<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
VOICESTREAM WIRELESS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
VoiceStream Logo OmniPoint Logo
Aerial Logo
PROPOSED TRANSACTIONS -- YOUR VOTE IS VERY IMPORTANT
Dear Fellow Stockholders:
We are pleased to propose the merger of VoiceStream Wireless Corporation,
Omnipoint Corporation and Aerial Communications, Inc., to the stockholders of
each of the companies. This merger, accomplished through the reorganizations
proposed in this joint proxy statement-prospectus, will bring together three
major providers of PCS services in the United States. When the reorganizations
are completed, the combined entity's licenses and pending licenses, together
with those of joint ventures in which it will be an investor, will cover
approximately 77% of the geography of the continental United States and over 200
million people, and will serve over 1.5 million customers.
Through the reorganizations, VoiceStream, Omnipoint and Aerial will each
become a subsidiary of VoiceStream Wireless Holding Corporation, which we refer
to in this joint proxy statement-prospectus as "VoiceStream Holdings." Each
company, as a subsidiary of VoiceStream Holdings, will principally operate its
existing business under the VoiceStream brand name. VoiceStream Holdings will
change its name to VoiceStream Wireless Corporation when the first
reorganization is complete.
The reorganizations contemplate the following consideration:
- each share of Omnipoint common stock you own will be exchanged for 0.825
of a share of VoiceStream Holdings common stock plus $8.00 in cash or, if
you so elect, subject to proration and adjustment under certain
circumstances, all cash or all VoiceStream Holdings common stock, as
described in this joint proxy statement-prospectus;
- each share of Aerial common stock you own will be exchanged for 0.455 of a
share of VoiceStream Holdings common stock, subject to adjustment under
certain circumstances, or, if you so elect, cash in the amount of $18.00
per share of Aerial common stock, as described in this joint proxy
statement-prospectus; and
- each share of VoiceStream common stock you own will be exchanged for one
share of VoiceStream Holdings common stock.
Also, the reorganizations contemplate the following investments:
- Hutchison Telecommunications PCS (USA) Limited will make a $957 million
investment in VoiceStream Holdings;
- Sonera Ltd. will make an aggregate $730 million investment in Aerial, an
Aerial subsidiary and VoiceStream Holdings; and
- Telephone and Data Systems, Inc., Aerial's parent, will replace $420
million of debt owed by an Aerial subsidiary to TDS with equity of Aerial.
We cannot complete the reorganizations and certain of the related
transactions unless we obtain the necessary governmental and stockholder
approvals and certain other conditions are satisfied. Each company will hold a
special meeting of its stockholders in connection with the reorganizations.
VoiceStream stockholders will vote on both transactions; stockholders of
Omnipoint and Aerial will vote only on their respective transactions. YOUR VOTE
IS VERY IMPORTANT. We urge you to vote "FOR" the reorganization of your company.
The board of directors of each company has voted unanimously in favor of these
reorganizations.
This joint proxy statement-prospectus gives you detailed information about
the proposed reorganizations and includes the reorganization agreements as
annexes. You can also obtain information about our companies from publicly
available documents we have filed with the Securities and Exchange Commission.
We encourage you to read this entire document carefully before you vote your
shares.
We enthusiastically support these reorganizations and join with the other
members of our boards of directors in recommending that you vote in favor of the
reorganizations.
<TABLE>
<S> <C> <C>
[signature] [signature] [signature]
John W. Stanton Douglas G. Smith LeRoy T. Carlson, Jr.
Chairman and Chief Executive Chairman and Chief Executive Chairman
Officer Officer Aerial Communications, Inc.
VoiceStream Wireless Corporation Omnipoint Corporation
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS
JOINT PROXY STATEMENT-PROSPECTUS OR DETERMINED IF THIS JOINT PROXY STATEMENT-
PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
JOINT PROXY STATEMENT-PROSPECTUS DATED NOVEMBER , 1999
AND FIRST MAILED TO STOCKHOLDERS ON OR ABOUT NOVEMBER , 1999
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
<PAGE> 3
VOICESTREAM LOGO
-------------------------
VOICESTREAM WIRELESS CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER , 1999
-------------------------
TO THE STOCKHOLDERS
OF VOICESTREAM WIRELESS CORPORATION:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of
VoiceStream Wireless Corporation, a Washington corporation, will be held on
, November , 1999, at :00 a.m. local time, at ,
Seattle, Washington, to:
1. Consider and vote upon a proposal to adopt, and approve the transactions
contemplated by, the Agreement and Plan of Reorganization, dated as of
June 23, 1999, by and among VoiceStream, Omnipoint Corporation, a
Delaware corporation, and VoiceStream Wireless Holding Corporation, a
Delaware corporation, by which, among other things, a wholly-owned
subsidiary of VoiceStream Holdings will merge with and into Omnipoint,
and VoiceStream Holdings will become the parent of both VoiceStream and
Omnipoint, on the terms and subject to the conditions set forth in the
Omnipoint reorganization agreement, as more fully described in this
joint proxy statement-prospectus. A vote for this proposal also
constitutes approval of the merger of a separate wholly-owned subsidiary
of VoiceStream Holdings with and into VoiceStream.
2. Consider and vote upon a proposal to adopt, and approve the transactions
contemplated by, the Agreement and Plan of Reorganization, dated as of
September 17, 1999, by and among VoiceStream, Aerial Communications,
Inc., a Delaware corporation, VoiceStream Holdings, Telephone and Data
Systems, Inc., a Delaware corporation, and a wholly-owned subsidiary of
VoiceStream Holdings by which, among other things, the VoiceStream
Holdings subsidiary will merge with and into Aerial, and VoiceStream
Holdings will become the parent of Aerial (and of VoiceStream, if it has
not already become a subsidiary of VoiceStream Holdings as a result of
the Omnipoint reorganization), on the terms and subject to the
conditions set forth in the Aerial reorganization agreement, as more
fully described in this joint proxy statement-prospectus. A vote for
this proposal also constitutes approval of the merger of a separate
wholly-owned subsidiary of VoiceStream Holdings with and into
VoiceStream.
3. Transact such other business as may properly be brought before the
special meeting or any adjournment or postponement of the special
meeting.
We have set October , 1999 as the record date for determining, as of the
close of business on that date, which stockholders will be entitled to vote at
the special meeting and any adjournments or postponements of the special
meeting. Only stockholders of record on the record date are entitled to notice
of, and to vote at, the special meeting and any adjournments or postponements of
the special meeting.
The adoption of, and approval of the transactions contemplated by, the
Omnipoint reorganization agreement and the Aerial reorganization agreement will
each require the affirmative vote of the holders of two-thirds of the
outstanding shares of VoiceStream common stock.
All stockholders of VoiceStream entitled to vote are cordially invited to
attend the special meeting in person. However, to ensure your representation at
the special meeting, you are urged to complete, date, sign and return the
enclosed proxy card as promptly as possible in the enclosed postage-prepaid
envelope. You may revoke your proxy in the manner described in this joint proxy
statement-prospectus at any time before it is voted at the special meeting.
Executed proxies with no instructions indicated will be voted "FOR" the adoption
of, and approval of the transactions contemplated by, the Omnipoint
reorganization agreement and adoption of, and approval of the transactions
contemplated by, the Aerial reorganization agreement. If you fail to return a
properly executed proxy card or to vote in person at the special meeting, the
effect will be a vote against the Omnipoint reorganization agreement and against
the Aerial reorganization agreement.
By Order of the Board of Directors
[signature]
Alan R. Bender
Secretary
November , 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE BOARD OF DIRECTORS OF VOICESTREAM RECOMMENDS UNANIMOUSLY THAT STOCKHOLDERS
VOTE "FOR" THE ADOPTION OF, AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY,
EACH OF THE REORGANIZATION AGREEMENTS.
<PAGE> 4
OmniPoint Logo
-------------------------
OMNIPOINT CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER , 1999
-------------------------
TO THE STOCKHOLDERS
OF OMNIPOINT CORPORATION:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Omnipoint
Corporation, a Delaware corporation, will be held on , November ,
1999, at :00 a.m. local time, at the offices of Piper & Marbury L.L.P., 1200
Nineteenth Street, N.W., Washington, D.C., to:
1. Consider and vote upon a proposal to adopt, and approve the transactions
contemplated by, the Agreement and Plan of Reorganization, dated as of
June 23, 1999, by and among Omnipoint, VoiceStream Wireless Corporation,
a Washington corporation, and VoiceStream Wireless Holding Corporation,
a Delaware corporation, by which, among other things, separate
subsidiaries of VoiceStream Holdings will merge with and into Omnipoint
and VoiceStream, and VoiceStream Holdings will become the parent of both
Omnipoint and VoiceStream, on the terms and subject to the conditions
set forth in the Omnipoint reorganization agreement, as more fully
described in this joint proxy statement-prospectus.
2. Transact such other business as may properly be brought before the
special meeting or any adjournment or postponement of the special
meeting.
We have set October , 1999 as the record date for determining, as of the
close of business on that date, which stockholders will be entitled to vote at
the special meeting and any adjournments or postponements of the special
meeting. Only stockholders of record on the record date are entitled to notice
of, and to vote at, the special meeting and any adjournments or postponements of
the special meeting.
The adoption of, and approval of the transactions contemplated by, the
Omnipoint reorganization agreement will require the affirmative vote of the
holders of a majority of the outstanding shares of Omnipoint common stock.
All stockholders of Omnipoint entitled to vote are cordially invited to
attend the special meeting in person. However, to ensure your representation at
the special meeting, you are urged to complete, date, sign and return the
enclosed proxy card as promptly as possible in the enclosed postage-prepaid
envelope. You may revoke your proxy in the manner described in this joint proxy
statement-prospectus at any time before it is voted at the special meeting.
Executed proxies with no instruction indicated will be voted "FOR" adoption of,
and approval of the transactions contemplated by, the Omnipoint reorganization
agreement. If you fail to return a properly executed proxy card or to vote in
person at the special meeting, the effect will be a vote against the Omnipoint
reorganization agreement.
By Order of the Board of Directors
[SIGNATURE]
Edwin M. Martin, Jr.
Secretary
November , 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE BOARD OF DIRECTORS OF OMNIPOINT RECOMMENDS UNANIMOUSLY THAT STOCKHOLDERS
VOTE "FOR" ADOPTION OF, AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY, THE
OMNIPOINT REORGANIZATION AGREEMENT.
<PAGE> 5
[AERIAL LOGO]
AERIAL COMMUNICATIONS, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [ , ]
TO THE STOCKHOLDERS
OF AERIAL COMMUNICATIONS, INC.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Aerial
Communications, Inc., a Delaware corporation, will be held on [ ],
[ ], [ ], at :00 a.m. local time, at the offices of
[ ], to:
1. Consider and vote upon a proposal to adopt, and approve the transactions
contemplated by, the Agreement and Plan of Reorganization, dated as of
September 17, 1999, by and among Aerial, VoiceStream Wireless
Corporation, a Washington corporation, VoiceStream Wireless Holding
Corporation, a Delaware corporation, Telephone and Data Systems, Inc., a
Delaware corporation, and a wholly-owned subsidiary of VoiceStream
Holdings by which, among other things, the subsidiary of VoiceStream
Holdings will merge with and into Aerial and VoiceStream Holdings will
become the parent of both Aerial and VoiceStream, on the terms and
subject to the conditions set forth in the Aerial reorganization
agreement, as more fully described in this joint proxy
statement-prospectus.
2. Transact such other business as may properly be brought before the
special meeting or any adjournment or postponement of the special
meeting.
We have set [ ], [ ] as the record date for determining, as of
the close of business on that date, which stockholders will be entitled to vote
at the special meeting and any adjournment or postponement of the special
meeting. Only stockholders of record on the record date are entitled to notice
of, and to vote at, the special meeting and any adjournment or postponement of
the special meeting.
The adoption of, and approval of the transactions contemplated by, the
Aerial reorganization agreement will require the affirmative vote of the holders
of a majority of the voting power of all classes of Aerial common stock. TDS,
which controls approximately 98% of the relevant voting power of all shares of
Aerial common stock, has agreed to vote for the proposal. Accordingly, the
approval of stockholders is assured regardless of the vote of other
stockholders.
All stockholders of Aerial entitled to vote are cordially invited to attend
the special meeting in person. However, to ensure your representation at the
special meeting, you are urged to complete, date, sign and return the enclosed
proxy card as promptly as possible in the enclosed postage-prepaid envelope. You
may revoke your proxy in the manner described in this joint proxy
statement-prospectus at any time before it is voted at the special meeting.
Executed proxies with no instruction indicated will be voted "FOR" adoption of,
and approval of the transactions contemplated by, the Aerial reorganization
agreement. If you fail to return a properly executed proxy card or to vote in
person at the special meeting, the effect will be a vote against the Aerial
reorganization agreement.
By Order of the Board of Directors
[SIGNATURE]
Michael G. Hron
Secretary
[ ], [ ]
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE BOARD OF DIRECTORS OF AERIAL RECOMMENDS UNANIMOUSLY THAT STOCKHOLDERS
VOTE "FOR" ADOPTION OF, AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY, THE
AERIAL REORGANIZATION AGREEMENT.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.......................... 1
QUESTIONS AND ANSWERS ABOUT THE
PROPOSED REORGANIZATIONS............ 2
SUMMARY............................... 6
The Companies....................... 6
The Reorganizations................. 6
The Omnipoint Reorganization........ 7
The Aerial Reorganization........... 10
The Investments..................... 14
Material United States Federal
Income Tax Consequences.......... 14
Dissenters' Rights of Appraisal..... 14
Selected Historical and Unaudited
Pro Forma Financial Data......... 16
RISK FACTORS.......................... 22
THE OMNIPOINT REORGANIZATION.......... 31
The Omnipoint Reorganization
Agreement........................ 31
Background of the Omnipoint
Reorganization................... 41
Recommendations of the VoiceStream
Board; Reasons for the Omnipoint
Reorganization................... 44
VoiceStream Fairness Opinion........ 46
Fee Arrangement with Goldman
Sachs............................ 52
Recommendations of the Omnipoint
Board; Reasons for the
Reorganization................... 52
Omnipoint Fairness Opinion.......... 53
Fee Arrangements with Lehman
Brothers and Allen & Co. ........ 61
Agreement to Vote in Favor of the
Omnipoint Reorganization......... 61
Hutchison Standstill Agreement...... 62
Timing of Closing................... 62
Accounting Treatment................ 62
Transaction Costs................... 62
Dissenters' Rights of Appraisal..... 63
CIRI Transactions................... 63
Hutchison Investments............... 64
Sonera-VoiceStream Investment....... 65
Material United States Federal
Income Tax Consequences of the
Omnipoint Reorganization......... 65
Consequences of the Omnipoint
Reorganization Under the
VoiceStream Tax Sharing
Agreement........................ 73
Interests of Certain Persons in the
Omnipoint Reorganization......... 76
Omnipoint Affiliated Persons..... 77
Miscellaneous.................... 77
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE AERIAL REORGANIZATION............. 80
The Aerial Reorganization
Agreement........................ 80
Background of the Aerial
Reorganization................... 92
Recommendations of the VoiceStream
Board; Reasons for the Aerial
Reorganization................... 110
VoiceStream Fairness Opinion........ 112
Fee Arrangement with Goldman
Sachs............................ 117
Recommendations of the Aerial Board;
Reasons for the Reorganization... 117
Aerial Fairness Opinion............. 120
Fee Arrangements with Donaldson,
Lufkin & Jenrette................ 127
Recommendations of the Aerial
Special Committee................ 128
Aerial Special Committee Fairness
Opinion.......................... 129
Fee Arrangements with Wasserstein
Perella.......................... 140
Agreements Relating to the Aerial
Reorganization................... 140
Sonera Settlement Agreement and
Release.......................... 144
Timing of Closing................... 144
Accounting Treatment................ 145
Transaction Costs................... 145
Dissenters' Rights of Appraisal..... 145
Litigation.......................... 145
Material United States Federal
Income Tax Consequences of the
Aerial Reorganization............ 146
Consequences of the Aerial
Reorganization under the
VoiceStream Tax Sharing
Agreement........................ 148
Interests of Certain Persons in the
Aerial Reorganization............ 148
VOICESTREAM HOLDINGS VOTING
AGREEMENT........................... 158
THE INVESTMENTS....................... 160
Hutchison Investments............... 160
Sonera-VoiceStream Investment....... 160
Sonera-Aerial Investment............ 161
TDS Debt Replacement................ 161
FINANCIAL INFORMATION................. 162
Unaudited Pro Forma Condensed
Combined Financial Statements.... 162
Comparative Per Share Market Price
and Dividend Information......... 179
THE SPECIAL MEETINGS.................. 180
VoiceStream Record Date; Quorum;
Vote Required.................... 180
</TABLE>
i
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Omnipoint Record Date; Quorum; Vote
Required......................... 181
Aerial Record Date; Quorum; Vote
Required......................... 181
Agreements to Vote in Favor of the
Omnipoint Reorganization......... 182
Agreements to Vote in Favor of the
Aerial Reorganization............ 182
Solicitation of Proxies............. 182
Dissenters' Rights of Appraisal..... 184
BUSINESS OF VOICESTREAM HOLDINGS...... 189
Background -- The Wireless
Communications Industry.......... 189
The Business of VoiceStream Holdings
After the Reorganizations........ 191
Executive Compensation.............. 225
Director Compensation............... 226
Director Committees................. 227
Employment Agreements............... 227
Indemnification Agreements.......... 228
Benefit and Compensation Plans...... 228
Business of VoiceStream, Omnipoint
and Aerial....................... 234
CERTAIN LEGAL INFORMATION............. 235
Description of VoiceStream Holdings
Capital Stock.................... 235
Comparison of Stockholder Rights.... 236
Opinions from Legal Counsel......... 255
Experts............................. 255
WHERE YOU CAN FIND MORE INFORMATION... 256
GLOSSARY.............................. 258
</TABLE>
<TABLE>
<S> <C>
ANNEX A Agreement and Plan of
Reorganization (Omnipoint
reorganization)
ANNEX B Opinion of Goldman, Sachs &
Co. (Omnipoint reorganization)
ANNEX C Opinion of Lehman Brothers,
Inc. (Omnipoint
reorganization)
ANNEX D Agreement and Plan of
Reorganization (Aerial
reorganization)
ANNEX E Opinion of Goldman, Sachs &
Company (Aerial
reorganization)
ANNEX F Opinion of Donaldson, Lufkin &
Jenrette (Aerial
reorganization)
ANNEX G Opinion of Wasserstein Perella
& Co. (Aerial reorganization)
ANNEX H Restated Certificate of
Incorporation for VoiceStream
Wireless Holding Corporation
ANNEX I Washington Dissenters' Rights
Statute
ANNEX J Delaware Dissenters' Rights
Statute
</TABLE>
ii
<PAGE> 8
INTRODUCTION
The document you are reading is referred to as a "joint proxy
statement-prospectus". This joint proxy statement-prospectus discusses two
separate proposed combinations:
(1) the combination of VoiceStream and Omnipoint, pursuant to an Agreement
and Plan of Reorganization, dated as of June 23, 1999, through which
Omnipoint will become a subsidiary of VoiceStream Holdings; and
(2) the combination of VoiceStream and Aerial, pursuant to an Agreement and
Plan of Reorganization, dated as of September 17, 1999, through which
Aerial will become a subsidiary of VoiceStream Holdings.
This joint proxy statement-prospectus also contemplates that upon the
completion of the first to occur of the above reorganizations, a subsidiary of
VoiceStream Holdings will merge with and into VoiceStream and VoiceStream will
become a subsidiary of VoiceStream Holdings. VoiceStream Holdings will then
change its name to VoiceStream Wireless Corporation. Except as otherwise
described in this joint proxy statement-prospectus, we have assumed that the
Omnipoint reorganization will occur prior to the Aerial reorganization.
Each of VoiceStream, Omnipoint and Aerial is mailing to its common
stockholders this joint proxy statement-prospectus in connection with its
special meeting of stockholders. We discuss both the Omnipoint reorganization
and the Aerial reorganization in this joint proxy statement-prospectus because
it is important for the common stockholders of all three companies to have
information about the terms of both proposed reorganizations.
In order to present the information in an understandable manner, we have
organized this document into the following sections which include the following
information:
- "QUESTIONS AND ANSWERS ABOUT THE PROPOSED REORGANIZATIONS" answers some
common questions that you might have regarding the Omnipoint
reorganization and the Aerial reorganization.
- "SUMMARY" highlights selected information from this joint proxy
statement-prospectus, including summary historical financial information
of VoiceStream, Omnipoint and Aerial, and pro forma financial information
of VoiceStream Holdings.
- "RISK FACTORS" provides information about risks arising as a result of
the proposed reorganizations and risks associated with the business
operations of VoiceStream Holdings.
- "THE OMNIPOINT REORGANIZATION" provides detailed information about the
Omnipoint reorganization.
- "THE AERIAL REORGANIZATION" provides detailed information about the
Aerial reorganization.
- "THE INVESTMENTS" provides detailed information about the $957 million
Hutchison Investments, the $730 million Sonera Investments and the $420
million TDS Debt Replacement.
- "THE VOICESTREAM HOLDINGS VOTING AGREEMENTS" describes the terms of one
or more voting agreements that govern voting for certain VoiceStream
Holdings directors.
- "FINANCIAL INFORMATION" provides pro forma financial information and
comparative per share information with respect to the reorganizations.
- "THE SPECIAL MEETINGS" provides information about VoiceStream's,
Omnipoint's and Aerial's special meetings.
- "BUSINESS OF VOICESTREAM HOLDINGS" provides information regarding the pro
forma business operations of VoiceStream Holdings.
- "WHERE YOU CAN FIND MORE INFORMATION" explains where you can find more
information about VoiceStream, Omnipoint and Aerial.
- "GLOSSARY" explains the meaning of the defined terms used in this joint
proxy statement-prospectus.
1
<PAGE> 9
QUESTIONS AND ANSWERS ABOUT
THE PROPOSED REORGANIZATIONS
Q: WHY ARE VOICESTREAM, OMNIPOINT AND AERIAL PROPOSING TO COMBINE?
A: VoiceStream, Omnipoint and Aerial are proposing to combine because we believe
that the resulting company will be a strong national competitor in the
wireless communications industry. As the wireless communications industry
continues to grow, competition increases and new technologies emerge, we
believe a combined company will be capable of achieving better performance
and will have greater growth potential than any of the separate companies
would be able to achieve on its own. We believe this to be true both for a
combination of all three companies and a combination involving VoiceStream
and either of Omnipoint or Aerial.
With all three companies combined, our licenses and pending licenses,
together with those of joint ventures in which we will be an investor, will
cover 22 of the 25 largest markets in the continental United States and over
200 million people, and will serve over 1.5 million customers. We will be
one of the largest companies in the world deploying GSM technology.
Q: HOW WILL THE REORGANIZATIONS BE ACCOMPLISHED?
A: We have formed VoiceStream Holdings to serve as the parent corporation of
VoiceStream, Omnipoint and Aerial. The reorganizations will be accomplished
by taking the following steps:
Omnipoint Reorganization
- the Omnipoint merger will occur, whereby a subsidiary of VoiceStream
Holdings will merge with and into Omnipoint, resulting in Omnipoint
becoming a subsidiary of VoiceStream Holdings;
- the VoiceStream merger will occur, if it has not already occurred as a
result of the Aerial reorganization, whereby a separate subsidiary of
VoiceStream Holdings will merge with and into VoiceStream, resulting in
VoiceStream becoming a subsidiary of VoiceStream Holdings; and
- to satisfy FCC requirements, all Omnipoint C and F Block licenses and
pending licenses, along with certain related assets and liabilities, will
be transferred to joint venture entities controlled by Cook Inlet, in each
of which VoiceStream Holdings will hold a 49.9% interest.
Aerial Reorganization
- the Aerial merger will occur, whereby a separate subsidiary of VoiceStream
Holdings will merge with and into Aerial, resulting in Aerial becoming a
subsidiary of VoiceStream Holdings; and
- the VoiceStream merger will occur, if it has not already occurred as a
result of the Omnipoint reorganization, whereby a subsidiary of VoiceStream
Holdings will merge with and into VoiceStream, resulting in VoiceStream
becoming a subsidiary of VoiceStream Holdings.
After the first to occur of either the Omnipoint reorganization or the Aerial
reorganization, VoiceStream Holdings will change its name to VoiceStream
Wireless Corporation and its headquarters will be located in Bellevue,
Washington, where VoiceStream's headquarters are presently located.
2
<PAGE> 10
Q: HOW WILL THE INVESTMENTS BE ACCOMPLISHED?
A: The investments will be accomplished as follows:
Hutchison Investments
- $150 million of Omnipoint securities, which were purchased by Hutchison as
part of the Omnipoint reorganization, will be exchanged for shares of
VoiceStream Holdings common stock at the time of the Omnipoint
reorganization;
- the balance of $807 million of the Hutchison Investments will be paid at
the time of the Omnipoint reorganization;
Sonera Investments
- the full amount of the proceeds of the $230 million Sonera-Aerial
Investment will be paid to Aerial and an Aerial subsidiary on November 1,
1999;
- the full amount of the proceeds of the $500 million Sonera-VoiceStream
Investment will be paid at the time of the Omnipoint reorganization;
TDS Debt Replacement
- the $420 million TDS Debt Replacement, whereby TDS will replace debt owed
to TDS by an Aerial subsidiary with an equity investment in Aerial, will
take place on November 1, 1999.
Q: WHAT WILL I RECEIVE IN THE REORGANIZATIONS?
A: VoiceStream stockholders: At the first to occur of the Omnipoint
reorganization or the Aerial reorganization, you will receive one share of
VoiceStream Holdings common stock for each share of VoiceStream common stock
that you own. You will not need to exchange your stock certificates because
your shares of VoiceStream will be treated as shares of VoiceStream Holdings.
Omnipoint stockholders: You will have the opportunity to request:
- the "Omnipoint Standard Election," which consists of 0.825 of a share of
VoiceStream Holdings common stock plus $8.00 in cash for each share of
Omnipoint common stock;
- the "Omnipoint Stock Election," by which you ask to receive only
VoiceStream Holdings common stock, the actual number of shares of which
will be subject to proration and adjustment and determined at the closing
of the Omnipoint reorganization pursuant to a formula established in the
Omnipoint reorganization agreement; or
- the "Omnipoint Cash Election" by which you ask to receive only cash, the
actual amount of which will be subject to proration and adjustment and
determined at the closing of the Omnipoint reorganization pursuant to a
formula established in the Omnipoint reorganization agreement.
If you make the Omnipoint Stock Election or the Omnipoint Cash Election, the
consideration you actually receive may consist of a mix of VoiceStream
Holdings common stock and cash, subject to proration and adjustment. If you
fail to return the election form in a timely manner, you will receive the
Omnipoint Standard Election.
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Aerial stockholders: You will have the opportunity to request:
- the "Aerial Stock Election," which consists of 0.455 of a share of
VoiceStream Holdings common stock for each share of Aerial common stock,
subject to adjustment under certain circumstances and determined at the
closing of the Aerial reorganization pursuant to a formula established in
the Aerial reorganization agreement; or
- the "Aerial Cash Election" which consists of $18.00 per share in cash for
each share of Aerial common stock.
Aerial stockholders can make the Aerial Stock Election with respect to all
or any portion of their shares of Aerial common stock and the Aerial Cash
Election with respect to the balance of their shares. Aerial stockholders who do
not timely or properly make the Aerial Cash Election for all or part of their
shares of Aerial common stock will be deemed to have made the Aerial Stock
Election in connection with such shares.
Q: HOW DO I SUBMIT MY REQUEST FOR A PARTICULAR FORM OF PAYMENT FOR MY STOCK?
A:Omnipoint stockholders: Following the closing of the Omnipoint reorganization,
we will send you a letter of transmittal and an election form, with
instructions for making an election as to your preference. Details of the
election and exchange procedures are set forth in "The Omnipoint
Reorganization -- Conversion of Omnipoint Common Stock to VoiceStream Holdings
Common Stock -- Election Procedure; Exchange of Certificates."
Aerial stockholders: Following the closing of the Aerial reorganization, we
will send you a letter of transmittal and an election form, with instructions
for making an election as to your preference. Details of the election and
exchange procedures are set forth in "The Aerial Reorganization -- Conversion
of Aerial Common Stock to VoiceStream Holdings Common Stock -- Election
Procedure, Exchange of Certificates."
Q: WHEN DO WE EXPECT TO COMPLETE THE REORGANIZATIONS?
A:We plan to complete the Omnipoint reorganization during the fourth quarter of
1999 and the Aerial reorganization during the first quarter of 2000. However,
completion of each reorganization is subject to separate governmental and
stockholder approvals that we do not control. We therefore cannot predict with
any certainty when we will complete the reorganizations.
Q: ARE THE CLOSINGS OF THE OMNIPOINT AND AERIAL REORGANIZATIONS CONDITIONED ON
EACH OTHER?
A:The closing of the Omnipoint reorganization is not conditioned on the closing
of the Aerial reorganization.
The closing of the Aerial reorganization is subject to the condition that the
Omnipoint reorganization has been consummated or terminated, provided that
this condition will be deemed satisfied if the Omnipoint reorganization has
not been consummated or terminated by June 30, 2000 or, under certain
circumstances, March 31, 2000.
Q: WHERE WILL I BE ABLE TO OBTAIN QUOTATIONS FOR THE VOICESTREAM HOLDINGS COMMON
STOCK?
A: After the closing of the first reorganization to occur, VoiceStream Holdings
will be renamed VoiceStream Wireless Corporation, and its common stock will
be listed for quotation on the Nasdaq Stock Market. The symbol for
VoiceStream Holdings common stock will be the same as the current symbol for
VoiceStream common stock, "VSTR."
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Q: WHAT SHOULD I DO NOW?
A:You should vote your shares by completing, dating and signing your proxy card
and mailing it in the enclosed envelope. If you prefer, you may vote by
attending your special meeting and voting in person instead of voting by
proxy.
Q: IF MY STOCK IS HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
STOCK FOR ME?
A: Your broker will vote your stock for you only if you provide instructions to
your broker on how to vote. You should follow the directions provided by your
broker regarding how to instruct your broker to vote your stock. Without
instructions, your stock will not be voted for or against any proposal as to
which you are entitled to vote, which will have the same effect as voting
against such proposal.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You may change your vote according to the proxy revocation procedures
set forth in "The Special Meetings -- Solicitation of Proxies." If you
execute a proxy, you will retain the right to revoke it at any time before it
is voted. You may revoke or change your proxy before it is voted by: (1)
sending a written revocation to ChaseMellon Shareholders Services, L.L.C.,
acting as inspector of elections; or (2) submitting a proxy with a later date
that revokes any prior proxies. Your right to revoke your proxy is not
limited to compliance with a specified formal procedure, but you should give
written notice to the secretary of VoiceStream, Omnipoint or Aerial, as
applicable, at or before your special meeting so that the number of shares
represented by proxy can be recomputed. Simply attending your company's
special meeting, or voting in person without revoking your proxy in writing,
will not revoke your proxy. If you have instructed a broker to vote your
shares, you must follow directions received from your broker to change your
vote or to vote at your respective special meeting.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: VoiceStream stockholders: No. You will not be required to exchange your
VoiceStream common stock certificates.
Omnipoint stockholders: No. Following the closing of the Omnipoint
reorganization, we will mail written instructions to you explaining how to
exchange your Omnipoint certificates.
Aerial stockholders: No. Following the closing of the Aerial reorganization,
we will mail written instructions to you explaining how to exchange your
Aerial certificates.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
A: VoiceStream stockholders: If you have questions about the reorganizations or
the proposed VoiceStream merger you may call, toll-free: 1-(800) 737-9864.
Omnipoint stockholders: If you have questions about the reorganizations or
the proposed Omnipoint merger you may call, toll-free: 1-(800) 737-9864.
