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock for a period of 90 days after the Closing Date without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation.
The Company shall, prior to or concurrently with the execution of this
Agreement, deliver an agreement executed by (i) each of the directors of the
Company and (ii) agreed upon stockholders to the effect that such person will
not, during the period commencing on the date such person signs such agreement
and ending 90 days after the Closing Date without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, (A) engage in any of the
transactions described in the first sentence of this paragraph or (B) make any
demand for, or exercise any right with respect to, the registration of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock.
(n) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Shares to the Initial
6
<PAGE>
Purchasers or pursuant to Exempt Resales in a manner that would require the
registration of any such sale of the Shares under the Act.
(o) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(p) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Shares.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. As of the
---------------------------------------------------------
date hereof, the Company represents and warrants to, and agrees with, the
Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering Memorandum
(including the information incorporated by reference therein (the "INCORPORATED
------------
DOCUMENTS")) do not, and any supplement or amendment to them will not, contain
- ---------
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in this paragraph (a)
shall not apply to statements in or omissions from the Preliminary Offering
Memorandum or the Offering Memorandum (or any supplement or amendment thereto)
based upon information relating to the Initial Purchasers furnished to the
Company in writing by the Initial Purchasers expressly for use therein. The
Company acknowledges for all purposes of this Agreement (including Section 8
hereof) that the statements with respect to price and discounts and commissions
and the last paragraph all as set forth in the cover page and in paragraphs one,
two and eight under the caption "Plan of Distribution" in the Offering
Memorandum (the "INITIAL PURCHASER INFORMATION") constitute the only written
-----------------------------
information furnished to the Company by or on behalf of the Initial Purchasers
expressly for use in the Preliminary Offering Memorandum or Offering Memorandum
(or any amendment or supplement to any of them) and that the Initial Purchasers
shall not be deemed to have provided any other information (and therefore are
not responsible for any such statements or omissions). No stop order preventing
the use of the Preliminary Offering Memorandum or the Offering Memorandum, or
any amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued. The Incorporated Documents, at the
time they were or hereafter are filed or last amended, as the case may be, with
the Commission, complied and will comply in all material respects with the
requirements of the Exchange Act.
(b) Each of the Company and its subsidiaries has been duly organized,
is validly existing as a corporation or limited liability company in good
standing under the laws of the State of Delaware and has the requisite power and
authority to carry on its business as described in the Preliminary Offering
Memorandum and the Offering Memorandum and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a foreign
entity authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole (a "MATERIAL ADVERSE
----------------
EFFECT").
- ------
7
<PAGE>
(c) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights.
(d) The entities listed on Schedule B hereto are the only
subsidiaries, direct or indirect, of the Company. All of the outstanding shares
of capital stock of and other ownership interests in each of the Company's
subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, directly or indirectly through one
or more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each, a "LIEN"), except for
----
(i) the ownership by an unaffiliated third party of 549 shares of common stock,
$.01 value (the "OCI Common Stock") of Omnipoint Communication, Inc., a Delaware
corporation ("OCI"), constituting 4.4% of the outstanding capital stock of OCI
and (ii) except for the information set forth in Schedule C hereto; there are no
outstanding subscriptions, rights, warrants, options, calls, convertible or
exchangeable securities, commitments of sale, or Liens related to or entitling
any person to purchase or otherwise to acquire any shares of the capital stock
of, or other ownership interest in, any subsidiary.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The Preferred Stock, and the deposit of the Preferred Stock by
the Company in accordance with the Deposit Agreement, have been duly and validly
authorized and, when the shares of Preferred Stock are issued and delivered as
provided herein, and upon payment for the Shares and delivery of the Depositary
Receipts in accordance with this Agreement, the Preferred Stock will be validly
issued, fully paid and non-assessable, and the issuance of the shares of
Preferred Stock will not be subject to any preemptive or similar rights.
(g) Assuming due authorization, execution and delivery of the Deposit
Agreement by the Depositary, each Share, upon delivery of the Depositary
Receipts in accordance with the provisions of the Deposit Agreement against the
deposit of validly issued, fully paid and non-assessable share of Preferred
Stock, will represent an interest in one-twentieth of a validly issued,
outstanding, fully paid and non-assessable share of Preferred Stock; assuming
due execution and delivery of the Depositary Receipts by the Depositary pursuant
to the Deposit Agreement and upon payment for the Shares and delivery of the
Depositary Receipts in accordance with this Agreement, the Depositary Receipts
will entitle the holders thereof to the benefits provided therein and in the
Deposit Agreement.
(h) The Shares are convertible into Common Stock in accordance with
the terms of the Certificate; the shares of Common Stock issuable upon
conversion of the Shares have been, and the shares of Common Stock issuable for
payment of dividends thereon, for payment of the redemption price thereon and
upon purchase with funds from the Deposit Account in accordance with the Deposit
Account Agreement (as defined in the Offering Memorandum) will be, duly
authorized and reserved for issuance upon such conversion, payment, redemption
or purchase and, when issued upon such conversion, payment, redemption or
purchase, will be validly issued, fully paid and nonassessable, will conform to
the description thereof contained in the Offering Memorandum and will be duly
authorized for listing on the Nasdaq National Market, subject to notice of
official issuance; the Company has the authorized and outstanding capital stock
as set forth in the Offering Memorandum; and the stockholders of the Company or
other holders of the Company's securities have no pre-emptive or similar rights
with respect to the Shares or the Common Stock issuable upon the Shares.
8
<PAGE>
(i) Each of the Registration Rights Agreement, the Deposit Agreement
and the Deposit Account Agreement has been duly authorized by the Company and,
on the Closing Date, will have been duly executed and delivered by the Company.
When each of the Registration Rights Agreement, the Deposit Agreement and the
Deposit Account Agreement has been duly executed and delivered, each will be a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. On
the Closing Date, the Registration Rights Agreement, the Deposit Agreement and
the Deposit Account Agreement will conform as to legal matters to the
description thereof in the Offering Memorandum.
(j) Neither the Company nor any of its subsidiaries is in violation
of its respective charter (or in the case of limited liability company,
certificate of formation) or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound.
(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is or could be a
party or to which any of their respective property is or could be subject, which
might result, singly or in the aggregate, in a Material Adverse Effect.
(l) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), any provisions of the
------------------
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any
-----
provisions of the Foreign Corrupt Practices Act or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(m) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any authorization, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(n) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "AUTHORIZATION") of, and has made all filings with and notices to, all
-------------
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including without limitation, the Federal
Communication Commission (the "FCC") and each applicable, state regulatory
---
agency or body that exercises or will exercise jurisdiction over the Company
("APPLICABLE PUCS"), as are necessary to own, lease, license and operate its
- -----------------
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Company and
its subsidiaries is in compliance with all the terms and conditions
9
<PAGE>
thereof and with the rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and no event has occurred
(including, without limitation, the receipt of any notice from any authority or
governing body) which allows or, after notice or lapse of time or both, would
allow, revocation, suspension or termination of any such Authorization or
results or, after notice or lapse of time or both, would result in any other
impairment of the rights of the holder of any such Authorization; and such
Authorizations contain no restrictions that are burdensome to the Company or any
of its subsidiaries; except where such failure to be valid and in full force and
effect or to be in compliance, the occurrence of any such event or the presence
of any such restriction would not, singly or in the aggregate, have a Material
Adverse Effect.
(o) The execution, delivery and performance of the Operative
Documents by the Company, compliance by the Company with all provisions hereof
and thereof and the consummation of the transactions contemplated hereby and
thereby will not (i) require any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the various states),
(ii) conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or by-laws of the Company or any of its
subsidiaries or any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or their respective property is
bound, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company, any of its subsidiaries or their
respective property including the Telecommunication Act of 1996, the
Communications Act of 1934 or the rules and regulations of the FCC or any
Applicable PUC, (iv) result in the imposition or creation of (or the obligation
to create or impose) a Lien under, any agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound, (v) result in the
termination, suspension or revocation of any Authorization of the Company or any
of its subsidiaries or result in any other impairment of the rights of the
holder of any such Authorization or (vi) require notice to or approval of the
FCC, any Applicable PUC or any court or any governmental body or agency having
jurisdiction over the Company, any of its subsidiaries or their respective
property.
(p) The accountants, Coopers & Lybrand L.L.P., that have certified
the financial statements and supporting schedules included in the Preliminary
Offering Memorandum and the Offering Memorandum are independent public
accountants with respect to the Company, as required by the Act and the Exchange
Act. The historical financial statements, together with related schedules and
notes, set forth in the Preliminary Offering Memorandum and the Offering
Memorandum comply as to form in all material respects with the requirements
applicable to registration statements on Form S-1 under the Act.
(q) The historical financial statements, together with related
schedules and notes forming part of the Offering Memorandum (and any amendment
or supplement thereto), present fairly the consolidated financial position,
results of operations and changes in financial position of the Company and its
subsidiaries on the basis stated or incorporated by reference in the Offering
Memorandum at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial and statistical information and data set forth or incorporated by
10
<PAGE>
reference in the Offering Memorandum (and any amendment or supplement thereto)
are, in all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Company.
(r) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the net proceeds thereof as described
in the Offering Memorandum, will not be, an "investment company," as such term
is defined in the Investment Company Act of 1940, as amended.
(s) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company or to require the Company to include such securities with the Shares
registered pursuant to any Registration Statement, except for the parties set
forth in Schedule E hereto. The Company agrees to use its best efforts to
obtain consent from these parties not to exercise their right to require the
Company to include their securities on any Registration Statement.
(t) Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the Shares to
violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(u) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company that it is considering imposing) any
condition (financial or otherwise) on the Company's retaining any rating
assigned to the Company or any securities of the Company or (ii) has indicated
to the Company that it is considering (a) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Company, or any securities of the Company.
(v) Since the respective dates as of which information is given in
the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there has not occurred any material adverse change or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or the earnings, business, management or operations of
the Company and its subsidiaries, taken as a whole, (ii) there has not been any
material adverse change or any development involving a prospective material
adverse change in the capital stock or in the long-term debt of the Company or
any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries has incurred any material liability or obligation, direct or
contingent.
(w) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act.
(x) When the Shares are issued and delivered pursuant to this
Agreement, the Shares will not be of the same class (within the meaning of Rule
144A under the Act) as any security
11
<PAGE>
of the Company that is listed on a national securities exchange registered under
Section 6 of the Exchange Act or that is quoted in a United States automated
inter-dealer quotation system.
(y) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company, or any of its
representatives (other than the Initial Purchasers, as to whom the Company makes
no representation) in connection with the offer and sale of the Shares
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Securities have been issued and sold by the
Company within the six-month period immediately prior to the date hereof.
(z) No registration under the Act of the Securities is required for
the sale of the Securities to the Initial Purchasers as contemplated hereby or
for the Exempt Resales assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof.
(aa) The form of Certificate to be filed in Delaware is in proper form
under Delaware law.
(bb) The Company and its subsidiaries maintain insurance at least in
such amounts and covering at least such risks as is adequate for the conduct of
their respective businesses and the value of their respective properties and as
is customary for companies engaged in similar businesses in similar industries.
(cc) The Company and each of its subsidiaries have filed (or have had
filed on their behalf) all tax returns required to be filed by any of them prior
to the date hereof under applicable law, other than those filings being
contested in good faith. All such tax returns and amendments thereto are true,
correct and complete in all material respects. The Company and each of its
subsidiaries have paid (or have had paid on their behalf) all material taxes,
including all Federal, state, local and foreign taxes, and other assessments of
a similar nature (whether imposed directly or through withholding), including
any interest, additions to tax, or penalties applicable thereto, other than
those taxes being contested in good faith and for which adequate reserves have
been provided or those currently payable without penalty or interest. To the
best of the Company's and each of its subsidiaries' knowledge, there are no tax
items of a material nature that are currently under examination by the Internal
Revenue Service or any other domestic or foreign governmental authority
responsible for the administration of any such taxes.
(dd) The Company and its subsidiaries possess the patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names (collectively,
"Intellectual Property"), presently employed by them in connection with the busi
nesses now operated by them, and neither the Company nor any subsidiary has
received any notice of infringement of or conflict with asserted rights of
others with respect to the foregoing except as could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The use of
such Intellectual Property in connection with the business and operations of the
Company and the subsidiaries does not infringe on the rights of any person.
12
<PAGE>
(ee) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(ff) Except as disclosed or incorporated by reference in the Offering
Memorandum, there are no business relationships or related party transactions
which would be required to be disclosed therein by Item 404 of Regulation S-K of
the Commission if the Offering Memorandum were a prospectus contained in a
registration statement on Form S-1 filed under the Act.
(gg) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each Initial
--------------------------------------------------
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Company:
(a) Such Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Shares.
(b) Such Initial Purchaser (A) is not acquiring the Securities with a
view to any distribution thereof or with any present intention of offering or
selling any of the Securities in a transaction that would violate the Act or the
securities laws of any state of the United States or any other applicable
jurisdiction and (B) will be reoffering and reselling the Securities only to
QIBs in reliance on the exemption from the registration requirements of the Act
provided by Rule 144A.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Securities pursuant
hereto, including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(d) Each Initial Purchaser agrees that it will offer to sell the
Securities only to, and will solicit offers to buy the Securities only from,
purchasers that are QIBs that agree that
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(x) the Securities purchased by them may be resold, pledged or otherwise
transferred within the time period referred to under Rule 144(k) (taking into
account the provisions of Rule 144(d) under the Act, if applicable) under the
Act, as in effect on the date of the transfer of such Securities, only (I) to
the Company or any of its subsidiaries, (II) to a person whom the seller
reasonably believes is a QIB purchasing for its own account or for the account
of a QIB in a transaction meeting the requirements of Rule 144A under the Act,
(III) in an offshore transaction (as defined in Rule 902 under the Act) meeting
the requirements of Rule 904 of the Act, (IV) in a transaction meeting the
requirements of Rule 144 under the Act, (V) in accordance with another exemption
from the registration requirements of the Act (and based on an opinion of
counsel acceptable to the Company) or (VI) pursuant to an effective registration
statement and, in each case, in accordance with the applicable securities laws
of any state of the United States or any other applicable jurisdiction and
(y) they will deliver to each person to whom such Securities or an interest
therein is transferred a notice substantially to the effect of the foregoing.