Aerial stockholders: If you have questions about the reorganizations or the
proposed Aerial merger you may call, toll-free: 1-(800) 737-9864.
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SUMMARY
The following summary highlights selected information from this joint proxy
statement-prospectus concerning the Omnipoint reorganization and the Aerial
reorganization. You should read this entire joint proxy statement-prospectus
carefully before you vote your shares.
THE COMPANIES
VOICESTREAM WIRELESS CORPORATION
3650 131st Avenue SE
Bellevue, Washington 98006
(425) 653-4600
VoiceStream is a leading provider of personal communications services in
the western United States. VoiceStream currently owns and operates fully digital
PCS networks in 11 major markets. VoiceStream holds 107 broadband PCS licenses.
VoiceStream's licenses, together with licenses held by joint ventures in which
it is an investor, cover 58% of the geography of the continental United States
and 89 million persons.
OMNIPOINT CORPORATION
3 Bethesda Metro Center, Suite 400
Bethesda, Maryland 20814
(301) 951-2500
Omnipoint is a leading provider of personal communications services in the
eastern United States. Omnipoint currently owns and operates fully digital PCS
networks in five major markets. Omnipoint holds 156 broadband PCS licenses and
pending licenses. Omnipoint's licenses, together with licenses held by joint
ventures in which it is an investor, cover 16% of the geography of the
continental United States and 98 million persons. Omnipoint, through its wholly
owned subsidiary, Omnipoint Technologies, Inc., is also a developer and supplier
of wireless communication technologies, products and engineering services.
AERIAL COMMUNICATIONS, INC.
8410 West Bryn Mawr, Suite 1100
Chicago, Illinois 60631
(312) 399-4200
Aerial is a provider of personal communications services in several major
markets in the United States. Aerial currently owns and operates fully digital
PCS networks in six major markets. Aerial holds six broadband PCS licenses.
Aerial's licenses, together with licenses held by joint ventures in which it is
an investor, cover 12% of the geography of the continental United States and 28
million persons.
THE REORGANIZATIONS
We have summarized below certain information describing the Omnipoint
reorganization and the Aerial reorganization. Although the reorganizations are
separate transactions, they are related because the future operations of
VoiceStream Holdings will depend directly upon whether one or both of the
reorganizations are approved. Therefore, we believe it is important for the
stockholders of
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VoiceStream, Omnipoint and Aerial to understand both transactions prior to
voting at their respective special meetings.
VoiceStream stockholders. You will be entitled to vote on both the
Omnipoint reorganization and the Aerial reorganization. Accordingly, you should
read all of the information contained in this joint proxy statement-prospectus.
Omnipoint stockholders. You will be entitled to vote on the Omnipoint
reorganization. Unless you are also an Aerial stockholder, you will not be
entitled to vote on the Aerial reorganization. However, you should carefully
read all of the information contained in this joint proxy statement-prospectus
because if the Aerial reorganization is approved and completed, Aerial will
become a subsidiary of VoiceStream Holdings and its operations will have a
direct impact on the future of VoiceStream Holdings.
Aerial stockholders. You will be entitled to vote on the Aerial
reorganization. Unless you are also an Omnipoint stockholder, you will not be
entitled to vote on the Omnipoint reorganization. However, you should carefully
read all of the information contained in this joint proxy statement-prospectus
because if the Omnipoint reorganization is approved and completed, Omnipoint
will become a subsidiary of VoiceStream Holdings and its operations will have a
direct impact on the future of VoiceStream Holdings.
THE OMNIPOINT REORGANIZATION
We have attached the Omnipoint reorganization agreement to this joint proxy
statement-prospectus as Annex A. We encourage you to read the Omnipoint
reorganization agreement as it is the principal legal document that governs the
Omnipoint reorganization.
The transactions contemplated by the Omnipoint reorganization agreement
encompass several distinct interconnected transactions:
- the Omnipoint merger, whereby Omnipoint will become a subsidiary of
VoiceStream Holdings;
- the VoiceStream merger, whereby VoiceStream will become a subsidiary of
VoiceStream Holdings;
- the Hutchison Investments, whereby Hutchison PCS (USA) will invest a
total of $957 million in VoiceStream Holdings; and
- the CIRI Transactions, whereby in order to comply with FCC requirements,
Omnipoint will contribute its C and F Block PCS licenses and pending
licenses, along with certain related assets and liabilities, in exchange
for 49.9% membership interests in each of two joint venture entities
controlled by Cook Inlet.
Separately, the Sonera-VoiceStream Investment, whereby Sonera will invest a
total of $500 million in VoiceStream Holdings, will be made at the time of the
Omnipoint reorganization.
EXCHANGE CONSIDERATION FOR THE OMNIPOINT REORGANIZATION
VoiceStream stockholders: You will receive one share of VoiceStream
Holdings common stock in exchange for each share of VoiceStream common stock you
own. However, even though you will own the same number of shares in VoiceStream
Holdings, your shares will represent a smaller percentage of the outstanding
shares of VoiceStream Holdings common stock than the percentage of the
outstanding shares of VoiceStream common stock that you owned prior to the
Omnipoint
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reorganization. If the Aerial reorganization closes prior to the Omnipoint
reorganization, you will receive VoiceStream Holdings common stock at the time
of the Aerial reorganization and not at the time of the Omnipoint
reorganization.
Omnipoint stockholders: You will have the opportunity to request:
- the Omnipoint Standard Election, which consists of 0.825 of a share of
VoiceStream Holdings common stock plus $8.00 in cash for each share of
Omnipoint common stock;
- the Omnipoint Stock Election, by which you ask to receive only
VoiceStream Holdings common stock, the actual number of shares of which
will be subject to proration and adjustment and determined at the closing
of the Omnipoint reorganization pursuant to a formula established in the
Omnipoint reorganization agreement; or
- the Omnipoint Cash Election, by which you ask to receive only cash, the
actual amount of which will be subject to proration and adjustment and
determined at the closing of the Omnipoint reorganization pursuant to a
formula established in the Omnipoint reorganization agreement.
In connection with the Omnipoint reorganization, VoiceStream Holdings will
issue to Omnipoint common stockholders (1) a total number of shares equal to
0.825 times the number of shares of Omnipoint common stock outstanding at the
closing of the Omnipoint reorganization and (2) a total amount of cash equal to
$8.00 times the number of shares of Omnipoint common stock outstanding at the
closing of the Omnipoint reorganization. If you make the Omnipoint Stock
Election or the Omnipoint Cash Election, depending upon the elections of your
fellow stockholders, you may receive some mixture of stock and cash instead of
receiving only stock or only cash. Keep in mind that the mixture of stock and/or
cash you receive could have important tax consequences to you. If you fail to
return the election form in a timely manner, you will receive the Omnipoint
Standard Election.
You will also receive cash instead of any fractional share which results
from the conversion of your Omnipoint common stock into VoiceStream Holdings
common stock. This amount will reflect the market value of VoiceStream common
stock at the closing of the Omnipoint reorganization.
EXCHANGE PROCEDURES FOR OMNIPOINT STOCKHOLDERS
Following the closing of the Omnipoint reorganization, we will send you a
letter of transmittal and an election form, allowing you to choose among the
three forms of consideration, along with exchange and share transmittal
instructions.
To request the form of payment you prefer, you must complete the letter of
transmittal and election form. The fully completed election form, together with
your certificates representing shares of Omnipoint common stock must be mailed
to ChaseMellon Shareholders Services, L.L.C. before the election deadline we
establish. If you do not make the Omnipoint Stock Election or the Omnipoint Cash
Election prior to the election deadline, you will receive the Omnipoint Standard
Election.
VOTE REQUIRED FOR THE OMNIPOINT REORGANIZATION
VoiceStream stockholders: Eligible holders of at least two-thirds of the
outstanding shares of VoiceStream common stock must adopt, and approve the
transactions contemplated by, the Omnipoint reorganization agreement. Approval
of these transactions will constitute approval of the merger of a subsidiary of
VoiceStream Holdings with and into VoiceStream.
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Omnipoint stockholders: Eligible holders of a majority of the outstanding
shares of Omnipoint common stock must adopt, and approve the transactions
contemplated by, the Omnipoint reorganization agreement.
RECOMMENDATIONS TO VOICESTREAM AND OMNIPOINT STOCKHOLDERS
VoiceStream stockholders: The board of directors of VoiceStream has voted
unanimously to approve the Omnipoint reorganization agreement and the
transactions contemplated by that agreement. The VoiceStream board believes that
the proposed transactions are in your best interests and recommends that you
vote "FOR" the proposal to adopt, and approve the transactions contemplated by,
the Omnipoint reorganization agreement.
Omnipoint stockholders: The board of directors of Omnipoint has voted
unanimously to approve the Omnipoint reorganization agreement and the
transactions contemplated by that agreement. The Omnipoint board believes that
the proposed transactions are in your best interests and recommends that you
vote "FOR" the proposal to adopt, and approve the transactions contemplated by,
the Omnipoint reorganization agreement.
CONDITIONS TO THE OMNIPOINT REORGANIZATION
The completion of the Omnipoint reorganization depends upon meeting a
number of conditions, including:
- adoption of, and approval of the transactions contemplated by, the
Omnipoint reorganization agreement by the stockholders of each of
VoiceStream and Omnipoint;
- absence of any new law or any injunction that effectively prohibits the
Omnipoint reorganization;
- receipt of all requisite orders and approvals of the FCC;
- effectiveness of the registration statement registering the shares of
VoiceStream Holdings' common stock to be issued pursuant to the Omnipoint
reorganization agreement;
- consummation of the Hutchison Investments and CIRI Transactions;
- receipt of legal opinions regarding certain federal income tax
consequences of the Omnipoint reorganization; and
- exercise of dissenters' rights with respect to no more than 10% of
VoiceStream shares or Omnipoint shares.
Further, VoiceStream is not required to complete the proposed transaction:
- unless it receives a legal opinion that the completion of the Omnipoint
reorganization should not cause the spin-off of VoiceStream from Western
Wireless, which occurred on May 3, 1999, to fail to be a tax-free
transaction to the holders of Western Wireless stock; or
- if certain changes occur which prevent VoiceStream Holdings from
refinancing certain Omnipoint indebtedness which will become due and
payable or redeemable prior to its stated maturity as a result of the
Omnipoint reorganization.
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TERMINATION FEE IN CONNECTION WITH THE OMNIPOINT REORGANIZATION
The Omnipoint reorganization agreement requires Omnipoint to pay
VoiceStream a termination fee of $70 million if the Omnipoint reorganization
agreement terminates under certain circumstances.
INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS OF VOICESTREAM AND OMNIPOINT IN
THE OMNIPOINT REORGANIZATION
VoiceStream stockholders: In considering the recommendation of the
VoiceStream board, you should be aware of the interests that executive officers
and directors of VoiceStream have in the proposed transaction. See "The
Omnipoint Reorganization -- Interests of Certain Persons in the Omnipoint
Reorganization; VoiceStream Affiliated Persons." In determining the fairness of
the proposed transaction to stockholders of VoiceStream, the VoiceStream board
took into account these interests. These interests are different from and in
addition to your and their interests as stockholders.
Omnipoint stockholders: In considering the recommendation of the Omnipoint
board, you should be aware of the interests that executive officers and
directors of Omnipoint have in the proposed transaction. See "The Omnipoint
Reorganization -- Interests of Certain Persons in the Omnipoint Reorganization;
Omnipoint Affiliated Persons." In determining the fairness of the proposed
transaction to stockholders of Omnipoint, the Omnipoint board took into account
these interests. These interests are different from and in addition to your and
their interests as stockholders.
OPINIONS OF FINANCIAL ADVISORS IN THE OMNIPOINT REORGANIZATION
In deciding to approve the Omnipoint reorganization agreement, the boards
of VoiceStream and Omnipoint received opinions from their respective financial
advisors as to the fairness of the Omnipoint reorganization consideration from a
financial point of view.
VoiceStream stockholders: VoiceStream received an opinion from its
financial advisor, Goldman, Sachs & Co. The full text of this opinion, dated
June 23, 1999, is attached as Annex B to this joint proxy statement-prospectus
and should be read carefully in its entirety.
Omnipoint stockholders: Omnipoint received an opinion from its financial
advisor, Lehman Brothers. The full text of this opinion, dated June 23, 1999, is
attached as Annex C to this joint proxy statement-prospectus and should be read
carefully in its entirety.
The opinions of Goldman Sachs and Lehman Brothers are directed to the
boards of VoiceStream and Omnipoint, respectively, and do not constitute a
recommendation to any stockholder with respect to any matters related to the
Omnipoint reorganization.
THE AERIAL REORGANIZATION
We have attached the Aerial reorganization agreement to this joint proxy
statement-prospectus as Annex D. We encourage you to read the Aerial
reorganization agreement as it is the principal legal document that governs the
Aerial reorganization.
The transactions contemplated by the Aerial reorganization agreement
encompass several interconnected transactions:
- the Aerial merger, whereby Aerial will become a subsidiary of VoiceStream
Holdings;
- the VoiceStream merger, whereby VoiceStream, if it has not previously
done so, will become a subsidiary of VoiceStream Holdings;
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- the $420 million TDS Debt Replacement, whereby TDS will replace debt owed
by an Aerial subsidiary with an equity investment in Aerial; and
- the $230 million Sonera-Aerial Investment.
EXCHANGE CONSIDERATION FOR THE AERIAL REORGANIZATION
VoiceStream stockholders. In the event the Aerial reorganization occurs
prior to the Omnipoint reorganization, you will receive, upon closing of the
Aerial reorganization, one share of VoiceStream Holdings common stock in
exchange for each share of VoiceStream common stock you own. However, even
though you will own the same number of shares of VoiceStream Holdings common
stock, your shares will represent a smaller percentage of the outstanding shares
of VoiceStream Holdings common stock than the percentage of the outstanding
shares of VoiceStream common stock that you owned prior to the Aerial
reorganization.
If, as anticipated, the Omnipoint reorganization has closed prior to the
closing of the Aerial reorganization, you will have received VoiceStream
Holdings common stock upon closing of the Omnipoint reorganization and will
receive nothing further upon closing of the Aerial reorganization.
Aerial stockholders: You will have the opportunity to request for each
share of Aerial common stock which you own:
- the Aerial Stock Election, which consists of 0.455 of a share of
VoiceStream Holdings common stock, subject to adjustment under certain
circumstances to be determined at the closing of the Aerial
reorganization pursuant to the terms of the Aerial reorganization
agreement; or
- the Aerial Cash Election, which consists of $18.00 per share in cash.
Aerial stockholders can make the Aerial Stock Election with respect to all
or any portion of their shares of Aerial common stock and the Aerial Cash
Election with respect to the balance of their shares. Aerial stockholders who do
not timely or properly make the Aerial Cash Election for all or part of their
shares of Aerial common stock will be deemed to have made the Aerial Stock
Election in connection with such shares.
Prior to making the Aerial Cash Election at $18.00 per Aerial Common Share,
Aerial stockholders should consider carefully the then current market value of
the VoiceStream common stock that will be received under the Aerial Stock
Election. Based on the closing market price of VoiceStream common stock on
, 1999, the Aerial Stock Election had a value of $ per
Aerial Common Share.
You will also receive cash instead of any fractional share that results
from the conversion of your Aerial common stock into VoiceStream Holdings common
stock. This amount will reflect the market value of VoiceStream common stock at
the closing of the Aerial reorganization.
EXCHANGE PROCEDURES FOR AERIAL STOCKHOLDERS
Following the closing of the Aerial reorganization, we will send you a
letter of transmittal and an election form, allowing you to choose among the two
forms of consideration, along with exchange and share transmittal instructions.
To request the form of payment you prefer, you must complete the letter of
transmittal and election form. The fully completed election form, together with
your certificates representing shares of Aerial common stock must be mailed to
ChaseMellon Shareholders Services, L.L.C. before the
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election deadline we establish. If you do not make the Aerial Cash Election
prior to the election deadline, you will receive the Aerial Stock Election.
VOTE REQUIRED FOR THE AERIAL REORGANIZATION
VoiceStream stockholders: Eligible holders of two-thirds of the outstanding
shares of VoiceStream common stock must adopt, and approve the transactions
contemplated by, the Aerial reorganization agreement. Approval of these
transactions will constitute approval of the merger of a subsidiary of
VoiceStream Holdings with and into VoiceStream.
Aerial stockholders: Eligible holders representing a majority of the voting
power of the outstanding Aerial Common Shares and Aerial Series A Common Shares
voting together as a single class must adopt, and approve the transactions
contemplated by, the Aerial reorganization agreement. TDS, which holds
approximately 98% of such combined voting power, has agreed to vote "FOR"
approval of the Aerial reorganization and the other transactions contemplated by
the Aerial reorganization agreement. Accordingly, the Aerial proposal will be
approved regardless of the vote of other Aerial stockholders.
RECOMMENDATIONS TO VOICESTREAM AND AERIAL STOCKHOLDERS
VoiceStream stockholders: The board of directors of VoiceStream has voted
unanimously to approve the Aerial reorganization agreement and the transactions
contemplated by that agreement. The VoiceStream board believes that the proposed
transactions are in your best interests and recommends that you vote "FOR" the
proposal to adopt, and approve the transactions contemplated by, the Aerial
reorganization agreement.
Aerial stockholders: The board of directors of Aerial has voted unanimously
to approve the Aerial reorganization agreement and the transactions contemplated
by that agreement. The Aerial board believes that the proposed transactions are
in your best interests and recommends that you vote "FOR" the proposal to adopt,
and approve the transactions contemplated by, the Aerial reorganization
agreement.
CONDITIONS TO THE AERIAL REORGANIZATION
The completion of the Aerial reorganization depends upon meeting a number
of conditions, including:
- adoption of, and approval of the transactions contemplated by, the Aerial
reorganization agreement by the stockholders of each of VoiceStream and
Aerial;
- absence of any new law or any injunction that effectively prohibits the
Aerial reorganization;
- receipt of all requisite orders and approvals of the FCC;
- effectiveness of the registration statement registering the shares of
VoiceStream Holdings' common stock to be issued pursuant to the Aerial
reorganization agreement;
- consummation or termination of the Omnipoint reorganization, provided
that this condition will be deemed satisfied if the Omnipoint
reorganization has not been consummated or terminated by June 30, 2000
or, under certain circumstances, March 31, 2000;
- consummation of the TDS Debt Replacement and the Sonera-Aerial
Investment;
- execution of certain agreements;
- acquisition, repayment or amendment of certain Aerial debt;
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- receipt of legal opinions regarding certain federal income tax
consequences of the Aerial reorganization; and
- exercise of dissenters' rights with respect to no more than 7.5% of
VoiceStream common stock.
TERMINATION FEE IN CONNECTION WITH THE AERIAL REORGANIZATION
The Aerial reorganization agreement requires Aerial to pay VoiceStream a
termination fee of $40 million if the Aerial reorganization agreement terminates
under certain circumstances.
INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS OF VOICESTREAM AND AERIAL IN THE
AERIAL REORGANIZATION
VoiceStream stockholders: In considering the recommendation of the
VoiceStream board, you should be aware of the interests that executive officers
and directors of VoiceStream have in the proposed transaction. See "The Aerial
Reorganization -- Interests of Certain Persons in the Aerial Reorganization;
VoiceStream Affiliated Persons." In determining the fairness of the proposed
transaction to stockholders of VoiceStream, the VoiceStream board took into
account these interests. These interests are different from and in addition to
your and their interests as stockholders.
Aerial stockholders: In considering the recommendations of the Aerial
board, you should be aware of the interests that executive officers and
directors of Aerial have in the proposed transaction. See "The Aerial
Reorganization -- Interests of Certain Persons in the Aerial Reorganization;
Aerial Affiliated Persons." Due to these interests, the Aerial board appointed a
transaction committee and a special committee to review the fairness of the
proposed transaction. In determining the fairness of the transaction to
stockholders of Aerial, the Aerial board, the transaction committee and the
special committee took into account these interests. These interests are
different from and in addition to your and their interests as stockholders.
OPINIONS OF FINANCIAL ADVISORS IN THE AERIAL REORGANIZATION
In deciding to approve the Aerial reorganization agreement, the boards of
VoiceStream and Aerial and the special committee of the Aerial board received
opinions from their respective financial advisors as to the fairness of the
Aerial reorganization consideration from a financial point of view.
VoiceStream Stockholders: VoiceStream received an opinion from its
financial advisor, Goldman Sachs. The full text of this opinion, dated September
17, 1999, is attached as Annex E to this joint proxy statement-prospectus and
should be read carefully in its entirety.
Aerial Stockholders: The Aerial board of directors received an opinion from
Aerial's financial advisor, Donaldson, Lufkin & Jenrette. The full text of this
opinion, dated September 17, 1999, is attached as Annex F to this joint proxy
statement-prospectus and should be read carefully in its entirety.
The special committee of the Aerial board of directors received an opinion
from its financial advisor, Wasserstein Perella & Co. The full text of this
opinion, dated September 17, 1999, is attached as Annex G to this joint proxy
statement-prospectus and should be read carefully in its entirety.
The opinions of Goldman Sachs, Donaldson, Lufkin & Jenrette, and
Wasserstein Perella are directed to the VoiceStream board, the Aerial board and
the special committee of the Aerial board, respectively, and do not constitute a
recommendation to any stockholder with respect to any matters related to the
Aerial reorganization.
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THE INVESTMENTS
In connection with the reorganizations, Hutchison Telecommunications and
Hutchison PCS (USA), Sonera and TDS have agreed to make certain investments, as
follows:
Hutchison Investments. At the closing of the Omnipoint reorganization, $150
million of Omnipoint securities purchased previously by Hutchison PCS (USA) will
be exchanged for shares of common stock of VoiceStream Holdings, and an
additional $807 million will be invested by the Hutchison Entities directly in
VoiceStream Holdings for a combination of VoiceStream Holdings common stock and
convertible preferred stock, at an equivalent price of $29.00 per common share,
for a total investment of $957 million.
Sonera Investments. At the closing of the Omnipoint reorganization, in the
Sonera-VoiceStream Investment, Sonera will invest $500 million directly in
VoiceStream Holdings by purchasing shares of common stock at $57.00 per share.
On November 1, 1999, in the Sonera-Aerial Investment, Sonera will invest $75
million in Aerial and $155 million in an Aerial subsidiary at an equivalent
price of $22.00 per share of Aerial common stock. The shares received by Sonera
in the Aerial subsidiary will be exchanged for shares of Aerial common stock
immediately prior to the closing of the Aerial reorganization, resulting in a
total investment of $230 million in Aerial. Sonera is not obligated to make this
exchange unless and until all conditions to the closing of the Aerial
reorganization have been satisfied or waived.
TDS Debt Replacement. On November 1, 1999, TDS will replace $420 million of
Aerial subsidiary debt owed to TDS with equity of Aerial at $22.00 per share of
Aerial common stock.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
VoiceStream stockholders: We expect that VoiceStream's stockholders will
not recognize gain or loss for federal income tax purposes as a result of the
Omnipoint reorganization or Aerial reorganization.
Omnipoint stockholders: We expect that Omnipoint's stockholders will not
recognize gain or loss for federal income tax purposes as a result of the
Omnipoint reorganization to the extent they receive VoiceStream Holdings common
stock, but that they will recognize gain on any cash they receive.
Aerial stockholders: We expect that Aerial's stockholders will not
recognize gain or loss for federal income tax purposes as a result of the Aerial
reorganization to the extent they receive VoiceStream Holdings common stock, but
that they will recognize gain on any cash they receive.
Dissenting stockholders: VoiceStream and Omnipoint stockholders who
exercise dissenters' rights will recognize gain or loss for federal income tax
purposes on any cash they receive.
Tax matters are very complicated, and the tax consequences of the
reorganizations to you will depend on the facts of your own situation. You
should consult your tax advisor for a full understanding of the tax consequences
of the reorganizations to you.
DISSENTERS' RIGHTS OF APPRAISAL
VoiceStream stockholders: VoiceStream common stockholders who follow
certain statutory procedures will have the right under Washington law to demand
payment in cash for the fair value of their VoiceStream common stock instead of
the shares of VoiceStream Holdings common stock they would otherwise receive as
a result of the VoiceStream merger. The VoiceStream merger will occur at the
time of the first to occur of the Omnipoint reorganization or the Aerial
reorganization. Since it is uncertain which reorganization will occur first, you
must vote against both reorganizations to ensure
14
<PAGE> 22
that you will be able to exercise your dissenters' rights of appraisal in
connection with the VoiceStream merger. Annex I contains the text of the
applicable sections of Washington law.
Omnipoint stockholders: Omnipoint common stockholders who follow certain
statutory procedures and do not vote in favor of the Omnipoint reorganization
agreement have appraisal rights under Delaware law that may allow them to
receive cash in the amount of the fair market value of their Omnipoint common
stock instead of the consideration they would otherwise receive as a result of
the Omnipoint reorganization. Annex J contains the text of the applicable
sections of Delaware law.
Aerial stockholders: Aerial common stockholders do not have appraisal
rights under Delaware law in connection with the Aerial reorganization. Annex J
contains the text of the applicable sections of Delaware law.
15
<PAGE> 23
SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
We are providing the following summary information to aid you in your
analysis of the financial aspects of the reorganizations. We derived this
information from the audited financial statements of VoiceStream, Omnipoint and
Aerial as of and for each of the five years ended December 31, 1998, and the
unaudited financial statements as of and for the six months ended June 30, 1999.
The information is only a summary and you should read it together with:
- the unaudited pro forma condensed combined financial statements, and
accompanying notes, of VoiceStream Holdings;
- the historical audited consolidated financial statements, and
accompanying notes, of VoiceStream, Omnipoint and Aerial; and
- "Management's Discussion and Analysis of Financial Condition and Results
of Operations" for VoiceStream, Omnipoint and Aerial.
All of the above information is included in or incorporated by reference
into this joint proxy statement-prospectus. See "Where You Can Find More
Information" for a list of the documents incorporated by reference. The
unaudited pro forma combined data below is for illustrative purposes only. You
should not rely on this information as being indicative of the historical
results that would have been achieved had the companies always been combined or
the future results that VoiceStream Holdings will experience after the
reorganizations.
The pro forma financial data and comparative per share data included in
this section is based on the historical consolidated balance sheets and related
historical consolidated statements of operations of VoiceStream, Omnipoint and
Aerial giving effect to the reorganizations using the purchase method of
accounting, and taking into account:
- the CIRI Transactions;
- the Hutchison Investments;
- the assumed conversion and subsequent exchange of all outstanding shares
of the Omnipoint 7% Convertible Preferred;
- the TDS Debt Replacement; and
- the Sonera Investments.
16
<PAGE> 24
VOICESTREAM HOLDINGS UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma condensed combined balance sheet data as
of June 30, 1999, assumes that both the Omnipoint reorganization and the Aerial
reorganization occurred on June 30, 1999 and the unaudited pro forma condensed
combined statements of operations data assumes that both the Omnipoint
reorganization and the Aerial reorganization occurred on January 1, 1998.
For presentation of the pro forma financial aspects of each of these
reorganizations, both individually and combined, see "Financial
Information -- Unaudited Pro Forma Condensed Combined Financial Statements."
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
PRO FORMA COMBINED STATEMENTS OF OPERATIONS DATA:
Revenues:
Subscriber revenues....................................... $ 328,692 $ 357,039
Roamer revenues........................................... 15,371 16,236
Equipment revenues........................................ 66,922 96,445
License fees and engineering services..................... 2,266 4,784
----------- -----------
Total revenues.................................... 413,251 474,504
----------- -----------
Operating Expenses:
Cost of service........................................... 129,487 212,566
Cost of equipment sales................................... 151,470 254,866
Cost of engineering services.............................. 1,686 4,168
Research and development.................................. 171 16,639
General and administrative................................ 184,199 332,427
Sales and marketing....................................... 183,214 261,278
Depreciation and amortization............................. 312,710 542,381
Stock based compensation.................................. 48,879
----------- -----------
Total operating expenses.......................... 1,011,816 1,624,325
----------- -----------
Operating loss.............................................. (598,565) (1,149,821)
Other income (expense):
Interest and financing expense, net....................... (156,425) (214,854)
Equity in net loss of unconsolidated affiliates........... (54,004) (97,515)
Interest income and other, net............................ 12,801 14,410
----------- -----------
Total other income (expense)...................... (197,628) (297,959)
----------- -----------
Loss before income taxes.......................... (796,193) (1,447,780)
Income tax benefit (expense)................................ 113,230 (2,579)
----------- -----------
Net loss.......................................... $ (682,963) $(1,450,359)
=========== ===========
PRO FORMA COMBINED BALANCE SHEET DATA:
Current assets.............................................. $ 1,622,060
Property and equipment, net................................. 2,137,765
Licensing costs and other intangible assets, net............ 6,797,863
Other assets................................................ 269,232
-----------
Total assets...................................... $10,826,920
===========
Current liabilities......................................... $ 616,009
Long-term debt.............................................. 3,628,202
Deferred tax liability, net................................. 17,456
VoiceStream Holdings Junior Preferred....................... 650,400
Shareholders' equity........................................ 5,914,853
-----------
Total liabilities and shareholders' equity........ $10,826,920
===========
</TABLE>
17
<PAGE> 25
SELECTED VOICESTREAM CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected consolidated financial and
operating data for VoiceStream as of and for each of the five years in the
period ended December 31, 1998 and as of and for the six months ended June 30,
1999. Financial data as of and for each of the five years in the period ended
December 31, 1998, were derived from VoiceStream's audited consolidated
financial statements and notes thereto. All the data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations of VoiceStream" and VoiceStream's consolidated
financial statements and notes thereto, incorporated herein by reference. See
"Where You Can Find More Information."
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30, ----------------------------------------------------------------
1999 1998 1997 1996 1995 1994
-------------- ----------- ----------- ----------- ----------- --------
(UNAUDITED) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenues:
Subscriber revenues..................... $ 137,971 $ 123,966 $ 52,360 $ 7,794
Roamer revenues......................... 3,560 3,506 227
Equipment revenues...................... 30,351 40,490 25,143 9,745
----------- ----------- ----------- -----------
Total revenues...................... 171,882 167,962 77,730 17,539
----------- ----------- ----------- -----------
Operating expenses:
Cost of service......................... 37,469 50,978 43,183 12,470
Cost of equipment sales................. 60,908 77,071 53,469 20,789
General and administrative.............. 48,396 75,343 51,678 20,209 $ 3,069
Sales and marketing..................... 85,806 85,447 59,466 31,505 339
Depreciation and amortization........... 55,414 83,767 66,875 14,395 269
Stock based compensation................ 47,303
----------- ----------- ----------- ----------- -----------
Total operating expenses............ 335,296 372,606 274,671 99,368 3,677
----------- ----------- ----------- ----------- -----------
Operating loss............................ (163,414) (204,644) (196,941) (81,829) (3,677)
Other income (expense):
Interest and financing expense, net..... (31,881) (34,118) (57,558) (3,607) (40)
Equity in net loss of unconsolidated
affiliates............................ (21,696) (24,120) (9,327) (954) (11)
Interest income and other, net.......... 6,988 8,616 11 40
----------- ----------- ----------- ----------- -----------
Net loss............................ $ (210,003) $ (254,266) $ (263,815) $ (86,350) $ (3,728)
=========== =========== =========== =========== ===========
CONSOLIDATED BALANCE SHEET DATA:
Current assets............................ $ 155,954 $ 59,398 $ 49,945 $ 59,515 $ 1,684 $ 10,000
Property and equipment, net............... 679,738 619,280 420,638 318,473 37,914 220
Licensing cost and other intangible
assets, net............................. 323,185 312,040 315,653 227,997 145,728
Other assets.............................. 212,504 60,938 36,055 8,142 8,484
----------- ----------- ----------- ----------- ----------- --------
Total assets........................ $ 1,371,381 $ 1,051,656 $ 822,291 $ 614,127 $ 193,810 $ 10,220
=========== =========== =========== =========== =========== ========
Current liabilities....................... $ 141,328 $ 125,026 $ 126,184 $ 155,769 $ 25,444 $ 10,158
Long-term debt............................ 1,025,000 540,000 300,000 143,000 13,000
Other long-term liabilities............... 173,705 7,613
Shareholders' equity...................... 205,053 386,630 396,107 141,653 147,753 62
----------- ----------- ----------- ----------- ----------- --------
Total liabilities and shareholders'
equity............................ $ 1,371,381 $ 1,051,656 $ 822,291 $ 614,127 $ 193,810 $ 10,220
=========== =========== =========== =========== =========== ========
OTHER DATA:
Licensed population....................... 62,593,000 62,593,000 62,808,000 19,488,000 14,853,000
Covered population(1)..................... 19,718,000 16,121,000 12,529,000 6,133,000
Subscribers/Users:
Subscribers............................. 553,200 322,400 128,600 35,500
Prepaid users........................... 10,000 10,400
EBITDA(2)................................. $ (60,697) $ (120,877) $ (130,066) $ (67,434) $ (3,408)
CASH FLOWS PROVIDED BY (USED IN):
Operating activities...................... $ (66,220) $ (112,931) $ (198,129) $ (81,272) $ (4,115) $(10,220)
Investing activities...................... $ (304,027) $ (253,633) $ (370,202) $ (342,587) $ (145,632) $ (220)
Financing activities...................... $ 442,046 $ 374,284 $ 563,254 $ 429,250 $ 149,770 $ 10,000
</TABLE>
- -------------------------
(1) Represents population that is covered by our consolidated systems.