Each Initial Purchaser acknowledges that the Company, for purposes of
the opinions to be delivered to each Initial Purchaser pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and each Initial
Purchaser hereby consents to such reliance.
8. INDEMNIFICATION.
---------------
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser, its directors, its officers and each person, if any, who controls
such Initial Purchaser (within the meaning of Section 15 of the Act or Section
20 of the Exchange Act), from and against any and all losses, claims, damages,
liabilities and judgments (including, without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action, that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Offering Memorandum (or any
amendment or supplement thereto), the Preliminary Offering Memorandum or any
Rule 144A Information provided by the Company to any holder or prospective
purchaser of Securities pursuant to Section 5(h) or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
Initial Purchaser Information; provided, however, that the foregoing indemnity
agreement with respect to any Preliminary Offering Memorandum shall not inure to
the benefit of any Initial Purchaser who failed to deliver an Offering
Memorandum, as then amended or supplemented (so long as such Offering Memorandum
and any amendment or supplement thereto was provided by the Company to the
several Initial Purchasers in the requisite quantity and on a timely basis to
permit proper delivery on or prior to the Closing Date) to the person asserting
any losses, claims, damages, liabilities or judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in such
Preliminary Offering Memorandum, or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such material misstatement or
omission or alleged material misstatement or omission was cured in the Offering
Memorandum, as so amended or supplemented.
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(b) Each Initial Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company and its directors and officers and each
person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Company to the same extent as the foregoing
indemnity from the Company to the Initial Purchasers but only with reference to
Initial Purchaser Information.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
- ------------ -----
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
------------ -----
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), the Initial Purchasers shall not be required to
assume the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Initial Purchasers). Any indemnified party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the
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subject matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchasers, on the other hand, from
the offering of the Securities or (ii) if the allocation provided by clause
8(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company, on the one hand, and
the Initial Purchasers, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Initial Purchasers,
on the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities (after Initial Purchaser's
discounts or commissions, but before deducting expenses) received by the
Company, and the total discounts and commissions received by the Initial
Purchasers bear to the total price to investors of the Securities, in each case
as set forth in the table on the cover page of the Offering Memorandum. The
relative fault of the Company, on the one hand, and the Initial Purchasers, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, on the one hand, or the Initial Purchasers, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchasers shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchasers exceeds the amount of any damages which the Initial
Purchasers have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective number
of Shares purchased by each of the Initial Purchasers hereunder, and not joint.
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(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations
---------------------------------------------
of the Initial Purchasers to purchase the Shares under this Agreement on the
Closing Date are subject to the satisfaction of each of the following
conditions.
(a) All the representations and warranties of the Company contained
in this Agreement shall be true and correct on the Closing Date with the same
force and effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have occurred
any downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal of, or
of any review (or of any potential or intended review) for a possible change
that does not indicate the direction of the possible change in, any rating of
the Company or any securities of the Company (including, without limitation, the
placing of any of the foregoing ratings on credit watch with negative or
developing implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" as such term is defined
for purposes of Rule 436(g)(2) under the Act and (ii) there shall not have
occurred any change, nor shall any notice have been given of any potential or
intended change, in the outlook for any rating of the Company or any securities
of the Company by any such rating organization.
(c) Since the respective dates as of which information is given in
the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there shall not have been any change or any
development involving a prospective change in the capital stock or in the long-
term debt of the Company or any of its subsidiaries and (iii) neither the
Company nor any of its subsidiaries shall have incurred any liability or
obligation, direct or contingent, the effect of which, in any such case
described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Shares on the terms and in the manner contemplated in the Offering Memorandum.
(d) The Initial Purchasers shall have received on the Closing Date a
certificate, dated the Closing Date, signed by the Chief Financial Officer and
the Secretary of the Company, confirming the matters set forth in Sections 6(v),
9(a) and 9(b) and stating that the Company has complied with all the agreements
and satisfied all of the conditions herein contained and required to be complied
with or satisfied on or prior to the Closing Date.
(e) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of Piper & Marbury L.L.P., counsel for the
Company, to the effect that:
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<PAGE>
(i) each of the Company and its subsidiaries identified in
Schedule D hereto has been duly organized, is validly existing as a corporation
or limited liability company, as applicable, in good standing under the laws of
the State of Delaware and has the requisite power and authority to carry on its
business as described in the Offering Memorandum and to own, lease and operate
its properties.
(ii) each of the Company and its subsidiaries identified in
Schedule D hereto is duly qualified and is in good standing as a foreign entity
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a Material Adverse
Effect;
(iii) all the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid, non-
assessable and not subject to any preemptive or similar rights;
(iv) all of the outstanding shares of capital stock of, or
other ownership interests in, each subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable, and, to the best of such
counsel's knowledge after due inquiry, other than (i) the ownership by an
unaffiliated third-party of 549 shares of OCI Common Stock and (ii) except for
the information set forth in Schedule C hereto, are owned, directly or
indirectly, by the Company free and clear of any Lien; and, to the best of such
counsel's knowledge after due inquiry, there are no outstanding subscriptions,
rights, warrants, options, calls, convertible or exchangeable securities,
commitments of sale, or Liens related to or entitling any person to purchase or
other wise to acquire any shares of the capital stock of, or other ownership
interest in, any subsidiary;
(v) the Preferred Stock, and the deposit of the Preferred Stock
by the Company in accordance with the Deposit Agreement, have been duly and
validly authorized and, when shares of the Preferred Stock are issued and
delivered as provided herein, and upon payment for the Shares and delivery of
the Depositary Receipts in accordance with this Agreement, the shares of
Preferred Stock will be validly issued, fully paid and non-assessable, and the
issuance of the Preferred Stock is not subject to any preemptive or similar
rights arising by operation of the certificate of incorporation of the Company
or the Delaware General Corporation Law;
(vi) the shares of Common Stock issuable upon the conversion of
the Shares have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly issued, fully
paid and nonassessable, will conform with the description thereof contained in
the Offering Memorandum and will not be subject to any preemptive or similar
rights arising by operation of the certificate of incorporation of the Company
or the Delaware General Corporation Law;
(vii) assuming due authorization, execution and delivery of the
Deposit Agreement by the Depositary, each Share, upon delivery of the Depositary
Receipts in accordance with the provisions of the Deposit Agreement against the
deposit of validly issued, fully paid and nonassessable shares of Preferred
Stock, will represent an interest in one-twentieth of a validly issued,
outstanding, fully paid and nonassessable shares of Preferred Stock; assuming
due execution and delivery of the Depositary Receipts by the Depositary pursuant
to the Deposit
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Agreement and upon payment for the Depositary Shares and delivery of the
Depositary Receipts in accordance with this Agreement, the Depositary Receipts
will entitle the holders thereof to the benefits provided therein and in the
Deposit Agreement;
(viii) this Agreement has been duly authorized, executed and
delivered by the Company;
(ix) Each of the Registration Rights Agreement, the Deposit
Agreement and the Deposit Account Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability;
(x) the statements under the captions "Description of the
Depositary Shares", "Description of the Preferred Stock", "Business--Regulatory
Environment", "Plan of Distribution" and "Certain United States Federal Income
Tax Consequences" in the Offering Memorandum, insofar as such statements
constitute a summary of the legal matters, documents or proceedings referred to
therein, fairly present in all material respects such legal matters, documents
and proceedings;
(xi) to the best of such counsel's knowledge, after due
inquiry, neither the Company nor any of its subsidiaries is (A) in violation of
its respective charter (or in the case of limited liability company, certificate
of formation) or by-laws or (B) in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is identified to such
counsel in writing as material to the Company and its subsidiaries, taken as a
whole, to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries or their respective property is bound;
(xii) the execution, delivery and performance of this Agreement
and the other Operative Documents by the Company, the compliance by the Company
with all provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the Company or any of its subsidiaries or any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is identified
to such counsel in writing as material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or their respective property is
bound, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company, any of its subsidiaries or their
respective property, including the Telecommunication Act of 1996, the
Communications Act of 1934 or the rules and regulations of the FCC or any
Applicable PUC, (iv) result in the imposition or creation of (or the obligation
to create or impose) a Lien under, any agreement or
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instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective property is
bound, (v) result in the termination, suspension or revocation of any
Authorization of the Company or any of its subsidiaries or result in any other
impairment of the rights of the holder of any such Authorization, or
(vi) require notice to or approval of the FCC, any Applicable PUC or any court
or any governmental body or agency having jurisdiction over the Company, any of
its subsidiaries or their respective property;
(xiii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the Company or
any of its subsidiaries is or could be a party or to which any of their
respective property is or could be subject, which might result, singly or in the
aggregate, in a Material Adverse Effect;
(xiv) to the best of such counsel's knowledge, neither the
Company nor any of its subsidiaries has violated any Environmental Law, any
provisions of ERISA, or any provisions of the Foreign Corrupt Practices Act or
the rules and regulations promulgated thereunder, except for such violations
which, singly or in the aggregate, would not have a Material Adverse Effect;
(xv) each of the Company and its subsidiaries has such
Authorizations of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including without limitation, the FCC and Applicable
PUCs, as are necessary to own, lease, license and operate its respective
properties and to conduct its business as currently being conducted and as
proposed to be conducted as described in the Offering Memorandum, except where
the failure to have any such Authorization or to make any such filing or notice
would not, singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and, to the best of such
counsel's knowledge, each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with respect thereto,
subject to such qualifications as may be set forth in the Offering Memorandum;
and, to the best of such counsel's knowledge, no event has occurred (including
the receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization, subject to such qualifications as may be set forth in
the Offering Memorandum; and such Authorizations contain no restrictions that
are burdensome to the Company or any of its subsidiaries; except where such
failure to be valid and in full force and effect or to be in compliance, the
occurrence of any such event or the presence of any such restriction would not,
singly or in the aggregate, have a Material Adverse Effect;
(xvi) the Company is not and, after giving effect to the
offering and sale of the Shares and the application of the net proceeds thereof
as described in the Offering Memorandum, will not be, an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended;
(xvii) to the best of such counsel's knowledge after due
inquiry, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect
20
<PAGE>
to any securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to any Registration Statement,
except for the parties set forth in Schedule E hereto.
(xviii) no registration under the Act of the Shares is required
for the sale of the Shares to the Initial Purchasers as contemplated by this
Agreement or for the Exempt Resales assuming that (i) each Initial Purchaser is
a QIB, (ii) the accuracy of, and compliance with, the Initial Purchasers'
representations and agreements contained in Section 7 of this Agreement, (iii)
the accuracy of the representations of the Company set forth in Section 6(y) of
this Agreement;
(xix) such counsel has no reason to believe that, as of the
date of the Offering Memorandum or as of the Closing Date, the Offering
Memorandum and any information incorporated by reference therein, as amended or
supplemented, if applicable (except for the financial statements and other
financial data included therein, as to which such counsel need not express any
belief) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
The opinion of Piper & Marbury L.L.P. described in Section 9(e) above
shall be rendered to the Initial Purchasers at the request of the Company and
shall so state therein. In giving such opinion with respect to the matters
covered by Section 9(e), Piper & Marbury L.L.P. may state that their opinion and
belief are based upon their participation in the preparation of the Offering
Memorandum and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification
except as specified;
(f) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of Skadden, Arps, Slate, Meagher & Flom
(Illinois), counsel for the Initial Purchasers, in form and substance reasonably
satisfactory to the Initial Purchasers.
(g) The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date hereof or
the Closing Date, in the form and substance satisfactory to the Initial
Purchasers from Coopers & Lybrand L.L.P., independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to the Initial Purchasers with respect to the
Initial Purchasers with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(h) The Shares shall have been approved by the NASD for trading and
duly listed in PORTAL and the shares of Common Stock shall have been duly
authorized for listing on the Nasdaq National Market subject to notice of
official issuance.
(i) The Company shall have executed the Registration Rights
Agreement, the Deposit Agreement and the Deposit Account Agreement and the
Initial Purchasers shall have received original copies thereof, duly executed by
the Company.
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(j) The Company shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and required to
be performed or complied with by the Company at or prior to the Closing Date.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement may be
------------------------------------------
terminated at any time on or prior to the Closing Date by the Initial Purchasers
by written notice to the Company if any of the following has occurred: (i) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in the Initial Purchasers' judgment, is
material and adverse and, in the Initial Purchasers' judgment, makes it
impracticable to market the Securities on the terms and in the manner
contemplated in the Offering Memorandum, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation on prices for securities or other instruments on
any such exchange or the Nasdaq National Market, (iii) the suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market, (iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in the opinion of the Initial Purchasers materially
and adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York or Maryland State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your opinion has a material adverse effect
on the financial markets in the United States.
If on the Closing Date, any one or more of the Initial Purchasers
shall fail or refuse to purchase the Shares which it or they have agreed to
purchase hereunder on such date and the aggregate number of Shares which such
defaulting Initial Purchaser or Initial Purchasers, as the case may be, agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
number of shares to be purchased on such date by all Initial Purchasers, each
non-defaulting Initial Purchaser shall be obligated severally, in the proportion
which the number of Shares set forth opposite its name in Schedule A bears to
the aggregate number of Shares which all the non-defaulting Initial Purchasers,
as the case may be, have agreed to purchase, or in such other proportion as the
Initial Purchasers may specify, to purchase the Shares which such defaulting
Initial Purchaser or Initial Purchasers, as the case may be, agreed but failed
or refused to purchase on such date; provided that in no event shall the
aggregate number of Shares which any Initial Purchaser has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this Section 10 by an
amount in excess of one-ninth of such number of Shares without the written
consent of such Initial Purchaser. If on the Closing Date, any Initial
Purchaser or Initial Purchasers shall fail or refuse to purchase the Shares and
the aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares to be purchased by all Initial
Purchasers and arrangements satisfactory to the Initial Purchasers and the
Company for purchase of such Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any non-
defaulting Initial Purchaser and the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Offering Memorandum or
any other documents or arrangements may be effected. Any action
22
<PAGE>
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of any such Initial Purchaser under
this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (i) if to the Company to Omnipoint
Corporation, 3 Bethesda Metro Center, Suite 400, Bethesda, Maryland 20814,
Attention: Bradley E. Sparks and (ii) if to the Initial Purchasers, Donaldson,
Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York
10172, Attention: Syndicate Department, or in any case to such other address as
the person to be notified may have requested in writing
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the Initial Purchasers set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Securities
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of the Initial Purchasers, the officers or directors of the
Initial Purchasers, any person controlling the Initial Purchasers, the Company,
the officers or directors of the Company, or any person controlling the Company,
(ii) acceptance of the Securities and payment for them hereunder and (iii)
termination of the Agreement.