(2) EBITDA represents operating loss before depreciation and amortization and
non-cash stock based compensation. Management believes EBITDA provides
meaningful additional information on VoiceStream's operating results and on
its ability to service its long-term debt and other fixed obligations and to
fund VoiceStream's continuing growth. EBITDA is considered by many financial
analysts to be a meaningful indicator of an entity's ability to meet its
future financial obligations, and growth in EBITDA is considered to be an
indicator of future profitability, especially in a capital-intensive
industry such as wireless telecommunications. EBITDA should not be construed
as an alternative to operating income (loss) as determined in accordance
with GAAP, as an alternate to cash flows from operating activities (as
determined in accordance with GAAP), or as a measure of liquidity. Because
EBITDA is not calculated in the same manner by all companies, VoiceStream's
presentation may not be comparable to other similarly titled measures of
other companies.
18
<PAGE> 26
SELECTED OMNIPOINT CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected consolidated financial and
operating data for Omnipoint as of and for each of the five years ended December
31, 1998 and as of and for the six months ended June 30, 1999. Financial data as
of and for each of the five years ended December 31, 1998, were derived from
Omnipoint's audited consolidated financial statements and notes thereto. Certain
reclassifications have been made to Omnipoint's historical presentation to
conform to VoiceStream's presentation. These reclassifications do not have a
material impact on the results of Omnipoint's operations or financial position
for the periods presented. All the data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Omnipoint" and Omnipoint's consolidated financial statements and
notes thereto, incorporated herein by reference. See "Where You Can Find More
Information".
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED -------------------------------------------------------------------
JUNE 30, 1999 1998 1997 1996 1995 1994
------------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenues:
Subscriber revenues....................... $ 116,255 $ 127,594 $ 29,448 $ 269
Roamer revenues........................... 10,625 9,999 1,318
Equipment revenues........................ 26,838 26,616 11,611 262
License fees and engineering services..... 2,266 4,784 9,573 $ 3,000
------------ ----------- ----------- ----------- -----------
Total revenues...................... 155,984 168,993 51,950 531 3,000
------------ ----------- ----------- ----------- -----------
Operating expenses:
Cost of service........................... 69,493 120,634 45,367 3,230
Cost of equipment sales................... 77,505 100,074 61,895
Cost of engineering services.............. 1,686 4,168 1,073
Research and development.................. 171 16,639 23,932 34,975 $ 14,345 7,018
General and administrative................ 73,252 128,031 38,246 24,407
Sales and marketing....................... 74,486 127,211 67,129 22,733 12,619 6,290
Depreciation and amortization............. 93,467 129,043 52,644 15,587 11,038 1,125
Stock based compensation.................. 1,576
------------ ----------- ----------- ----------- ----------- -----------
Total operating expenses............ 391,636 625,800 290,286 100,932 38,002 14,433
------------ ----------- ----------- ----------- ----------- -----------
Operating loss.............................. (235,652) (456,807) (238,336) (100,401) (38,002) (11,433)
Other income (expense):
Interest and financing expense............ (126,490) (187,187) (89,061) (37,226) (517) (1,519)
Equity in loss of unconsolidated
affiliates.............................. (3,006) (11,879)
Interest income and other................. 4,824 3,206 12,978 10,697 749 428
Gain on sale of subsidiary stock.......... 3,194
------------ ----------- ----------- ----------- ----------- -----------
Loss before extraordinary item...... (360,324) (652,667) (314,419) (126,930) (37,770) (9,330)
Extraordinary loss.......................... (11,115) (6,591)
------------ ----------- ----------- ----------- ----------- -----------
Net loss............................ $ (360,324) $ (663,782) $ (321,010) $ (126,930) $ (37,770) $ (9,330)
============ =========== =========== =========== =========== ===========
CONSOLIDATED BALANCE SHEET DATA:
Current assets.............................. $ 349,577 $ 321,669 $ 197,279 $ 344,657 $ 64,134 $ 6,348
Property and equipment, net................. 1,051,150 1,013,225 579,050 186,851 18,957 3,015
Licensing cost and other intangible assets,
net....................................... 728,127 711,823 995,187 751,965 391,020 347,090
Other assets................................ 28,617 13,402 6,937 135,999 879 4,492
------------ ----------- ----------- ----------- ----------- -----------
Total assets........................ $ 2,157,471 $ 2,060,119 $ 1,778,453 $ 1,419,472 $ 474,990 $ 360,945
============ =========== =========== =========== =========== ===========
Current liabilities......................... $ 427,593 $ 362,969 $ 289,444 $ 98,342 $ 65,544 $ 3,253
Long-term debt.............................. 2,470,371 2,283,170 1,670,915 1,187,356 395,867 349,206
Preferred stock (mezzanine)................. 44,127 15,902
Shareholders' equity (deficit).............. (740,493) (586,020) (181,906) 133,774 (30,548) (7,416)
------------ ----------- ----------- ----------- ----------- -----------
Total liabilities and shareholders'
equity (deficit).................. $ 2,157,471 $ 2,060,119 $ 1,778,453 $ 1,419,472 $ 474,990 $ 360,945
============ =========== =========== =========== =========== ===========
OTHER DATA:
Licensed population......................... 100,000,000 95,000,000 96,500,000 40,200,000 26,800,000 26,800,000
Covered population(1)....................... 46,000,000 45,600,000 16,000,000
Subscribers................................. 579,200 370,000 139,800
EBITDA(2)................................... $ (140,609) $ (327,764) $ (185,692) $ (84,814) $ (26,964) $ (10,308)
CASH FLOWS PROVIDED BY (USED IN):
Operating activities........................ $ (176,494) $ (422,665) $ (217,666) $ (64,508) $ (19,747) $ (7,895)
Investing activities........................ $ (158,361) $ (563,411) $ (441,503) $ (290,490) $ (43,991) $ 720
Financing activities........................ $ 354,725 $ 1,117,227 $ 507,721 $ 512,243 $ 115,979 $ (126)
</TABLE>
- -------------------------
(1) Represents population that is covered by our consolidated, directly managed
systems.
(2) EBITDA represents operating loss before depreciation and amortization and
non-cash stock based compensation. Management believes EBITDA provides
meaningful additional information on Omnipoint's operating results and on
its ability to service its long-term debt and other fixed obligations and to
fund Omnipoint's continuing growth. EBITDA is considered by many financial
analysts to be a meaningful indicator of an entity's ability to meet its
future financial obligations, and growth in EBITDA is considered to be an
indicator of future profitability, especially in a capital-intensive
industry such as wireless telecommunications. EBITDA should not be construed
as an alternative to operating income (loss) as determined in accordance
with GAAP, as an alternate to cash flows from operating activities (as
determined in accordance with GAAP), or as a measure of liquidity. Because
EBITDA is not calculated in the same manner by all companies, Omnipoint's
presentation may not be comparable to other similarly titled measures of
other companies.
19
<PAGE> 27
SELECTED AERIAL CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected consolidated financial and
operating data for Aerial as of and for each of the five years in the period
ended December 31, 1998 and as of and for the six months ended June 30, 1999.
Financial data as of and for each of the five years in the period ended December
31, 1998, were derived from Aerial's audited consolidated financial statements
and notes thereto. Certain reclassifications have been made to Aerial's
historical presentation to conform to VoiceStream's presentation. These
reclassifications do not have a material impact on the results of Aerial's
operations or financial position for the periods presented. All the data should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations of Aerial" and Aerial's consolidated
financial statements and notes thereto, incorporated herein by reference. See
"Where You Can Find More Information".
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
SIX MONTHS ENDED ----------------------------------------------------------------
JUNE 30, 1999 1998 1997 1996 1995 1994
---------------- ----------- ----------- ----------- ----------- --------
(UNAUDITED) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenues:
Subscriber revenues........................ $ 91,070 $ 121,160 $ 32,316
Roamer revenues............................ 2,300 3,231
Equipment revenues......................... 13,433 31,514 23,645
----------- ----------- -----------
Total revenues....................... 106,803 155,905 55,961
----------- ----------- -----------
Operating expenses:
Cost of service............................ 33,845 57,396 23,210
Cost of equipment sales.................... 25,557 87,715 71,454
General and administrative................. 66,251 139,458 95,058 $ 28,843 $ 4,795 $ 858
Sales, and marketing....................... 34,122 67,920 38,077
Depreciation and amortization.............. 44,209 83,401 40,554
Development costs.......................... 5,773 15,107 2,767 1,119
----------- ----------- ----------- ----------- ----------- --------
Total operating expenses............. 203,984 435,890 274,126 43,950 7,562 1,977
----------- ----------- ----------- ----------- ----------- --------
Operating loss.............................. (97,181) (279,985) (218,165) (43,950) (7,562) (1,977)
Other income (expense):
Interest and financing
expense -- affiliate..................... (33,568) (62,137) (21,558) (1,960) (1,051) (50)
Interest and financing expense -- other.... (10,397) (18,010) (5,507) (802)
Equity in loss of unconsolidated
affiliates............................... (100) (128) (2,518) (304)
Minority share of loss..................... 4,902 23,620
Interest income and other -- affiliate..... 95 4,488 49 2
Interest income and other -- other......... 489 1,324 2,402 1,158
Gain on sale of PCS licenses............... 2,582
----------- ----------- ----------- ----------- ----------- --------
Loss before income taxes............. (135,855) (335,316) (245,251) (38,788) (8,564) (2,025)
Income tax benefit (expense)................ 113,230 (2,579) (1,806) 867 2,096 742
----------- ----------- ----------- ----------- ----------- --------
Net loss............................. $ (22,625) $ (337,895) $ (247,057) $ (37,921) $ (6,468) $ (1,283)
=========== =========== =========== =========== =========== ========
CONSOLIDATED BALANCE SHEET DATA:
Current assets.............................. $ 50,111 $ 48,724 $ 58,009 $ 109,131 $ 42,323 $ 254
Property and equipment, net................. 569,252 576,953 553,174 252,423 12,087
Licensing costs and other intangible assets,
net........................................ 328,003 333,816 347,973 304,354 305,818 20,401
Investments in unconsolidated affiliates.... 1,902 1,444 1,298 6,771
Other assets................................ 810 410 194 148 216 665
----------- ----------- ----------- ----------- ----------- --------
Total assets......................... $ 950,078 $ 961,347 $ 960,648 $ 672,827 $ 360,444 $ 21,320
=========== =========== =========== =========== =========== ========
Current liabilities......................... $ 686,130 $ 86,124 $ 109,769 $ 119,326 $ 9,182 $ 105
Long-term debt.............................. 241,501 827,953 644,673 103,743 60,238 22,659
Deferred tax liability, net................. 17,456 16,357 13,779 11,973 9,742
Minority interest........................... 479 5,835
Shareholders' equity........................ 4,512 25,078 192,427 437,785 281,282 (1,444)
----------- ----------- ----------- ----------- ----------- --------
Total liabilities and shareholders'
equity............................. $ 950,078 $ 961,347 $ 960,648 $ 672,827 $ 360,444 $ 21,320
=========== =========== =========== =========== =========== ========
OTHER DATA:
Licensed population......................... 27,500,000 27,700,000 27,600,000 27,600,000 27,300,000
Covered population(1)....................... 22,096,000 22,196,000 21,367,000
Subscribers................................. 346,600 311,900 125,000
EBITDA(2)................................... $ (52,972) $ (196,584) $ (177,611) $ (42,016) $ (7,515) $ (1,977)
CASH FLOWS PROVIDED BY (USED IN):
Operating activities........................ $ 6,885 $ (228,801) $ (206,863) $ (17,781) $ 126 $ (1,564)
Investing activities........................ $ 29,060 $ 368,134 $ 568,333 $ 230,029 $ 297,397 $ 22,009
Financing activities........................ $ (36,443) $ (139,402) $ (391,642) $ (177,225) $ (297,812) $(20,439)
</TABLE>
- -------------------------
(1) Represents population that is covered by our consolidated systems.
(2) EBITDA represents operating loss before depreciation and amortization and
non-cash stock based compensation. While Aerial was a development stage
enterprise, amounts related to depreciation during 1996 and 1995, were
included in general and administrative expense. Management believes EBITDA
provides meaningful additional information on Aerial's operating results and
on its ability to service its long-term debt and other fixed obligations and
to fund Aerial's continuing growth. EBITDA is considered by many financial
analysts to be a meaningful indicator of an entity's ability to meet its
future financial obligations, and growth in EBITDA is considered to be an
indicator of future profitability, especially in a capital-intensive
industry such as wireless telecommunications. EBITDA should not be construed
as an alternative to operating income (loss) as determined in accordance
with GAAP, as an alternate to cash flows from operating activities (as
determined in accordance with GAAP), or as a measure of liquidity. Because
EBITDA is not calculated in the same manner by all companies. Aerial's
presentation may not be comparable to other similarly titled measures of
other companies.
20
<PAGE> 28
COMPARATIVE PER SHARE DATA
Set forth below are the net loss and book value per common share data
presented separately for VoiceStream, Omnipoint and Aerial on a historic basis
and for VoiceStream Holdings on a pro forma combined basis per equivalent common
share. We have provided this information only for the six months ended June 30,
1999, as VoiceStream became a publicly traded entity in May 1999 and, therefore,
comparative information prior to that date would not be meaningful to you.
Historical per share loss for Omnipoint and Aerial for the periods prior to this
date can be found in their annual reports to stockholders. See "Where You Can
Find More Information."
The exchange ratios assumed for the reorganizations are one share of
VoiceStream Holdings common stock for each share of VoiceStream common stock;
0.825 of a share of VoiceStream Holdings common stock for each share of
Omnipoint common stock; and 0.455 of a share of VoiceStream Holdings common
stock for each share of Aerial common stock. The following information should be
read in conjunction with the combined pro forma financial statements and notes
thereto -- see "Pro Forma Financial Information."
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1999
-------------
(UNAUDITED)
<S> <C>
VoiceStream historic per common share data:
Net loss, basic and diluted.............................. $ (2.20)
Book value............................................... $ 2.15
Omnipoint historic per common share data:
Net loss, basic and diluted.............................. $ (6.97)
Book value............................................... $(13.86)
Aerial historic per common share data:
Net loss, basic and diluted.............................. $ (0.31)
Book value............................................... $ 0.07
VoiceStream, Omnipoint and Aerial unaudited pro forma
combined per equivalent common share data:
Pro forma net loss, basic and diluted.................... $ (3.44)
Book value............................................... $ 29.87
VoiceStream and Omnipoint unaudited pro forma combined per
equivalent common share data:
Pro forma net loss, basic and diluted.................... $ (4.28)
Book value............................................... $ 21.36
VoiceStream and Aerial unaudited pro forma combined per
equivalent common share data:
Pro forma net loss, basic and diluted.................... $ (1.83)
Book value............................................... $ 21.56
</TABLE>
21
<PAGE> 29
RISK FACTORS
You should carefully consider the risk factors described below before
voting your stock. The risks described below are not the only ones facing
VoiceStream Holdings. Additional risks not presently known to us or that we
currently deem immaterial may also impair our business operations. VoiceStream
Holdings will face all of these risks whether either or both of the
reorganizations have closed.
WE FACE INTENSE COMPETITION, WHICH COULD ADVERSELY AFFECT OUR ABILITY TO GROW
OUR SUBSCRIBER BASE AND REVENUES
VoiceStream, Omnipoint and Aerial compete with providers of PCS, cellular
and other wireless communications services. Under the current rules of the FCC,
up to seven PCS licensees and two cellular licensees may operate in each
geographic area. With so many companies targeting many of the same customers,
competition is intense. VoiceStream, Omnipoint and Aerial compete against AT&T
Wireless, Bell Atlantic Mobile Systems, Nextel, SBC Communications, Sprint PCS,
and Vodafone AirTouch, among others. Many of these competitors have
substantially greater financial resources than VoiceStream, Omnipoint or Aerial,
and several operate in multiple segments of the industry. AT&T Wireless, Nextel
and Sprint PCS operate substantially nationwide networks and Bell Atlantic
Mobile Systems and Vodafone AirTouch, among others, through joint ventures and
affiliation arrangements, operate or plan to operate substantially nationwide
wireless systems throughout the continental United States. As a result of such
competition, we cannot assure you that after either or both of the
reorganizations, VoiceStream Holdings will be able to successfully attract and
retain customers and grow its subscriber base and revenues.
VOICESTREAM, OMNIPOINT AND AERIAL EACH HAS A LIMITED OPERATING HISTORY WITH
SUBSTANTIAL OPERATING LOSSES AND NEGATIVE CASH FLOW AND VOICESTREAM HOLDINGS MAY
NOT BECOME PROFITABLE
VoiceStream sustained operating losses of approximately $163.4 million for
the six months ended June 30, 1999, and $204.6 million in fiscal 1998, $196.9
million in fiscal 1997 and $81.8 million in fiscal 1996. At June 30, 1999,
VoiceStream had an accumulated deficit of $818.2 million and equity, net of
accumulated deficit, of $205.1 million. Omnipoint sustained operating losses of
approximately $235.7 million for the six months ended June 30, 1999, and $456.8
million in fiscal 1998, $238.3 million in fiscal 1997 and $100.4 million in
fiscal 1996. At June 30, 1999, Omnipoint had an accumulated deficit of $1.5
billion and negative equity, net of accumulated deficit, of $740.5 million.
Aerial sustained operating losses of approximately $97.2 million for the six
months ended June 30, 1999, and $280 million in fiscal 1998, $218.2 million in
fiscal 1997 and $44 million in fiscal 1996. At June 30, 1999, Aerial had an
accumulated deficit of $653.5 million and equity, net of accumulated deficit, of
$4.5 million.
We expect to incur significant operating losses and to generate negative
cash flow from operating activities during the next several years while we
continue to develop and construct our systems and grow our subscriber base. We
cannot assure you that after either or both of the reorganizations we will
achieve or sustain profitability or positive cash flow from operating activities
in the future or that we will generate sufficient cash flow to service current
or future debt requirements.
OUR SUBSTANTIAL DEBT CREATES FINANCIAL AND OPERATING RISK
After either or both of the reorganizations, we will be highly leveraged
and subject to strict financial limitations because VoiceStream, Omnipoint and
Aerial have incurred a significant amount of debt in building their systems and
subscriber bases. As of June 30, 1999, VoiceStream had approximately $1 billion
of total outstanding long-term debt, Omnipoint had approximately $2.5 billion of
total outstanding long-term debt and Aerial had approximately $0.9 billion of
total
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outstanding long-term debt (including current portion). Our level of debt, and
the incurrence of additional debt in the future, could have important
consequences to you. For example, it could:
- require us to dedicate a substantial portion of our cash flow from
operations to paying principal and interest on our debt, thereby reducing
the availability of our cash flow to fund working capital, capital
expenditures, acquisitions of additional systems and other general
corporate requirements;
- limit our flexibility in reacting to changes in our business and the
wireless industry generally;
- limit our ability to borrow additional funds due to financial and
restrictive covenants in such debt; and
- make us more vulnerable to increases in prevailing interest rates because
certain of our borrowings are and will continue to be at variable rates
of interest.
Additionally, we cannot guarantee that after the closing of either or both
of the reorganizations we will be able to generate enough cash flow from
operations or that we will be able to obtain enough capital to service our debt
or fund our planned capital expenditures. We may also need to refinance some or
all of our indebtedness on or before its maturity. We cannot guarantee, however,
that we will be able to refinance our indebtedness on commercially reasonable
terms or at all. Should VoiceStream Holdings be liquidated, VoiceStream Holdings
stockholders' claims would be subordinated to the claims of the holders of any
outstanding indebtedness.
WE MAY NOT BE ABLE TO REFINANCE ON COMMERCIALLY REASONABLE TERMS OMNIPOINT DEBT
THAT WILL MATURE OR THAT MAY HAVE TO BE REPURCHASED AS A RESULT OF THE OMNIPOINT
REORGANIZATION
After the Omnipoint reorganization, the holders of a substantial amount of
Omnipoint's debt will have the right to either cause such debt to become due and
payable prior to its stated maturity or to require Omnipoint to repurchase its
debt. Failure to refinance such debt on commercially reasonable terms or to
cause the lenders to waive their rights to accelerate repayment of this debt
prior to the completion of the Omnipoint reorganization will materially and
adversely affect VoiceStream Holdings' financial condition.
IF WE CANNOT RAISE SUFFICIENT FUNDS TO MEET OUR SIGNIFICANT FUTURE CAPITAL
REQUIREMENTS, WE WILL NOT BE ABLE TO COMPETE EFFECTIVELY IN THE WIRELESS
COMMUNICATIONS INDUSTRY
After either or both of the reorganizations, our systems and the systems of
joint ventures in which we are an investor will not be completely built out and
will not have nationwide coverage. The build-out of these systems and the
development of new systems will require significant capital expenditures. We
plan to meet our additional capital needs for the build-out of our systems with
the proceeds from credit facilities and other borrowings, the proceeds from
sales of additional debt securities, the sale or issuance of equity securities,
financing arrangements with vendors and through joint ventures. We cannot
guarantee that we will be able to raise sufficient additional capital on
commercially reasonable terms or at all. If we do not raise sufficient funds, we
may delay or abandon some or all of our planned build-out or expenditures, which
could materially limit our ability to compete in the wireless communications
industry.
WE WILL HAVE TO RELY ON JOINT VENTURE ENTITIES THAT WE WILL NOT CONTROL TO
MAINTAIN PCS COVERAGE AND EXPAND IN SELECTED MARKETS
When implementing the PCS licensing scheme in the United States, the FCC
established six PCS license Blocks, A, B, C, D, E and F, and adopted rules that
granted a narrow category of defined "Designated Entities" the right to own and
operate under the C and F Block PCS licenses. Although Omnipoint qualified as a
Designated Entity under FCC rules and was therefore able to hold
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and operate under C and F Block PCS licenses, VoiceStream Holdings does not
qualify as a Designated Entity and therefore cannot own or operate under C or F
Block PCS licenses.
As a result, immediately prior to the Omnipoint reorganization, the C and F
Block PCS licenses of Omnipoint and existing rights of Omnipoint to obtain
pending C and F Block PCS licenses are being transferred in the CIRI
Transactions to two new joint venture entities controlled by Cook Inlet.
VoiceStream Holdings will have a 49.9% minority interest in each of such
entities. VoiceStream is also a 49.9% minority joint venture owner of and
technical services provider to two other joint venture entities controlled by
Cook Inlet that hold or have rights to obtain C and F Block licenses. Following
the Omnipoint reorganization, we will hold a 49.9% interest in and provide
technical services to each of the joint venture entities that have agreed to
purchase the C and F Block licenses of Omnipoint, and will also continue to hold
VoiceStream's 49.9% interests in the two existing joint venture entities
controlled by Cook Inlet.
As a group, the four joint venture entities controlled by Cook Inlet will
hold or have rights to acquire licenses for approximately 130 BTA markets, many
of which are key urban markets. Among the markets previously owned and operated
by Omnipoint that will be acquired by and subsequently owned and operated by
these joint venture entities controlled by Cook Inlet are Philadelphia and
Miami. In addition, one of the existing joint venture entities controlled by
Cook Inlet was the winning bidder in the recent FCC re-auctions for licenses in
Chicago and Dallas, and intends to own and operate PCS networks in those
markets.
We do not have control and will maintain limited investor protection rights
in the existing Cook Inlet/VoiceStream joint venture entities and in the new
joint venture entities to be formed at the time of the Omnipoint reorganization.
We will have substantial financial commitments and must rely on corresponding
financial commitments to the joint venture entities from Cook Inlet in the
markets served by these joint venture entities. Also, many of the systems owned
by these joint venture entities have not been built out and the joint ventures
will have substantial capital needs in connection with such build-outs. We
cannot guarantee that these joint venture entities will be able to raise
sufficient capital, whether through bank borrowings or otherwise to complete the
build-out of their systems.
While we expect substantially all markets to be operated under the
VoiceStream brand and to utilize our technical services, we cannot assure you
that any of these joint venture entities will continue to use the VoiceStream
brand or our technical services. While we have certain rights which may allow us
to acquire the interests in these joint ventures that we do not control, we
cannot assure you that third parties will not outbid us.
Similarly, due to the licensing restrictions discussed above, and because
of the scarcity of available PCS licenses covering United States urban markets,
we may be required to rely on similar joint ventures that we do not control for
expansion into new markets. We cannot assure you that we will be able to find
acceptable joint venture partners. In the event that we do find acceptable joint
venture partners, due to our lack of control over these joint ventures, we
cannot assure you that they will operate in a manner that increases the value of
our business.
IF WE LOSE ANY MEMBER OF OUR MANAGEMENT TEAM, OUR BUSINESS COULD SUFFER
After either or both of the reorganizations, we will depend on the
continued services of our management team. If we fail to retain the services of
any member of our senior management, our operating results may be adversely
affected.
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WE WILL BE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION, ANY CHANGE IN WHICH COULD
AFFECT OUR BUILD-OUT PLAN OR FINANCIAL PERFORMANCE
The licensing, construction, operation, sale and interconnection
arrangements of wireless telecommunications systems are regulated to varying
degrees by the FCC and, depending on the jurisdiction, also may be regulated by
state and local governmental bodies. There can be no assurance that either the
FCC or such state and local agencies will not adopt regulations or take other
actions that would adversely affect our business. We cannot assure you that
VoiceStream, Omnipoint and Aerial will be able to obtain and retain all
necessary governmental authorizations and permits. Failure to do so could
negatively affect our existing operations and delay or prevent proposed
operations.
REGULATORY AGENCIES MUST APPROVE THE REORGANIZATIONS AND COULD DELAY OR REFUSE
TO APPROVE THE REORGANIZATIONS OR IMPOSE CONDITIONS THAT COULD ADVERSELY AFFECT
OUR BUSINESS OR FINANCIAL CONDITION
The Communications Act and FCC rules require the FCC's prior approval of
the transfer of control of Omnipoint's, VoiceStream's and Aerial's PCS licenses
to VoiceStream Holdings, as well as the assignment of Omnipoint's C and F Block
PCS licenses to the two new Cook Inlet entities.
VoiceStream and Omnipoint filed applications relating to the transfer and
assignment of Omnipoint's PCS licenses to VoiceStream Holdings and the two new
Cook Inlet entities, and the transfer of VoiceStream's licenses to VoiceStream
Holdings, on July 15, 1999. On August 16, 1999, the FCC released a Public Notice
announcing the acceptance for filing of the applications. In response, two
petitions to deny were filed: one by Qualcomm asking the FCC to deny transfer of
Omnipoint's New York MTA PCS license to VoiceStream, and one by NatTel asking
the FCC to deny assignment of 11 C Block licenses from Omnipoint to CIVS III.
(NatTel claimed it had standing to challenge the assignment because two
petitions it had filed to deny grant of certain PCS licenses to Cook Inlet and
an Omnipoint subsidiary remained pending. These petitions were dismissed October
4, 1999.) Oppositions to Qualcomm's petition to deny were filed by Omnipoint and
VoiceStream on September 27, 1999, and oppositions to NatTel's petition to deny
were filed by VoiceStream, Omnipoint and Cook Inlet on September 27, 1999.
Qualcomm and NatTel filed replies on October 5, 1999.
Closing on each of the reorganizations is conditioned among other factors
upon grants of the requisite FCC consents becoming final. A "final" FCC order is
one that has not been stayed and is no longer subject to review by the FCC or
the courts because the statutory period for seeking such review has expired
without any request for review or stay pending. Following the FCC's grants of
consents to the reorganizations, we cannot assure you that there will not be any
post-grant challenges by private parties or actions by the FCC or the courts
that would delay or prevent finality. Though the parties to each reorganization
may waive finality as a condition of closing, we cannot assure you that they
will do so.
The provisions of the Exon-Florio amendment to the Omnibus Trade and
Competitiveness Act of 1988 empower the president of the United States to
prohibit or suspend an acquisition of, or investment in, a United States company
by a non-United States company if the president finds, after investigation,
credible evidence that the non-United States company might take action that
threatens to impair the national security of the United States and that
provisions of existing law do not provide adequate and appropriate authority to
protect the national security. Any determination that an investigation is called
for must be made within 30 days of notice of the proposed transaction. If a
determination is made, any investigation must be completed within 45 days of the
determination and any decision to take action must be announced within 15 days
of completion of the investigation. The Committee for Foreign Investment in the
United States (CFIUS) is charged with reviewing certain investments by a
non-United States company in a United States company, and to determine whether
an investigation under the provisions of Exon-Florio should be conducted.
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On October 5, 1999, the Federal Bureau of Investigation and the Department
of Justice filed a petition with the FCC seeking the deferral by the FCC of
action on VoiceStream's applications for transfer of control of the Omnipoint
FCC licenses pending execution of an agreement between VoiceStream Holdings and
the FBI and DOJ to address certain national security concerns of such agencies.
Negotiations relating to this agreement have commenced and could take several
months. During the course of the FCC process, VoiceStream will determine whether
it needs to file a voluntary notice under Exon-Florio requesting confirmation
that the Hutchison investments do not impair the national security of the United
States. While VoiceStream believes it will be able to reach an agreement on
these issues with these agencies in the context of the FCC review process, and
that the agreement will satisfy any review undertaken by CFIUS, we cannot assure
you that we will be able to satisfy the FBI, DOJ or CFIUS as to their national
security concerns, or that they will not impose restrictions or conditions on
the Hutchison Investments, or that there will be no delays caused thereby.
VoiceStream and Aerial filed applications relating to the transfer and
assignment of Aerial's PCS licenses to VoiceStream Holdings on October , 1999.
On , 1999, the FCC released a Public Notice announcing the
acceptance for filing of the applications. The , 1999 Public Notice
also established a deadline of , 1999 for comment upon the
applications.
While we expect that the applications will be processed in accordance with
the FCC's routine procedures and without conditions other than conditions that
are consistent with those generally applicable to the transfer and assignment of
PCS licenses, we cannot assure you that the FCC will grant the applications,
that the FCC will grant the applications without conditions, or that there will
be no delay caused by the filing of a challenge to the transfer and assignment
applications.
THERE IS A RISK THAT WE COULD LOSE ONE OR MORE LICENSES AS A RESULT OF COURT OR
REGULATORY PROCEEDINGS
Omnipoint's New York MTA A Block license was issued as a Pioneer's
Preference, and as a consequence contains a condition that requires Omnipoint to
construct a PCS system that "substantially uses" the design and technology upon
which the Pioneer's Preference license was based. The FCC has never specifically
defined the phrase "substantial use." In its petition to deny transfer of this
license, Qualcomm claims that Omnipoint has failed to comply with the
"substantial use" requirement. Omnipoint responded in its September 27, 1999
opposition that Omnipoint is in full compliance with the requirement. Although
there can be no assurance as to whether or how the FCC will in the future
construe the phrase "substantial use," Omnipoint believes, on the basis of prior
FCC pronouncements, that its build-out plan in connection with the New York MTA
has satisfied the "substantial use" condition and has so notified the FCC. None
of Omnipoint's or VoiceStream's other licenses contains a similar condition.
FCC restrictions on spectrum aggregation could require divestiture of
certain spectrum licenses if waivers of the aggregation limits are not granted.
The "spectrum cap" and its implications are discussed in more detail under "The
Business of VoiceStream Holdings -- Government Regulation; Licensing of PCS
Systems."
All C Block licenses held by Cook Inlet entities could be affected by U.S.
Airwaves, Inc. v FCC, which is pending in the U.S. Court of Appeals for the D.C.
Circuit. U.S. Airwaves participated in the original C Block auction, which
closed on May 6, 1996, but withdrew after the bids exceeded the maximum prices
it was willing to pay. U.S. Airwaves is now seeking judicial review of two
orders in the FCC's rulemaking proceeding on payment financing for PCS licenses:
the Second Report and Further Notice of Proposed Rulemaking and the Order on
Reconsideration of the Second Report and Order. Since these orders enabled
initial C Block licensees to return licenses or modify the conditions of
payment, there is a remote threat that if the orders are reversed, affected
licenses could be
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returned to the Commission for reauction. The court consolidated into this case
similar petitions filed by seven other parties. The case has not been placed on
the court's calendar.
On June 25, 1999, U.S. Airwaves filed with the FCC an informal objection to
several applications (including those of Cook Inlet and OPCS Three), arguing
that if its challenge to the FCC's orders described in the preceding paragraph
is successful, the Auction 22 winners may be required to return their licenses
to the FCC. The objection was dismissed as moot on September 8, 1999.
Additionally, 14 C Block licenses won by Cook Inlet/VoiceStream PCS LLC and
11 C Block licenses won by Omnipoint were issued subject to the outcome of the
bankruptcy proceeding of the original licensee, a subsidiary of Pocket
Communications Inc. which was conditionally granted 43 C Block licenses in 1996.
Pursuant to an FCC order, the bankruptcy debtors elected to relinquish certain
licenses, which subsequently were reauctioned, and the bankruptcy court issued
an order making the election effective. Pacific Eagle, a secured creditor of the
debtors, filed with the court a motion for reconsideration of the election
order. The motion was denied, and Pacific Eagle appealed the denial to the U.S.
District Court for Northern Maryland. As a result, the bankruptcy court stayed
its order denying the motion for reconsideration pending appeal. Because the
appeal of the election order is still pending there is uncertainty as to the
referenced C Block licenses of the Cook Inlet entities. The district court could
order the return of these licenses to the jurisdiction of the bankruptcy court.
In the event that these licenses are so returned, it is unlikely that the Cook
Inlet entities will be able to recoup any or all of the costs incurred by them
in connection with the construction and development of systems related to such
licenses.
On September 8, 1999, the FCC rejected a request by Pacific Eagle to defer
grant of the 31 licenses subject to possible return to the debtors' estate.
According to the FCC, since grant of the licenses was already conditioned upon
the outcome of pending litigation, such deference was not necessary.
In addition, FCC licenses to provide PCS services are subject to renewal
requirements and to revocation at any time for cause. Omnipoint's New York MTA A
Block license will expire in December 2004 and its other licenses will expire
beginning in 2006. VoiceStream's and Aerial's licenses will expire beginning in
2005. We cannot assure you that the FCC will renew the licenses of VoiceStream,
Omnipoint and Aerial.
AS A RESULT OF THE REORGANIZATIONS, VOICESTREAM MAY HAVE TO MAKE SUBSTANTIAL TAX
INDEMNITY PAYMENTS TO WESTERN WIRELESS
In a spin-off transaction effected on May 3, 1999, Western Wireless
distributed its entire 80.1% interest in VoiceStream's common stock to its
stockholders. Western Wireless will recognize gain as a result of the spin-off
if the spin-off is considered to be part of a "prohibited plan," which is a plan
or series of related transactions pursuant to which one or more persons acquire,
directly or indirectly, 50% or more of VoiceStream's common stock. This is a
risk because VoiceStream has agreed to indemnify Western Wireless on an
after-tax basis for any taxes, penalties, and interest and various other
expenses incurred by Western Wireless if it is required to recognize such gain.
Under the Code, the reorganizations and the related transactions, combined
with Hutchison's acquisition of its existing VoiceStream stock within two years
prior to the spin-off, will give rise to a rebuttable presumption that the
spin-off was effected pursuant to a prohibited plan and, thus, that Western
Wireless recognized gain as a result of the spin-off. At present, there is no
direct authority that specifies the precise standard that must be met by
VoiceStream in order to rebut this presumption. The IRS recently proposed
regulations dealing with this issue. However, these proposed regulations remain
subject to revision by the IRS, and, in any event, will have a prospective
effective
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date when finalized and thus will not apply to the spin-off. Because the precise
standard that must be met by VoiceStream to rebut the presumption is not
presently clear, there is a risk that VoiceStream will be unable to rebut the
presumption.
In addition, no matter what the standard is for rebutting the presumption,
there is a risk that the IRS would not agree that any facts that would be
presented by VoiceStream would establish that the spin-off and the
reorganizations and the related transactions, combined with Hutchison's
acquisition of its existing VoiceStream stock within two years prior to the
spin-off, are not pursuant to a prohibited plan. Although VoiceStream could
contest such an IRS position in court, there is a risk that a court would agree
with such an IRS position. As a result, Western Wireless would be required to
recognize gain upon the spin-off and VoiceStream would be required to indemnify
Western Wireless on an after-tax basis for its resulting taxes, penalties (if
any), and interest, and various other expenses. Any such payment by VoiceStream
could have a material adverse effect on VoiceStream Holdings. See "Pro Forma
Financial Information -- Notes to Pro Forma Condensed Combined Financial
Statements; Contingencies."
BEFORE APPROVING YOUR REORGANIZATION AGREEMENT, YOU MUST WEIGH THE RISKS OF
OWNING VOICESTREAM HOLDINGS COMMON STOCK
By approving the Omnipoint reorganization agreement, every Omnipoint
stockholder acknowledges that he or she may receive an amount of VoiceStream
Holdings common stock in the Omnipoint reorganization even if he or she makes
the Omnipoint Cash Election. See "The Omnipoint Reorganization -- Structure of
the Omnipoint Reorganization; Conversion of Omnipoint Common Stock to
VoiceStream Holdings Common Stock." Every Aerial stockholder, other than those
who make the Aerial Cash Election, will receive VoiceStream Holdings common
stock in the Aerial reorganization. VoiceStream Holdings common stock will be
supported by a different mix of assets and personnel than that of either the
VoiceStream common stock, Omnipoint common stock or Aerial common stock prior to
either or both of the reorganizations. As a consequence, the VoiceStream
Holdings common stock may perform differently in the stock market than the
VoiceStream common stock, Omnipoint common stock or Aerial common stock has
performed historically. Each stockholder must weigh the risks of this new equity
ownership, understanding that the stock price of VoiceStream Holdings common
stock may fluctuate significantly after either or both of the reorganizations
and the value of cash will be less volatile than the value of VoiceStream
Holdings common stock.
THE STOCK PRICE OF VOICESTREAM HOLDINGS COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY
AFTER EITHER OR BOTH OF THE REORGANIZATIONS
Prior to the first to occur of the reorganizations, there will be no public
market for VoiceStream Holdings common stock. Our common stock will trade on the
Nasdaq Stock Market after the first to occur of the reorganizations. The market
price of our common stock could fluctuate significantly in response to various
factors and events, including:
- our success with integrating the operations of VoiceStream, Omnipoint
and/or Aerial;
- the perceived prospects of the combined company;
- changes in our operating results;
- changes in, or our failure to meet, financial estimates by securities
analysts;
- liquidity of our common stock; and
- developments in the wireless communications industry.
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In addition, the stock market in general and wireless industry stocks in
particular have experienced extreme volatility that often has been unrelated to
the operating performance of particular companies. These broad market and
industry fluctuations may adversely affect the trading price of our common
stock, regardless of our actual operating performance.
CONCERNS ABOUT WIRELESS COMMUNICATIONS HEALTH AND SAFETY RISKS AND LEGISLATION
MAY AFFECT OUR PROSPECTS
Media reports have suggested that some radio frequency emissions from
wireless handsets may raise various health concerns, including cancer, and may
interfere with various electronic medical devices, including hearing aids and
pacemakers. Concerns over radio frequency emissions may discourage the use of
wireless handsets, which would adversely affect our business.
The findings of studies like these could have an adverse effect on the
wireless industry, our business, or the use of GSM technology. Such findings
could lead to governmental regulations that may have an adverse effect on our
business. Several states have proposed or enacted legislation which would limit
or prohibit the use and/or possession of a mobile telephone while driving an
automobile. If states adopt and strictly enforce such legislation, it may have
an adverse effect on our business.
OUR OPERATIONS MAY BE HARMED IF VOICESTREAM, OMNIPOINT, AERIAL OR THEIR VENDORS'
COMPUTER PROGRAMS DO NOT FUNCTION PROPERLY BEFORE, DURING AND AFTER THE YEAR
2000
VoiceStream, Omnipoint and Aerial are in the process of modifying portions
of their software so that it will function properly before, during and after the
year 2000. Any computer programs of VoiceStream, Omnipoint, Aerial or their
vendors that have date-sensitive software or embedded technology may recognize a
date containing "00" as the year 1900 rather than the year 2000. VoiceStream,
Omnipoint and Aerial currently are remediating their critical systems to address
the year 2000 issue. Critical systems are those whose failure poses a risk of
disruption to the ability to provide wireless services, collect revenues, meet
safety standards, or comply with legal requirements. We expect that VoiceStream,
Omnipoint and Aerial will incur ongoing internal staff costs as well as
consulting and other expenses related to infrastructure and facilities
enhancements necessary to prepare their systems for the year 2000. We cannot
assure you that the remediation of these critical systems will be complete by
the year 2000.
VoiceStream, Omnipoint and Aerial purchase much of their technology,
including technology associated with their critical systems, from third parties.
VoiceStream, Omnipoint and Aerial are dependent on those third parties to assess
the impact of the year 2000 issue on the technology and services they supply and
to take any necessary corrective action. We cannot assure you that these third
parties will have taken the necessary corrective action prior to the year 2000.
If these third parties do not take the necessary corrective action it may have
an adverse effect on our business.
VOICESTREAM HOLDINGS DOES NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE
For the foreseeable future, we expect to retain all earnings, if any, to
service debt and for the growth and expansion of our business and do not expect
to declare or pay dividends. Payment of any future dividends will depend upon
our earnings and capital requirements, our debt facilities and other factors
that our board considers appropriate. Our ability to declare and pay dividends
on our common stock is also restricted by covenants in our debt instruments and
by applicable law.
YOUR ABILITY TO RESELL VOICESTREAM HOLDINGS COMMON STOCK MAY BE RESTRICTED
All VoiceStream Holdings common stock that VoiceStream, Omnipoint and
Aerial stockholders receive as a result of the reorganizations will be freely
transferable, except for VoiceStream Holdings common stock received by
stockholders who are deemed to be "affiliates" of VoiceStream, Omnipoint
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or Aerial prior to the reorganizations. Affiliates may resell their VoiceStream
Holdings common stock only in transactions permitted by the resale provisions
and volume limitations of Rule 145 or Rule 144 of the Securities Act or as the
Securities Act otherwise permits.
THIS JOINT PROXY STATEMENT-PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS AND WE
CAUTION YOU NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS
This joint proxy statement-prospectus contains statements that are not
based on historical fact, including the words "believes," "anticipates,"
"intends," "expects" and similar words. These statements constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, events or developments to be significantly different from any future
results, events or developments expressed or implied by such forward-looking
statements. Such factors include:
- general economic and business conditions, both nationally and in the
regions in which we operate;
- technology changes;
- competition;
- changes in business strategy or development plans;
- our high level of debt;
- the ability to attract and retain qualified personnel;
- existing governmental regulations and changes in, or the failure to
comply with, governmental regulations;
- product liability and other claims asserted against us;
- our ability and the ability of our third-party suppliers to take
corrective action in a timely manner with respect to the year 2000 issue;
and
- other factors referenced in this joint proxy statement-prospectus,
including without limitation, factors discussed under the captions
"Questions and Answers About the Proposed Reorganizations," "Summary,"
"Risk Factors" and "Financial Information"
GIVEN THESE UNCERTAINTIES, WE CAUTION VOICESTREAM, OMNIPOINT AND AERIAL
STOCKHOLDERS NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. We
also disclaim any obligation to update any such factors or to publicly announce
any revisions to any of the forward-looking statements contained in this joint
proxy statement-prospectus to reflect future results, events or developments.
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THE OMNIPOINT REORGANIZATION
THE OMNIPOINT REORGANIZATION AGREEMENT
In addition to the following summary of the Omnipoint reorganization
agreement, you should read the entire Omnipoint reorganization agreement, which
is hereby incorporated by reference and attached as Annex A.
STRUCTURE OF THE OMNIPOINT REORGANIZATION
Prior to the closing of both the Omnipoint reorganization and the Aerial
reorganization, VoiceStream Holdings will own all the outstanding stock of three
newly formed subsidiaries. At the closing of the Omnipoint reorganization, if it
has not already done so, one of the newly formed subsidiaries will merge with
and into VoiceStream and a second newly formed subsidiary will merge with and
into Omnipoint, with VoiceStream and Omnipoint being the surviving entities. At
the closing of the Aerial reorganization, the third subsidiary will be merged
with and into Aerial, with Aerial being the surviving entity. See "The Aerial
Reorganization."
CONVERSION OF VOICESTREAM COMMON STOCK TO VOICESTREAM HOLDINGS COMMON STOCK
At the closing of the Omnipoint reorganization, the following will occur,
if they have not already occurred as a result of the earlier closing of the
Aerial reorganization:
- each outstanding share of VoiceStream common stock will be converted into
one share of VoiceStream Holdings common stock; and
- each certificate representing shares of VoiceStream common stock will be
deemed to represent an equivalent number of shares of VoiceStream
Holdings common stock.
CONVERSION OF OMNIPOINT COMMON STOCK TO VOICESTREAM HOLDINGS COMMON STOCK
At the closing of the Omnipoint reorganization, each share of Omnipoint
common stock will be converted into the right to receive cash, shares of
VoiceStream Holdings common stock or a combination of both cash and shares of
VoiceStream Holdings common stock. Each Omnipoint stockholder will have the
opportunity to indicate, on an election form, whether the stockholder wishes to
make the Omnipoint Standard Election, the Omnipoint Stock Election or the
Omnipoint Cash Election for each share of Omnipoint common stock held by the
stockholder. The maximum number of shares of VoiceStream Holdings common stock
to be issued to holders of Omnipoint common stock (including Omnipoint common
stock subject to issuance upon the conversion of the Omnipoint 7% Convertible
Preferred) (the "Maximum Share Issuance Number") will be equal to the product of
(1) 0.825 and (2) the number of outstanding Omnipoint common shares (including
Omnipoint common stock subject to issuance upon the conversion of the Omnipoint
7% Convertible Preferred). The maximum amount of cash to be issued (the "Maximum
Cash Amount") will be equal to the product of (1) $8.00 and (2) the number of
outstanding Omnipoint common shares (including Omnipoint common stock subject to
issuance upon the conversion of the Omnipoint 7% Convertible Preferred). The
allocation of cash and/or shares of VoiceStream Holdings common stock that a
stockholder of Omnipoint may receive will depend on the stated preferences of
the Omnipoint stockholders on the election forms and the proration procedures
described below. For the purposes of the proration procedures, dissenting shares
will be considered to have made the Omnipoint Standard Election.
- The Omnipoint Standard Election. Stockholders of Omnipoint who make the
Omnipoint Standard Election or who make no election, will receive, for each
share of Omnipoint common stock for which such election is made or for which no
election is made, (1) 0.825 of a share of
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VoiceStream Holdings common stock, plus (2) $8.00 in cash. The number of shares
of VoiceStream Holdings common stock and the amount of cash to be distributed to
Omnipoint stockholders who make the Omnipoint Standard Election or who make no
election, will not be affected by the proration procedures described below.
- Omnipoint Stock Election. Stockholders of Omnipoint who make the
Omnipoint Stock Election will be asking to receive (subject to the proration
procedures described below), for each share of Omnipoint common stock for which
such election is made, a number of shares of VoiceStream Holdings common stock
equal to the sum of (1) $8.00 divided by the Closing Date Market Price and (2)
0.825.
- Omnipoint Cash Election. Stockholders of Omnipoint who make the
Omnipoint Cash Election will be asking to receive (subject to the proration
procedures described below), for each share of Omnipoint common stock for which
such election is made, cash in an amount equal to the sum of (1) the Closing
Date Market Price multiplied by 0.825 and (2) $8.00.
For example, if an Omnipoint stockholder holds 1,000 shares of Omnipoint
common stock at the effective time and the Closing Date Market Price is $75.00,
then such stockholder would be entitled to elect to receive one of the
following:
- the Omnipoint Standard Election which will consist of 825 shares of
VoiceStream Holdings common stock plus $8,000 in cash;
- the Omnipoint Stock Election which, assuming no proration or adjustment,
will consist of 931 shares of VoiceStream Holdings common stock, plus
$50.00 cash in lieu of a fractional share; or
- the Omnipoint Cash Election which, assuming no proration or adjustment,
will consist of cash in the amount of $69,875.
PRORATION PROCEDURES
In the event that the number of shares of VoiceStream Holdings common stock
to be issued to holders of Omnipoint common stock in connection with the
Omnipoint merger or to become subject to issuance upon conversion of the
Omnipoint 7% Convertible Preferred exceeds the Maximum Share Issuance Number
based on the elections of the Omnipoint stockholders (together with the
conversions applicable to the Omnipoint 7% Convertible Preferred), then the
number of shares of VoiceStream Holdings common stock to be issued to Omnipoint
stockholders who chose the Omnipoint Stock Election will be less than the amount
requested and such stockholders will receive an amount of cash equal to the
value of the shares of VoiceStream Holdings common stock they did not receive as
a result of the proration. The exact number of shares to be issued to such
holders will be determined in accordance with a procedure that ensures that the
reduction is accomplished pro-rata among all the Omnipoint stockholders making
the Omnipoint Stock Election. In no event will the number of shares issued to an
Omnipoint stockholder choosing the Omnipoint Stock Election be less than the
number of shares such stockholder would have received had the stockholder chosen
the Omnipoint Standard Election. Similarly, in no event will the cash received
by an Omnipoint stockholder who chooses the Omnipoint Stock Election exceed the
amount of cash which such stockholder would have received under the Omnipoint
Standard Election.
In the event that the amount of cash to be paid to holders of Omnipoint
common stock in connection with the Omnipoint merger exceeds the Maximum Cash
Amount based on the elections of the Omnipoint stockholders, then the amount of
cash to be paid to Omnipoint stockholders who chose the Omnipoint Cash Election
will be less than the amount requested and such stockholders will receive shares
of VoiceStream Holdings common stock equal in value to the amount of cash they
did not receive as a result of the proration. The exact amount of cash to be
paid to such holders will be
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determined in accordance with a procedure that ensures that the reduction is
accomplished pro-rata among all the Omnipoint stockholders making the Omnipoint
Cash Election. In no event will the amount of cash paid to an Omnipoint
stockholder choosing the Omnipoint Cash Election be less than the amount of cash
such stockholder would have received had the stockholder chosen the Omnipoint
Standard Election, nor will the stock amount exceed 0.825 per share of Omnipoint
common stock.
NON-ELECTION
If an Omnipoint stockholder has not made a proper election by the election
deadline, he will be deemed to have made the Omnipoint Standard Election.
FRACTIONAL SHARES
No fractional shares of VoiceStream Holdings common stock will be issued
pursuant to the Omnipoint reorganization. In lieu of the issuance of any
fractional shares of VoiceStream Holdings common stock, cash equal to the
product of such fractional share amount and the Closing Date Market Price will
be paid to holders in respect of a fractional share of VoiceStream Holdings
common stock that would otherwise be issuable. Payments with respect to
fractional shares may come from the sale of the aggregate number of whole shares
resulting from the foregoing.
ELECTION PROCEDURE; EXCHANGE OF CERTIFICATES
Following the closing of the Omnipoint reorganization, we will send a form
of election and letter of transmittal to Omnipoint stockholders. Elections may
be made by holders of Omnipoint common stock by delivering the form of election
and letter of transmittal to the exchange agent, ChaseMellon Shareholder
Services L.L.C. To be effective, a form of election and letter of transmittal
must be properly completed, dated, signed and submitted in the return envelope
mailed therewith to the exchange agent by the election deadline, which will be
specified in the election form, and accompanied by (1) the certificates as to
which the election is being made or (2) an appropriate guarantee of delivery of
the certificates as set forth in the form of election from a firm that is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in the United States, provided that such
certificates are in fact delivered to the exchange agent within three trading
days after the date of execution of the guarantee of delivery.
Failure to deliver certificates covered by any guaranty of delivery within
three trading days after the date of execution of such guaranty of delivery will
be deemed to invalidate any otherwise properly made Omnipoint Cash Election or
Omnipoint Stock Election and will be deemed to be an Omnipoint Standard
Election. VoiceStream Holdings has the discretion, which it may delegate in
whole or in part to the exchange agent, to determine whether any form of
election and/or letter of transmittal has been properly completed, signed and
submitted or revoked and to disregard immaterial defects in the form of election
or letter of transmittal. The good faith decision of VoiceStream Holdings (or,
if so delegated, the exchange agent) in such matters will be conclusive and
binding. Neither VoiceStream Holdings nor the exchange agent is under any
obligation to notify any person of any defect in a form of election or letter of
transmittal submitted to the exchange agent. The exchange agent will also make
all computations contemplated by the Omnipoint reorganization agreement, and all
such computations will be conclusive and binding on the holders of Omnipoint
common stock in the absence of manifest error.
An Omnipoint stockholder who does not submit a form of election and letter
of transmittal to the exchange agent prior to the election deadline, or who
submits a form of election without the corresponding certificates or a guarantee
of delivery, will be deemed to have made the Omnipoint Standard Election. If any
form of election is defective in any manner such that the exchange agent
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cannot reasonably determine the election preference of the Omnipoint stockholder
submitting such form of election, the Omnipoint stockholder will also be deemed
to have made the Omnipoint Standard Election.
TREATMENT OF OMNIPOINT PREFERRED STOCK
In addition to its common stock, Omnipoint will have outstanding
immediately prior to the closing 6.5 million shares of Omnipoint 7% Convertible
Preferred and 12,500 shares of Omnipoint Series A Preferred.
Each outstanding share of Omnipoint 7% Convertible Preferred that has not
been converted into Omnipoint common stock as of the closing of the Omnipoint
reorganization will remain outstanding and will be convertible into VoiceStream
Holdings common stock and cash in amounts equal to the Omnipoint Standard
Election.
All outstanding shares of Omnipoint Series A Preferred (or all shares of
Omnipoint common stock issued on conversion of Omnipoint Series A Preferred)
held by VoiceStream will remain outstanding after the closing of the Omnipoint
reorganization. All outstanding shares of Omnipoint Series A Preferred (or all
shares of Omnipoint common stock issued on conversion of the Omnipoint Series A
Preferred) held by Hutchison PCS (USA) will be exchanged directly for
VoiceStream Holdings common stock in connection with the closing of the
Omnipoint reorganization.
TREATMENT OF OMNIPOINT STOCK OPTIONS AND WARRANTS
On the closing of the Omnipoint reorganization, each outstanding and
unexercised option or warrant to purchase shares of Omnipoint common stock will
be assumed by VoiceStream Holdings and converted, as the case may be, into an
option or warrant to purchase shares of VoiceStream Holdings common stock. The
number of shares of VoiceStream Holdings common stock that a holder will be
entitled to purchase upon the exercise of such new option or warrant will be
determined by multiplying:
- the number of shares of Omnipoint common stock subject to the original
option or warrant; and
- the sum of (1) $8.00 divided by the closing price of VoiceStream common
stock on the last day on which such shares are traded on the Nasdaq Stock
Market immediately preceding the closing date and (2) 0.825.
The exercise price for such options or warrants will be equal to:
- the exercise price under the original option or warrant divided by
- the sum of (1) $8.00 divided by the closing price of VoiceStream common
stock on the last day on which such shares are traded on the Nasdaq Stock
Market immediately preceding the closing date and (2) 0.825.
The new option or warrant will otherwise have the same terms and conditions
in effect immediately prior to the effective date of the Omnipoint
reorganization except to the extent that the vesting of certain options will or
may be accelerated as a result of the Omnipoint reorganization.
TREATMENT OF VOICESTREAM STOCK OPTIONS AND WARRANTS
On the closing of the Omnipoint reorganization, each outstanding and
unexercised option or warrant to purchase shares of VoiceStream common stock
will be assumed by VoiceStream Holdings and converted into an option or warrant,
as the case may be, to purchase shares of VoiceStream Holdings common stock. The
number of shares of VoiceStream Holdings common stock that a
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holder will be entitled to purchase upon the exercise of such new option or
warrant will be equal to the number of shares of VoiceStream common stock
subject to the original option or warrant. The exercise price for such options
or warrants will be equal to the exercise price under the original VoiceStream
option or warrant. The new option or warrant will otherwise have the same terms
and conditions in effect immediately prior to the date the Omnipoint
reorganization becomes effective.
VOICESTREAM HOLDINGS BOARD
VoiceStream and VoiceStream Holdings have agreed to take the necessary
corporate action so that, at the closing of the Omnipoint reorganization four
members of the Omnipoint board, selected by Omnipoint, will join the VoiceStream
Holdings board. See "The VoiceStream Holdings Voting Agreement" for a discussion
of this agreement as well as other agreements relating to the election of the
VoiceStream Holdings board.
COVENANTS OF VOICESTREAM AND OMNIPOINT
In the Omnipoint reorganization agreement, VoiceStream Holdings,
VoiceStream and Omnipoint have agreed to take or not to take certain actions.
The following summarizes these actions, however, these obligations are also set
forth in detail in the Omnipoint reorganization agreement.
NO SOLICITATION OF ALTERNATIVE ACQUISITION TRANSACTIONS BY OMNIPOINT
Omnipoint has agreed that it and its subsidiaries and their officers,
directors, employees, affiliates and advisors will not directly or indirectly:
- take any action to solicit or encourage the submission of any alternative
acquisition proposal;
- other than in the ordinary course of business and not related to an
alternative acquisition proposal, engage in any discussions or negotiate
with, or provide any information or provide access to any other party who
Omnipoint knows is considering an alternative acquisition proposal;
- approve any transactions under the antitakeover statutes of the DGCL or
approve any person becoming an "interested stockholder" under such
statute; or
- enter into any agreement with respect to an alternative acquisition
proposal.
BOARD RECOMMENDATION
The VoiceStream board and the Omnipoint board have each agreed to recommend
to their respective stockholders the adoption of, and approval of the
transactions contemplated by, the Omnipoint reorganization agreement. However,
the Omnipoint board may withdraw or modify in a manner adverse to VoiceStream
this recommendation if:
- the Omnipoint board by a majority vote determines in its good faith
judgment that it is necessary to do so to comply with its fiduciary duty
to stockholders under applicable law, after receiving the advice of
outside legal counsel; and
- Omnipoint and its subsidiaries, officers, directors, employees,
affiliates and advisors have substantially complied with their
obligations under the no solicitation covenant described above.
The boards of Omnipoint and VoiceStream are each required to call a meeting
of their respective stockholders to vote on the Omnipoint reorganization, even
if such board has modified or withdrawn its recommendation of the Omnipoint
reorganization.
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CONDUCT OF OMNIPOINT'S BUSINESS PENDING THE OMNIPOINT REORGANIZATION
In general, the Omnipoint reorganization agreement requires Omnipoint and
its subsidiaries, until either the closing of the Omnipoint reorganization or
the termination of the Omnipoint reorganization agreement, to conduct their
business in the ordinary course consistent with past practice and to use their
reasonable best efforts to preserve intact their business organizations and
relationships with third parties. In addition, Omnipoint has agreed to specific
restrictions, subject to certain exceptions described in the Omnipoint
reorganization agreement and the schedules thereto. With certain exceptions,
Omnipoint may not:
- amend its organizational documents;
- amend the terms of its outstanding securities;
- enter into any merger, liquidation or other significant transaction;
- split, combine or reclassify its capital stock;
- issue or dispose of equity securities, options or other securities
convertible into or exercisable for equity securities, except in
connection with the exercise or conversion of options or convertible
securities outstanding on the day of the Omnipoint reorganization
agreement or the granting of options as permitted in the Omnipoint
reorganization agreement;
- encumber or transfer any assets having a fair market value exceeding
$5,000,000, or $10,000,000 in the aggregate;
- incur or assume any indebtedness;
- make any guarantees;
- make any loans, advances or capital contributions;
- amend the terms of any outstanding stock options;
- make capital expenditures;
- increase termination or severance benefits;
- commit to provide more than a limited amount of severance or termination
payments;
- enter into certain employment or other similar agreements;
- establish or amend any of its bonus plans or benefits;
- increase the total compensation or benefits payable;
- acquire material assets;
- change its accounting policies;
- enter into or amend the terms of any joint venture, partnership, or other
minority investment;
- settle or propose to settle any litigation;
- take any other action that would make any representation or warranty by
Omnipoint inaccurate in any material respect;
- make any material tax election or enter into a settlement with respect to
any material tax liability;
- incur any liens;
- enter into or amend in a material respect any material agreement; or
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- enter into any agreement that would materially limit the ability of
Omnipoint, VoiceStream or VoiceStream Holdings to engage in the wireless
communications business or any other business.
CONDUCT OF VOICESTREAM'S BUSINESS PENDING THE OMNIPOINT REORGANIZATION
VoiceStream also has agreed to certain restrictions on it and its
subsidiaries until either the closing of the Omnipoint reorganization or the
termination of the Omnipoint reorganization agreement. Among other things, these
restrictions may affect VoiceStream's ability to:
- amend its organizational documents;
- amend the terms of its outstanding securities;
- split, combine or reclassify its capital stock;
- change its accounting policies;
- take any action that would impair or materially delay the ability of
Omnipoint or VoiceStream to complete the Omnipoint reorganization or the
other transactions contemplated by the Omnipoint reorganization
agreement; or
- enter into a new line of business that is material to VoiceStream and not
strategically related to its business.
The Omnipoint reorganization agreement provides that, notwithstanding
anything to the contrary, VoiceStream Holdings may enter into a subsequent
transaction provided that such subsequent transaction would not reasonably be
expected to prevent, impair or materially delay the transactions between
VoiceStream, VoiceStream Holdings and Omnipoint. A subsequent transaction is
defined in the Omnipoint reorganization agreement as any transaction whereby
VoiceStream or its subsidiaries:
- would acquire control or an investment in any entity in the business of
providing wireless communication services;
- would issue equity or debt in connection with such an acquisition or
otherwise;
- would enter into a strategic alliance or other commercial relationship;
or
- would be acting in the ordinary course of business consistent with past
practices;
provided, that in the case of the first three bullet points listed above,
VoiceStream Holdings must receive an opinion from a national investment bank
that the subsequent transaction is fair to VoiceStream Holdings stockholders or,
if applicable, VoiceStream Holdings. The Aerial reorganization qualifies as a
subsequent transaction under the Omnipoint reorganization agreement.