If for any reason the Shares are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 10), the Company agrees to reimburse the Initial
Purchasers for all out-of-pocket expenses (including the fees and disbursements
of counsel) incurred by them. Notwithstanding any termination of this Agreement,
the Company shall be liable for all expenses which it has agreed to pay pursuant
to Section 5(i) hereof. The Company also agrees to reimburse the Initial
Purchasers and their officers, directors and each person, if any, who controls
such Initial Purchasers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act for any and all fees and expenses (including
without limitation the fees and expenses of counsel) incurred by them in
connection with enforcing their rights under this Agreement (including without
limitation its rights under Section 8).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchasers, the Initial Purchasers' directors and officers, any controlling
persons referred to herein, the directors of the Company and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Securities from the Initial Purchasers merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
23
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, and the Initial Purchasers.
Very truly yours,
OMINIPOINT CORPORATION
By: /s/ Bradley E. Sparks
-------------------------------------
Name: Bradley E. Sparks
Title: Vice President and
Chief Financial Officer
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCAMERICA ROBERTSON STEPHENS
BEAR, STEARNS & CO. INC.
SMITH BARNEY INC.
As representatives of the several Initial Purchasers
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Robert A. Moore
----------------------------------
Name: Robert A. Moore
Title: Managing Director
24
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial Purchaser Depositary Shares
------------------- -----------------
<S> <C>
Donaldson, Lufkin & Jenrette
Securities Corporation 3,757,814
BancAmerica Robertson Stephens 931,937
Bear, Stearns & Co. Inc. 661,375
Smith Barney Inc. 661,375
Allen & Company Incorporated 208,333
Lehman Brothers Inc. 83,333
Raymond James & Associates, Inc. 83,333
Credit Suisse First Boston Corporation 56,250
Cowen & Company 56,250
---------
Total 6,500,000
=========
</TABLE>
25
<PAGE>
SCHEDULE B
SUBSIDIARIES
26
<PAGE>
SCHEDULE C
SCHEDULE OF EXCEPTIONS
1. As of February 17, 1998, (i) all capital stock of Omnipoint
Holdings, II, LLC, (ii) 95.6% of the capital stock of Omnipoint Communications
Inc., and (iii) all capital stock of Omnipoint NY MTA License, LLC were pledged
under the Permanent Credit Facility.
2. As of July 25, 1997, all capital stock of Omnipoint MB Holdings,
LLC ("OMB"), Omnipoint Communications MB Operations LLC, and each of the license
subsidiaries of OMB were pledged under the Ericsson MB Facility.
3. As of July 25, 1997, all capital stock of Omnipoint Philadelphia
Holdings, LLC ("OPCS"), Omnipoint Communications Enterprises, L.P., and each of
the license subsidiaries of OPCS were pledged under the Ericsson Philadelphia
Facility.
4. As of January 30, 1998, all capital stock of Omnipoint Midwest
Holdings, LLC ("OMWH"), Omnipoint Communications Midwest Operations, LLC, and
each of the license subsidiaries of OMWH were pledged under the NT Midwest
Facility.
5. Omnipoint Technologies, Inc. has an employee option plan.
27
<PAGE>
SCHEDULE D
Omnipoint Communications Services, LLC
Omnipoint Communications, Inc.
Omnipoint Technologies, Inc.
Omnipoint Communications Enterprises, L.P.
Omnipoint Communications MB Operations, LLC
Omnipoint Communications Midwest Operations, LLC
28
<PAGE>
SCHEDULE E
Holders of Common Stock issued upon conversion of the Class B Common
Stock and the Class C Common Stock, the Common Stock Purchase Warrants to
Purchase 625,000 shares of Common Stock, dated November 22, 1995, and the Common
Stock Purchase Warrants to Purchase 375,000 shares of Common Stock, dated
November 22, 1995, have demand and piggy back registration rights.
29
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
[INTENTIONALLY OMITTED.]
30
<PAGE>
EXHIBIT 10.61
OMNIPOINT CORPORATION
Marine Midland Bank, as Depositary
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
DEPOSIT AGREEMENT
FOR
7% CUMULATIVE CONVERTIBLE PREFERRED STOCK
Dated as of May 6, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I Definitions 1
ARTICLE II Book-Entry, Form of Receipts, Deposit of Stock, Execution and
Delivery, Transfer, Surrender and Redemption of Receipts 3
Section 2.1 Book-Entry Form; Form and Transfer of Receipts 3
Section 2.2 Deposit of Stock; Execution and Delivery of
Receipts in Respect Thereof 5
Section 2.3 Redemption and Conversion of Stock 6
Section 2.4 Registration of Transfer of Receipts 9
Section 2.5 Surrender of Receipts and Withdrawal of Stock 9
Section 2.6 Limitations on Execution and Delivery, Transfer,
Surrender and Exchange of Receipts 11
Section 2.7 Lost Receipts, etc. 11
Section 2.8 Cancellation and Destruction of Surrendered
Receipts 11
Section 2.9 Interchangeability of Book-Entry Receipts and
Receipts in Physical, Certificated Form 11
ARTICLE III Certain Obligations of Holders of Receipts and the Company 12
Section 3.1 Filing Proofs, Certificates and Other Information 12
Section 3.2 Payment of Taxes or Other Governmental Charges 13
Section 3.3 Warranty as to Stock 13
ARTICLE IV The Deposited Securities; Notices 13
Section 4.1 Cash and Common Stock Distributions 13
Section 4.2 Distributions Other than Cash, Rights, Preferences
or Privileges 14
Section 4.3 Subscription Rights, Preferences or Privileges 15
Section 4.4 Notice of Dividends, etc.; Fixing of Record Date
for Holders of Receipts 16
Section 4.5 Voting Rights 16
Section 4.6 Inspection of Reports 17
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 4.7 Lists of Receipt Holders 17
ARTICLE V The Depositary, the Depositary's Agents, the Registrar
and the Company 17
Section 5.1 Maintenance of Offices, Agencies and Transfer Books
by the Depositary; Registrar 17
Section 5.2 Prevention of or Delay in Performance by the
the Depositary's Agents, the Registrar
or the Company 18
Section 5.3 Obligations of the Depositary, the Depositary's
Agents, the Registrar and the Company 18
Section 5.4 Resignation and Removal of the Depositary;
Appointment of Successor Depositary 20
Section 5.5 Corporate Notices and Reports 21
Section 5.6 Indemnification by the Company 21
Section 5.7 Charges and Expenses 21
ARTICLE VI Amendment and Termination 22
Section 6.1 Amendment 22
Section 6.2 Termination 23
ARTICLE VII Miscellaneous 24
Section 7.1 Counterparts 24
Section 7.2 Exclusive Benefit of Parties 24
Section 7.3 Invalidity of Provisions 24
Section 7.4 Notices 24
Section 7.5 Depositary's Agents 25
Section 7.6 Holders of Receipts are Parties 25
Section 7.7 Governing Law 25
Section 7.8 Inspection of Deposit Agreement 25
Section 7.9 Headings 25
</TABLE>
ii
<PAGE>
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT dated as of May 6, 1998, among Omnipoint
Corporation, a Delaware corporation, Marine Midland Bank, a New York banking
corporation and trust company, and the holders from time to time of the Receipts
described herein.
WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of the Stock of the Company with
the Depositary for the purposes set forth in this Deposit Agreement and for the
issuance hereunder of Receipts evidencing Depositary Shares in respect of the
Stock so deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed hereto, with appropriate insertions, modifications and omissions, as
hereinafter provided in this Deposit Agreement.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
Definitions
The following definitions shall for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit Agreement. Terms
not otherwise defined herein shall be given the meaning assigned to such terms
in the Certificate.
"Beneficial Owner" shall have the meaning set forth in Section 2.1
hereof.
"Certificate" shall mean the Certificate of Designation filed with the
Secretary of State of the State of Delaware establishing the Stock as a series
of preferred stock of the Company designated as "7% Cumulative Convertible
Preferred Stock."
"Common Stock" shall mean the Company's Common Stock, par value $0.01
per share, or any security into which the Common Stock may be converted.
<PAGE>
"Company" shall mean Omnipoint Corporation, a Delaware corporation,
and its successors.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time.
"Depositary" shall mean Marine Midland Bank, and any successor as
Depositary hereunder.
"Depositary Shares" shall mean Depositary Shares, each representing
ownership of one-twentieth of a share of the Stock deposited with the Depositary
under this Deposit Agreement, all as evidenced by a Receipt. Subject to the
terms of this Deposit Agreement, each owner of a Depositary Share is entitled,
in proportion to the applicable fraction of a share of Stock represented by such
Depositary Share, to all the rights, preferences and privileges of the Stock
represented by such Depositary Share, including dividend, voting, redemption,
conversion and liquidation rights and subject, proportionately, to all of the
limitations of the Stock represented thereby, contained in the Certificate, and
to the benefits of all obligations of the Company under the Certificate.
"Depositary's Agent" shall mean any agent appointed by the Depositary
pursuant to Section 7.5.
"Depositary's Office" shall mean the corporate trust office of the
Depositary in New York, New York, at which at any particular time its depositary
receipt business shall be administered.
"DTC" shall have the meaning set forth in Section 2.1.
"DTC Receipt" shall have the meaning set forth in Section 2.1.
"Officer's Certificate" shall mean a certificate signed by the
Chairman of the Board, the President or any Vice President of the Company and
delivered to the Depositary.
"Receipt" shall mean one of the Depositary Receipts issued hereunder
by the Depositary, whether in definitive or temporary form, evidencing interests
held in Depositary Shares, in substantially the form set forth in Exhibit A
hereto. Wherein the context requires, the term "Receipt" shall be deemed to
include the DTC Receipt.
2
<PAGE>
"Record Holder" as applied to a Receipt shall mean the person in whose
name a Receipt is registered on the books of the Depositary maintained for such
purpose.
"Redemption Date" shall have the meaning specified in Section 2.3(a).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean the Company's 7% Cumulative Convertible Preferred
Stock, par value $0.01 per share.
ARTICLE II
Book-Entry, Form of Receipts, Deposit of Stock, Execution
and Delivery, Transfer, Surrender and Redemption of Receipts
Section 2.1 Book-Entry Form; Form and Transfer of Receipts. The
----------------------------------------------
Company and the Depositary shall make application to The Depository Trust
Company ("DTC") for acceptance of all or a portion of the Receipts for its book-
entry settlement system. The Company hereby appoints the Depositary acting
through any authorized officer thereof as its attorney-in-fact, with full power
to delegate, for purposes of executing any agreements, certifications or other
instruments or documents necessary or desirable in order to effect the
acceptance of such Receipts for DTC eligibility, including, but not limited to,
a letter of representations, in form satisfactory to the Company, the Depositary
and DTC. So long as the Receipts are eligible for book-entry settlement with
DTC, except as provided for in Section 2.9 of this Deposit Agreement, or unless
otherwise required by law, all Depositary Shares to be issued and sold in
reliance on Rule 144A are expected to be eligible for trading in the Private
Offerings, Resales and Trading Through Automated Linkages ("PORTAL") market of
the National Association of Securities Dealers, Inc. with book-entry settlement
through DTC, shall be represented by a single receipt (the "DTC Receipt") which
shall be deposited with DTC (or its custodian) evidencing all such Depositary
Shares and registered in the name of the nominee of DTC (initially expected to
be Cede & Co.). Marine Midland Bank or such other entity as is agreed to by DTC
may hold the DTC Receipt as custodian for DTC. During any period in which any
Depositary Shares are evidenced by the DTC Receipts, except as expressly
provided for in the following paragraph and in Section 2.9 of this Deposit
Agreement, Beneficial Owners acquiring Depositary Shares, issued and sold in
reliance on Rule 144A with book-entry settlement through DTC, shall not
3
<PAGE>
receive or be entitled to receive physical delivery of the Receipts representing
their ownership interest in such Depositary Shares. Ownership of beneficial
interests in the DTC Receipt ("Beneficial Owners") shall be shown on, and the
transfer of such ownership shall be effected through, records maintained by (i)
DTC or its nominee for such DTC Receipt, or (ii) institutions that have accounts
with DTC.
If DTC subsequently ceases to make its book-entry settlement system
available for the Receipts, the Company may instruct the Depositary regarding
making other arrangements for book-entry settlement. In the event that the
Receipts are not eligible for, or it is no longer necessary to have the Receipts
available in book-entry form, the Depositary shall provide written instructions
to DTC to deliver to the Depositary for cancellation the DTC Receipt, and the
Company shall instruct the Depositary to deliver to the Beneficial Owners of the
Depositary Shares previously evidenced by the DTC Receipt definitive Receipts in
physical form evidencing such Depositary Shares. Such definitive Receipts shall
be in the form annexed hereto as Exhibit A with appropriate insertions,
modifications and omissions, as hereafter provided.
The Receipts shall be typewritten, in the case of the DTC Receipt, and
otherwise shall, upon notice by the Company to the Depositary, be definitive
Receipts which shall be engraved or printed or lithographed on steel-engraved
borders and shall be substantially in the form set forth as Exhibit A annexed to
this Deposit Agreement, with appropriate insertions, modifications and
omissions, as hereinafter provided. The DTC Receipt shall bear such legend or
legends as may be required by DTC in order for it to accept the Depositary
Shares for its book-entry settlement system. Until such time as the Receipts
are so engraved or printed or lithographed in accordance with the preceding
sentence, the Depositary, upon the written order of the Company or any holder of
Stock, as the case may be, delivered in compliance with Section 2.2, shall
execute and deliver temporary Receipts which are printed, lithographed,
typewritten, mimeographed or otherwise substantially identical to (and entitling
the Record Holders thereof to all the rights pertaining to) the definitive
Receipts in lieu of which they are issued, and with such appropriate insertions,
omissions, substitutions and other variations as the persons executing such
Receipts may determine, as evidenced by their execution of such Receipts. After
the preparation of definitive Receipts, the temporary Receipts shall be
exchangeable for definitive Receipts upon surrender of the temporary Receipts at
the Depositary's Office, without charge to the Record Holder. Upon surrender
for cancellation of any one or more temporary Receipts, the Depositary shall
execute and deliver in exchange therefor definitive Receipts representing the
same number of Depositary Shares as represented by the surrendered temporary
Receipt or
4
<PAGE>
Receipts. Such exchange shall be made at the Company's expense and without any
charge therefor to the Record Holder of the Receipts. Until so exchanged, the
temporary Receipts shall in all respects be entitled to the same benefits under
this Deposit Agreement, and with respect to the Stock, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual signature
of a duly authorized officer of the Depositary; provided, that such signature
may be a facsimile if a registrar for the Receipts (other than the Depositary)
shall have been appointed by the Depositary and such Receipts are countersigned
by manual signature of a duly authorized officer of such registrar. No Receipt
shall be entitled to any benefits under this Deposit Agreement or be valid or
obligatory for any purpose unless it shall have been executed manually by a duly
authorized officer of the Depositary or, if a registrar for the Receipts (other
than the Depositary) shall have been appointed, by manual or facsimile signature
of a duly authorized officer of the Depositary and countersigned manually by a
duly authorized officer of such registrar. The Depositary shall record on its
books each Receipt so signed and delivered as hereinafter provided.
Receipts shall be in denominations of any number of whole Depositary
Shares.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement (in each case as set forth in an Officer's Certificate
delivered to the Depositary) as may be required by the Company or required to
comply with any applicable law or any regulation or with the rules and
regulations of any securities exchange upon which the Stock, the Depositary
Shares or the Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Receipts are subject.
Subject to any limitations set forth in a Receipt or in this Deposit
Agreement, title to Depositary Shares evidenced by a Receipt which is properly
endorsed or accompanied by a properly executed instrument of transfer, shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the Depositary as provided in Section 2.4, the
Depositary may, notwithstanding any notice to the contrary, treat the Record
Holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distributions of dividends or other
distributions, the exchange of Depositary Shares for Stock, the right to
5
<PAGE>
exchange Receipts pursuant to Section 2.9 or to any notice provided for in this
Deposit Agreement and for all other purposes.
Section 2.2 Deposit of Stock; Execution and Delivery of Receipts in
-------------------------------------------------------
Respect Thereof. Subject to the terms and conditions of this Deposit Agreement,
- ---------------
the Company or any holder of Stock may from time to time deposit shares of the
Stock under this Deposit Agreement by delivery to the Depositary of a
certificate or certificates for the Stock to be deposited, properly endorsed or
accompanied, if required by law or the Depositary, by a duly executed instrument
of transfer or endorsement, in form satisfactory to the Depositary, together
with all such certifications as may be required by the Depositary in accordance
with the provisions of this Deposit Agreement, and together with a written order
of the Company or such holder, as the case may be, directing the Depositary to
execute and deliver to, or upon the written order of, the person or persons
stated in such order a Receipt or Receipts for the number of Depositary Shares
representing such deposited Stock.
Deposited Stock shall be held by the Depositary at the Depositary's
Office or at such other place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates for
Stock deposited in accordance with the provisions of this Section, together with
the other documents required as above specified, and upon recordation of the
Stock on the books of the Company in the name of the Depositary or its nominee,
the Depositary, subject to the terms and conditions of this Deposit Agreement,
shall execute and deliver, to or upon the order of the Company or a holder of
Stock depositing shares of Stock in accordance with the first paragraph of this
Section, a Receipt or Receipts for the number of Depositary Shares representing
the Stock so deposited and registered in such name or names as may be requested
by the Company or such holder. The Depositary shall execute and deliver such
Receipt or Receipts at the Depositary's Office or such other offices, if any, as
the Depositary may designate. Delivery at other offices shall be at the risk
and expense of the person requesting such delivery. The DTC Receipt shall
provide that it shall evidence the aggregate number of Depositary Shares from
time to time indicated in the records of the Depositary and that the aggregate
number of Depositary Shares evidenced thereby may from time to time be increased
or decreased by making adjustments on such records of the Depositary.
Other than in the case of splits, combinations or other
reclassifications affecting the Stock, or in the case of dividends or other
distributions of Stock, if any, there shall be deposited hereunder not more than
325,000 shares of Stock.
6
<PAGE>
Section 2.3 Redemption and Conversion of Stock.
----------------------------------
(a) Optional Redemption. Whenever the Company shall elect to redeem
-------------------
shares of Stock in accordance with the provisions of the Certificate, it shall
(unless otherwise agreed to in writing with the Depositary) give the Depositary
not less than five (unless a shorter period shall be acceptable to the
Depositary) nor more than 10 days' written notice of the proposed date of the
mailing of a notice of redemption of Depositary Shares to Record Holders of
Receipts in connection with a redemption of Stock of the number of such shares
of Stock held by the Depositary to be so redeemed as hereinafter provided and
such other information as shall be required by the Depository to furnish the
notice of redemption required by the next succeeding paragraph. Any such notice
shall be accompanied by an Officer's Certificate from the Company stating that
such redemption of Stock is in accordance with the provisions of the
Certificate. Such notice to the Depositary, if given more than 60 days prior to
the redemption date, shall be in addition to the notice required to be given for
redemption pursuant to the Certificate. On the date of any such redemption,
provided that the Company shall then have deposited with the Depositary the
shares of Common Stock as required by the Certificate, the Depositary shall
redeem (using the shares of Common Stock and funds, if any, deposited with it)
the number of Depositary Shares representing such redeemed Stock.
The Depositary shall mail notice of redemption of Stock and the number
of Depositary Shares representing the Stock to be redeemed by first-class mail,
postage prepaid, not less than 20 and not more than 60 days prior to the date
fixed for redemption of such Stock and Depositary Shares (the "Redemption
Date"). Such notice shall be mailed to Record Holders of the Receipts
evidencing the Depositary Shares to be so redeemed, at the addresses of such
Record Holders as they appear on the Receipt register of the Depositary; but
neither failure to mail any such notice to one or more such Record Holders nor
any defect in any notice to one or more such Record Holders shall affect the
sufficiency of the proceedings for redemption as to other Record Holders. Each
such notice shall state the record date for such redemption; the Redemption Date
that all outstanding Depositary Shares are to be redeemed or, in the case of a
redemption of fewer than all outstanding Depositary Shares in connection with a
partial redemption of Stock, the number of such Depositary Shares held by such
Record Holder to be so redeemed; the Redemption Price for the Depositary Shares,
the number of shares of Common Stock deliverable upon redemption of each
Depositary Share to be redeemed; the amount of cash, if any, that the Company is
paying in lieu of fractional shares of Common Stock and the Market Value (as
defined in the Certificate) to be used to calculate the number of shares of
Common Stock to be delivered; the place
7
<PAGE>
or places where Receipts evidencing Depositary Shares to be redeemed are to be
surrendered for redemption; and that dividends in respect of the Stock
represented by the Depositary Shares to be redeemed will cease to accumulate on
such Redemption Date. In case less than all the outstanding Depositary Shares
are to be redeemed, the Depositary Shares to be so redeemed shall be selected by
lot or pro rata (as nearly as practicable without creating fractional shares) or
by any other way determined by the Depositary to be equitable, except that the
Depositary may redeem Depositary Shares held by any Record Holder of fewer than
100 Depositary Shares (or Depositary Shares held by Record Holders of stock who
would hold fewer than 100 Depositary Shares as a result of such redemption).
Notice having been mailed by the Depositary as aforesaid with respect
to redemptions described in the preceding paragraph, from and after the
Redemption Date (unless the Company shall have failed to redeem the shares of
Stock to be redeemed as set forth in the Company's notice provided for in the
preceding paragraph), all dividends in respect of the shares of Stock so called
for redemption shall cease to accumulate, the Depositary Shares called for
redemption shall be deemed no longer to be outstanding, and all rights of the
Record Holders of Receipts evidencing such Depositary Shares (except the right
to receive shares of Common Stock and, if applicable, cash upon redemption)
shall, to the extent of such Depositary Shares, cease and terminate. The
foregoing shall be subject further to the terms and conditions of the
Certificate.
If less than all the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the Record Holder of such
Receipt, upon surrender of such Receipt to the Depositary, a new Receipt
evidencing the Depositary Shares evidenced by such prior Receipt and not called
for redemption, together with certificates representing the shares of Common
Stock issuable upon redemption of the Depositary Shares called for redemption.
(b) Conversion at Option of Holder. Whenever a Record Holder of
------------------------------
Receipts shall elect to convert shares of Stock underlying the Depositary Shares
evidenced by such Receipts in accordance with the provisions of the Certificate,
it shall deliver Receipts evidencing the Depositary Shares relating to the
shares of Stock to be converted, together with written notice of conversion and
a proper assignment of the Receipts to the Company or in blank to the Depositary
or its agent. Each optional conversion of shares of Stock underlying Depositary
Shares shall be deemed to have been effected immediately prior to the close of
business on the date of which the foregoing requirements have been satisfied.
8
<PAGE>
From and after the relevant date fixed for conversions (the
"Conversion Date")(unless the Company shall have failed to convert the shares of
Stock to be converted by it), all dividends in respect of the shares of Stock so
called for conversion shall cease to accumulate, the shares of Stock and
Depositary Shares so converted shall be deemed no longer to be outstanding, and
all rights of the Record Holders of Receipts evidencing such Depositary Shares
(except the right to receive shares of Common Stock and, if applicable, cash
upon conversion) shall, to the extent of such Depositary Shares, cease and
terminate. Upon any surrender for conversion of the Receipts evidencing any
such Depositary Shares (properly endorsed or assigned for transfer, if the
Depositary shall so require), shares of Stock underlying such Depositary Shares
shall be converted by the Company (as nearly as may be practicable without
creating fractional shares) into shares of Common Stock at a conversion rate
equal to one-twentieth of the number of shares of Common Stock received upon
conversion of each share of Stock pursuant to the Certificate. The foregoing
shall be subject further to the terms and conditions of the Certificate.
(c) Fractional Interests. To the extent that shares of Stock
--------------------
underlying Depositary Shares are redeemed for or converted into shares of Common
Stock and all of such shares of Common Stock cannot be distributed to the Record
Holders of Receipts without creating fractional interests in such shares, the
Company shall cause the Depositary to distribute cash to Record Holders in lieu
of fractional shares. The amount distributed in the foregoing case will be
reduced by any amount required to be withheld by the Company or the Depositary
on account of taxes or otherwise required pursuant to law, regulation or court
process.
(d) Limitations on Depositary Requirements for Transfer and Exchange.
----------------------------------------------------------------
The Depositary shall not be required (a) to issue, register the transfer of or
exchange any Receipts for a period beginning at the opening of business 10 days
next preceding any selection of Depositary Shares to be redeemed and ending at
the close of business on the day of the mailing of notice of redemption of
Depositary Shares or (b) to register the transfer of or exchange for another
Receipt any Receipt evidencing Depositary Shares called or being called for
redemption in whole or in part.
Section 2.4 Registration of Transfer of Receipts. Subject to the
------------------------------------
terms and conditions of this Deposit Agreement, the Depositary shall register on
its books from time to time transfers of Receipts upon any surrender thereof by
the Record Holder in person or by such Record Holder's duly authorized attorney,
properly endorsed or accompanied by a properly executed instrument of transfer.
Thereupon the Depositary
9
<PAGE>
shall execute a new Receipt or Receipts evidencing the same aggregate number of
Depositary Shares as those evidenced by the Receipt or Receipts surrendered and
deliver such new Receipt or Receipts to or upon the order of the person entitled
thereto.
Section 2.5 Surrender of Receipts and Withdrawal of Stock. Any
---------------------------------------------
Record Holder of a Receipt or Receipts representing any number of whole shares
of Stock (or such Record Holder's duly authorized attorney), unless the related
Depositary Shares have been previously called for redemption, may withdraw the
Stock and all money and other property, if any, represented thereby by
surrendering such Receipt or Receipts at the Depositary's Office or at such
other offices as the Depositary may designate for such withdrawals. If such
Record Holder's Depositary Shares are being held by DTC or its nominee pursuant
to Section 2.1, such Record Holder shall request, in accordance with Section
2.9, withdrawal from the book-entry system of the number of Depositary Shares
specified in the preceding sentence. Thereafter, without unreasonable delay, the
Depositary shall deliver to Record Holder, or to the person or persons
designated by such Record Holder as hereinafter provided, the number of whole
shares of Stock and all money and other property, if any, represented by the
Receipt or Receipts so surrendered for withdrawal, but holders of such whole
shares of Stock will not thereafter be entitled to receive Depositary Shares in
exchange therefor. If a Receipt delivered by the Record Holder to the Depositary
in connection with such withdrawal shall evidence a number of Depositary Shares
in excess of the number of Depositary Shares representing the number of whole
shares of Stock to be so withdrawn, the Depositary shall at the same time, in
addition to such number of whole shares of Stock and such money and other
property, if any, to be so withdrawn, deliver to such Record Holder, or (subject
to Section 2.4) upon his order, a new Receipt evidencing such excess number of
Depositary Shares. Delivery of the Stock and money and other property being
withdrawn may be made by the delivery of such certificates, documents of title
and other instruments as the Depositary may deem appropriate.
Stock delivered pursuant to the preceding paragraph may be endorsed
with or have incorporated in the text thereof such legends or recitals or
changes not inconsistent with the provisions of this Deposit Agreement as may be
required by the Company or required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any securities
exchange upon which the Stock may be listed or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to which
any particular shares of Stock are subject.