BEST EFFORTS TO COMPLETE OMNIPOINT REORGANIZATION
VoiceStream and Omnipoint have agreed to cooperate with each other and use
their best efforts to take all actions and do all things necessary or advisable
under the Omnipoint reorganization agreement and applicable laws to complete the
Omnipoint reorganization and the other transactions contemplated by the
Omnipoint reorganization agreement.
EMPLOYEE BENEFITS MATTERS
The Omnipoint reorganization agreement provides that VoiceStream Holdings,
itself or through its subsidiaries, will honor all obligations under Omnipoint's
various employee plans and benefit arrangements in effect as of the closing of
the Omnipoint reorganization and provide a level of employee benefits and
aggregate compensation that is substantially comparable in the aggregate with
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that provided by Omnipoint until December 31, 2001. To the extent any employees
of Omnipoint are included in any VoiceStream Holdings employee benefit plan or
benefit arrangements, such employees will be vested in these plans to the same
extent as they are vested in the comparable Omnipoint plans. Notwithstanding the
foregoing, VoiceStream Holdings is not obligated to continue any specific plan
or benefit arrangement, so long as any changes in any such plan or arrangement
are permitted by applicable law.
INDEMNIFICATION AND INSURANCE OF OMNIPOINT DIRECTORS AND OFFICERS
VoiceStream Holdings has agreed that:
- VoiceStream Holdings will indemnify former Omnipoint and VoiceStream
directors and officers for liabilities from their acts or omissions in
those capacities occurring prior to the closing of the Omnipoint
reorganization to the extent provided under Omnipoint's or VoiceStream's,
as applicable, charter and bylaws as in effect on June 23, 1999; and
- For six years after closing, VoiceStream Holdings will provide officers'
and directors' liability insurance covering acts or omissions occurring
prior to closing by each person currently covered by Omnipoint's or
VoiceStream's, as applicable, officers' and directors' liability
insurance policy; provided, that this policy must be at least as
favorable as the Omnipoint or VoiceStream, as applicable, policy in
effect on June 23, 1999, except that VoiceStream Holdings will only be
obligated to pay up to 200% of the annual premium paid by Omnipoint or
VoiceStream, as applicable, for such insurance as of June 23, 1999.
REPRESENTATIONS AND WARRANTIES OF VOICESTREAM, VOICESTREAM HOLDINGS AND
OMNIPOINT
The Omnipoint reorganization agreement contains substantially reciprocal
representations and warranties made by VoiceStream Holdings and VoiceStream, on
the one hand, and Omnipoint on the other. The most significant of these relate
to:
- corporate existence and power;
- corporate authorization to enter into the transactions provided for in
the Omnipoint reorganization agreement and authorization, execution,
delivery and enforceability of the Omnipoint reorganization agreement and
related matters;
- required governmental approvals;
- validity and sufficiency of FCC licenses and FCC requirements;
- absence of conflicts under organizational documents, applicable law or
certain material agreements;
- capitalization;
- ownership of subsidiaries and minority investments;
- accuracy of filings with the SEC;
- accuracy of financial statements;
- absence of certain material changes since a specified balance sheet date;
- absence of undisclosed material liabilities;
- litigation;
- tax matters;
- employee and employee benefits matters;
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- compliance with laws and court orders;
- intellectual property;
- material contracts;
- the opinions received from financial advisors regarding the Omnipoint
reorganization;
- finders' or advisors' fees; and
- environmental matters.
In addition, Omnipoint has represented and warranted to VoiceStream
Holdings and VoiceStream that the Delaware anti-takeover statute does not apply.
The representations and warranties in the Omnipoint reorganization
agreement will not survive the closing or termination of the Omnipoint
reorganization agreement.
CONDITIONS TO THE COMPLETION OF THE OMNIPOINT REORGANIZATION
MUTUAL CLOSING CONDITIONS
The obligations of VoiceStream Holdings and VoiceStream, on the one hand,
and Omnipoint, on the other hand, to complete the transactions provided for in
the Omnipoint reorganization agreement are subject to the satisfaction or, to
the extent legally permissible, waiver of the following conditions:
- receipt of all necessary approvals from the VoiceStream and Omnipoint
stockholders;
- expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976;
- absence of legal prohibition on completion of the Omnipoint
reorganization or the other transactions provided for in the Omnipoint
reorganization agreement;
- effectiveness of VoiceStream Holdings' registration statement on Form
S-4;
- approval for listing on the Nasdaq Stock Market of the shares of
VoiceStream Holdings common stock to be issued in the Omnipoint
reorganization;
- receipt of opinions of counsel that the Omnipoint reorganization will
qualify as a tax-free transaction (except with respect to any cash
received);
- receipt of all requisite orders and approvals of the FCC;
- effectiveness of all governmental consents without limitations,
restrictions or obligations that would have a material adverse effect on
the business operations of VoiceStream or Omnipoint;
- consummation of the Hutchison Investments at closing;
- consummation of the CIRI Transactions prior to closing;
- accuracy as of closing of the representations and warranties made by the
parties to the extent specified in the Omnipoint reorganization
agreement; and
- performance in all material respects by the parties of their obligations
required to be performed at or prior to closing.
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ADDITIONAL VOICESTREAM CONDITIONS
VoiceStream's obligation to complete the Omnipoint reorganization agreement
is additionally conditioned upon the following:
- its receipt of a legal opinion that the Omnipoint reorganization
agreement and the transactions contemplated by the Omnipoint
reorganization agreement should not cause the spin-off of VoiceStream,
which occurred on May 3, 1999, to fail to be a tax-free transaction to
the stockholders of Western Wireless; and
- fewer than 10% of VoiceStream stockholders or Omnipoint stockholders
electing dissenters' rights.
Further, VoiceStream is not required to close the transaction if (1) a
change shall occur in the United States financial, political, or economic
conditions which would materially and adversely affect the ability of
VoiceStream and Omnipoint to restructure or refinance the indebtedness of
Omnipoint on such terms as would not have a material adverse effect on
VoiceStream Holdings after the closing, and (2) more than $200 million of
Omnipoint indebtedness either becomes due and payable prior to its stated
maturity or is required to be redeemed or repurchased prior to its stated
maturity.
TERMINATION OF THE OMNIPOINT REORGANIZATION AGREEMENT
RIGHT TO TERMINATE
VoiceStream or Omnipoint may terminate the Omnipoint reorganization
agreement at any time prior to the closing in any of the following ways:
- by mutual written consent of VoiceStream and Omnipoint;
- by either VoiceStream or Omnipoint if:
- the Omnipoint reorganization has not been consummated by March 31, 2000,
which may under some circumstances be extended to June 30, 2000 unless
the terminating party has failed to fulfill its obligations under the
Omnipoint reorganization agreement that resulted in the failure to
timely complete the Omnipoint reorganization; or
- there is a permanent legal prohibition to closing the Omnipoint
reorganization;
- by VoiceStream if:
- the Omnipoint board fails to recommend, or withdraws or modifies in a
manner adverse to VoiceStream, its approval or recommendation of the
Omnipoint reorganization, or fails to call the Omnipoint meeting;
- Omnipoint stockholders fail to give the necessary approvals at a duly
held meeting;
- Omnipoint willfully and materially breaches the no solicitation covenant
of the Omnipoint reorganization agreement;
- Omnipoint shall be incapable of satisfying, in all material respects,
its obligations under the Omnipoint reorganization agreement; or
- Omnipoint breaches any representation or warranty that would cause a
representation or warranty to be incapable of being true and correct at
and as of the closing; and
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- by Omnipoint if:
- the VoiceStream board fails to recommend, or withdraws or modifies in a
manner adverse to Omnipoint, its approval or recommendation of the
Omnipoint reorganization or fails to call the VoiceStream meeting;
- VoiceStream shall be incapable of satisfying, in all material respects,
its obligations under the Omnipoint reorganization agreement; or
- VoiceStream breaches any representation or warranty that would cause a
representation or warranty to be incapable of being true and correct at
and as of the closing.
If the Omnipoint reorganization agreement is terminated, it will become
void without any liability on the part of any party unless that party is in
willful breach of the Omnipoint reorganization agreement. However, the
provisions of the Omnipoint reorganization agreement relating to expenses and
termination fees, as well as the confidentiality agreement, will continue in
effect notwithstanding termination of the Omnipoint reorganization agreement.
TERMINATION FEE PAYABLE BY OMNIPOINT
Omnipoint has agreed to pay VoiceStream a cash amount equal to $70 million
in any of the following circumstances:
- VoiceStream terminates the Omnipoint reorganization agreement because (1)
the Omnipoint board fails to recommend or withdraws, or modifies in a
manner adverse to VoiceStream, its approval of the Omnipoint
reorganization, (2) the Omnipoint board fails to call a special meeting
in accordance with the Omnipoint reorganization agreement or (3)
Omnipoint materially and willfully breaches any obligation with respect
to the non-solicitation of other acquisition proposals; or
- VoiceStream terminates the Omnipoint reorganization agreement in
circumstances where the following three conditions are met:
- Omnipoint's stockholders do not approve the Omnipoint reorganization;
- prior to Omnipoint's special meeting a third party makes a proposal for
an alternative transaction; and
- within 12 months of the special meeting Omnipoint enters into an
agreement for an alternative transaction with that third party or any
third party makes a tender offer for and obtains control of Omnipoint.
BACKGROUND OF THE OMNIPOINT REORGANIZATION
On September 28, 1998, Douglas Smith met with John Stanton to discuss
developing trends in the telecommunications industry, consolidation in the GSM
market and ways in which VoiceStream and Omnipoint could cooperate
strategically. Mr. Smith advised Mr. Stanton that Omnipoint was looking to raise
additional equity. A discussion ensued concerning the possibility of
VoiceStream, or its affiliates, making an investment in Omnipoint. Mr. Smith
also met with other members of VoiceStream and Western Wireless management. At
the end of the meeting, they agreed to continue discussions.
Over the next several weeks, VoiceStream and Omnipoint senior management
each independently began their internal analyses of possible transactions
between the companies.
On October 7, 1998, VoiceStream retained Goldman Sachs as its financial
advisor.
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<PAGE> 49
On October 7, 1998, Omnipoint publicly announced that it had been in
discussions over the prior several weeks with potential strategic investors.
Throughout this period until an agreement in principle was reached with
VoiceStream in June 1999, discussions between Omnipoint and other potential
strategic investors continued.
On October 14, 1998, Western Wireless (on behalf of itself and its then
affiliate, VoiceStream) and Omnipoint entered into a mutual non-disclosure
agreement.
On October 28, 1998, Omnipoint retained Lehman Brothers as a financial
advisor concerning an investment in or sale of the company.
On November 10, 1998, Mr. Stanton and other representatives of VoiceStream
met with Mr. Smith and other representatives of Omnipoint, and discussed
Omnipoint's financial requirements and a possible transaction with VoiceStream.
On November 13, 1998, VoiceStream sent a draft term sheet to Omnipoint
describing a possible transaction involving an initial investment by VoiceStream
in Omnipoint as well as other terms.
On November 17, 1998, representatives of VoiceStream and representatives of
Omnipoint discussed the term sheet sent by VoiceStream to Omnipoint.
On November 30, 1998, Omnipoint responded by sending to VoiceStream an
alternative term sheet.
On December 2, 1998, Mr. Stanton met with Canning Fok, a director of
VoiceStream and a senior executive of Hutchison, to discuss the possible
VoiceStream transaction with Omnipoint, and an investment by Hutchison in
connection with such transaction.
On December 3, 1998, representatives of VoiceStream, including Mr. Stanton,
and representatives of Omnipoint, including Mr. Smith, met to discuss the two
term sheets. In addition to differences between the parties with respect to
structure, the parties also discussed differences with respect to the valuations
ascribed to the respective companies.
From December 8, 1998 until December 29, 1998 representatives of
VoiceStream and Omnipoint, together with their investment bankers, had a series
of meetings and discussions with respect to valuation and alternative
structures.
On December 31, 1998, VoiceStream sent a proposal to Omnipoint regarding an
investment by VoiceStream in Omnipoint.
On January 25, 1999, Omnipoint sent to VoiceStream a counter proposal on
the respective valuations of Omnipoint and VoiceStream.
On January 28, 1999, representatives of VoiceStream, including Mr. Stanton,
and representatives of Omnipoint, including Mr. Smith, discussed valuation. No
agreements were reached concerning valuation and the parties were at an impasse.
On February 12, 1999, Omnipoint and Cook Inlet each filed an application to
bid in the PCS reauction. VoiceStream also filed an application but did not make
an upfront payment and thus did not participate in the re-auction. Between the
time their applications were filed on February 12, 1999 and May 5, 1999, in
accordance with FCC rules, there were no communications between Omnipoint and
Cook Inlet or between Omnipoint and VoiceStream.
During the period February 12 through June 7, 1999, Omnipoint engaged in
active discussions with multiple potential strategic investors and exchanged
term sheets with a number of them.
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<PAGE> 50
On April 26, 1999, representatives of VoiceStream and representatives of
Hutchison held meetings to discuss Hutchison's possible investment in
VoiceStream in connection with a possible deal with Omnipoint.
In late April of 1999, VoiceStream advised Cook Inlet of VoiceStream's
interest in exploring a possible transaction with Omnipoint and inquired as to
Cook Inlet's interest in working with VoiceStream on a joint venture to acquire
the C and F Block licenses of Omnipoint.
On May 5, 1999, restrictions on discussions expired. During the subsequent
weeks, representatives of VoiceStream and Omnipoint resumed discussions as did
Mr. Stanton and Mr. Smith concerning a possible investment by VoiceStream into
Omnipoint as well as a possible merger.
On May 7, 1999, representatives of VoiceStream and Omnipoint, including
Messrs. Stanton and Smith met and discussed alternative transactions including
an investment by VoiceStream in Omnipoint and a merger of VoiceStream and
Omnipoint.
On May 26 and 27, 1999, meetings took place among representatives of
VoiceStream and Hutchison regarding the possible transaction with Omnipoint,
including the investment by Hutchison in VoiceStream and the possible merger of
VoiceStream with Omnipoint.
On May 27, 1999, VoiceStream sent a merger proposal to Omnipoint. The
Omnipoint board, which held a regularly scheduled meeting later that day, agreed
to continue discussions with VoiceStream. In the days after the merger proposal
was sent, numerous calls among the parties took place regarding the proposal.
On June 2, 1999, representatives of VoiceStream and Omnipoint met to
discuss the status of the merger discussions and the relevant significant
issues.
On June 7, 1999, the VoiceStream board held a regularly scheduled meeting.
Among other matters, the board discussed the possible transactions.
On June 8, 1999, a series of phone calls among representatives of
VoiceStream and Omnipoint took place during which time the parties agreed to
merger pricing subject to approval of their respective boards.
During the period of June 12 through signing on June 23, 1999, numerous
meetings and phone conversations took place among representatives of VoiceStream
and Omnipoint in connection with the preparation, negotiation and finalization
of reorganization documents. Similarly, meetings and phone conversations took
place among representatives of VoiceStream and Hutchison in connection with the
preparation, negotiation and execution of documents associated with the
Hutchison Investments, and among representatives of VoiceStream, Omnipoint and
Cook Inlet in connection with preparation, negotiation and execution of
documents associated with the CIRI Transactions.
On June 21, 1999, VoiceStream held a meeting of its board. At such meeting
Mr. Stanton reviewed the strategic rationale for the proposed merger and members
of senior management presented further details. Goldman Sachs presented an
analysis of the proposed transaction. A lengthy discussion ensued.
On June 21, 1999, Omnipoint held a meeting of its board by phone. Attorneys
from Piper & Marbury and representatives from Lehman Brothers were also present
at this meeting. Lehman Brothers presented an analysis of the proposed
transaction and delivered its opinion concerning the fairness of the proposed
transaction from a financial point of view. The board reviewed the strategic
rationale for, and had a lengthy discussion concerning, the proposed
transaction.
On June 22, 1999, the VoiceStream board held a meeting. Goldman Sachs
delivered an oral opinion that, as of June 22, 1999, the merger consideration to
be paid by VoiceStream pursuant to the Omnipoint reorganization agreement was
fair from a financial point of view to VoiceStream. After
43
<PAGE> 51
a discussion, the board approved the proposed merger and the execution and
delivery of the Omnipoint reorganization agreement, and the transactions
contemplated thereby, including the Hutchison Investments and the CIRI
Transactions.
On June 23, 1999, the Omnipoint board approved the Omnipoint reorganization
and received copies of Lehman Brother's written fairness opinion, meetings with
counsel for all parties continued, and the parties executed the Omnipoint
reorganization agreement.
RECOMMENDATIONS OF THE VOICESTREAM BOARD; REASONS FOR THE OMNIPOINT
REORGANIZATION
The VoiceStream board believes that combining VoiceStream's and Omnipoint's
resources will enable the combined company to be a stronger competitor in the
rapidly consolidating telecommunications industry. At various meetings of the
VoiceStream board held between September 1998 and June 1999, members of
VoiceStream's management made presentations concerning the business and
prospects of Omnipoint and the potential combination of Omnipoint and
VoiceStream. At a meeting held on June 21, 1999, VoiceStream's board received
presentations concerning, and reviewed the terms of, the Omnipoint
reorganization agreement and the related agreements with members of
VoiceStream's management, its legal counsel and its financial advisors. At a
meeting held on June 22, 1999, Goldman Sachs delivered its oral opinion, as of
that date, that the merger consideration to be paid by VoiceStream pursuant to
the Omnipoint reorganization agreement was fair from a financial point of view
to VoiceStream and the VoiceStream board determined that the Omnipoint
reorganization, the Omnipoint reorganization agreement and the related
transactions were fair to, and in the bests interests of, VoiceStream
stockholders. Accordingly, the VoiceStream board approved the Omnipoint
reorganization, the Omnipoint reorganization agreement and the related
transactions. The board unanimously recommends that VoiceStream stockholders
adopt, and approve the transactions contemplated by, the Omnipoint
reorganization agreement, at a special stockholders meeting.
In reaching its determination to approve the Omnipoint reorganization, the
Omnipoint reorganization agreement and the related transactions, the VoiceStream
board consulted with VoiceStream's financial and legal advisers and senior
management and considered a number of factors in addition to those set forth
above. The following summarizes the material factors that the VoiceStream board
considered:
- the current conditions and trends in the telecommunications industry,
including the likelihood that future mergers and acquisitions will
increase the size and strength of competitors;
- the extent and geographical scope of business operations, and
VoiceStream's continuing ability to compete against larger wireless
carriers;
- the need for significant capital resources to build out the combined
company's GSM systems;
- the requirement that VoiceStream make an interim investment in Omnipoint;
- the terms and availability of equity financing from the Hutchison
Entities in connection with the Omnipoint reorganization and the impact
of the corresponding increase in the equity ownership by the Hutchison
Entities and the number of board members designated by the Hutchison
Entities;
- the consistency of the strategies that the two companies were pursuing;
- the synergies which the combined company might realize, and the risks
that the synergies would not all be realized;
- the impact that the transaction would be expected to have on the combined
company's balance sheet, earnings and cash flow;
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<PAGE> 52
- the likelihood that VoiceStream and Omnipoint would be able to obtain the
necessary regulatory approvals to complete the Omnipoint reorganization,
and the likelihood that regulatory authorities would insist on conditions
to those approvals which could substantially reduce the benefits of the
Omnipoint reorganization;
- the impact the transaction would have on the tax-free status of the
spin-off of VoiceStream from Western Wireless and VoiceStream's
obligations under its tax sharing agreement with Western Wireless;
- the impact of the transaction on the combined company's ability to
maintain and enhance VoiceStream's reputation for delivering high-quality
services to customers;
- the impact of the transaction on the combined company's ability to
maintain a high-quality, highly-motivated work force;
- the advantages and potential disadvantages of the structure of the
holding company;
- a review of the historical operating results of Omnipoint and VoiceStream
and the projected operating results of Omnipoint and VoiceStream,
individually and in combination;
- the fact that four seats on the holding company's board and one or more
senior management positions in the holding company would be offered to
the current directors or senior management of Omnipoint;
- the other potential major transactions which might be available to
VoiceStream either in addition to, or as alternatives to, the Omnipoint
reorganization, and the effect of the Omnipoint reorganization on the
ability of VoiceStream to pursue those transactions; and
- the opinion of VoiceStream's financial advisors that, as of the date of
such opinion, the consideration to be paid by VoiceStream pursuant to the
Omnipoint reorganization agreement was fair from a financial point of
view to VoiceStream.
The foregoing summary addresses the material facts, matters and information
considered by the VoiceStream board in connection with its deliberations on the
combination of Omnipoint and VoiceStream. In view of the variety of factors
considered, the VoiceStream board did not find it practical to and did not make
a specific assessment of or otherwise assign relative weights to the specific
facts, matters and information considered. The VoiceStream board adopted the
Omnipoint reorganization agreement and approved the transactions contemplated
thereby, in consideration of all of the facts, matters and information brought
to its attention.
Taking into account all of the material facts, matters and information,
including those described above, the VoiceStream board believes that the terms
of the Omnipoint reorganization agreement and the transactions provided for
therein are fair to and in the best interest of VoiceStream's stockholders.
THE VOICESTREAM BOARD UNANIMOUSLY RECOMMENDS THAT VOICESTREAM'S
STOCKHOLDERS VOTE "FOR" ADOPTION OF, AND APPROVAL OF THE TRANSACTIONS
CONTEMPLATED BY, THE OMNIPOINT REORGANIZATION AGREEMENT.
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<PAGE> 53
VOICESTREAM FAIRNESS OPINION
Goldman Sachs has acted as financial advisor to VoiceStream in connection
with the Omnipoint reorganization. On June 22, 1999, Goldman Sachs delivered its
oral opinion, conditioned on the finalization of the Omnipoint reorganization
agreement in substantially the form as reviewed by Goldman Sachs on June 22,
1999. Goldman Sachs subsequently confirmed its oral opinion in writing without
such condition, that, as of June 22, 1999 with respect to the oral opinion and
June 23, 1999 with respect to the written opinion, the merger consideration to
be paid by VoiceStream for each share of Omnipoint of:
- cash in an amount equal to the sum of (1) the average closing price
(calculated on a weighted average based upon the volume of shares traded
on each day) (the "Closing Date Market Price") for each share of
VoiceStream common stock during the period of the 15 most recent trading
days ending on the business day prior to the effective time multiplied by
0.825 and (2) $8.00;
- a number of shares of VoiceStream Holdings common stock equal to the sum
of (1) 0.825 and (2) $8.00 divided by the Closing Date Market Price; or
- (1) 0.825 of a share of VoiceStream Holdings common stock and (2) $8.00
pursuant to the Omnipoint reorganization agreement was fair from a financial
point of view to VoiceStream.
The full text of the Goldman Sachs opinion is attached as Annex B to this
joint proxy statement-prospectus and is incorporated into this joint proxy
statement-prospectus by reference. Stockholders of VoiceStream are urged to, and
should, read such opinion in its entirety.
In connection with its opinion, Goldman Sachs reviewed:
- the Omnipoint reorganization agreement;
- the securities purchase agreement among Hutchison PCS (USA), Omnipoint
and VoiceStream;
- the stock subscription agreement among Hutchison PCS (USA), Hutchison
Telecommunications and VoiceStream Holdings;
- the registration statement on Form 10 of VoiceStream;
- the annual reports to stockholders and annual reports on Form 10-K of
Western Wireless for the three years ended December 31, 1998;
- the annual reports to stockholders and annual reports on Form 10-K of
Omnipoint for the three years ended December 31, 1998;
- certain interim reports to stockholders and quarterly reports on Form
10-Q of VoiceStream, Western Wireless and Omnipoint;
- certain other communications from VoiceStream, Western Wireless and
Omnipoint to their respective stockholders; and
- certain internal financial analyses and forecasts for VoiceStream
prepared by the management of VoiceStream, certain financial analyses and
forecasts for Omnipoint prepared by the management of VoiceStream and
certain internal financial analyses and forecasts for Omnipoint prepared
by the management of Omnipoint (collectively, the "Forecasts").
Goldman Sachs also held discussions with members of the senior management
of VoiceStream and Omnipoint regarding the strategic rationale for, and the
potential benefits of, the transactions
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<PAGE> 54
contemplated by the Omnipoint reorganization agreement and the past and current
business operations, financial condition and future prospects of their
respective companies. In addition, Goldman Sachs reviewed the reported price and
trading activity for the VoiceStream and Omnipoint common stock, compared
certain financial and stock market information for VoiceStream and Omnipoint
with similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the United States wireless communications industry specifically
and in other industries generally and performed such other studies and analyses
as it considered appropriate.
Goldman Sachs assumed the accuracy and completeness of all of the financial
and other information reviewed by it for purposes of rendering its opinion.
Goldman Sachs assumed, with the consent of the VoiceStream board, that the
Forecasts had been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of VoiceStream and Omnipoint, as the case may
be. In addition, Goldman Sachs did not make an independent evaluation or
appraisal of the assets and liabilities of VoiceStream or Omnipoint or any of
their subsidiaries and Goldman Sachs was not furnished with any such evaluation
or appraisal. Goldman Sachs also took into account VoiceStream's view as to the
possible tax consequences of the transactions contemplated by the Omnipoint
reorganization agreement as described to Goldman Sachs by VoiceStream. Goldman
Sachs assumed that all material governmental, regulatory or other consents and
approvals necessary would be obtained without any adverse effect on VoiceStream
or Omnipoint or on the contemplated benefits of the transactions contemplated by
the Omnipoint reorganization agreement. The Goldman Sachs opinion was provided
for the information and assistance of the VoiceStream board in connection with
its consideration of the transactions contemplated by the Omnipoint
reorganization agreement. The Goldman Sachs opinion does not constitute a
recommendation as to how any holder of VoiceStream common stock should vote with
respect to such transaction.
The following is a summary of the material financial analyses presented by
Goldman Sachs to the VoiceStream board on June 22, 1999, utilizing, however, the
stock price information used by Goldman Sachs with respect to its written
opinion dated June 23, 1999. Some of the summaries of the financial analyses
include information presented in tabular format. The tables must be read
together with the text accompanying each summary.
SELECTED COMPANIES ANALYSIS
Goldman Sachs reviewed and compared certain financial and operating
information relating to VoiceStream and Omnipoint to corresponding information
for Aerial, Powertel and Sprint PCS. The selected companies were chosen because
they are publicly traded companies with operations that for purposes of analysis
may be considered similar to those of VoiceStream and Omnipoint. The analysis
was performed using share prices as of June 23, 1999. Enterprise value for each
of the companies is the sum of the market capitalization for that company and
its total debt, preferred stock and minority interest, less cash and cash
equivalents. Adjusted enterprise value for each of the companies is the
enterprise value for that company less the value of its POPs not to be covered
under the business plan for that company, valued at $5 per POP. "POPs" are the
number of persons within a license's coverage area and are derived from
management estimates and public sources. "Covered POPs" are the estimated number
of POPs within the license area served by the operating network. Weighted POPs
are determined by multiplying the number of POPs in a 10 MHz license area by
0.25, the number of POPs in a 20 MHz license area by 0.75 and the number of POPs
in a 30 MHz license area by one, and reflect the fact that licenses with greater
MHz provide greater bandwidth or capacity. License value for each of the
companies is the difference between enterprise value and cumulative capital
expenditures. Finally, invested capital is the sum of the cumulative capital
expenditures and license costs based on public sources.
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<PAGE> 55
The following chart summarizes the results of that analysis:
<TABLE>
<CAPTION>
COMBINED OMNIPOINT AT
COMPANY DEAL PRICE VOICESTREAM OMNIPOINT POWERTEL AERIAL SPRINT PCS
-------- ------------ ----------- --------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Adjusted Enterprise
Value/2000 Covered POPs.... $90.08 $81.43 $103.84 $68.63 $97.19 $71.54 $186.46
License Value/2000 Covered
POPs....................... 73.31 66.50 84.03 53.70 61.68 37.03 149.32
Adjusted Enterprise
Value/Total POPs........... 44.05 40.43 49.65 34.50 85.71 64.08 149.40
License Value/Total POPs..... 33.65 30.83 37.96 24.90 54.00 32.88 118.82
License Value/Weighted
POPs....................... 51.26 43.62 65.96 35.22 59.35 32.88 147.73
Adjusted Enterprise Value/
Weighted POPs.............. 67.11 57.20 86.27 48.81 94.21 64.08 185.74
PCS Enterprise Value/Invested
Capital.................... 279% 251% 327% 214% 190% 173% 350%
</TABLE>
DISCOUNTED CASH FLOW ANALYSIS
Goldman Sachs performed a discounted cash flow analysis comparing the range
of values for VoiceStream on a stand-alone basis based on VoiceStream
management's internal model for VoiceStream to Omnipoint on a stand-alone basis
based on (1) Omnipoint management's internal model for Omnipoint ("Case A"), (2)
VoiceStream management's internal model for Omnipoint ("Case B") and (3) Goldman
Sachs' adjustment of Omnipoint management's internal model for Omnipoint giving
effect to VoiceStream's operating performance trend ("Case C"). VoiceStream's
operating performance trend is based upon, among other things, VoiceStream's
historical and projected incremental penetration of its covered POPs.
The following table presents ranges of enterprise value and equity value
for VoiceStream and each of the three Omnipoint cases and the resulting range of
implied ownership of the combined company by VoiceStream stockholders, assuming
an all-stock transaction, based on forward 2008 EBITDA multiples for VoiceStream
ranging from 9.0x to 13.0x, forward 2006 EBITDA multiples for Omnipoint ranging
from 9.0x to 13.0x and discount rates ranging from 12% to 16%. Equity value of
each of the companies represents the company's enterprise value net of the book
value of the company's outstanding net indebtedness. "EBITDA," for purposes of
this opinion represents earnings before interest, taxes, depreciation and
amortization.
<TABLE>
<CAPTION>
OMNIPOINT OMNIPOINT OMNIPOINT
VOICESTREAM CASE A CASE B CASE C
--------------- --------------- --------------- ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Enterprise Value........... $3,220 - $6,096 $4,179 - $7,191 $3,231 - $6,283 $3,758 - $6,704
Equity Value............... 2,541 - 5,417 1,454 - 4,466 506 - 3,558 1,032 - 3,979
Implied VoiceStream
Ownership................ N/A 55% - 64% 60% - 83% 58% - 71%
</TABLE>
Goldman Sachs also performed a discounted cash flow analysis comparing the
range of values for VoiceStream on a stand-alone basis based on VoiceStream
management's internal model for VoiceStream to the combined company based on the
three cases for Omnipoint described above.