If the Stock and the money and other property being withdrawn are to
be delivered to a person or persons other than the Record Holder of the Receipt
or
10
<PAGE>
Receipts being surrendered for withdrawal of Stock, such Record Holder shall
execute and deliver to the Depositary a written order so directing the
Depositary and the Depositary may require that the Receipt or Receipts
surrendered by such Record Holder for withdrawal of such shares of Stock be
properly endorsed in blank or accompanied by a properly executed instrument of
transfer in blank.
Delivery of the Stock and the money and other property, if any,
represented by Receipts surrendered for withdrawal shall be made by the
Depositary at the Depositary's Office, except that, at the request, risk and
expense of the Record Holder surrendering such Receipt or Receipts and for the
account of the Record Holder thereof, such delivery may be made at such other
place as may be designated by such Record Holder.
Section 2.6 Limitations on Execution and Delivery, Transfer,
------------------------------------------------
Surrender and Exchange of Receipts. As a condition precedent to the execution
- ----------------------------------
and delivery, registration of transfer, surrender or exchange of any Receipt,
the Depositary, any of the Depositary's Agents or the Company may require (i)
payment to it of a sum sufficient for the payment (or, in the event that the
Depositary or the Company shall have made such payment, the reimbursement to it)
of any charges or expenses payable by the Record Holder of a Receipt pursuant to
Section 5.7 (or evidence reasonably satisfactory to the Company that such
charges and expenses have been paid), (ii) the production of evidence
satisfactory to it as to the identity and genuineness of any signature and (iii)
compliance with such regulations, if any, as the Depositary or the Company may
establish not inconsistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against
Stock may be suspended, the registration of transfer of Receipts may be refused
and the registration of transfer, surrender or exchange of outstanding Receipts
may be suspended (i) during any period when the register of stockholders of the
Company is closed or (ii) if any such action is deemed necessary or advisable by
the Depositary or the Company any of the Depositary's Agents or the Company at
any time or from time to time because of any requirement of law or of any
government or governmental body or commission or under any provision of this
Deposit Agreement.
Section 2.7 Lost Receipts, etc. In case any Receipt shall be
------------------
mutilated, destroyed, lost or stolen, the Depositary in its discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt, or in lieu of and in substitution for
such destroyed, lost or stolen Receipt, upon (i) the filing by the Record Holder
thereof with the Depositary of evidence satisfactory to the
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Depositary of such destruction or loss or theft of such Receipt, of the
authenticity thereof and of his or her ownership thereof and (ii) the furnishing
to the Depositary of indemnification satisfactory to it.
Section 2.8 Cancellation and Destruction of Surrendered Receipts.
----------------------------------------------------
All Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all Receipts so cancelled.
Any Receipt evidenced in book-entry form shall be deemed cancelled when the
Depositary has caused the amount of Depositary Shares evidenced by the DTC
Receipt to be reduced in proportion to the number of Depositary Shares evidenced
by the surrendered Receipt.
Section 2.9 Interchangeability of Book-Entry Receipts and Receipts in
---------------------------------------------------------
Physical, Certificated Form. Subject to the terms and conditions of this
- ---------------------------
Deposit Agreement, upon receipt by the Depositary of written instructions from
DTC on behalf of any Beneficial Owner for the purpose of directing the
Depositary to execute and deliver a Receipt in physical, certificated form
evidencing such Depositary Shares, the Depositary shall follow the customary
procedures established by DTC for the purpose of reducing the number of
Depositary Shares evidenced by the DTC Receipt and, following such reduction,
shall execute and deliver to or upon the order of the person or persons named in
such order a Receipt or Receipts registered in the name or names requested by
such person and evidencing in the aggregate the number of Depositary Shares
equal to the reduction in the number evidenced by the DTC Receipt. The Company
may require in such written instructions any certification or representation as
it shall deem necessary to comply with applicable law.
Subject to the terms and conditions of this Deposit Agreement, upon
receipt by the Depositary of a Receipt or Receipts in physical, certificated
form, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Depositary, including any required certifications, and
together with written instructions directing the Depositary to adjust its
records to reflect an increase in the aggregate amount of Depositary Shares
evidenced by the DTC Receipt (including, without limitation, information
regarding the DTC participant account to be credited with such increase), and
upon payment of the fees and expenses of the Depositary, the Depositary shall
cancel such Receipt or Receipts in physical, certificated form and shall follow
the customary procedures established by DTC for the purpose of reflecting such
increase in the number of Depositary Shares evidenced by the DTC Receipt.
12
<PAGE>
ARTICLE III
Certain Obligations of
Holders of Receipts and the Company
Section 3.1 Filing Proofs, Certificates and Other Information. Any
-------------------------------------------------
Record Holder of a Receipt may be required from time to time to file such proof
of residence, or other matters or other information, to execute such
certificates and to make such representations and warranties as the Depositary
or the Company may reasonably deem necessary or proper. The Depositary or the
Company may withhold the delivery, or delay the registration of transfer,
redemption or exchange, of any Receipt or the withdrawal of the Stock
represented by the Depositary Shares evidenced by any Receipt or the
distribution of any dividend or other distribution or the sale of any rights or
of the proceeds thereof until such proof or other information is filed or such
certificates are executed or such representations and warranties are made.
Section 3.2 Payment of Taxes or Other Governmental Charges. Record
----------------------------------------------
Holders of Receipts shall be obligated to make payments to the Depositary of
certain charges and expenses as provided in Section 5.7, or provide reasonably
satisfactory evidence to the Depositary that such charges and expenses have been
paid. Registration of transfer of any Receipt or any withdrawal of Stock and
all money or other property, if any, represented by the Depositary Shares
evidenced by such Receipt may be refused until any such payment due is made, and
any dividends, interest payments or other distributions may be withheld or any
part of or all the Stock or other property represented by the Depositary Shares
evidenced by such Receipt and not theretofore sold may be sold for the account
of the Record Holder thereof (after attempting by reasonable means to notify
such Record Holder prior to such sale), and such dividends, interest payments or
other distributions or the proceeds of any such sale may be applied to any
payment of such charges or expenses, the Record Holder of such Receipt remaining
liable for any deficiency. The Depositary shall at the direction of the Company
withhold any payments, distributions and exchanges made with respect to the
Depositary Shares and Receipts, and the Stock, Common Stock or other securities
or assets represented thereby (collectively, the "Securities"). In the event
the Depositary is required to pay any such amounts, the Company shall reimburse
the Depositary for payment thereof upon the request of the Depositary and the
Depositary shall, upon the Company's request and as instructed by the Company,
pursue its rights against such Record Holder at the Company's expense.
13
<PAGE>
Section 3.3 Warranty as to Stock. The Company hereby represents and
--------------------
warrants that the Stock, when issued, will be validly issued, fully paid and
nonassessable. Such representation and warranty shall survive the deposit of the
Stock and the issuance of the Receipts.
ARTICLE IV
The Deposited Securities; Notices
Section 4.1 Cash and Common Stock Distributions. Whenever the
-----------------------------------
Depositary shall receive any cash dividend or other cash distribution on Stock
(including Liquidated Damages and Quarterly Return Amounts, each as defined in
the Offering Memorandum pursuant to which the Stock was originally issued) or
distribution of Common Stock, the Depositary shall, subject to Sections 3.1 and
3.2, distribute to Record Holders of Receipts on the record date fixed pursuant
to Section 4.4 such amounts of such dividend or distribution as are, as nearly
as practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such Record Holders; to the extent that
dividends are paid in shares of Common Stock and all of such shares of Common
Stock cannot be distributed to the Record Holders of Receipts without creating
fractional interests in such shares, the Company shall cause the Depositary to
distribute cash to Record Holders in lieu of fractional shares; provided,
however, that in case the Company or the Depositary shall be required to
withhold and shall withhold from any cash dividend or other cash distribution in
respect of the Stock an amount on account of taxes, the amount made available
for distribution or distributed in respect of Depositary Shares shall be reduced
accordingly. The Depositary shall distribute or make available for distribution,
as the case may be, only such amount, however, as can be distributed without
attributing any Record Holder of Depositary Shares a fraction of one cent, and
any balance not so distributable shall be held by the Depositary (without
liability for interest thereon) and shall be added to and be treated as part of
the next sum received by the Depositary for distribution to Record Holders of
Receipts then outstanding.
Section 4.2 Distributions Other than Cash, Rights, Preferences or
-----------------------------------------------------
Privileges. Whenever the Depositary shall receive any distribution other than
- ----------
cash, rights, preferences or privileges upon Stock, the Depositary shall,
subject to Sections 3.1 and 3.2, distribute to Record Holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of the securities or
property received by it as are, as nearly as practicable, in proportion to the
respective numbers of Depositary Shares evidenced
14
<PAGE>
by the Receipts held by such Record Holders, in any manner that the Depositary
may deem equitable and practicable for accomplishing such distribution. If in
the opinion of the Depositary such distribution cannot be made proportionately
among such Record Holders, or if for any other reason (including any requirement
that the Company or the Depositary withhold an amount on account of taxes) the
Depositary deems, after consultation with the Company, such distribution not to
be feasible, the Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the purpose of effecting such
distribution, including the sale (at public or private sale) of the securities
or property thus received, or any part thereof, at such place or places and upon
such terms as it may deem proper. The net proceeds of any such sale shall,
subject to Sections 3.1 and 3.2, be distributed or made available for
distribution, as the case may be, by the Depositary to Record Holders of
Receipts as provided by Section 4.1 in the case of a distribution received in
cash. The Company shall not make any distribution of such securities unless the
Company shall have provided an opinion of counsel stating that such securities
have been registered under the Securities Act or that the offering and sale of
such securities are exempt from registration under the Securities Act.
Section 4.3 Subscription Rights, Preferences or Privileges. If the
----------------------------------------------
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the Record Holders of Receipts in such manner as the Company may determine,
either by the issue to such Record Holders of warrants representing such rights,
preferences or privileges or by such other method as may be determined by the
Company in its discretion with the approval of the Depositary; provided,
however, that (i) if at the time of issue or offer of any such rights,
preferences or privileges the Company determines that it is not lawful or (after
consultation with the Depositary) not feasible to make such rights, preferences
or privileges available to Record Holders of Receipts by the issue of warrants
or otherwise or (ii) if and to the extent so instructed by Record Holders of
Receipts who do not desire to exercise such rights, preferences or privileges,
then the Company, in its discretion, may, if applicable laws or the terms of
such rights, preferences or privileges permit such transfer, sell such rights,
preferences or privileges at public or private sale, at such place or places and
upon such terms as it may deem proper. The net proceeds of any such sale shall,
subject to Sections 3.1 and 3.2, be distributed by the Depositary to the Record
Holders of Receipts entitled thereto as provided by Section 4.1 in the case of a
distribution received in cash. The Company shall not make any distribution of
any such rights, preferences
15
<PAGE>
or privileges unless the Company shall have provided an opinion of counsel
stating that such rights, preferences or privileges have been registered under
the Securities Act or that the offering and sale of such rights, preferences or
privileges are exempt from registration under the Securities Act.
If registration under the Securities Act of the securities to which
any rights, preferences or privileges relate is required in order for Record
Holders of Receipts to be offered or sold the securities to which such rights,
preferences or privileges relate, the Company agrees with the Depositary that it
will file promptly a registration statement pursuant to the Securities Act with
respect to such rights, preferences or privileges and securities and use its
best efforts and take all steps available to it to cause such registration
statement to become effective sufficiently in advance of the expiration of such
rights, preferences or privileges to enable such Record Holders to exercise such
rights, preferences or privileges. In no event shall the Depositary make
available to the Record Holders of Receipts any right, preference or privilege
to subscribe for or to purchase any securities unless and until such
registration statement shall have become effective, or unless the offering and
sale of such securities to such Record Holders are exempt from registration
under the provisions of the Securities Act.
If any other action under the laws of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to Record
Holders of Receipts, the Company agrees with the Depositary that the Company
will use its best efforts to take such action or obtain such authorization,
consent or permit sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such Record Holders to exercise such rights,
preferences or privileges.
Section 4.4 Notice of Dividends, etc.; Fixing of Record Date for
----------------------------------------------------
Holders of Receipts. Whenever (i) any cash dividend or other cash distribution
- -------------------
shall become payable, any distribution other than cash shall be made, or any
rights, preferences or privileges shall at any time be offered, with respect to
Stock, or (ii) the Depositary shall receive notice of any meeting at which
holders of Stock are entitled to vote or of which holders of Stock are entitled
to notice or any solicitation of consents in respect of the Stock, or any call
of any shares of Stock or at any time the Depositary and the Company shall
decide it is appropriate, the Depositary shall in each such instance fix a
record date (which shall be the same date as the record date fixed by the
Company with respect to the Stock) for the determination of the Record Holders
of Receipts who shall be entitled to (a) receive such dividend, distribution,
rights,
16
<PAGE>
preferences or privileges or the net proceeds of the sale thereof, (b) receive
notice of, and give instructions for the exercise of voting rights at, any such
meeting or (c) receive notice of any such call, subject to the provisions
hereof.
Section 4.5 Voting Rights. Upon receipt of notice of any meeting at
-------------
which the holders of Stock are entitled to vote or any solicitation of consents
in respect of Stock, the Depositary shall, as soon as practicable thereafter,
mail to the Record Holders of Receipts a notice which shall contain (i) such
information as is contained in such notice of meeting or consent solicitation
and (ii) a statement that the Record Holders may, subject to any applicable
restrictions, instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of Stock represented by their respective Depositary
Shares and a brief statement as to the manner in which such instructions may be
given. Upon the written request of a Record Holder of a Receipt on the relevant
record date, the Depositary shall use its best efforts insofar as practicable to
vote or cause to be voted or deliver a consent with respect to the amount of
Stock represented by the Depositary Shares evidenced by such Receipt, in
accordance with the instructions set forth in such request. The Company hereby
agrees to take all reasonable action which may be deemed necessary by the
Depositary in order to enable the Depositary to vote such Stock or cause such
Stock to be voted. In the absence of specific instructions from the Record
Holder of a Receipt, the Depositary will abstain from voting to the extent of
the Stock represented by the Depositary Shares evidenced by such Receipt.
Record Holders of Receipts shall also be entitled to vote on certain
amendments to this Deposit Agreement pursuant to Section 6.1 hereof.
Section 4.6 Inspection of Reports. The Depository shall make
---------------------
available for inspection by Record Holders of Receipts at the Depositary's
Office during normal business hours, and at such other places as it may from
time to time deem advisable, any reports and communications received from the
Company which are received by the Depositary as the holder of Stock.
Section 4.7 Lists of Receipt Holders. Promptly upon request from
------------------------
time to time by the Company, the Depositary shall furnish to it a list, as of
recent date, of the names, addresses and holdings of Depositary Shares of all
persons in whose names Receipts are registered on the books of the Depositary.
17
<PAGE>
ARTICLE V
The Depositary, the Depositary's
Agents, the Registrar and the Company
Section 5.1 Maintenance of Offices, Agencies and Transfer Books by
------------------------------------------------------
the Depositary; Registrar. Upon execution of this Deposit Agreement, the
- -------------------------
Depositary shall maintain at the Depositary's Office facilities for the
execution and delivery, registration and registration of transfer, surrender and
exchange of Receipts, all in accordance with the provisions of this Deposit
Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and registration of transfer of Receipts, and to reflect potential
split-ups and combinations of Depositary Shares, which books at all reasonable
times shall be open for inspection by the Record Holders of Receipts; provided,
that any such Record Holder requesting to exercise such right shall certify to
the Depositary that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
The Depositary may close each such books only when the Depositary's
Office is not open for business, the register of stockholders of the Company is
closed or as otherwise required by law.
If the Receipts or the Depositary Shares evidenced thereby or the
Stock represented by such Depositary Shares shall be listed on a national
securities exchange or the Nasdaq National Market, the Depositary may appoint a
registrar (acceptable to the Company) for registration of such Receipts or
Depositary Shares in accordance with any requirements of such Exchange. Such
registrar (which may be the Depositary if so permitted by the requirements of
such Exchange) may be removed and a substitute registrar appointed by the
Depositary upon the request or with the approval of the Company. If the
Receipts, such Depositary Shares or such Stock are listed on one or more other
stock exchanges, the Depositary will, at the request of the Company, arrange
such facilities for the delivery, registration, registration of transfer,
surrender and exchange of such Receipts, such Depositary Shares or such Stock as
may be required by law or applicable stock exchange regulation.
Section 5.2 Prevention of or Delay in Performance by the Depositary,
--------------------------------------------------------
the Depositary's Agents, the Registrar or the Company. None of the Depositary,
- -----------------------------------------------------
any Depositary's Agent or the Company shall incur any liability to any Record
Holder of any Receipt if by reason of any provision of any present or future
law, or regulation thereunder, of the United States of America or of any other
governmental authority or,
18
<PAGE>
in the case of the Depositary or any Depositary's Agent, by reason of any
provision, present or future, of the Company's Amended and Restated Certificate
of Incorporation, as amended (including the Certificate) or by reason of any act
of God or war or other circumstance beyond the control of the relevant party,
the Depositary, any Depositary's Agent, or the Company shall be prevented or
forbidden from, or subjected to any penalty on account of, doing or performing
any act or thing which the terms of this Deposit Agreement provide shall be done
or performed; nor shall the Depositary, any Depositary's Agent or the Company
incur any liability to any Record Holder of a Receipt (i) by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing which the terms of this Deposit Agreement provide shall or may be done or
performed, or (ii) by reason of any exercise of, or failure to exercise, any
discretion provided for in this Deposit Agreement except, in the case of any
such exercise or failure to exercise discretion not caused as aforesaid, if
caused by the negligence, willful misconduct or bad faith of the party charged
with such exercise or failure to exercise.
Section 5.3 Obligations of the Depositary, the Depositary's Agents,
-------------------------------------------------------
the Registrar and the Company. None of the Depositary, any Depositary's Agent
- -----------------------------
or the Company assumes any obligation or shall be subject to any liability under
this Deposit Agreement to Record Holders of Receipts other than for its
negligence, willful misconduct or bad faith.
None of the Depositary, any Depositary's Agent or the Company shall be
under any obligation to appear in, prosecute or defend any action, suit or other
proceeding in respect of the Stock, the Common Stock, the Depositary Shares or
the Receipts which in its opinion may involve it in expense or liability unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
None of the Depositary, any Depositary's Agent or the Company shall be
liable for any action or any failure to act by it in reliance upon the written
advice of legal counsel or accountants, or information from any person
presenting Stock for deposit, any Record Holder of a Receipt or any other person
believed by it in good faith to be competent to give such information. The
Depositary, any Depositary's Agent, any Registrar and the Company may each rely
and shall each be protected in acting upon any written notice, request,
direction or other document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
19
<PAGE>
The Depositary shall not be responsible for any failure to carry out
any instruction to vote any of the shares of Stock or for the manner or effect
of any such vote made, as long as any such action or non-action is in good faith
or in accordance with the Deposit Agreement. The Depositary undertakes, and any
Registrar shall be required to undertake, to perform such duties and only such
duties as are specifically set forth in this Deposit Agreement, and no implied
covenants or obligations shall be read into this Deposit Agreement against the
Depositary or any Registrar. The Depositary and the Depositary's Agents may
own and deal in any class of securities of the Company and its affiliates and in
Receipts. The Depositary may also act as transfer agent or registrar of any of
the securities of the Company and its affiliates.
It is intended that neither the Depositary nor any Depositary's Agent
shall be deemed to be an "issuer" of the securities under the federal securities
laws or applicable state securities laws, it being expressly understood and
agreed that the Depositary and any Depositary's Agent are acting only in a
ministerial capacity as depositary for the Stock.
None of the Depositary (or its officers, directors, employees or
agents), any Depositary's Agent or the Registrar makes any representation or has
any responsibility as to the validity of the shelf registration statement
pursuant to which the Depositary Shares are registered under the Securities Act,
the Stock, the Depositary Shares or the Receipts (except its countersignature
thereon), or any instruments referred to therein or herein, or as to the
correctness of any statement made therein or herein; provided, however, that the
Depositary is responsible for its representations in this Deposit Agreement.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity, genuineness or
sufficiency of any Stock at any time deposited with the Depositary hereunder or
of the Depositary Shares or the Receipts, as to the validity or sufficiency of
this Deposit Agreement, as to the value of the Depositary Shares or as to any
right, title or interest of the Record Holders of Receipts in and to the
Depositary Shares, except that the Depositary hereby represents and warrants as
follows: (i) the Depositary has been duly organized and is validly existing and
in good standing under the laws of the State of New York, with full power,
authority and legal right under such law to execute, deliver and carry out the
terms of this Deposit Agreement; (ii) this Deposit Agreement has been duly
authorized, executed
20
<PAGE>
and delivered by the Depositary; and (iii) this Deposit Agreement constitutes a
valid and binding obligation of the Depositary, enforceable against the
Depositary in accordance with its terms.
Section 5.4 Resignation and Removal of the Depositary; Appointment of
---------------------------------------------------------
Successor Depositary. The Depositary may at any time resign as Depositary
- --------------------
hereunder by notice of its election so to do delivered to the Company, such
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 45 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 45 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Stock and any moneys or property held hereunder to
such successor, and shall deliver to such successor a list of the Record Holders
of all outstanding Receipts. Any successor Depositary shall promptly mail notice
of its appointment to the Record Holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted, or any corporation succeeding to all or substantially
all of the corporate trust business of the Depositary, shall be the successor of
such Depositary
21
<PAGE>
without the execution or filing of any document or any further act, and notice
thereof shall not be required hereunder. Such successor Depositary may
authenticate the Receipts in the name of the predecessor Depositary or in the
name of the successor Depositary.
Section 5.5 Corporate Notices and Reports. The Company agrees that
-----------------------------
it will forward to the Depositary, and the Depositary shall in turn transmit to
the Record Holders of Receipts, in each case at the addresses furnished to it
pursuant to Section 4.8, all notices and reports (including without limitation
financial statements) required by law, by the rules of any national securities
exchange upon which the Stock, the Depositary Shares or the Receipts are listed
or by the Company's Amended and Restated Certificate of Incorporation,
(including the Certificate), to be furnished by the Company to holders of Stock.
Such transmission will be at the Company's expense.
Section 5.6 Indemnification by the Company. The Company shall
------------------------------
indemnify the Depositary and any Depositary's Agent against, and hold each of
them harmless from, any loss, liability or expense (including the costs and
expenses of defending itself) which may arise out of (a) acts performed or
omitted in connection with this Deposit Agreement and the Receipts (i) by the
Depositary or any of its agents (including any Depositary's Agent), except for
any liability arising out of negligence, wilful misconduct or bad faith on the
respective parts of any such person or persons, or (ii) by the Company or any of
its agents, or (b) the offer, sale or registration of the Receipts, the Common
Stock or the Stock pursuant to the provisions hereof. The obligations of the
Company set forth in this Section 5.6 shall survive any resignation or removal
of any Depositary or Depositary's Agent and the termination of this Deposit
Agreement.
Section 5.7 Charges and Expenses. The Company shall pay all transfer
--------------------
and other taxes and governmental charges arising solely from the existence of
the depositary arrangements. The Company shall pay all charges of the Depositary
in connection with the initial deposit of the Stock, the initial issuance of the
Depositary Shares and any redemption or conversion of the Stock and all
withdrawals of shares of the Stock by owners of Depositary Shares. All other
transfer and other taxes and governmental charges shall be at the expense of
Record Holders of Depositary Shares. The Depositary may refuse to effect any
registration of transfer of a Receipt or any withdrawal of Stock evidenced
thereby until all such taxes and charges with respect to such Receipt or Stock
are paid by the holder thereof. If a Record Holder of Receipts requests the
Depositary to perform duties not required under this Deposit Agreement, the
Depositary shall notify the Record Holder of the approximate cost of the
performance
22
<PAGE>
of such duties. If such duties are subsequently performed at the request of such
Record Holder, such Record Holder will be liable for such charges and expenses.
All other charges and expenses of the Depositary and any Depositary's Agent
hereunder (including, in each case, fees and expenses of counsel) incident to
the performance of their respective obligations hereunder will be paid upon
consultation and agreement between the Depositary and the Company as to the
amount and nature of such charges and expenses.
ARTICLE VI
Amendment and Termination
Section 6.1 Amendment. The form of Receipt evidencing the Depositary
---------
Shares and any provision of this Deposit Agreement may at any time be amended by
agreement between the Company and the Depositary. However, any amendment to
such documents which materially and adversely alters the rights of the holders
of Receipts or of the Depositary Shares evidenced thereby (or, which relates to
or affects rights to receive dividends or distributions, or voting or redemption
rights) will not be effective unless such amendment has been approved by the
Record Holders of at least 66 2/3% of the Depositary Shares then outstanding.
In no event may any amendment impair the right of any Record Holders of
Receipts, subject to the conditions specified in this Deposit Agreement, upon
such surrender of the Receipts evidencing such Depositary Shares, to receive
Stock or upon conversion of the Stock represented by the Depositary Receipts, to
receive shares of Common Stock, and in each case any money or other property
represented thereby, except in order to comply with mandatory provisions of
applicable law. Every Record Holder of Receipts at the time any such amendment
becomes effective shall be deemed to consent and agree to such amendment and to
be bound by this Deposit Agreement.
Section 6.2 Termination. This Deposit Agreement may be terminated by
-----------
the Company or the Depositary only if (i) all outstanding Depositary Shares have
been redeemed or converted, (ii) there has been a final distribution in respect
of the Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the Record Holders of
Receipts or (iii) upon the consent of Record Holders of Receipts representing
not less than 66 2/3% of the Depositary Shares then outstanding.
23
<PAGE>
Whenever this Deposit Agreement has been terminated pursuant to clause
(iii) of the preceding paragraph the Depositary will mail notice of such
termination to the Record Holders of all Receipts then outstanding at least 30
days prior to the date fixed in such notice for such termination. The
Depositary may likewise terminate this Deposit Agreement if at any time 45 days
shall have expired after the Depositary shall have delivered to the Company a
written notice of its election to resign and a successor depositary shall not
have been appointed and accepted its appointment. If any Receipts remain
outstanding after the date of termination, the Depositary thereafter will
discontinue the transfer of Receipts, will suspend the distribution of dividends
to the Record Holders thereof, and will not give any further notices (other than
notices of such termination) or perform any further acts under this Deposit
Agreement except as provided below and except that the Depositary will continue
to (i) collect dividends on the Stock and any distributions with respect thereto
and (ii) deliver the Stock together with such dividends and distributions and
the net proceeds of any sales of rights, preferences, privileges or other
property, without liability for interest thereon, in exchange for Receipts
surrendered. At any time after the expiration of three years from the date of
termination, the Depositary may sell the Stock then held by it at public or
private sales, at such place or places and upon such terms as it deems proper
and may thereafter hold the net proceeds of any such sale, together with any
money and other property then held by it, without liability or interest thereon,
for the pro rata benefit of the Record Holders of Receipts which have not been
surrendered. Subject to applicable escheat laws, any monies set aside by the
Company in respect of any payment with respect to the Stock represented by the
Depositary Shares, or dividends thereon, and unclaimed at the end of three years
from the date upon which such payment is due and payable shall revert to the
general funds of the Company, after which time the Record Holders of such
Depositary Shares shall look only to the general funds of the Company for the
payment thereof.
The Company does not intend to terminate this Deposit Agreement or to
permit the resignation of the Depositary without appointing a successor
depositary.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary and any Depositary's Agent under Sections 5.6 and
5.7.
24
<PAGE>
ARTICLE VII
Miscellaneous
Section 7.1 Counterparts. This Deposit Agreement may be executed in
------------
any number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
Section 7.2 Exclusive Benefit of Parties. This Deposit Agreement is
----------------------------
for the exclusive benefit of the parties hereto, including the holders of the
Receipts, and their respective successors hereunder, and shall not be deemed to
give any legal or equitable right, remedy or claim to any other person
whatsoever.
Section 7.3 Invalidity of Provisions. In case any one or more of the
------------------------
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
Section 7.4 Notices. Any and all notices to be given to the Company
-------
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, telegram, telex or
facsimile confirmed by letter, addressed to the Company at 3 Bethesda
MetroCenter, Bethesda, Maryland 20814, to the attention of Bradley E. Sparks,
facsimile number (301) 951-2592, or at any other address of which the Company
shall have notified the Depositary in writing.