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<PAGE> 56
The following table presents for the combined company a range of price per
share, the implied value per 2004 covered POP and per weighted POP and the
implied 2005 EBITDA multiple, based on forward EBITDA multiples ranging from
10.0x to 12.0x and a discount rate of 13%:
<TABLE>
<CAPTION>
COMBINED COMPANY
---------------------------------------------------------
CASE A CASE C CASE B
VOICESTREAM
STANDALONE OMNIPOINT WITH MANAGEMENT
VOICESTREAM OMNIPOINT VOICESTREAM MODEL OF
MANAGEMENT MANAGEMENT DRIVERS OMNIPOINT
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EBITDA Exit Multiple......... 10.0x 12.0x 11.0x 13.0x 11.0x 12.0x 11.0x 13.0x
Discounted Cash Flow Value
per Share.................. $ 82.76 $ 96.32 $ 94.61 $ 109.97 $ 92.15 $ 107.91 $ 81.05 $ 95.66
Value per 2004 Covered POP... $ 211.00 $ 241.00 $ 229.00 $ 259.00 $ 231.00 $ 262.00 $ 220.00 $ 248.00
Value per Weighted POP....... $ 163.00 $ 186.00 $ 158.00 $ 179.00 $ 159.00 $ 180.00 $ 152.00 $ 171.00
Implied 2005 EBITDA
Multiple................... 12.7x 14.4x 13.5x 15.3x 14.8x 16.8x 14.1x 16.0x
</TABLE>
Finally, Goldman Sachs performed the same analysis assuming a 10% decrease
in average monthly revenue per subscriber and EBITDA margins for each of the
companies, as summarized in the following table:
<TABLE>
<CAPTION>
COMBINED COMPANY
---------------------------------------------------------
CASE A CASE C CASE B
VOICESTREAM
STANDALONE OMNIPOINT WITH MANAGEMENT
VOICESTREAM OMNIPOINT VOICESTREAM MODEL OF
MANAGEMENT MANAGEMENT DRIVERS OMNIPOINT
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EBITDA Exit Multiple(e)...... 10.0x 12.0x 11.0x 13.0x 11.0x 13.0x 11.0x 13.0x
Discounted Cash Flow Value
per Share.................. $ 67.17 $ 78.90 $ 85.72 $ 100.08 $ 83.26 $ 98.02 $ 72.87 $ 86.48
Value per 2004 Covered POP... $ 182.00 $ 207.00 $ 214.00 $ 242.00 $ 215.00 $ 244.00 $ 204.00 $ 231.00
Value per Weighted POP....... $ 141.00 $ 207.00 $ 148.00 $ 167.00 $ 149.00 $ 141.00 $ 141.00 $ 159.00
Implied 2005 EBITDA
Multiple................... 12.8x 14.5x 13.5x 15.2x 14.9x 16.9x 14.2x 16.0x
</TABLE>
RELATIVE CONTRIBUTION ANALYSIS
Goldman Sachs performed contribution analyses of VoiceStream and Omnipoint
to the combined company based on various factors. The following table presents
the contribution analysis of VoiceStream and Omnipoint for the year 2006 to the
combined company's equity free cash flows based on three scenarios: (1)
Omnipoint management's internal model for Omnipoint, (2) VoiceStream
management's internal model for Omnipoint and (3) Goldman Sachs' adjustment for
Omnipoint management's internal model for Omnipoint giving effect to
VoiceStream's operating performance trend (Cases A, B and C described above).
Equity free cash flows represent the combined company's EBITDA adjusted for
changes in the combined company's working capital and less capital expenditures
and financing costs.
<TABLE>
<CAPTION>
VOICESTREAM OMNIPOINT
----------- ---------
<S> <C> <C>
2006 Case A............................................... 49% 51%
2006 Case B............................................... 60 40
2006 Case C............................................... 55 45
</TABLE>
The following table presents the contribution analysis of VoiceStream and
Omnipoint to the combined company's 1998 and estimated 1999 and 2000 revenue and
subscribers and current total
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<PAGE> 57
and weighted POPs and estimated 2000 covered POPs. Revenue and subscriber
information for 1999 and 2000 and 2000 covered POPs for VoiceStream are from
VoiceStream management estimates and for Omnipoint are from Omnipoint management
estimates. The analysis is based upon the enterprise value of VoiceStream and
Omnipoint and, therefore, does not take into account the outstanding
indebtedness of either company.
<TABLE>
<CAPTION>
VOICESTREAM OMNIPOINT
----------- ---------
<S> <C> <C>
1998 Revenue.............................................. 49% 51%
1999E Revenue............................................. 51 49
2000E Revenue............................................. 50 50
1998 Subscribers.......................................... 46 54
1999E Subscribers......................................... 50 50
2000E Subscribers......................................... 49 51
Total POPs................................................ 38 62
Weighted POPs............................................. 34 66
2000E Covered POPs........................................ 38 62
</TABLE>
TRANSACTION PREMIUM ANALYSIS
Goldman Sachs compared the stock price of VoiceStream common stock and
Omnipoint common stock on the basis of the respective closing prices on June 23,
1999. Based on those stock prices and an assumed consideration per share of
Omnipoint common stock of a fraction of a share of VoiceStream common stock
equal to 0.825 and $8.00 in cash, the implied transaction price per share of
Omnipoint common stock was $32.34. Goldman Sachs also compared the historical
stock prices of VoiceStream common stock and Omnipoint common stock on the basis
of the respective closing stock prices per share on June 23, 1999, and the
respective closing stock prices and period averages or highs for the prior 10
days, three months and 52 weeks.
The following table presents the premiums over the Omnipoint common stock
prices at such times or for such period implied by the merger consideration and
the VoiceStream common stock price at June 23, 1999:
<TABLE>
<CAPTION>
IMPLIED PRICE
PER SHARE OF OMNIPOINT
DATE/PERIOD COMMON STOCK PREMIUM PAID
----------- ---------------------- ------------
<S> <C> <C>
June 23, 1999.................................. $20.81 55%
10-day average................................. 18.31 77
3-month average................................ 16.06 101
52-week high................................... 25.38 27
</TABLE>
The following table presents the premiums over the Omnipoint historical
price per POP implied by the merger consideration for estimated 2000 covered
POPs and current total and weighted POPs.
<TABLE>
<CAPTION>
JUNE 23,
JUNE 23, 1999
1999 PRICE IMPLIED DEAL PREMIUM TO PRICE PER
OMNIPOINT PER PRICE PER JUNE 23, 1999 VOICESTREAM VOICE-
POPS (IN OMNIPOINT OMNIPOINT OMNIPOINT POPS (IN STREAM
MILLIONS) POP POP PRICE MILLIONS) POP
--------- ---------- ------------ ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
2000 Covered POPs....... 53.1 $68.63 $81.43 19% 32.2 $103.84
Total POPs.............. 114.6 34.50 40.43 17 71.3 49.65
Weighted Total POPs..... 81.0 48.81 57.20 17 41.0 86.27
</TABLE>
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<PAGE> 58
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is directly comparable to
VoiceStream or Omnipoint or the Omnipoint reorganization. The analyses were
prepared solely for purposes of Goldman Sachs providing its opinion to the
VoiceStream board that, as of the date of such opinion, the merger consideration
to be paid by VoiceStream pursuant to the Omnipoint reorganization agreement was
fair from a financial point of view to VoiceStream. The analyses do not purport
to be appraisals or necessarily reflect the prices at which the business or
securities actually may be sold. Analyses based upon forecasts of future
results, which are inherently subject to uncertainty, are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. As described above, Goldman Sachs'
opinion to the VoiceStream board was one of many factors taken into
consideration by the VoiceStream board in making its determination to approve
the Omnipoint reorganization agreement.
The foregoing summary describes material financial analyses used by Goldman
Sachs in connection with providing its opinion to VoiceStream's board of
directors on June 22, 1999, but does not purport to be a complete description of
the analysis performed by Goldman Sachs in connection with that opinion. You
should read the entire opinion of Goldman Sachs in Annex B.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. VoiceStream selected
Goldman Sachs as its financial advisor because it is a nationally recognized
investment banking firm that has substantial experience in transactions similar
to the Omnipoint reorganization.
Goldman Sachs is familiar with VoiceStream having provided certain
investment banking services to VoiceStream and its former parent, Western
Wireless, from time to time, including having acted as lead managing underwriter
of the initial public offering of 12.65 million shares of Western Wireless
common stock in May 1996; having acted as lead manager in the public offering of
$200 million aggregate principal amount of 10.5% senior subordinated notes due
June 2006 of Western Wireless in May 1996; having acted as lead manager in the
private offering of $200 million aggregate principal amount of 10.5% senior
subordinated notes due February 2007 of Western Wireless in October 1996; having
acted as lead manager in the public offering of 13.915 million shares of Western
Wireless common stock in April 1998; having acted as Western Wireless' financial
advisor in connection with the sale of 19.9% of the outstanding shares of
VoiceStream common stock to Hutchison (USA) in February 1998; and having acted
as VoiceStream's financial advisor in connection with, and having participated
in certain of the negotiations leading to, the Omnipoint reorganization
agreement. Investment funds affiliated with Goldman Sachs have a principal
investment in VoiceStream in the amount of 9,730,208 shares of VoiceStream
common stock and have the right to designate a nominee for election to
VoiceStream's board of directors. Terence O'Toole, a managing director of
Goldman Sachs, is a director of VoiceStream. In addition, Goldman Sachs Credit
Partners, L.P., an affiliate of Goldman Sachs, has offered to be lead arranger
and syndication agent for a $3 billion credit facility in connection with the
Omnipoint reorganization, and has offered a commitment to fully underwrite the
facility. In addition, Goldman Sachs has provided certain investment banking
services to Omnipoint from time to time, including having acted as co-manager in
the public offering of 6 million shares of Omnipoint common stock in June 1996;
having acted as co-manager in the private offering of $250 million aggregate
principal amount of 11.625% senior notes due August 2006 in August 1996; and
having acted as co-manager in the
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private offering of $200 million aggregate principal amount of 11.625% senior
notes due August 2006 in November 1996.
Goldman Sachs provides a full range of financial, advisory and brokerage
services and, in the course of its normal trading activities, may from time to
time effect transactions and hold securities, including derivative securities,
of VoiceStream and Omnipoint for its own accounts and for the account of
customers. As of June 17, 1999, Goldman Sachs had a long position of $46.4
million of Omnipoint funded bank loans; a net long position of $7.1 million of
Omnipoint unfunded bank loans; a net short position of 214,627 shares of
Omnipoint common stock; a short position of 40,000 call options on Omnipoint
common stock at an exercise price of $15.00; a long position of 100,000 put
options on Omnipoint common stock at an exercise price of $5.00; a long position
of $16.5 million face value of Omnipoint convertible preferred stock; and a net
short position of $2.0 million aggregate principal amount of Omnipoint 11.652%
senior notes due August 2006. As of the same date and in addition to the
principal investment referred to above, Goldman Sachs had a long position of
$8.5 million of VoiceStream bank loans.
FEE ARRANGEMENT WITH GOLDMAN SACHS
Pursuant to a letter agreement dated October 7, 1998, VoiceStream engaged
Goldman Sachs to act as its financial advisor in connection with a potential
transaction involving Omnipoint or another third party. VoiceStream has agreed
to pay Goldman Sachs a transaction fee equal to $14,000,000 upon consummation of
the Omnipoint reorganization. VoiceStream has agreed to reimburse Goldman Sachs
for its reasonable out-of-pocket expenses, including attorney's fees, and to
indemnify Goldman Sachs against certain liabilities, including certain
liabilities under the federal securities laws.
RECOMMENDATIONS OF THE OMNIPOINT BOARD; REASONS FOR THE OMNIPOINT REORGANIZATION
The Omnipoint board has determined that the Omnipoint reorganization
agreement and the Omnipoint merger are fair to and in the best interests of
Omnipoint's stockholders, has approved the Omnipoint reorganization agreement,
and unanimously recommends a vote "FOR" approval of, and adoption of the
transactions contemplated by, the Omnipoint reorganization agreement.
The Omnipoint board believes that the completion of the Omnipoint merger
will substantially benefit both Omnipoint and its stockholders. In reaching its
decision to approve the Omnipoint reorganization agreement, the Omnipoint board
consulted with Omnipoint's financial and legal advisors and senior management
and considered numerous factors, including:
- the Omnipoint board's review of and familiarity with the business,
assets, competitive position, and prospects of Omnipoint, including
Omnipoint's prospects if it were to continue operating as an independent
company;
- the strategic and financial alternatives available to Omnipoint in the
highly competitive wireless communications industry, as well as the
attractiveness of a business combination with VoiceStream and the
strategic fit between Omnipoint and VoiceStream;
- the terms of proposed investments or strategic transactions with various
third parties with whom Omnipoint had engaged in negotiations since the
autumn of 1998;
- benefits expected to be achieved as a result of combining Omnipoint and
VoiceStream, including synergies relating to expanded in-network
coverage, economies of scale, product procurement, and financing;
- a review of the historical operating results of Omnipoint and VoiceStream
and the projected operating results of Omnipoint and VoiceStream,
individually and in combination;
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- the opinions delivered by Lehman Brothers to the Omnipoint board verbally
on June 21, 1999, and in writing on June 23, 1999, to the effect that the
consideration offered by VoiceStream to Omnipoint's stockholders in the
Omnipoint reorganization, as of those dates, was fair from a financial
viewpoint;
- the substantial per share premium over prevailing market prices for
Omnipoint's common stock represented by the VoiceStream proposal;
- the opportunity for Omnipoint's stockholders who elect to receive and
hold VoiceStream Holdings common stock in the Omnipoint merger to
continue to retain an interest in the wireless telecommunications market
in general through a geographically more diverse and larger combined
company;
- the expectation that the Omnipoint reorganization would be accounted for
as a purchase for accounting purposes and would be accomplished on a
tax-free basis for federal income tax purposes, except for taxes payable
on any cash consideration received by Omnipoint's stockholders in the
Omnipoint merger or as a result of proration or of their exercise of
dissenters' rights;
- the arrangements proposed under the Omnipoint reorganization agreement
for the expansion of the VoiceStream board of directors and the
designation by Omnipoint of four new members to serve on the VoiceStream
board; and
- the anticipated purchase by VoiceStream and Hutchison PCS (USA) from
Omnipoint of $300 million of Omnipoint equity securities prior to the
Omnipoint reorganization.
The foregoing summary addresses the material facts, matters and information
considered by the Omnipoint board in connection with its deliberations on the
combination of Omnipoint and VoiceStream. In view of the variety of factors
considered, the Omnipoint board did not find it practical to and did not make a
specific assessment of or otherwise assign relative weights to the specific
facts, matters and information considered. The Omnipoint board adopted the
Omnipoint reorganization agreement and approved the transactions contemplated
thereby in consideration of all of the facts, matters and information brought to
its attention.
Taking into account all of the material facts, matters and information,
including those described above, the Omnipoint board believes that the terms of
the Omnipoint reorganization agreement and the transactions provided for therein
are fair to and in the best interest of Omnipoint's stockholders.
THE OMNIPOINT BOARD UNANIMOUSLY RECOMMENDS THAT OMNIPOINT'S STOCKHOLDERS
VOTE "FOR" ADOPTION OF, AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY, THE
OMNIPOINT REORGANIZATION AGREEMENT.
OMNIPOINT FAIRNESS OPINION
Lehman Brothers acted as financial advisor to the Omnipoint board in
connection with the Omnipoint reorganization and delivered its oral opinion to
the Omnipoint board at the June 21, 1999 meeting of the Omnipoint board, which
was confirmed in writing on June 23, 1999 to the effect that, as of the dates
thereof, and based on and subject to the assumptions, limitations and
qualifications set forth in the opinion, the consideration to be offered to the
Omnipoint common stockholders in the Omnipoint reorganization is fair to such
stockholders.
The full text of Lehman Brothers' written opinion, dated June 23, 1999, is
attached as Annex C to this joint proxy statement-prospectus. Stockholders may
read the opinion for a discussion of assumptions made, matters considered and
limitations of the review undertaken by Lehman Brothers in rendering its
opinion. The summary of the Lehman Brothers opinion set forth in this joint
proxy statement-prospectus is qualified in its entirety by reference to the full
text of the opinion attached as
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Annex C. The Lehman Brothers opinion was provided to the Omnipoint board for its
use and benefit in connection with its consideration of the Omnipoint
reorganization. This opinion was not intended to be and does not constitute a
recommendation to any stockholder of Omnipoint with respect to:
- how any stockholder should vote with respect to the Omnipoint
reorganization;
- the consideration to be offered in connection with the Omnipoint
reorganization; or
- which of the consideration election alternatives stockholders should
make.
No limitations were imposed by Omnipoint on the scope of Lehman Brothers'
investigation or the procedures to be followed by Lehman Brothers in rendering
its opinion. Lehman Brothers was not requested to and did not make any
recommendation to the Omnipoint board as to the form or amount of the
consideration to be received by Omnipoint common stockholders, which was
determined through arms-length negotiations between the parties. In arriving at
its opinion, Lehman Brothers did not ascribe a specific range of values to
Omnipoint, but rather made its determination as to the fairness, from a
financial point of view, of the consideration to be received by the holders of
Omnipoint common stock in the Omnipoint reorganization on the basis of the
financial and comparative analyses described below. Lehman Brothers' opinion is
for the use and benefit of the Omnipoint board and was rendered to the Omnipoint
board in connection with its consideration of the Omnipoint reorganization.
Lehman Brothers was not requested to opine as to, and its opinion does not
address, Omnipoint's underlying business decision to proceed with or effect the
Omnipoint reorganization.
In connection with the preparation and delivery of its opinion to the
Omnipoint board, Lehman Brothers performed a variety of financial and
comparative analyses, as described below. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant methods
of financial and comparative analysis and the application of those methods to
the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Furthermore, in arriving at its opinion,
Lehman Brothers did not attribute any particular weight to any analysis or
factor considered by it, but, rather made qualitative judgements as to the
significance and relevance of each analysis and factor. Accordingly, Lehman
Brothers believes that its analyses must be considered as a whole and that
considering any portion of such analyses and factors, without considering all
analyses and factors, could create a misleading or incomplete view of the
process underlying its opinion. In its analyses, Lehman Brothers made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control of Omnipoint
and VoiceStream. Any estimates or projections contained in these analyses are
not necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
therein. In addition, analyses relating to the value of a business do not
purport to be appraisals or to reflect the prices at which businesses actually
may be sold.
In arriving at its opinion, Lehman Brothers reviewed and analyzed:
- the draft Omnipoint reorganization agreement and the specific terms of
the proposed Omnipoint reorganization;
- publicly available information concerning Omnipoint and VoiceStream that
Lehman Brothers believed to be relevant to its analysis;
- financial and operating information with respect to the businesses,
operations and prospects of Omnipoint and VoiceStream furnished to Lehman
Brothers by Omnipoint and VoiceStream, respectively;
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- a trading history of Omnipoint's common stock from June 17, 1998 to the
present and a comparison of that trading history with those of other
companies that Lehman Brothers deemed relevant;
- a trading history of VoiceStream's common stock from May 3, 1999 (the
date VoiceStream's common stock first began to trade independently from
Western Wireless) to the present and a comparison of that trading history
with those of other companies that Lehman Brothers deemed relevant;
- a comparison of the historical financial and operating results and
present financial condition of Omnipoint with those of other companies
that Lehman Brothers deemed relevant;
- a comparison of the historical financial and operating results and
present financial condition of VoiceStream with those of other companies
that Lehman Brothers deemed relevant;
- a comparison of the financial terms of the proposed Omnipoint
reorganization with the financial terms of certain other recent
transactions that Lehman Brothers deemed relevant;
- third party research analysts' estimates, valuation analyses, target
prices and investment considerations for Omnipoint and VoiceStream;
- the terms of the CIRI Transactions;
- the terms of the Hutchison Investments;
- Omnipoint's current cash flow forecast and limited cash position, its
ability to meet its liquidity requirements in the future, and the
potential alternatives available to Omnipoint to fund such requirements;
- the results of Lehman Brothers' efforts to secure a strategic equity
investor for Omnipoint and Omnipoint's negotiations with selected
potential equity investors; and
- the terms of interim investing available to Omnipoint in conjunction with
the Omnipoint reorganization and a comparison of such terms with the
terms of investments by other potential sources of equity available to
Omnipoint.
In addition, Lehman Brothers had discussions with the respective management
of Omnipoint and VoiceStream concerning their businesses, operations, assets,
financial condition and prospects and undertook such other studies, analyses and
investigations as Lehman Brothers deemed appropriate.
In arriving at its opinion, Lehman Brothers assumed and relied upon the
accuracy and completeness of the financial and other information used by it
without assuming any responsibility for independent verification of such
information and further relied upon the assurances of members of management of
Omnipoint that they were not aware of any facts or circumstances that would make
such information inaccurate or misleading. With respect to the financial
projections of Omnipoint, upon advice of Omnipoint, Lehman Brothers has assumed
that such projections have been reasonably prepared on a basis reflecting the
best currently available estimates and judgments of the management of Omnipoint
as to the future financial performance of Omnipoint and that Omnipoint will
perform substantially in accordance with such projections. With respect to the
financial projections of VoiceStream, upon advice of VoiceStream, Lehman
Brothers has assumed that such projections have been reasonably prepared on a
basis reflecting the best currently available estimates and judgments of the
management of VoiceStream as to the future financial performance of VoiceStream
and that VoiceStream will perform substantially in accordance with such
projections. In arriving at its opinion, Lehman Brothers did not conduct a
physical inspection of the properties and facilities of Omnipoint or VoiceStream
and did not make or obtain any evaluations or appraisals of the assets or
liabilities of Omnipoint or VoiceStream. Upon advice of Omnipoint and its legal
advisors, Lehman Brothers has assumed that the exchange of shares of common
stock of Omnipoint
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pursuant to the Omnipoint reorganization will be pursuant to Section 351 of the
Internal Revenue Code of 1986, as amended, and therefore will be tax free to the
stockholders of Omnipoint who receive only VoiceStream Holdings common stock in
exchange for their shares of common stock of Omnipoint. Lehman Brothers' opinion
necessarily is based upon market, economic and other conditions as they exist
on, and can be evaluated as of, the date of the opinion.
In addition, Lehman Brothers expressed no opinion as to the prices at which
shares of VoiceStream Holdings common stock actually will trade following
consummation of the Omnipoint reorganization and this opinion should not be
viewed as providing any assurance that the market value of the VoiceStream
Holdings common stock to be held by stockholders of Omnipoint after the
Omnipoint reorganization will be in excess of the market value of the shares of
Omnipoint owned by such stockholders at any time prior to announcement or
consummation of the Omnipoint reorganization.
The following is a summary of certain financial and comparative analyses
performed by Lehman Brothers and presented to the Omnipoint board. Certain of
the analyses include information presented in tabular or graphic format. In
order to fully understand the financial analyses used by Lehman Brothers, the
tables and graphs must be read together with the text of each summary. The
tables or graphs alone do not constitute a complete description of the financial
analyses.
PURCHASE PRICE ANALYSIS
As of June 21, 1999, Lehman Brothers estimated that the price per share
Omnipoint would receive in the Omnipoint reorganization would be $31.07, based
on the VoiceStream 10-day volume-weighted average price as of June 18, 1999 of
$27.97. This price per share represented a 64.1% premium over the Omnipoint June
18, 1999 closing price of $18.94.
DISCOUNTED CASH FLOW ANALYSIS
Lehman Brothers performed discounted cash flow analyses of the Omnipoint
and VoiceStream businesses. A discounted cash flow analysis involves an analysis
of the present value of projected cash flows and a terminal value using discount
rates and terminal year EBITDA multiples as indicated below. Lehman Brothers
performed two separate discounted cash flow cases for Omnipoint, the first based
on management projections received on June 14, 1999 and the other based on
Lehman Brothers' recent equity research model for Omnipoint.
In the management discounted cash flow case, Lehman Brothers analyzed
Omnipoint's PCS business using a management forecast for the period beginning
January 1, 1999 and ending December 31, 2006. Lehman Brothers used discount
rates ranging from 13% to 15% and terminal multiples of estimated 2006 EBITDA
ranging from 8.0x to 10.0x. This analysis yielded a range of values for
Omnipoint's PCS business of approximately $3.8 billion to $5.3 billion, implying
a range of values for Omnipoint common stock of $19 to $43 per share.
In the research discounted cash flow case, Lehman Brothers analyzed
Omnipoint's PCS business using a forecast for the period beginning January 1,
1999, and ending December 31, 2007. Lehman Brothers applied the same discount
rates and terminal multiples in the research discounted cash flow case as in the
management discounted cash flow case. The research discounted cash flow case
yielded an enterprise value range of approximately $3.4 billion to $4.9 billion
and a range of values for Omnipoint common stock of $13 to $38 per share.
Lehman Brothers analyzed VoiceStream's business using a management forecast
for the period beginning January 1, 1999 and ending December 31, 2008. Lehman
Brothers used discount rates ranging from 12% to 14% and terminal multiples of
estimated 2008 EBITDA ranging from 8.0x to
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10.0x. This analysis yielded a range of values for VoiceStream's business of
approximately $3.1 billion to $4.6 billion, implying a range of values for
VoiceStream common stock of $24 to $40 per share.
PEER GROUP COMPARISON
Lehman Brothers compared certain financial statistics of Omnipoint with
corresponding financial statistics for the following six PCS companies:
- Aerial
- Microcell
- Nextel
- Powertel
- Sprint PCS
- VoiceStream
Lehman Brothers compared certain financial statistics of VoiceStream with
corresponding financial statistics for the following six PCS companies:
- Aerial
- Microcell
- Nextel
- Omnipoint
- Powertel
- Sprint PCS
Lehman Brothers analyzed, among other things, firm value (market value of
equity plus net debt) as a multiple of total POPs (the number of persons within
the companies' license coverage areas); built POPs (the number of persons within
the companies' built network coverage area); covered POPs (the number of persons
within the companies' operating network coverage area); and weighted POPs (the
total persons within the companies' license coverage area adjusted for MHz
bandwidth capacity). As of June 18, 1999, the statistics derived from this
analysis are set forth below:
<TABLE>
<CAPTION>
OMNIPOINT PEER GROUP COMPARISON
-------------------------------------------------------
MEAN MEAN EXCL. NEXTEL AND SPRINT PCS OMNIPOINT
---- -------------------------------- -----------
<S> <C> <C> <C>
Firm Value/Total POPs................ $ 73 $ 50 $38
Firm Value/Built POPs................ $ 80 $ 61 $62
Firm Value/Covered POPs.............. $142 $108 $76
Firm Value/Weighted POPs............. $105 $ 61 $51
</TABLE>
<TABLE>
<CAPTION>
VOICESTREAM PEER GROUP COMPARISON
-------------------------------------------------------
MEAN MEAN EXCL. NEXTEL AND SPRINT PCS VOICESTREAM
---- -------------------------------- -----------
<S> <C> <C> <C>
Firm Value/Total POPs................ $ 71 $47 $ 50
Firm Value/Built POPs................ $ 78 $57 $ 75
Firm Value/Covered POPs.............. $122 $74 $177
Firm Value/Weighted POPs............. $ 99 $52 $ 88
</TABLE>
Because of the inherent differences in the businesses, operations,
financial conditions and prospects of Omnipoint and VoiceStream and the
comparable companies, Lehman Brothers believed that it was inappropriate to, and
therefore did not, rely solely on the quantitative results of the comparable
companies analysis, and, accordingly, also made qualitative judgements
concerning differences between the characteristics of the comparable companies
and Omnipoint and
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VoiceStream, respectively, that would affect the trading values of Omnipoint,
VoiceStream and the comparable companies.
The statistics contained in the center columns of the tables above omit
data concerning Nextel and Sprint PCS. This data was omitted because of
differences identified by Lehman Brothers in the businesses of Nextel and Sprint
PCS on the one hand, and VoiceStream, Omnipoint and the other members of the
peer group on the other.
SELECTED COMPARABLE PRECEDENT TRANSACTION ANALYSIS
As part of its analysis, Lehman Brothers reviewed the following ten
transactions involving domestic PCS and wireless companies since 1996:
- April 1999 -- Sprint PCS/Cox Communications
- September 1998 -- Sonera/Aerial
- April 1998 -- AirTouch/U.S. WEST (PrimeCo)
- March 1999 -- Triton PCS/AT&T Wireless
- February 1998 -- AT&T Wireless/Cincinnati Bell
- January 1998 -- Sprint PCS/APC
- October 1997 -- Hutchison Whampoa/Western Wireless
- December 1996 -- Deutsche Telekom/APC
- March 1996 -- Powertel (Intercel)/GTE Mobilnet
- January 1996 -- Western Wireless/GTE Mobilnet
For each of these, Lehman Brothers reviewed the prices paid and calculated
the enterprise value as a multiple of total POPs. This analysis indicated
multiples ranging from $17 to $158 per POP for these transactions, with an
overall mean per POP multiple of $66. Lehman Brothers also evaluated the mean
per POP multiples excluding the GTE transactions, and the mean per POP multiples
excluding the GTE transactions, the Sprint PCS/Cox Communications transaction
and the APC transactions, resulting in $77 and $43 mean per POP multiples,
respectively.
Because the reasons for and the circumstances surrounding each of the
transactions analyzed were specific to each transaction and because of the
inherent differences between the businesses, operations and prospects of
Omnipoint and the businesses, operations and prospects of the acquired companies
included in the selected transactions, Lehman Brothers believed that it was
inappropriate to, and therefore did not, rely solely on the quantitative results
of the precedent transactions analysis, and accordingly also made qualitative
judgements concerning differences between the characteristics of these
transactions and the Omnipoint reorganization that would affect the acquisition
values of Omnipoint and such acquired companies.
RELATIVE CONTRIBUTION ANALYSIS
Lehman Brothers compared the pro forma contribution of each of Omnipoint
and VoiceStream, based on historical information, to the resultant combined
company upon completion of the Omnipoint reorganization. Under the terms of the
Omnipoint reorganization, holders of Omnipoint common stock will receive in the
aggregate 0.825 of a share of VoiceStream Holdings common stock plus $8.00 in
cash for each share of Omnipoint common stock. Based on the VoiceStream 10-day
volume-weighted average price as of June 18, 1999, Omnipoint stockholders would
own approximately 30.6% of the combined company in addition to the cash they are
to receive. As of June 18, 1999, Omnipoint would have contributed 61.6% of total
POPs, 59.3% of built POPs, 69.9% of covered POPs and 20.7% of stockholders
equity. For the three months ended March 31, 1999, Omnipoint
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would have contributed 53.4% of subscribers, 49.8% of services revenue, 74.8% of
net debt and 76.2% of total debt.
HISTORICAL PUBLIC MARKET TRADING ANALYSIS
Lehman Brothers reviewed the recent stock price performance of Omnipoint
based on an analysis of the historical closing prices from June 18, 1998 to June
18, 1999. The following table lists the low, average and high daily closing
prices of shares of Omnipoint common stock for the periods indicated.
<TABLE>
<CAPTION>
HISTORICAL OMNIPOINT COMMON STOCK PRICES
----------------------------------------
<S> <C>
Close (6/18/99)............................................. $18.94
52-Week Low................................................. $ 5.00
52-Week High................................................ $25.00
</TABLE>
[GRAPH]
Lehman Brothers also reviewed the recent stock price performance of
VoiceStream based on an analysis of the historical closing prices from May 3,
1999 to June 18, 1999. The following table lists the low, average and high daily
closing prices of shares of VoiceStream common stock for the periods indicated.
<TABLE>
<CAPTION>
HISTORICAL VOICESTREAM COMMON STOCK PRICES
------------------------------------------
<S> <C>
10-Day June 7 to June 18 Volume-Weighted Average Price...... $27.97
Close (6/18/99)............................................. $30.00
52-Week Low................................................. $20.50
52-Week High................................................ $33.06
</TABLE>
[GRAPH]
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COMPARATIVE STOCK PRICE PERFORMANCE
As part of its analysis, Lehman Brothers reviewed the recent price
performance of Omnipoint common stock from June 18, 1998 to June 18, 1999 and
compared this performance with that of a group of the following six PCS
companies over the same time period:
- Aerial
- Microcell
- Nextel
- Powertel
- Sprint PCS
- VoiceStream
[GRAPH]
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As part of its analysis, Lehman Brothers also reviewed the recent price
performance of VoiceStream common stock from May 3, 1999 to June 18, 1999 and
compared this performance with that of a group of the following six PCS
companies over the same time period:
- Aerial
- Microcell
- Nextel
- Omnipoint
- Powertel
- Sprint PCS
[GRAPH]
Lehman Brothers has acted as financial advisor to Omnipoint in connection
with the Omnipoint reorganization and will receive a fee for its services which
is contingent upon the consummation of the Omnipoint reorganization. In
addition, Omnipoint has agreed to indemnify Lehman Brothers for certain
liabilities that may arise out of the rendering of this opinion. In the ordinary
course of its business, Lehman Brothers actively trades in the debt and equity
securities of Omnipoint for its own account and for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities.
FEE ARRANGEMENTS WITH LEHMAN BROTHERS AND ALLEN & CO.
Pursuant to a letter agreement dated October 28, 1998, Omnipoint engaged
Lehman Brothers to act as its financial advisor in connection with any
opportunities for investment in or sale of Omnipoint. Pursuant to a letter dated
June 22, 1999, Omnipoint formalized the engagement of Allen & Co. whereby it had
been acting as a financial advisor to Omnipoint since 1998 in connection with
any opportunities for investment in or sale of Omnipoint. Omnipoint has agreed
to pay Lehman Brothers and Allen & Co. an aggregate transaction fee equal to
$11,000,000 upon consummation of the Omnipoint reorganization. Omnipoint also
has agreed to reimburse Lehman Brothers and Allen & Co. for their reasonable
out-of-pocket expenses, including attorney's fees, and to indemnify them against
certain liabilities.
AGREEMENT TO VOTE IN FAVOR OF THE OMNIPOINT REORGANIZATION
Certain principal stockholders of VoiceStream and certain stockholders of
Omnipoint have entered into an agreement to vote in favor of the Omnipoint
reorganization. For a discussion of this
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agreement, see "The Special Meetings -- Agreement to Vote in Favor of the
Omnipoint Reorganization."
HUTCHISON STANDSTILL AGREEMENT
In connection with the Hutchison Investments certain of the Hutchison
Entities entered into a standstill agreement with VoiceStream Holdings. With
certain exceptions, this agreement provides that, for a period of five years
after the completion of the Omnipoint reorganization, the beneficial ownership
of VoiceStream Holdings common stock by the Hutchison Entities and their
affiliates will not exceed:
- 35% during the first two years after the Omnipoint reorganization (or 33%
if the aggregate number of outstanding shares of VoiceStream Holdings
common stock exceeds 200 million);
- 36% during the third year after the Omnipoint reorganization; and
- 40% during the fourth and fifth years after the Omnipoint reorganization.
Among other things, this agreement also:
- prohibits the Hutchison Entities and their affiliates from, in certain
circumstances, participating in a proxy contest, tender offer, exchange
offer or other transaction relating to a change of control of VoiceStream
Holdings;
- provides Hutchison PCS (USA) a preemptive right with respect to future
VoiceStream Holdings equity issuances; and
- entitles Hutchison PCS (USA) to maintain its percentage ownership level
in VoiceStream Holdings and to certain registration rights.
TIMING OF CLOSING
The closing of the Omnipoint reorganization will occur on the fifth
business day following the day on which the last of the conditions set forth in
the Omnipoint reorganization agreement has been satisfied or waived, unless
VoiceStream and Omnipoint agree to a different date. Upon closing of the
VoiceStream and Omnipoint mergers, the parties will file required certificates
of merger with the Secretary of State of Delaware and the Secretary of State of
Washington, at which time the VoiceStream and Omnipoint mergers will be
effective.
ACCOUNTING TREATMENT
The Omnipoint reorganization will be accounted for using the purchase
method of accounting with VoiceStream Holdings becoming the successor company to
VoiceStream and Omnipoint. Under the purchase method of accounting, the purchase
price will be allocated among the Omnipoint assets and liabilities. The excess
of purchase price over the fair value of the identifiable tangible assets and
liabilities acquired will be recorded as intangible assets and amortized on a
straight-line basis over a period not to exceed 40 years. The assets and
liabilities of VoiceStream will be reflected in our financial statements at
their historical cost basis. Earnings of VoiceStream Holdings subsequent to the
date of the Omnipoint reorganization will be reduced by the amortization of
intangible assets. See "VoiceStream Holdings Unaudited Pro Forma Condensed
Combined Financial Statements."
TRANSACTION COSTS
Anticipated non-recurring charges to VoiceStream Holdings as a result of
the Omnipoint reorganization are estimated to be approximately $30.5 million.
This includes transaction costs to be paid by Omnipoint of approximately $11
million related to investment banking fees and $1.5 million related to legal,
accounting and employee separation costs which will be expensed as incurred by
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Omnipoint. This total also includes non-recurring costs to be paid by
VoiceStream of $14 million related to investment banking fees, and $4 million
related to legal, accounting and other transaction fees, which will be
considered as part of the purchase price.
DISSENTERS' RIGHTS OF APPRAISAL
VoiceStream common stockholders who dissent from the VoiceStream merger and
follow certain statutory procedures have the right under the WBCA to demand
payment in cash for the fair value of their VoiceStream common stock, calculated
as of the day prior to the effective time. The VoiceStream merger will occur at
the time of the first to occur of the Omnipoint reorganization or the Aerial
reorganization. Since it is uncertain which reorganization will occur first,
VoiceStream common stockholders must vote against both reorganizations if they
intend to exercise their dissenters' rights of appraisal in connection with the
VoiceStream merger.
Holders of Omnipoint common stock who dissent from the Omnipoint merger and
follow certain statutory procedures have the right under the DGCL to receive
payment in cash for the fair value of their Omnipoint common stock.
See "The Special Meetings--Dissenters' Rights of Appraisal" and Annexes I
and J hereto which set forth the text of the applicable sections of the WBCA and
DGCL.
CIRI TRANSACTIONS
To satisfy FCC requirements, all Omnipoint C and F Block licenses and
pending licenses, together with certain assets and liabilities, will be
transferred to CIVS II and CIVS III at the closing of the Omnipoint
reorganization pursuant to separate purchase agreements with Omnipoint
(collectively, the "CIRI Transactions"). CIVS II and CIVS III are limited
liability companies and are eligible to hold C and F Block licenses issued by
the FCC. Cook Inlet, through its wholly owned subsidiary Cook Inlet GSM, Inc.,
is the managing member of each of CIVS II and CIVS III.
Pursuant to the CIVS II purchase agreement, Omnipoint (prior to becoming a
subsidiary of VoiceStream Holdings) will contribute to CIVS II C and F Block
licenses for 54 BTA markets together with certain associated assets. In
consideration for such licenses and assets, CIVS II will issue to Omnipoint
Class B membership interests in CIVS II entitling Omnipoint to a 49.9% interest
in CIVS II and an initial capital account of $85.7 million. CIVS II will also
assume certain liabilities of Omnipoint associated with such licenses and
assets.
The CIVS II purchase agreement also provides as follows:
- amounts payable to the FCC for licenses shall not exceed the total
indebtedness incurred for the purchase of the licenses (approximately
$220 million);
- indebtedness to vendors shall not exceed approximately $130 million plus
any indebtedness incurred after the date of the CIVS II purchase
agreement in the ordinary course;
- the liabilities of Omnipoint to be assumed by CIVS II shall not exceed
the amount such that, when netted, together with other debt assumed by
CIVS II, against the value of the licenses and assets, the value of the
licenses and assets are less than $85.7 million; and
- prior to the consummation of the sale by Omnipoint, Cook Inlet GSM, Inc.
shall have contributed at least $60 million to CIVS II.
In conjunction with the CIVS II purchase agreement and formation of CIVS
II, VoiceStream Holdings agreed to grant to Cook Inlet certain rights to
exchange Cook Inlet's interest in CIVS II for VoiceStream Holdings common stock
during the 30-day period beginning five years after the issuance date of the
licenses held by CIVS II.
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Pursuant to the CIVS III purchase agreement, Omnipoint agreed to contribute
to CIVS III certain pending C and F Block licenses for 34 BTA markets. In
consideration for such contribution, CIVS III will issue to Omnipoint Class B
membership interests in CIVS III entitling Omnipoint to a 49.9% interest in CIVS
III and an initial capital account of $21.4 million. CIVS III will also assume
certain of the liabilities of Omnipoint associated with such licenses.
The CIVS III purchase agreement also provides as follows:
- liabilities of Omnipoint to be assumed by CIVS III shall not exceed the
amount such that, when netted against the actual price paid for the
licenses (approximately $45 million), the value of the licenses are less
than $21.4 million;
- Omnipoint shall contribute cash to CIVS III in an amount equal to any
amounts payable to the FCC for any FCC licenses that remain to be issued
to Omnipoint's wholly-owned subsidiary, OPCS Three, LLC, as of the
closing date of the Omnipoint reorganization; and
- prior to the consummation of the sale by Omnipoint, Cook Inlet GSM, Inc.
shall have contributed at least $15 million to CIVS III.
In conjunction with the CIVS III purchase agreement and formation of CIVS
III, VoiceStream Holdings agreed to grant to Cook Inlet certain rights to
exchange Cook Inlet's interest in CIVS III for VoiceStream Holdings common stock
during the 30-day period beginning five years after the issuance date of the
licenses held by CIVS III.
HUTCHISON INVESTMENTS
At the same time that we entered into the Omnipoint reorganization
agreement, Hutchison Telecommunications Limited, Hutchison PCS (USA) and
VoiceStream Holdings entered into agreements providing for the Hutchison
Investments. In the Hutchison Investments, Hutchison PCS (USA) agreed to
purchase shares of VoiceStream Holdings common stock for a purchase price of $29
per share and shares of VoiceStream Holdings Junior Preferred, for a purchase
price of $100,000 per share. The total purchase price of the VoiceStream
Holdings common stock and the VoiceStream Holdings Junior Preferred will be $957
million, consisting of $807 million in cash and $150 million in shares of
Omnipoint Series A Preferred purchased by Hutchison PCS (USA) from Omnipoint
under a securities purchase agreement. The Omnipoint Series A Preferred (or all
shares of Omnipoint common stock obtained prior to the Omnipoint reorganization
on conversion of the Omnipoint Series A Preferred) will be exchanged in
connection with the Omnipoint reorganization for VoiceStream Holdings common
stock at a conversion price of $29.00 per share. Hutchison PCS (USA) has the
right to determine the allocation between VoiceStream Holdings common stock and
VoiceStream Holdings Junior Preferred that it will hold so long as it holds at
least 18.6% of the total number of outstanding shares of VoiceStream Holdings
common stock immediately after the closing of the Omnipoint reorganization.
VoiceStream Holdings entered into the Hutchison Investments because it
believed that in order to successfully merge with Omnipoint, which was and
remains substantially leveraged, VoiceStream Holdings would need additional
equity. If the entire $957 million is used to purchase (or is converted into)
VoiceStream Holdings common stock, at the completion of the Omnipoint
reorganization, the total number of shares of VoiceStream Holdings common stock
purchased as part of the Hutchison Investments will be 33 million shares. After
giving effect to the Omnipoint reorganization, Aerial reorganization, the
Hutchison Investments and the Sonera-VoiceStream Investment, the Hutchison
Entities would own 55,899,252 shares (approximately 23%) of VoiceStream Holdings
common stock. The consummation of the purchases under this subscription
agreement will take place in connection with the completion of the Omnipoint
reorganization.
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The VoiceStream Holdings Junior Preferred has no voting rights, ranks
senior to the VoiceStream Holdings common stock but junior to any other series
or class of VoiceStream Holdings preferred stock which may be issued, provides
for a 2.5% cumulative dividend payable at maturity (40 years from the date of
issuance), and may not be redeemed by VoiceStream Holdings (other than a
mandatory redemption from a holder whose ownership of these shares may result in
the loss of a license or franchise from any governmental agency). The Hutchison
Entities cannot require VoiceStream Holdings to redeem these shares prior to
maturity. Upon conversion of the VoiceStream Holdings Junior Preferred any
cumulative dividend outstanding on the shares so converted will be canceled.
Upon a change of control of VoiceStream Holdings, VoiceStream Holdings has the
right to require the VoiceStream Holdings Junior Preferred to be converted into
VoiceStream Holdings common stock.
SONERA-VOICESTREAM INVESTMENT
On September 17, 1999, VoiceStream Holdings and Sonera entered into an
agreement providing for the Sonera-VoiceStream Investment. In the
Sonera-VoiceStream Investment, Sonera agreed to purchase at the closing of the
Omnipoint reorganization 8,771,930 shares of VoiceStream Holdings common stock
for a purchase price of $500 million ($57.00 per share). The Sonera-VoiceStream
Investment is desirable to us in light of the fact that Omnipoint is
substantially leveraged, and the Sonera-VoiceStream Investment will provide us
with additional equity.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OMNIPOINT
REORGANIZATION
CONSEQUENCES OF THE VOICESTREAM MERGER
The following is a summary of the material United States federal income tax
consequences of the VoiceStream merger to holders of VoiceStream common stock.
It does not discuss all aspects of United States federal income taxation that
may be important to you in light of your particular circumstances. For example,
it does not discuss tax consequences that may apply to you if you are a taxpayer
that is subject to special treatment under the federal income tax laws (for
example, if you are a bank, financial institution, broker-dealer, insurance
company, foreign person, or tax-exempt entity, or if you acquired your
VoiceStream common stock by exercising employee stock options or otherwise as
compensation or through a tax-qualified retirement plan). It also does not
discuss any aspect of state, local or foreign taxation. The summary assumes that
you will hold your VoiceStream common stock as a capital asset at the effective
time.
Jones, Day, Reavis & Pogue, tax counsel to VoiceStream, has delivered an
opinion to the effect that the description of the federal income tax
consequences to holders of VoiceStream common stock contained under this heading
correctly summarizes the material federal income tax consequences for such
holders.
YOU ARE URGED TO CONSULT WITH YOUR OWN TAX ADVISOR CONCERNING THE TAX
CONSEQUENCES OF THE VOICESTREAM MERGER TO YOU.
Consummation of the VoiceStream merger is conditioned upon, among other
things, VoiceStream having received the opinion of Jones, Day, Reavis & Pogue,
dated the effective date of the Omnipoint reorganization, stating that on the
basis of the facts, representations, and assumptions set forth in such opinion:
- the VoiceStream merger will qualify as a reorganization described in
section 368(a) of the Code, and each of VoiceStream, VoiceStream Holdings
and, in the case of a reorganization described in section 368(a)(2)(E) of
the Code, the VoiceStream Holdings subsidiary which is a party to the
VoiceStream merger, will be a party to the reorganization within the
meaning of section 368(b) of the Code, or
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- the VoiceStream merger will be treated as a transfer of property by the
VoiceStream stockholders, other than dissenting stockholders, to
VoiceStream Holdings described in section 351(a) of the Code.
Assuming that the VoiceStream merger is consummated in accordance with the
terms of the Omnipoint reorganization agreement and as described in this joint
proxy statement-prospectus, and assuming that the representations and
assumptions set forth in the opinion referred to above will be true, correct,
and complete at the effective time of the VoiceStream merger, it is the opinion
of Jones, Day, Reavis & Pogue that under current law:
- the VoiceStream merger will qualify as a reorganization described in
section 368(a) of the Code, and each of VoiceStream, VoiceStream
Holdings, and the VoiceStream Holdings subsidiary which is a party to the
VoiceStream merger will be a party to the reorganization within the
meaning of section 368(b) of the Code, or
- the VoiceStream merger will be treated as a transfer of property by the
VoiceStream stockholders, other than dissenting stockholders, to
VoiceStream Holdings described in section 351(a) of the Code.
This conclusion is based on the Code, Treasury regulations promulgated
thereunder, administrative rulings and practice, and judicial precedent, all as
of the date hereof. All of these authorities are subject to change, possibly
with retroactive effect. Any change in any of these authorities or failure of
the representations and assumptions to be true, correct and complete in all
material respects at the effective time of the VoiceStream merger could alter
the tax consequences to VoiceStream and VoiceStream's stockholders discussed
herein. The parties will not request, and the VoiceStream merger is not
conditioned upon, a ruling from the IRS as to any of the United States federal
income tax consequences of the VoiceStream merger. As a result, there can be no
assurance that the IRS will not disagree with or challenge any of the
conclusions concerning the VoiceStream merger set forth in this discussion.
Consistent with the VoiceStream merger qualifying as a reorganization
described in section 368(a) of the Code or as a transfer of property by the
VoiceStream stockholders to VoiceStream Holdings described in section 351(a) of
the Code:
- holders of VoiceStream common stock who exchange such common stock for
VoiceStream Holdings common stock in the VoiceStream merger will not
recognize gain or loss for United States federal income tax purposes;
- each holder's aggregate tax basis in the VoiceStream Holdings common
stock received in the VoiceStream merger will be the same as his or her
aggregate tax basis in the VoiceStream common stock surrendered in the
merger;
- the holding period of the VoiceStream Holdings common stock received in
the VoiceStream merger by a holder of VoiceStream common stock will
include the holding period of the VoiceStream common stock that he or she
surrendered in the VoiceStream merger; and
- no gain or loss will be recognized by VoiceStream, VoiceStream Holdings,
or the VoiceStream Holdings subsidiary which is a party to the
VoiceStream merger as a result of the VoiceStream merger.
A holder of VoiceStream common stock who receives cash in exchange for his
VoiceStream common stock pursuant to the exercise of appraisal rights will
recognize capital gain or loss equal to the difference between the tax basis of
the VoiceStream common stock surrendered and the amount of cash received
therefor. Such capital gain or loss will constitute long-term capital gain or
loss if the VoiceStream common stock has been held for more than one year at the
effective time of the VoiceStream merger. Gain or loss must be calculated
separately for each block of VoiceStream
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common stock surrendered (that is, for shares of VoiceStream common stock
acquired at the same time in a single transaction).
CONSEQUENCES OF THE OMNIPOINT MERGER
The following is a summary of the material United States federal income tax
consequences of the Omnipoint merger to holders of:
- Omnipoint common stock;
- certain warrants to acquire Omnipoint common stock; and
- Omnipoint preferred stock.
The summary does not discuss all aspects of United States federal income
taxation that may be important to you in light of your particular circumstances.
For example, it does not discuss tax consequences that may apply to you if you
are a taxpayer that is subject to special treatment under the federal income tax
laws (for example, if you are a bank, financial institution, broker-dealer,
insurance company, foreign person, or tax-exempt entity, or if you acquired your
Omnipoint common stock by exercising employee stock options or otherwise as
compensation or through a tax-qualified retirement plan, or if you acquired your
warrants to acquire Omnipoint common stock as compensation). It also does not
address any aspect of state, local or foreign taxation. The summary assumes that
you will hold your Omnipoint common stock, warrants to acquire Omnipoint common
stock, and Omnipoint preferred stock as capital assets at all times. This
summary also does not discuss any consequences to you if, in addition to holding
stock in Omnipoint, you also own stock in VoiceStream or Aerial.
Piper & Marbury L.L.P., counsel to Omnipoint, has delivered an opinion to
the effect that the description of the federal income tax consequences to
holders of Omnipoint common stock, including certain holders of warrants to
acquire Omnipoint common stock, and Omnipoint preferred stock contained under
this heading correctly summarizes the material federal income tax consequences
for such holders.
YOU ARE URGED TO CONSULT WITH YOUR OWN TAX ADVISOR CONCERNING THE TAX
CONSEQUENCES OF THE OMNIPOINT MERGER TO YOU.
Consummation of the Omnipoint merger is conditioned upon, among other
things, Omnipoint having received the opinion of Piper & Marbury L.L.P., dated
the effective date of the Omnipoint merger, stating that on the basis of the
facts and assumptions set forth in such opinion:
- the receipt of VoiceStream Holdings common stock by holders of Omnipoint
common stock pursuant to the Omnipoint merger will be treated as
described in section 351 of the Code, and
- no gain or loss will be recognized for federal income tax purposes by
Omnipoint in connection with the Omnipoint merger.
This opinion will be based upon, among other things, certificates to be
provided by officers of VoiceStream, Omnipoint, Aerial and VoiceStream Holdings,
and by 5% or greater stockholders of VoiceStream, Omnipoint and Aerial
containing customary statements relating to the absence of plans to dispose of
shares of VoiceStream Holdings by the holders of Omnipoint common stock,
VoiceStream common stock and Aerial common stock, and the absence of plans on
the part of VoiceStream Holdings to undertake or cause Omnipoint, VoiceStream or
Aerial to undertake transactions outside the ordinary course of business or to
liquidate Omnipoint, VoiceStream or Aerial or dispose of their shares, as well
as certain other technical requirements under the Code.
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Assuming that:
- the Omnipoint merger is consummated in accordance with the terms of the
reorganization agreement and as described in this joint proxy
statement-prospectus;
- the certificates referred to above will be received and will be true,
correct and complete at the effective time of the reorganization;
- the assumptions set forth in the opinion referred to above will be true,
correct and complete at the effective time of the reorganization; and
- the Omnipoint reorganization is consummated prior to or simultaneously
with the Aerial reorganization,
it is the opinion of Piper & Marbury L.L.P. that, under current law:
- the receipt of VoiceStream Holdings common stock by holders of Omnipoint
common stock pursuant to the Omnipoint merger will be treated as
described in section 351 of the Code; and
- no gain or loss will be recognized for federal income tax purposes by
Omnipoint in connection with the Omnipoint merger.
This conclusion is based on the Code, Treasury regulations promulgated
thereunder, administrative rulings and practice, and judicial precedent, all as
of the date hereof. All of these authorities are subject to change, possibly
with retroactive effect. Any change in any of these authorities or failure of
the factual representations and assumptions to be true, correct and complete in
all material respects at the effective time of the Omnipoint merger could alter
the tax consequences to Omnipoint and Omnipoint's stockholders discussed herein.
The parties will not request, and the Omnipoint merger is not conditioned upon,
a ruling from the IRS as to any of the United States federal income tax
consequences of the Omnipoint merger. As a result, there can be no assurance
that the IRS will not disagree with or challenge any of the conclusions
concerning the Omnipoint merger set forth in this discussion.
TREATMENT OF HOLDERS OF OMNIPOINT COMMON STOCK
Consistent with the receipt of VoiceStream Holdings common stock by holders
of Omnipoint common stock pursuant to the Omnipoint merger being treated as
described in section 351 of the Code, the treatment of holders of Omnipoint
common stock would be as follows:
Exchange of Omnipoint Common Stock Solely for VoiceStream Holdings Common
Stock
If you hold Omnipoint common stock and receive solely VoiceStream Holdings
common stock in exchange for your Omnipoint common stock in the Omnipoint
merger, you will not recognize gain or loss upon the exchange. The aggregate tax
basis of the VoiceStream Holdings common stock you receive will be equal to the
aggregate tax basis of the Omnipoint common stock you surrender, and the holding
period of the VoiceStream Holdings common stock will include your holding period
of the Omnipoint common stock surrendered. If you hold Omnipoint common stock
and are considering making the Omnipoint Stock Election, you should note that
there can be no assurance that you will receive only VoiceStream Holdings common
stock (because of the possibility of proration) and, therefore, there can be no
assurance that if you make the Omnipoint Stock Election you will recognize no
taxable gain upon the exchange of Omnipoint common stock.
Exchange of Omnipoint Common Stock Solely for Cash
If you hold Omnipoint common stock and receive solely cash in exchange for
Omnipoint common stock in the Omnipoint merger (or by reason of exercising
appraisal rights under Delaware
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Law), you will recognize capital gain or loss equal to the difference between
your tax basis in the Omnipoint common stock you surrender and the amount of
cash you receive in the exchange. Such capital gain or loss will be long-term
capital gain or loss if you have held the Omnipoint common stock for more than
one year as of the effective time of the reorganization. Gain or loss must be
calculated separately for each block of Omnipoint common stock (i.e., shares of
Omnipoint common stock acquired at the same time in a single transaction). If
you hold Omnipoint common stock and are considering making the Omnipoint Cash
Election, you should note that there can be no assurance that you will receive
only cash (because of the possibility of proration) in exchange for your
Omnipoint common stock.
Exchange of Omnipoint Common Stock for a Combination of VoiceStream
Holdings Common Stock and Cash
If you hold Omnipoint common stock and you receive a combination of
VoiceStream Holdings common stock and cash in exchange for your Omnipoint common
stock (either because you make the Omnipoint Standard Election or because you
make the Omnipoint Stock Election or the Omnipoint Cash Election but do not
receive all stock or all cash, respectively, because of proration), you
generally will recognize capital gain realized in the transaction but will not
recognize any loss realized in the transaction. The amount of capital gain that
you recognize generally will be calculated separately for each block of
Omnipoint common stock surrendered (i.e., shares of Omnipoint common stock
acquired at the same time in a single transaction) and will be equal to the
lesser of:
- the amount of gain realized in respect of such block (i.e., the excess of
(1) the sum of the amount of cash and the fair market value of
VoiceStream Holdings common stock you receive that is allocable to such
block of Omnipoint common stock over (2) the tax basis of such block);
and
- the amount of cash you receive that is allocable to such block.
Such capital gain will be long-term capital gain if you have held the block
of Omnipoint common stock for more than one year as of the closing date of the
Omnipoint reorganization. For this purpose, all of the cash and VoiceStream
Holdings common stock that you receive generally will be allocated
proportionately among the blocks of Omnipoint common stock that you surrender.
The tax basis of the VoiceStream Holdings common stock that you receive in
exchange for a block of Omnipoint common stock generally will be equal to your
tax basis in the surrendered block of Omnipoint common stock, decreased by the
amount of cash you receive in respect of such block and increased by the amount
of gain you recognize in respect of such block. Your holding period of the
VoiceStream Holdings common stock will include the holding period of such block
of Omnipoint common stock surrendered.
The tax treatment to you could be different than described above and you
should consult your own tax advisor, if the Aerial reorganization and the Sonera
Investments are not treated, for tax purposes, as part of the same transaction
as the Omnipoint reorganization. In that case, it is likely that the common
stockholders of Omnipoint, together with the Hutchison entities, would own at
least 50 percent of the VoiceStream Holdings common stock outstanding
immediately after the Omnipoint reorganization, which would mean that the tax
treatment of the cash received would be governed by Section 304 of the Code (and
not Section 351 of the Code). In such case, except as described under "Cash In
Lieu of Fractional Shares," you would be treated as having exchanged (1) a
portion of your Omnipoint common stock for VoiceStream Holdings common stock in
a tax-free transaction and (2) a portion of your Omnipoint common stock for
cash. You would generally recognize capital gain or loss equal to the difference
between the amount of cash you receive and your basis in the portion of your
Omnipoint common stock which is surrendered in exchange for cash.
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Federal Income Tax Considerations in Choosing an Election
If you are a stockholder of Omnipoint who makes the Omnipoint Stock
Election for all of your Omnipoint common stock and you receive cash as a result
of the proration procedures, or if you make the Omnipoint Cash Election for all
of your Omnipoint common stock and you receive VoiceStream Holdings common stock
as a result of the proration procedures, the tax consequences will be those
described above under the heading "-- Exchange of Omnipoint Common Stock for a
Combination of VoiceStream Holdings Common Stock and Cash." At the time you make
an election, the actual federal income tax consequences of making the Omnipoint
Cash Election or the Omnipoint Stock Election cannot be determined because you
will not know at that time if, or to what extent, the proration procedures will
apply.
Cash in Lieu of Fractional Shares
If you hold Omnipoint common stock and you receive cash in lieu of
fractional shares of VoiceStream Holdings common stock, you will be treated as
having received the fractional shares in the Omnipoint merger and then as having
sold them, and you will recognize gain or loss equal to the difference between
the ratable portion of your tax basis in the Omnipoint common stock that you
surrendered in the Omnipoint merger that is allocated to such fractional shares,
and the cash received in lieu thereof. Any gain or loss attributable to
fractional shares generally will be capital gain or loss. Any such capital gain
or loss will be long-term capital gain or loss if you have held the Omnipoint
common stock for more than one year at the effective time of the reorganization.
Treatment of Omnipoint Warrant Holders
If you hold a warrant to acquire Omnipoint common stock (other than a
warrant issued in connection with the performance of services) and you exercise
the warrant before the effective time, you will not recognize gain or loss as a
result of such exercise. When you then exchange the Omnipoint common stock which
you received upon exercise in the Omnipoint merger, the federal income tax
consequences will be the same as those described above for the holders of
Omnipoint common stock. However, your holding period for the Omnipoint common
stock received upon the exercise of the warrant will begin only upon such
exercise. As a result, any capital gain recognized in the Omnipoint merger with
respect to Omnipoint common stock acquired by exercise of a warrant is likely to
be short-term.
If you hold a warrant to acquire Omnipoint common stock and you do not
exercise such warrant before the Effective Time you will recognize capital gain,
and possibly capital loss, upon the conversion of such warrant into a new
warrant to purchase shares of VoiceStream Holdings.
If you are not also surrendering Omnipoint common stock in the Omnipoint
merger, the amount of capital gain or loss that you must recognize with respect
to the receipt of a VoiceStream Holdings warrant will be equal to the difference
between your tax basis in the warrant surrendered and the fair market value of
the VoiceStream Holdings warrant that you receive. Such gain or loss will be
long term capital gain or loss if you have held the warrant surrendered for more
than one year as of the effective time. Gain or loss must be allocated
separately for each block of warrants surrendered (i.e., warrants to acquire
Omnipoint common stock acquired in a single transaction).
If you are surrendering Omnipoint common stock in the Omnipoint merger in
addition to a warrant to acquire Omnipoint common stock, the method for
determining the amount of capital gain or loss to be recognized upon surrender
of the warrant is not entirely clear. One approach would be to allocate the fair
market value of the VoiceStream Holdings warrants and any VoiceStream Holdings
common stock and cash received in the exchange proportionately among the blocks
of Omnipoint common stock and the blocks of warrants to acquire Omnipoint common
stock surrendered to determine the amount of capital gain. Under this approach,
the capital gain recognized in the
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exchange will be calculated separately for each block of Omnipoint common stock
and such block of warrants to acquire Omnipoint common stock surrendered and,
with respect to each such block, will be equal to the lesser of:
- the amount of capital gain realized in respect of such block (i.e., the
excess of the sum of (1) any cash, the fair market value of VoiceStream
Holdings common stock and the fair market value of VoiceStream Holdings
warrants allocated to such block) over (2) the tax basis of such block);
and
- the amount of cash and the fair market value of the VoiceStream Holdings
warrants allocated to such block.
Such capital gain with respect to a block of Omnipoint common stock or a
block of warrants to acquire Omnipoint common stock will be long-term capital
gain if such block exchanged in the Omnipoint reorganization has been held for
more than one year as of the closing of the Omnipoint reorganization. Under this
approach, you would not recognize any loss.
A second approach would be to treat the transaction as:
- an exchange of Omnipoint common stock for any VoiceStream Holdings common
stock plus any cash subject to the tax consequences described above under
the heading "-- Exchange of Omnipoint Common Stock for a Combination of
VoiceStream Holdings Common Stock and Cash," and
- a separate, fully taxable, exchange of warrants to acquire Omnipoint
common stock for VoiceStream Holdings warrants, subject to the tax
consequences described above for a holder of a warrant to acquire
Omnipoint common stock who is not also exchanging Omnipoint common stock
in the Omnipoint merger.
The tax treatment to you could be different from that described above, and
you should consult your own tax advisor, if the Aerial reorganization and the
Sonera Investments are not treated, for tax purposes, as part of the same
transaction as the Omnipoint reorganization. In that case, it is likely that the
common stockholders of Omnipoint, together with the Hutchison Entities, would
own at least 50 percent of the VoiceStream Holdings common stock outstanding
immediately after the Omnipoint reorganization, which would mean that the tax
treatment of the cash received (but not the warrants) would be governed by
section 304 of the Code (and not section 351 of the Code).
It is not clear which of these two methods might be required by the IRS and
it is possible that the IRS might require the use of another method.
Either method could turn out to be more or less favorable for a particular
holder, depending on the amount of overall gain or loss that such holder
realized with respect to the Omnipoint common stock and warrants to acquire
Omnipoint common stock, the amount of gain or loss recognized with respect to
cash received, if any, by such holder in the Omnipoint merger and the amount of
basis that such holder has in the warrants.
Tax Consequences if Aerial Reorganization Occurs Before Omnipoint
Reorganization.