Any and all notices to be given to the Depositary hereunder or under
the Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, telegram or facsimile confirmed by letter,
addressed to the Depositary at the Depositary's Office at 140 Broadway, 12/th/
Floor, New York, New York 10005-1180 to the attention of the Corporate Trust
Department, facsimile (212) 658-6425 or at any other address of which the
Depositary shall have notified the Company in writing.
Any and all notices to be given to any Record Holder of a Receipt
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail or by telegram or telex
confirmed by letter, addressed to such Record Holder at the address of such
Record Holder as it appears on the Receipt register of the Depositary, or if
such Record Holder shall have
25
<PAGE>
filed with the Depositary a written request that notices intended for such
Record Holder be mailed to some other address, at the address designated in such
request.
Delivery of a notice sent by mail, by telegram, telex or facsimile
shall be deemed to be effective at the time when a duly addressed letter
containing the same (or a confirmation thereof in the case of a telegram or
telex message) is deposited, postage prepaid, in a post office letter box. The
Depositary or the Company may, however, act upon any telegram, telex or
facsimile message received by it from the other or from any Record Holder of a
Receipt, notwithstanding that such telegram, telex or facsimile message shall
not subsequently be confirmed by letter or as aforesaid.
Section 7.5 Depositary's Agents. The Depositary may from time to
-------------------
time appoint one or more agents (each, a "Depository's Agent") to act in any
respect for the Depositary for the purposes of this Deposit Agreement and may at
any time appoint additional Depositary's Agents and vary or terminate the
appointment of such Depositary's Agents. The Depositary will notify the Company
of any such action.
Section 7.6 Holders of Receipts are Parties. The Record Holders of
-------------------------------
Receipts from time to time shall be parties to this Deposit Agreement and shall
be bound by and entitled to the benefits of all of the terms and conditions
hereof and of the Receipts by acceptance of delivery thereof.
Section 7.7 Governing Law. This Deposit Agreement and the Receipts
-------------
and all rights hereunder and thereunder and provisions hereof and thereof shall
be governed by, and construed in accordance with, the laws of the State of New
York without giving effect to principles of conflict of laws.
Section 7.8 Inspection of Deposit Agreement. Copies of this Deposit
-------------------------------
Agreement shall be filed with the Depositary and the Depositary's Agents and
shall be open to inspection during business hours at the Depositary's Office and
the respective offices of the Depositary's Agents, if any, by any Record Holder
of a Receipt.
Section 7.9 Headings. The headings of articles and sections in this
--------
Deposit Agreement and in the form of Receipt set forth in Exhibit A hereto have
been inserted for convenience only and are not to be regarded as a part of this
Deposit Agreement or the Receipts or to have any bearing upon the meaning or
interpretation of any provision contained herein or in the Receipts.
26
<PAGE>
IN WITNESS WHEREOF, the Company and the Depositary have duly executed
this Deposit Agreement as of the day and year first above set forth, and all
holders of Receipts shall become parties hereto by and upon acceptance by them
of delivery of Receipts issued in accordance with the terms hereof.
OMNIPOINT CORPORATION
By: /s/ Bradley E. Sparks
-------------------------------------
Name: Bradley E. Sparks
Title: Vice President and
Chief Financial Officer
MARINE MIDLAND BANK, as Depositary
By: /s/ Frank J. Godino
-------------------------------------
Name: Frank J. Godino
Title: Corporate Trust Officer
<PAGE>
ANNEX A
FORM OF DEPOSITARY RECEIPT
A-1
<PAGE>
EXHIBIT 10.62
OMNIPOINT CORPORATION
DEPOSIT ACCOUNT AGREEMENT
This Deposit Account Agreement (the "Agreement"), dated as of the 6th day
of May, 1998, by and between Omnipoint Corporation, a Delaware corporation (the
"Company"), and The First National Bank of Maryland (the "Deposit Agent"), for
the benefit of the holders (individually a "Holder" and collectively the
"Holders") of the depositary shares (the "Depositary Shares"), each of which is
equivalent to 1/20 of a share of 7% Cumulative Convertible Preferred Stock (the
"Preferred Stock").
This Agreement is made to induce all present and future Holders to purchase
the Depositary Shares by providing a deposit account (the "Deposit Account") to
provide for a quarterly cash payment to the Holders in an amount equal to $0.875
per Depositary Share (the "Quarterly Return Amount") in the manner hereinafter
provided.
NOW THEREFORE, the parties hereto agree as follows:
1. Definitions.
-----------
(a) Common Stock: common stock of the Company, par value $0.01 per share.
(b) Certificate: Certificate of Designation filed with the Delaware
Secretary of State establishing the Preferred Stock as a series of preferred
stock of the Company designated as "7% Cumulative Convertible Preferred Stock."
(c) Deposit Fund: $62,753,894.58 represented by Treasury securities
delivered by the Initial Holders to the Deposit Agent.
(d) Deposit Expiration Date: May 1, 2001.
(e) Deposit Payment Date: February 1, May 1, August 1 and November 1 of
each year commencing August 1, 1998 and continuing until the Deposit Expiration
Date.
(f) Depositary: Marine Midland Bank
(g) Depositary Receipt: a written receipt evidencing ownership of
Depositary Shares.
(h) Direction Notice: a notice from the Company delivered to the Deposit
Agent on or prior to the Notice Date directing the Deposit Agent to (i) purchase
from the Company, for transfer to each Holder, in lieu of all or a portion of
the Quarterly Return Amount or any deferred Quarterly Return Amount (which has
not been previously paid in cash or shares of Common Stock) on the next Deposit
Payment Date, that number of whole shares of Common Stock determined by dividing
such Quarterly Return Amount or deferred Quarterly Return Amount by 95% of the
Market Value of the Common Stock as of the date of such notice or (ii) defer
payment of any Quarterly Return Amount to Holders until the next Deposit Payment
Date or any subsequent Deposit Payment Date.
(i) Indentures: the Indentures between the Company and Marine Midland
Bank, as trustee with respect to the Company's two series of 11-5/8% Senior
Notes.
(j) Market Value: the average of the daily closing price for the five
consecutive trading days ending on such date. The closing price for each day
shall be the last sales price or, in case no
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<PAGE>
such reported sales take place on such day, the average of the last reported bid
and asked price, in either case on the principal national securities exchange on
which the shares of Common Stock are admitted to trading or listed, or if not
listed or admitted to trading on such exchange, the representative closing bid
price as reported by the Nasdaq National Market, or other similar organization
if the Nasdaq National Market is no longer reporting such information, or if not
so available, the fair market price as determined, in good faith, by the Board
of Directors of the Company. The Deposit Agent shall have no duty or
responsibility for the calculation of the Market Value.
(k) Notice Date: the day on or before the tenth day prior to the
applicable Deposit Payment Date or Deposit Expiration Date, as the case may be,
on which the Company sends the Direction Notice.
(l) Offering: the offering of Depositary Shares described in the Company's
Offering Memorandum dated May 1, 1998.
(m) Preferred Stock: the 7% Cumulative Convertible Preferred Stock of the
Company.
(n) Record Date: the tenth business day prior to the applicable Deposit
Payment Date or Deposit Expiration Date, as the case may be.
(o) Any capitalized terms not otherwise defined herein shall have the
meaning attributed to them in the Offering Memorandum.
2. Establishment of Deposit Account.
--------------------------------
(a) The Company hereby agrees that the Deposit Account shall be established
in connection with the Offering and shall be held subject to the terms and
conditions of this Agreement.
(b) Simultaneously with the closing of the Offering, the Initial Holders
shall deliver the Deposit Fund to the Deposit Agent against the Deposit Agent's
written acknowledgment and receipt of the Deposit Fund, in the form attached
hereto as Exhibit A, which amount the Deposit Agent will deposit into the
---------
Deposit Account and hold pursuant to the terms of this Agreement. The Deposit
Fund represented by the Treasury securities as set forth in Exhibit B attached
---------
hereto will provide sufficient funds without any further investment to cover the
aggregate Quarterly Return Amount due on the outstanding Depositary Shares, as
such Quarterly Return Amount becomes due, for each Deposit Payment Date. All
interest accruing on moneys held in the Deposit Account and any earnings
realized from investments permitted hereunder shall be credited to the Deposit
Account and any loss resulting from investments permitted hereunder shall be
similarly charged. Any income earned on investments held hereunder shall be
accumulated and added to the Deposit Account and subject to distribution as set
forth herein. The Deposit Account shall bear the Company's taxpayer
identification number. The Deposit Agent shall have no responsibility for
determining whether funds held in the Deposit Account shall have been invested
in such a manner so as to comply with the requirements of this Section 2(b).
3. Distribution, Reduction and Termination of Deposit Account.
----------------------------------------------------------
(a) Unless on or prior to the Notice Date the Company shall have delivered
to the Deposit Agent a Direction Notice, the Deposit Agent shall deliver to each
Holder pursuant to the direction of the Company the Quarterly Return Amount on
each Deposit Payment Date, commencing August 1, 1998 and continuing until May 1,
2001 (the "Deposit Expiration Date"). If the Company shall have delivered a
Direction Notice, substantially in the form attached hereto as Exhibit C, to the
---------
Deposit Agent
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<PAGE>
on or prior to the Notice Date, the Deposit Agent shall, as instructed by the
Company in such Direction Notice, (i) defer payment of all or a portion of the
Quarterly Return Amount on the next Deposit Payment Date or any subsequent
Deposit Payment Date, or (ii) purchase from the Company, for transfer to each
Holder in lieu of all or a portion of the Quarterly Return Amount on the next
Deposit Payment Date, that number of whole shares of Common Stock determined by
dividing the Quarterly Return Amount and any deferred Quarterly Return Amount by
95% of the Market Value of the Common Stock as of the Notice Date.
(b) (i) In the event of any conversion of the Depositary Shares on or prior
to the Deposit Expiration Date, the cumulative amount to the date of conversion,
on the basis of a 360-day year of 30-day months, of any Quarterly Return
Amounts, including any deferred Quarterly Return Amounts allocable to the
Preferred Stock (and the corresponding Depositary Shares) being converted, at
the time of such conversion, shall be paid by the Deposit Agent to the Holders
who are converting their Depositary Shares at the time of such conversion. The
Deposit Agent shall make any such payment in cash unless, prior thereto, the
Company delivers a Direction Notice to the Deposit Agent requiring the Deposit
Agent to purchase from the Company for transfer to Holders who are converting
their Depositary Shares that number of whole shares of the Common Stock
determined by dividing all or a portion of the deferred Quarterly Return Amount
allocable to the Depositary Shares being converted by 95% of the Market Value of
the Common Preferred Stock as of the date of the Direction Notice. (ii)
Immediately after such conversion and payment of any Quarterly Return Amount
allocable to the Depositary Shares being converted, the Company shall be paid by
the Deposit Agent any funds remaining in the Deposit Account allocable to the
Depositary Shares so converted. Such allocation shall be made pro rata based
upon the number of Depositary Shares so converted.
(c) On the Deposit Expiration Date, the Deposit Agent shall deliver to the
Holders any cash remaining in the Deposit Account on such date pro rata unless,
prior thereto, the Company delivers a Direction Notice to the Deposit Agent
requiring the Deposit Agent to purchase from the Company for transfer to Holders
that number of whole shares of the Common Stock determined by dividing all or a
portion of the Quarterly Return Amount and all or a portion of the cash
remaining in the Deposit Account by 95% of the Market Value of the Common
Preferred Stock as of the Notice Date.
(d) Notwithstanding the foregoing provisions contained in Sections 3(a),
(b) and (c) of this Agreement, the Company may terminate the Deposit Account
earlier than the Deposit Expiration Date in the event that the Company is
permitted to pay a dividend in cash or Common Stock by either (i) the terms of
the Indentures, or (ii) an amendment or termination of the Indentures. Written
notice of any such termination shall be given to the Deposit Agent. In the event
of an early termination of the Deposit Account, the Deposit Agent shall (i) pay
to each Holder any deferred Quarterly Return Amount held in the Deposit Account,
either in cash or, if so specified in the Direction Notice, in that number of
whole shares of Common Stock, to be purchased from the Company for transfer to
the Holders, determined by dividing the deferred Quarterly Return Amount by 95%
of the Market Value of the Common Stock as of the Notice Date; and (ii) to
distribute the remaining balance of the Deposit Account to the Company.
(e) Delivery of a Direction Notice directing the Deposit Agent to purchase
Common Stock for the accounts of Holders shall also constitute a direction to
the Company to issue and deliver such shares to the Holders immediately upon
receipt by the Company of the purchase price for them.
(f) This Agreement shall remain in full force and effect until all amounts
held hereunder by the Deposit Agent have been finally distributed in accordance
herewith.
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<PAGE>
(g) Any fractional interest in a share of Common Stock resulting from
payment of the Quarterly Return Amount will be paid in cash based on the last
reported sale price of the Common Stock on the Nasdaq National Market (or any
national securities exchange or authorized quotation system on which the Common
Stock is then listed) at the close of business on the trading day next preceding
the date of conversion or such later time as the Company is legally and
contractually able to pay for such fractional shares.
4. Record Date. The Quarterly Return Amount or, if a Direction Notice has
-----------
been delivered by the Company, Common Stock, shall be paid or delivered to the
Holders of record of the Depositary Shares, as they appear on the Depositary's
stock register 10 business days prior to each Deposit Payment Date.
5. Rights, Duties and Immunities of the Deposit Agent. In order to induce the
--------------------------------------------------
Deposit Agent to act as Deposit Agent hereunder, the Company hereby covenants
and agrees with the Deposit Agent as follows:
(a) The Deposit Agent shall not in any way be bound or affected by any
amendment, modification or cancellation of this Deposit Account Agreement,
unless the same shall have been agreed to in writing by the Deposit Agent.