Under the terms of the Omnipoint reorganization agreement and the Aerial
reorganization agreement, it is possible that the Aerial reorganization could
take place before the Omnipoint reorganization. This could occur if
- the Omnipoint reorganization has not occurred by June 30, 2000 (or, under
certain circumstances, March 31, 2000);
- neither Omnipoint nor VoiceStream elects to terminate the Omnipoint
reorganization agreement; and
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- all other conditions to the Aerial reorganization have been satisfied.
If the Aerial reorganization were in fact to occur before the Omnipoint
reorganization, the receipt of VoiceStream Holdings common stock by holders of
Omnipoint common stock pursuant to the Omnipoint merger would be treated as
described in Section 351 of the Code (and the tax consequences described above
would apply) only if the Aerial reorganization, the VoiceStream merger, the
Omnipoint reorganization, the Hutchison Investments and the Sonera Investments
were all treated as parts of a single transaction for federal income tax
purposes. Because of the inherently factual nature of this determination, if the
Aerial reorganization were to close before the Omnipoint reorganization, it is
likely that Piper & Marbury, L.L.P. would be unable to render the opinion
described above, in which case Omnipoint would not be required to consummate the
Omnipoint reorganization. If Omnipoint were nevertheless to consummate the
Omnipoint reorganization, it is possible that Section 351 would not apply and
(unless the parties were able to take and took action which would bring the
transaction within another nonrecognition provision of the Code) that the
Omnipoint reorganization would be a fully taxable transaction to holders of
Omnipoint common stock. In that case, if you hold Omnipoint common stock, you
would recognize gain or loss equal to the difference between
- the sum of the fair market value of the VoiceStream Holdings common stock
and the amount of cash (if any) that you receive in the Omnipoint
reorganization, and
- your tax basis in your Omnipoint common stock.
TREATMENT OF HOLDERS OF OMNIPOINT PREFERRED STOCK
Conversion of Omnipoint 7% Convertible Preferred Prior to the Omnipoint
Merger
If you hold Omnipoint 7% Convertible Preferred and you elect to convert
such stock into Omnipoint common stock prior to the closing of the Omnipoint
merger, you generally will not recognize gain or loss as a result of such
conversion. The aggregate tax basis of the Omnipoint common stock you receive on
conversion will generally be equal to your aggregate tax basis in the Omnipoint
7% Convertible Preferred converted and the holding period of the Omnipoint
common stock received in the conversion will include the holding period of the
Omnipoint 7% Convertible Preferred surrendered in the exchange. When you
exchange the Omnipoint common stock received upon conversion in the Omnipoint
merger, the federal income tax consequences will be the same as those described
above for holders of Omnipoint common stock.
Treatment of Omnipoint 7% Convertible Preferred Stock Outstanding as of the
Closing of the Omnipoint Merger
There will be no federal income tax consequences to a holder of Omnipoint
7% Convertible Preferred whose stock remains outstanding as of the closing of
the Omnipoint merger, and such a holder will not recognize gain or loss, as a
result of the Omnipoint merger. No other Omnipoint preferred stock will be
outstanding as of the closing of the Omnipoint merger.
Conversion of Omnipoint 7% Convertible Preferred Stock into VoiceStream
Holdings Common Stock and Cash after the Closing of the Omnipoint Merger
If you hold Omnipoint 7% Convertible Preferred and then convert such stock
into VoiceStream Holdings common stock and cash after the effective time of the
Omnipoint merger, you generally will recognize capital gain or loss, equal to
the difference between the tax basis of the Omnipoint 7% Convertible Preferred
surrendered and the amount of cash and the fair market value of the VoiceStream
Holdings common stock received upon conversion. Such capital gain or loss will
be long-term capital gain or loss if you have held the Omnipoint 7% Convertible
Preferred for more than
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one year as of the date of the conversion. Gain or loss must be calculated
separately for each block of Omnipoint 7% Convertible Preferred (i.e., shares of
Omnipoint 7% Convertible Preferred stock acquired at the same time in a single
transaction).
Reporting Requirements
Each holder of Omnipoint common stock that receives VoiceStream Holdings
common stock in exchange for Omnipoint common stock and each holder of Omnipoint
7% Convertible Preferred who exchanges such stock for Omnipoint common stock
prior to the closing of the Omnipoint reorganization will be required to retain
records and file with such holder's United States federal income tax return a
statement setting forth certain facts relating to the exchange.
CONSEQUENCES OF THE OMNIPOINT REORGANIZATION UNDER THE VOICESTREAM TAX SHARING
AGREEMENT
BACKGROUND
On May 3, 1999, Western Wireless distributed to its stockholders in the
spin-off all of its shares of VoiceStream's stock. Western Wireless had
previously received a ruling from the IRS to the effect that the spin-off would
not result in the recognition of income or gain by Western Wireless or its
stockholders. At the time of the spin-off, VoiceStream generally agreed to
indemnify Western Wireless on an after-tax basis for any taxes, penalties, and
interest and various other expenses incurred by Western Wireless as a result of
its recognition of gain upon the spin-off under section 355(e) of the Code,
notwithstanding the IRS ruling. We call this indemnity agreement the "Tax
Sharing Agreement."
Under section 355(e) of the Code, Western Wireless would recognize gain
upon the spin-off, notwithstanding the IRS ruling, if the spin-off were part of
a "prohibited plan," that is, a plan or series of related transactions pursuant
to which one or more persons acquire, directly or indirectly, 50 percent or more
of VoiceStream's stock. For this purpose, if an existing VoiceStream stockholder
did not acquire his existing VoiceStream stock pursuant to a prohibited plan,
then additional direct or indirect acquisitions of VoiceStream's stock by that
stockholder also are not part of a prohibited plan, to the extent there is no
decrease in the percentage of stock owned directly or indirectly in VoiceStream
by each VoiceStream stockholder immediately before the additional acquisitions.
Acquisitions of 50% or more of VoiceStream's stock, in the aggregate,
occurring during the four year period beginning two years before the spin-off
would give rise to a rebuttable presumption that the spin-off was part of a
prohibited plan.
CONSEQUENCES OF THE OMNIPOINT REORGANIZATION
VoiceStream Holdings' acquisition of VoiceStream's stock pursuant to the
Omnipoint reorganization, in conjunction with the Hutchison Investments, the
Sonera Investments, the Aerial reorganization (collectively, the "Other
Transactions") and Hutchison's acquisition of its existing VoiceStream stock
within two years prior to the spin-off, would give rise to a rebuttable
presumption that the spin-off was part of a prohibited plan. (VoiceStream
Holdings' acquisition of VoiceStream's stock, by itself, would not cause this
result because each VoiceStream stockholder would continue to own indirectly,
through VoiceStream Holdings, the same percentage of VoiceStream stock that he
previously owned directly.)
At present, there is no direct authority that specifies the precise
standard that must be met by VoiceStream in order to rebut the presumption and
establish that the spin-off was not part of a prohibited plan. The IRS recently
proposed regulations dealing with this issue. However, these proposed
regulations remain subject to IRS revision and, in any event, will have a
prospective effective date when finalized and thus will not apply to the
spin-off.
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The proposed regulations are a strong indication, however, of what the IRS
presently believes the standard should be for rebutting the presumption that a
spin-off is part of a prohibited plan. In cases where the presumption arises
because stock of a spun-off corporation was acquired within six months after the
spin-off, the proposed regulations require, among other things, that two facts
be established by clear and convincing evidence to rebut the presumption. First,
it generally must be established that, at the time of the spin-off, the
corporations participating in the spin-off (and their controlling stockholders)
did not intend that a prohibited stock acquisition would occur. Second, it
generally must be established that, at the time of the spin-off, the
corporations participating in the spin-off (and their controlling stockholders)
did not reasonably anticipate that a prohibited stock acquisition more likely
than not would occur. The proposed regulations set forth certain other rules in
cases where the presumption arises because stock of a spun-off corporation was
acquired within two years prior to the spin-off.
In the absence of direct authority, and although the issue is not free from
doubt, VoiceStream believes that it should be able to establish that the
spin-off and VoiceStream Holdings' acquisition of VoiceStream's stock pursuant
to the Omnipoint reorganization, in conjunction with the Other Transactions and
Hutchison's acquisition of its existing VoiceStream stock within two years prior
to the spin-off, are not pursuant to a prohibited plan. A partial summary of the
facts that VoiceStream believes it should be able to establish supporting this
position is set forth in the next two paragraphs.
Hutchison acquired its existing VoiceStream stock approximately 15 months
before the spin-off (pursuant to a contract entered into approximately 19 months
before the spin-off). VoiceStream believes that Hutchison's acquisition should
not be considered to have been pursuant to a prohibited plan because it occurred
long before it was clear that the spin-off would take place and long before
VoiceStream had any plan to combine with Omnipoint or engage in the Other
Transactions, and it had no effect on the spin-off (which would have taken place
at the same time, and on the same terms, had Hutchison not made its
acquisition). As a result, VoiceStream believes that Hutchison's proposed
acquisitions of indirect interests in VoiceStream's stock pursuant to the
Omnipoint reorganization and the Other Transactions also should not be
considered to be pursuant to a prohibited plan, to the extent there is no
decrease in the percentage of stock owned directly or indirectly in VoiceStream
by each VoiceStream stockholder immediately before the acquisitions.
Furthermore, VoiceStream presently expects that the stockholders of VoiceStream
(including Hutchison) will receive interests in VoiceStream (through VoiceStream
Holdings) as a result of the Omnipoint reorganization and the Other Transactions
that represent more than 50% of VoiceStream's stock (excluding for this purpose
any of Hutchison's percentage interest in VoiceStream that represents an
increase over its percentage interest prior to the Omnipoint reorganization and
the Other Transactions). Assuming that will be the case, VoiceStream thus
believes that the Omnipoint reorganization and the Other Transactions should not
be considered to be part of a prohibited plan. VoiceStream believes that the
same result should arise if the Omnipoint reorganization is completed but the
Aerial reorganization is not (and if the Aerial reorganization is completed but
the Omnipoint reorganization is not). The IRS could disagree with VoiceStream's
conclusions under the standards it has articulated in the proposed regulations,
or otherwise.
In addition, apart from whether Hutchison's existing VoiceStream stock was
acquired pursuant to a prohibited plan, VoiceStream does not believe that the
spin-off should be considered to be part of a prohibited plan. The spin-off was
originally conceived by Western Wireless in late 1997. Thereafter, in
discussions that took place during September 1998 through the beginning of
February 1999, VoiceStream and Omnipoint considered the possibility of having
VoiceStream make an equity investment in Omnipoint or combining their two
companies. These discussions were terminated on February 12, 1999. At that time,
no material term of a VoiceStream equity investment or VoiceStream-Omnipoint
combination had been agreed upon, formally or informally. In particular, the
parties' disagreement at that time over the relative values of the two companies
appeared to be
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irreconcilable, without a fundamental change in view by one of the parties.
Beginning on February 12, 1999, and continuing until May 5, 1999 (two days after
the spin-off), VoiceStream and Omnipoint were prohibited from speaking to each
other (because each was participating directly or indirectly in an FCC auction
of spectrum licenses and applicable FCC rules prohibited the participants from
speaking to each other). During this period, Omnipoint engaged in active
discussions with unrelated persons concerning a possible equity investment in
Omnipoint or combination transaction with Omnipoint (in lieu of any such
transaction with VoiceStream) and exchanged term sheets with a number of such
persons. Thus, at the time the spin-off occurred, VoiceStream and Omnipoint had
not spoken for approximately three months, any possible combination transaction
between them was highly speculative, and it could not be anticipated with any
reasonable degree of confidence that any combination transaction would occur.
(Similarly, at the time the spin-off occurred, any possible combination
transaction between VoiceStream and Aerial was highly speculative, Aerial was
under a contractual obligation to negotiate exclusively with Sonera concerning
any Aerial combination transaction, and it could not be anticipated with any
reasonable degree of confidence that any such combination transaction would
occur.) Conversely, the spin-off was conceived of apart from any combination
transaction with Omnipoint or Aerial, was effected during the period that
VoiceStream and Omnipoint were not speaking (and VoiceStream and Aerial were
prohibited from negotiating), and was implemented entirely without regard to,
and independent of, any possible combination transaction with Omnipoint or
Aerial. Finally, at the time the spin-off occurred, VoiceStream was aware of the
law concerning prohibited plans and did not intend to participate in a
prohibited plan.
No assurance can be given that the IRS would not successfully contend that
VoiceStream has failed to establish one or more of the facts set forth in the
prior two paragraphs. Furthermore, no assurance can be given that the IRS would
not contend, in any event, that the spin-off and VoiceStream Holdings'
acquisition of VoiceStream's stock pursuant to the Omnipoint reorganization, in
conjunction with the Other Transactions and Hutchison's acquisition of its
existing VoiceStream stock within two years prior to the spin-off, are pursuant
to a prohibited plan. If the IRS were to assert that the spin-off was part of a
prohibited plan, it also would likely seek to revoke retroactively its ruling
that Western Wireless would not recognize gain as a result of the spin-off.
No assurance can be given that a court would disagree with an IRS assertion
that the spin-off and VoiceStream Holdings' acquisition of VoiceStream's stock
pursuant to the Omnipoint reorganization, in conjunction with the Other
Transactions and Hutchison's acquisition of its existing VoiceStream stock
within two years prior to the spin-off, are pursuant to a prohibited plan. If a
court were to agree with such an IRS assertion, Western Wireless would be
required to recognize gain upon the spin-off under section 355(e) of the Code,
and VoiceStream would be required to indemnify Western Wireless on an after tax
basis for its resulting taxes, penalties (if any) and interest, and various
other expenses, under the Tax Sharing Agreement. The amount of gain that Western
Wireless would recognize under section 355(e) of the Code would be equal to the
difference between the fair market value of VoiceStream's stock at the time of
the spin-off and Western Wireless' adjusted tax basis in such stock at that
time. See "Financial Information -- Notes to Pro Forma Condensed Combined
Financial Statements; Contingencies."
PROSPECTIVE OWNERS OF VOICESTREAM HOLDINGS COMMON STOCK ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS ABOUT THE APPLICATION OF THE TAX SHARING
AGREEMENT TO VOICESTREAM AND THE MATERIAL, ADVERSE EFFECT ON VOICESTREAM THAT
COULD ARISE IF VOICESTREAM IS UNABLE TO ESTABLISH THAT THE SPIN-OFF AND
VOICESTREAM HOLDINGS' ACQUISITION OF VOICESTREAM'S STOCK PURSUANT TO THE
OMNIPOINT REORGANIZATION, IN CONJUNCTION WITH THE OTHER TRANSACTIONS AND
HUTCHISON'S ACQUISITION OF ITS EXISTING VOICESTREAM STOCK WITHIN TWO YEARS PRIOR
TO THE SPIN-OFF ARE NOT PURSUANT TO A PROHIBITED PLAN.
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INTERESTS OF CERTAIN PERSONS IN THE OMNIPOINT REORGANIZATION
VOICESTREAM AFFILIATED PERSONS
In considering the recommendation of the VoiceStream board with respect to
approval and adoption of the Omnipoint reorganization agreement, stockholders of
VoiceStream should be aware that some directors and officers of VoiceStream have
interests, set forth below, relating to the VoiceStream merger that are in
addition to their interests as stockholders of VoiceStream.
VOICESTREAM DIRECTORS
The current members of the VoiceStream board, John W. Stanton, Robert R.
Stapleton, Donald Guthrie, John L. Bunce, Jr., Mitchell R. Cohen, Daniel J.
Evans, Canning Fok, Jonathan M. Nelson, Terence M. O'Toole and Hans Snook, will
become members of the VoiceStream Holdings board upon the closing of the
Omnipoint reorganization. Mr. Bunce has advised the board that he will resign
prior to the effective date of the Omnipoint reorganization. See "The
VoiceStream Holdings Voting Agreement."
HUTCHISON
In connection with the Omnipoint reorganization, Hutchison will be entitled
to designate two additional directors (for a total of four directors) of the
VoiceStream Holdings board.
INDEMNIFICATION AND INSURANCE
The Omnipoint reorganization agreement requires VoiceStream Holdings to
indemnify officers and directors of VoiceStream and its subsidiaries with
respect to acts taken by them in their respective capacities on or prior to the
effective time of the reorganization, to the same extent provided under
VoiceStream's certificate of incorporation and bylaws. Additionally, the
directors of VoiceStream selected to join the VoiceStream Holdings board will be
entitled to the same indemnification as provided to other directors on the
VoiceStream Holdings board, as provided in the VoiceStream Holdings certificate
of incorporation and bylaws.
VoiceStream Holdings also has agreed to provide, for six years following
the effective time of the Omnipoint reorganization, ongoing directors' and
officers' liability insurance relating to acts and omissions occurring prior to
the completion of the Omnipoint reorganization for each person who was covered
by the corresponding insurance maintained by VoiceStream as of June 23, 1999.
The Omnipoint reorganization agreement provides that the insurance coverage to
be maintained by VoiceStream Holdings must be no less favorable with respect to
coverage and amount than that provided under VoiceStream's current policies as
of June 23, 1999. If, however, VoiceStream Holdings cannot obtain comparable
insurance for a price less than 200% of the yearly rate being paid by
VoiceStream at June 23, 1999, then VoiceStream Holdings will only be obligated
to provide a policy with the best coverage then available at 200% of that yearly
rate.
EQUITY BASED AWARDS
In accordance with the terms of the stock option plans maintained by
VoiceStream and the terms of the Omnipoint reorganization agreement, all awards
of stock options outstanding at the time of the Omnipoint reorganization
automatically will be converted into similar options exercisable for shares of
VoiceStream Holdings common stock on a one-for-one basis. The vesting of these
new VoiceStream Holdings options will not be accelerated as a result of the
transactions described in the reorganization agreement.
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OMNIPOINT AFFILIATED PERSONS
In considering the recommendation of the Omnipoint board with respect to
approval and adoption of the Omnipoint reorganization agreement, stockholders of
Omnipoint should be aware that certain directors and officers of Omnipoint have
interests, set forth below, relating to the Omnipoint merger that are in
addition to their interests as stockholders of Omnipoint.
OMNIPOINT DIRECTORS
The Omnipoint reorganization agreement provides that four current members
of the Omnipoint board designated by Omnipoint will become members of the
VoiceStream Holdings board upon the closing of the Omnipoint reorganization. The
persons designated by Omnipoint are Douglas G. Smith, Richard L. Fields, James
N. Perry, Jr. and James J. Ross. See "Business of VoiceStream
Holdings -- Directors and Executive Officers."
INDEMNIFICATION AND INSURANCE
The Omnipoint reorganization agreement requires VoiceStream Holdings to
indemnify officers and directors of Omnipoint and its subsidiaries with respect
to acts taken by them in their respective capacities on or prior to the
effective time of the Omnipoint reorganization, to the same extent provided
under Omnipoint's certificate of incorporation and bylaws. Additionally, the
directors of Omnipoint selected to join the VoiceStream Holdings board will be
entitled to the same indemnification as provided to other directors on the
VoiceStream Holdings board, as provided in the VoiceStream Holdings certificate
of incorporation and bylaws.
VoiceStream Holdings also has agreed to provide, for six years following
the effective time of the Reorganization, ongoing directors' and officers'
liability insurance relating to acts and omissions occurring prior to the
completion of the Omnipoint reorganization for each person who was covered by
the corresponding insurance maintained by Omnipoint as of June 23, 1999. The
Omnipoint reorganization agreement provides that the insurance coverage to be
maintained by VoiceStream Holdings must be no less favorable with respect to
coverage and amount than that provided under Omnipoint's coverage as of June 23,
1999. If, however, VoiceStream Holdings cannot obtain comparable insurance for a
price less than 200% of the yearly rate being paid by Omnipoint at June 23,
1999, then VoiceStream Holdings will only be obligated to provide a policy with
the best coverage then available at 200% of that yearly rate.
EQUITY BASED AWARDS AND EMPLOYMENT AGREEMENTS
In accordance with the terms of the stock option plans maintained by
Omnipoint and the terms of the Omnipoint reorganization agreement, all stock
options outstanding at the time of the Omnipoint reorganization automatically
will be converted into similar options exercisable for shares of VoiceStream
Holdings common stock, adjusted to reflect the exchange ratio of Omnipoint
common stock in the Omnipoint reorganization. The vesting of these new
VoiceStream Holdings options will not be accelerated as a result of the
transactions described in the Omnipoint reorganization agreement, except (1) in
the case of certain Omnipoint employees identified below whose employment or
stock option agreements provide for acceleration of these options as a result of
such transactions, and (2) in the case of all other Omnipoint employees, in the
event of the termination or material reduction of their employment
responsibilities within one year of the Omnipoint reorganization.
Omnipoint has entered into an employment agreement with Douglas G. Smith,
under which he currently serves as President, CEO and Chairman of Omnipoint.
Among other things, this agreement provides that upon the completion of certain
business combinations, dispositions or related transactions, Mr. Smith will,
subject to certain limited restrictions, receive an incentive bonus of four
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times his annual base salary and target bonus. Following the initial closing of
the Interim Investment, Mr. Smith received a payment of approximately 63% of the
incentive bonus. Also, if certain excess payment taxes apply to any payments or
distributions made to him, Mr. Smith will be entitled to receive an additional
tax "gross-up" payment, which will put him in the same financial position after-
tax that he would have been in if that excise tax did not apply.
The employment agreement between Omnipoint and George Schmitt, an Executive
Vice President of Omnipoint and President of Omnipoint Communications, Inc., as
amended, entitled Mr. Schmitt to purchase 50,000 restricted shares of Omnipoint
common stock which he paid for with a $750,000 promissory note to Omnipoint. The
restrictions lapse periodically over the five-year period ending October 1,
2000. The employment agreement provides that if Mr. Schmitt's employment
terminates for any reason other than "cause" (as such term is defined in his
employment agreement), any remaining restrictions on the shares lapse and the
principal and accrued interest on the promissory note will be forgiven in
proportion to the amount of the five-year employment term that has been served
by Mr. Schmitt. Also, the employment agreement provides for severance pay equal
to up to twice Mr. Schmitt's annual salary and target bonus, payable in the
event of the termination of his employment without cause or his resignation for
good reason, and continued medical benefits for one year. When the Omnipoint
reorganization is completed, vesting will accelerate for 772,510 of Mr.
Schmidt's stock options (adjusted to reflect the exchange ratio in the Omnipoint
reorganization assuming the price of VoiceStream common stock is $75 per share
at that time). The weighted average exercise price of these accelerated stock
options would be $16.77 per share. Assuming that the per share price of
VoiceStream common stock is $75 at the time the Omnipoint reorganization is
completed, the aggregate value of the shares subject to the accelerated options
would exceed the aggregate option exercise price by approximately $45 million at
the time of the Omnipoint reorganization.
The employment agreement between Omnipoint and Kjell S. Andersson, an
Executive Vice President of Omnipoint and the President of Omnipoint Technology
Holdings, Inc. entitled Mr. Andersson to purchase 60,000 restricted shares of
Omnipoint common stock which he paid for with a $1,087,500 promissory note to
Omnipoint. The restrictions lapse periodically over the five-year period ending
November 3, 2001. The applicable stock restriction agreement provides that if
Mr. Andersson's employment is terminated without cause (as such term is defined
in his employment agreement) or he resigns with good reason following a change
of control of Omnipoint, any remaining restrictions on the shares lapse and the
principal and accrued interest on the promissory note will be forgiven. Also,
the employment agreement provides for severance pay equal to twice Mr.
Andersson's annual salary and bonus compensation, payable in the event of the
termination of his employment without cause or resignation for good reason, and
continued medical benefits for two years. When the Omnipoint reorganization is
completed, vesting will accelerate for 107,328 of Mr. Andersson's stock options
(adjusted to reflect the exchange ratio in the Omnipoint reorganization assuming
the price of VoiceStream common stock is $75 per share at that time). The
weighted average exercise price of these accelerated stock options would be
$23.44 per share. Assuming that the price per share of VoiceStream common stock
is $75 at the time the Omnipoint reorganization is completed, the aggregate
value of the shares subject to the accelerated options would exceed the
aggregate option exercise price by approximately $5.5 million at the time of the
Omnipoint reorganization.
The employment agreement between Omnipoint and Harry Plonskier, Omnipoint's
Treasurer and acting Chief Financial Officer, provides for one year's severance
pay upon his disability or the termination of his employment without cause. When
the Omnipoint reorganization is completed, vesting will accelerate for 73,383 of
Mr. Plonskier's stock options (adjusted to reflect the exchange ratio in the
Omnipoint reorganization assuming the price of VoiceStream common stock is $75
per share at that time). The weighted average exercise price of these
accelerated stock options would be $16.90 per share. Assuming that the price per
share of VoiceStream common stock is $75 at the time
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the Omnipoint reorganization is completed, the aggregate value of the shares
subject to the accelerated options would exceed the aggregate option exercise
price by approximately $4.2 million at the time of the Omnipoint reorganization.
In June 1999, Omnipoint entered into an employment agreement with Evelyn
Goldfine, Omnipoint's Chief Administrative Officer and a director, which
provides for an increase in her salary to $150,000, effective retroactively to
January 1, 1999; one year's severance pay payable in the event of her death,
disability, termination of employment without cause or resignation for good
reason; and the grant of 36,000 stock options, 6,000 of which have a one cent
exercise price per share and 30,000 of which have a $16 exercise price per
share. In addition, the options, to the extent not earlier vested, will vest in
full one year after the Omnipoint reorganization. One year after the Omnipoint
reorganization is completed, vesting will accelerate for 16,266 of Ms.
Goldfine's stock options (adjusted to reflect the exchange ratio in the
Omnipoint reorganization assuming the price of VoiceStream common stock is $75
per share when the Omnipoint reorganization is completed). The weighted average
exercise price of these accelerated stock options would be $10.47 per share.
Assuming that the price per share of VoiceStream common stock is $40 at the time
the Omnipoint reorganization is completed, the aggregate value of the shares
subject to the accelerated options would exceed the aggregate option exercise
price by approximately $1 million at the time of the Omnipoint reorganization.
MISCELLANEOUS
In connection with its services as a financial advisor to Omnipoint with
respect to various matters, including the Omnipoint reorganization, Allen & Co.
is entitled to a financial advisory fee of $7,500,000 and reimbursement of
certain fees and expenses from Omnipoint. Richard Fields, a director of
Omnipoint who is expected to serve as a director of VoiceStream Holdings, is a
Managing Director and an Executive Vice President of Allen & Co.
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THE AERIAL REORGANIZATION
THE AERIAL REORGANIZATION AGREEMENT
The parties to the Aerial reorganization agreement are VoiceStream,
VoiceStream Holdings, a subsidiary of VoiceStream Holdings, Aerial and TDS.
In addition to the following summary of the Aerial reorganization
agreement, you should read the entire Aerial reorganization agreement, which is
hereby incorporated by reference into this document and attached as Annex D.
STRUCTURE OF THE AERIAL REORGANIZATION
Prior to the closing of both the Aerial reorganization and the Omnipoint
reorganization, VoiceStream Holdings will own all of the outstanding stock of
three newly formed subsidiaries. At the closing of the Aerial reorganization,
one of the subsidiaries will merge with and into Aerial, with Aerial being the
surviving entity and, if it has not already done so as a result of the earlier
closing of the Omnipoint reorganization, another of the subsidiaries will be
merged with and into VoiceStream with VoiceStream being the surviving entity. At
the closing of the Omnipoint reorganization, whether it occurs before, after or
simultaneously with the closing of the Aerial reorganization, the remaining
subsidiary will be merged with and into Omnipoint, with Omnipoint being the
surviving entity.
CONVERSION OF VOICESTREAM COMMON STOCK TO VOICESTREAM HOLDINGS COMMON STOCK
If the Omnipoint reorganization closes prior to the closing of the Aerial
reorganization, the conversion of VoiceStream common stock into VoiceStream
Holdings common stock will occur at the closing of the Omnipoint reorganization.
In such event, there will be no change to the VoiceStream common stock or
VoiceStream Holdings common stock at the closing of the Aerial reorganization.
If the Omnipoint reorganization closes concurrently with the closing of the
Aerial reorganization, the conversion of VoiceStream common stock into
VoiceStream Holdings common stock will occur at the closing of the Omnipoint
reorganization.
If the Omnipoint reorganization has not closed prior to the closing of the
Aerial reorganization, then at the closing of the Aerial reorganization:
- each outstanding share of VoiceStream common stock will be converted into
one share of VoiceStream Holdings common stock; and
- each certificate representing shares of VoiceStream common stock will be
deemed to represent an equivalent number of shares of VoiceStream
Holdings common stock.
CONVERSION OF AERIAL COMMON STOCK TO VOICESTREAM HOLDINGS COMMON STOCK
At the closing of the Aerial reorganization, each share of Aerial common
stock held by an Aerial stockholder will be converted into the right to receive
shares of VoiceStream Holdings common stock. Each Aerial stockholder, except TDS
and Sonera, will have the opportunity to elect to receive cash, stock or a
combination of cash and stock for its shares of Aerial common stock. It is
possible that the amount of cash to be received by an Aerial stockholder
pursuant to the Aerial Cash Election may be higher or lower than the value of
the shares of VoiceStream Holdings that such stockholder would receive pursuant
to the Aerial Stock Election.
- The Aerial Stock Election. An Aerial stockholder who elects to receive
VoiceStream Holdings stock will be asking to receive shares of common
stock of VoiceStream Holdings at an
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exchange ratio of 0.455 per share of Aerial common stock, except as
provided in the following two paragraphs.
- Adjustment to the Aerial Stock Election relating to the Omnipoint
Reorganization. If the Aerial reorganization closes prior to the
Omnipoint reorganization and if the 15-day weighted average of the high
and low trading prices of VoiceStream common stock immediately prior to
the effective time of the Aerial reorganization is less than $39.56 per
share, the exchange ratio described above will be determined by dividing
$18.00 by this 15-day weighted average. However, the exchange ratio will
not be more than 0.5 or less than 0.455, except as described in the next
paragraph.
- Adjustment to the Aerial Stock Election relating to the Number of
Outstanding Shares of Aerial Common Stock. If the number of issued and
outstanding shares of Aerial common stock exceeds 85,839,161 at the
closing of the Aerial reorganization, excluding any shares of Aerial
common stock issued pursuant to the TDS Debt Replacement or the
Sonera-Aerial Investment and excluding shares issuable or issued pursuant
to performance options, the exchange ratio will be decreased. The
exchange ratio will be recalculated by dividing 39,056,818 by the number
of Adjusted Fully Diluted Shares then issued and outstanding. If the
exchange ratio is recalculated, the recalculated number will be
substituted for 0.455 in the previous two paragraphs.
- The Aerial Cash Election. Stockholders of Aerial who elect to receive
cash will be asking to receive $18.00 for each share of Aerial common
stock for which such election is made. Unlike the Aerial Stock Election,
the amount of cash paid per share of Aerial common stock pursuant to the
Aerial Cash Election is not subject to adjustment.
- Non-Election. If a stockholder of Aerial has not made a proper election
by the election deadline, he will be treated as having chosen the Aerial
Stock Election.
For example, if an Aerial stockholder, other than TDS or Sonera, holds
1,000 shares of Aerial common stock at the effective time, then such stockholder
would be entitled to choose one of the following:
- the Aerial Stock Election, which, assuming that no adjustment has been
made to the exchange ratio, will consist of 455 shares of VoiceStream
Holdings common stock;
- the Aerial Cash Election, which, regardless of any adjustments to the
exchange ratio, will consist of cash in the amount of $18.00 per share
for a total of $18,000; or
- a combination of the Aerial Stock Election and the Aerial Cash Election,
each in proportion to the number of shares with respect to which such
election is exercised.
TREATMENT OF TDS, AS THE HOLDER OF AERIAL SERIES A COMMON SHARES
TDS is the sole holder of all of the issued and outstanding Aerial Series A
Common Shares. At the closing of the