(b) The Deposit Agent shall be entitled to rely, and shall be fully
protected in acting in reliance upon, any Direction Notice or other instructions
or directions furnished to the Deposit Agent in writing by the proper party
under this Deposit Account Agreement and shall be entitled to treat as genuine,
and as the document it purports to be, any letter, instruction or other document
or instrument delivered to the Deposit Agent hereunder and believed by the
Deposit Agent to be genuine and to have been presented by the proper party or
parties, without being required to determine the authenticity or correctness of
any fact stated therein, the propriety or validity thereof, or the authority or
authorization of the party or parties making and/or delivering the same to do
so.
(c) This Agreement sets forth exclusively the duties and obligations of the
Deposit Agent with respect to any and all matters pertinent to its acting as
Deposit Agent hereunder.
(d) The Deposit Agent undertakes to perform only such duties as are
expressly set forth in this Deposit Account Agreement, and no other duty,
obligation or covenant shall be implied or enforceable against the Deposit Agent
by any person. Without limiting the effect of this Section 5(d), the Deposit
Agent shall have no liability or obligation to the Company, any Holder or any
person claiming by or through any of them: (i) to review or examine any
instrument, agreement or document other than this Agreement and any notice
provided for herein; (ii) to determine whether any conditions precedent to a
disbursement of funds from the Deposit Account, other than the receipt of
written notices provided for in Section 3 hereof, have been or will be satisfied
or otherwise to investigate any notice received by the Deposit Agent hereunder;
(iii) to evaluate or determine the validity, legality or veracity of any action
or omission by any person; (iv) to communicate with any person other than as
expressly provided for in this Agreement; (v) to make any payment hereunder from
any source other than funds in the Deposit Account; (vi) for the issuance of,
delivery to or receipt by a Holder of Common Stock purchased by the Deposit
Agent hereunder; (vii) for any action or omission of the Deposit Agent taken or
made upon the written instructions of the Company, whether or not the persons
giving such instructions were in fact authorized to do so; (viii) for any other
action or omission of, or for errors in judgment by, the Deposit Agent under or
in connection with this Agreement taken or made in good faith and without
negligence or willful misconduct; (ix) for any action or omission of any third
party, including the Company or any Holder; (x) for any change in the value of
any asset held in the Deposit Account or for any loss on disposition of any
investment of the Deposit funds; and (xi) for incidental, consequential or
punitive damages in any event.
-4-
<PAGE>
(e) The Company covenants and agrees to indemnify and hold the Deposit
Agent and each of its directors, officers, employees and agents (the Deposit
Agent and any such person or entity seeking indemnification hereunder being
hereinafter referred to as an "Indemnified Party") harmless from and against,
and upon demand reimburse each Indemnified Party for, any and all losses,
claims, damages, liabilities, costs and expenses (including expenses of its
legal counsel) (collectively, "Indemnified Losses") which may be paid, incurred
or suffered by such Indemnified Party or to which such Indemnified Party may
become subject by reason of or in connection with the administration of the
Deposit Agent's duties as Deposit Agent hereunder (including, but not limited
to, any action taken or omitted by the Deposit Agent in connection with this
Agreement or any action allegedly so taken or omitted) or by reason of, or as a
result of, the Deposit Agent's compliance with the instructions set forth herein
or with any instructions delivered to the Deposit Agent pursuant hereto, except
with respect to Indemnified Losses which shall be the result of negligence or
willful misconduct on the part of such Indemnified Party.
(f) In the event of any controversy or dispute hereunder, or with respect
to any question as to the construction of this Agreement or any action to taken
by it hereunder, the Deposit Agent may, in its discretion, obtain the advice of
counsel and shall incur no liability for any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(g) If any part of the Deposit Fund is at any time attached, garnished or
levied upon or under any court order, or in case the payment, assignment,
transfer, conveyance or delivery of any of the Deposit Fund shall be stayed or
enjoined by any court order, or in case any order, writ, judgment or decree
shall be made or entered by any court affecting the Deposit Fund or any part
thereof, then and in any of such events, the Deposit Agent is authorized, in its
sole discretion, to rely upon and comply with any such order, writ, judgment or
decree. The Deposit Agent shall not be liable to any of the parties hereto, to
any Holder or to any other person, firm or corporation by reason of such
compliance even though such order, writ, judgment or decree may be subsequently
reversed, modified, annulled, set aside, vacated, found to have been entered
without jurisdiction, or found be in violation of or beyond the scope of a
constitution or a law.
(h) Notwithstanding anything to the contrary contained therein, if the
Deposit Agent shall be uncertain as to its duties or rights hereunder, shall
receive any notice, advice, direction, or other document from the Company with
respect to the Deposit Fund which, in its opinion, is in conflict with any of
the provisions of this Agreement, or should be advised that a dispute has arisen
with respect to the payment, ownership, or right of possession of the Deposit
Fund or any part thereof (or as to the delivery, non-delivery, or content of any
notice, advice, direction, or other document), the Deposit Agent shall be
entitled (but not obligated), without liability to anyone, under any
circumstance to refrain from taking any action other than to use its best
efforts to keep safely the Deposit Fund until the Deposit Agent shall be
directed otherwise in writing by Company and a majority of the Holders or by an
order, decree or judgment of a court of competent jurisdiction which has been
finally affirmed on appeal or which by lapse of time or otherwise is no longer
subject to appeal, but the Deposit Agent shall be under no duty to institute or
to defend any proceeding, although it may institute or defend such proceedings.
(i) The Company shall have the right to cause the Deposit Agent to be
relieved of its duties hereunder and to select a substitute Deposit Agent, upon
the expiration of thirty (30) days following delivery of written notice of
substitution to the Deposit Agent. Upon selection of such substitute Deposit
Agent, such substitute Deposit Agent and the Company shall enter into an
agreement substantially identical to this Agreement and, thereafter, the
replaced Deposit Agent shall be relieved of its duties and obligations to
perform hereunder, except that the replaced Deposit Agent shall transfer to the
substitute Deposit Agent upon request therefor the Deposit Account and copies of
all books, records, plans and other documents in the replaced Deposit Agent's
possession relating to such funds or this Agreement.
-5-
<PAGE>
(j) Upon not less than 30 days' written notice to the Company and the
Holders of its intention to resign under this Agreement, the Deposit Agent may
resign as Deposit Agent hereunder by selecting, as a successor Deposit Agent,
any other Deposit Agent as directed or approved by the Company (which approval
shall not be unreasonably withheld). Such resignation shall take effect upon
delivery by the resigning Deposit Agent of the Deposit Account to such successor
Deposit Agent; the resigning Deposit Agent shall thereupon be discharged of all
its duties and obligations hereunder. In addition, the Deposit Agent shall be
discharged of all of its duties and obligations hereunder upon its deposit of
the Deposit Account with a court of competent jurisdiction. The Company and the
Holders each hereby irrevocably consents and submits to the jurisdiction of such
court in any such action and waives all rights to contest the jurisdiction of
such court.
(k) The Company hereby authorizes the Deposit Agent, if the Deposit Agent
is threatened with litigation or is sued, to interplead all interested parties
in any court of competent jurisdiction and to deposit the Deposit Account with
the clerk of that court.
(l) The Deposit Agent's duties, obligations and liabilities hereunder,
except as a result of the Deposit Agent's negligence or willful misconduct, will
terminate upon its delivery of all the Deposit Account under any provision of
this Agreement. The provisions of Section 5(e) and of this Section 5(l) shall
survive any such termination.
6. Expenses. The Deposit Agent shall be entitled to customary fees and
--------
expenses for performing its duties hereunder, as may be agreed from time to time
by the Company and the Deposit Agent. The Deposit Agent shall be entitled to
prompt reimbursement of all reasonable expenses incurred by the Deposit Agent in
carrying out its duties hereunder, including, without limitation, travel and
other out-of-pocket expenses.
7. Notices. All notices, requests, demands and other communications hereunder
-------
shall be deemed to have been duly given if delivered by hand or mailed,
certified or registered mail, return receipt requested, with postage prepaid:
(a) if to the Holders, to their address as set forth in the stock transfer
records of the Company;
(b) if to the Company, to Omnipoint Corporation, 3 Bethesda Metro Center,
Suite 400, Bethesda, MD 20814, Attn: Bradley Sparks, or to such person or
address as the Company shall designate in writing, with a copy to Piper &
Marbury, LLP, 1200 Nineteenth Street, N.W., Washington, D.C. 20036, Attn:
Edwin M. Martin, Jr.
(c) if to Deposit Agent, to The First National Bank of Maryland, 25 South
Charles Street, 16th Floor, Mail Stop 101-591, Baltimore, MD 21201, Attn:
Robert D. Brown.
Any party may change the address (or the person to whose attention such notice
is directed) by notice given to the other parties hereto as aforesaid.
8. Miscellaneous.
-------------
(a) Binding Effect. This Agreement shall be binding upon the parties
--------------
hereto and their respective heirs, personal representatives, executors,
successors and assigns.
(b) Counterparts. This Agreement may be executed in any number of
------------
counterparts all of which, taken together shall one fully executed agreement.
-6-
<PAGE>
(c) No Amendments. This Agreement may not be modified or amended, nor any
-------------
provision hereof be waived, except by a writing duly executed by the Deposit
Agent, the Company and by a majority of the Holders.
(d) Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Maryland, without reference
to or application of rules or principles of conflicts of law.
(e) Headings. Headings, sections and subsections contained in this
--------
Agreement are for convenience or reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(f) Specific Performance. In the event of the failure by a party hereto to
--------------------
give any notice required under the terms of this Agreement, the other parties
hereto shall be entitled to specific performance by such non-performing party.
(g) Severability. If any provisions of this Agreement shall be declared by
------------
any court of competent jurisdiction illegal, void or unenforceable, the other
provisions shall not be affected, but shall remain in full force and effect.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and the year first above written.
OMNIPOINT CORPORATION
/s/ Bradley E. Sparks
-------------------------------
Bradley E. Sparks
Chief Financial Officer
THE FIRST NATIONAL BANK
OF MARYLAND
By: /s/ Donald Hargadon
----------------------------
Name: Donald Hargadon
Title: Assistant Vice President
-8-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT OF OMNIPOINT CORPORATION AS OF AND FOR THE THREE
MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 49,323
<SECURITIES> 3,259
<RECEIVABLES> 34,377
<ALLOWANCES> 5,687
<INVENTORY> 29,134
<CURRENT-ASSETS> 154,243
<PP&E> 821,445
<DEPRECIATION> (60,915)
<TOTAL-ASSETS> (1,922,111)
<CURRENT-LIABILITIES> 318,883
<BONDS> 478,237
0
0
<COMMON> 525
<OTHER-SE> (306,208)
<TOTAL-LIABILITY-AND-EQUITY> 1,922,111
<SALES> 33,328
<TOTAL-REVENUES> 34,068
<CGS> 53,196
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,689
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (124,785)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (124,785)
<EPS-PRIMARY> (2.38)
<EPS-DILUTED> (2.38)
</TABLE>
<PAGE>
EXHIBIT 99.1
[OMNIPOINT LOGO APPEARS HERE]
OMNIPOINT CORPORATION
3 Bethesda Metro Center, Suite 400
NEWS! Bethesda, MD 20814
Telephone: 301 951-2500
Fax: 301 951-2580
Omnipoint Contact: LAURA KNIGHT
Manager-Investor Relations
(301) 951-2517
OMNIPOINT SELLS PREFERRED SHARES CONVERTIBLE
AT $31.12 PER COMMON SHARE
BETHESDA, MD. - May 1, 1998--Omnipoint Corporation (OMPT:NASDAQ) today announced
that it has sold $325 million through a Rule 144A offering of Depository Shares,
each with liquidation preference of $50 and representing 1/20th of a share of a
new class of convertible preferred shares. Omnipoint will use the net proceeds
of the offering for working capital and general corporate purposes, including
funding for the buildout of its PCS networks, payments to the FCC for licenses
awarded through participation in the C and F Block auctions, and potentially to
take advantage of some near term opportunities to purchase additional licenses.
The convertible preferred stock will be convertible at a ratio of 1.6069 common
shares per $50 Depository Share or $31.12 per common share. At closing
(scheduled for May 6, 1998), the purchasers of the Depository Shares will
deposit a portion of the purchase price sufficient to pay the equivalent of
three years' dividends into an account from which purchasers will receive
quarterly payments or, if so instructed by the Company, common stock of the
Company acquired from the Company using such quarterly payments. Dividends on
the convertible preferred stock, commencing August 1, 2001, will also be payable
in cash or, at the option of the Company, in shares of the Company's common
stock.
The Depository Shares and the convertible preferred stock have not been
registered under the Securities Act of 1933, as amended, and may not be offered
or sold in the United States absent registration or an applicable exemption from
registration requirements under such laws.
This news release shall not constitute an offer to sell or the solicitation of
an offer to buy the Depository Shares mentioned herein.
-more-
<PAGE>
Founded in 1987, Omnipoint Corporation is the fourth largest PCS license holder
in the U.S. with licenses covering 95 million people (Pops). Omnipoint currently
provides advanced wireless communications services in much of New York, New
Jersey, Connecticut, eastern Pennsylvania, Delaware, Massachusetts, New
Hampshire, Rhode Island and southern Florida; it intends to provide those
services in additional areas. The company also develops technology and equipment
for PCS and wireless local loop. The company's stock is traded on the NASDAQ
National Market. Its trading symbol is OMPT.
Except for historical information contained herein, the matters discussed and
the statements made in this release concerning Omnipoint's future prospects are
"forward-looking statements" under the Federal securities laws that involve
risks and uncertainties. There can be no assurance that future results will be
achieved, and actual results could differ materially from the forecast and
estimates. Important factors that could cause actual results to differ
materially include, but are not limited to, Omnipoint's limited operating
history, including a history of losses and the uncertainty of future operating
results, dependence upon cash flow from its subsidiaries, high leverage, debt
service requirements and restrictive covenants related to its outstanding Senior
Notes, the emerging market for PCS service, the continued buildout of the New
York MTA network and the buildout of the Entrepreneur's Band BTA networks,
market acceptance of the Omnipoint system, reliance upon its relationships with
Northern Telecom and Ericsson, and its dependence upon key employees.
Omnipoint's future results may be impacted by other risk factors listed from
time to time in its SEC reports, including, but not limited to, the report on
Form 10-K for the year ended December 31, 1997, as amended.
###
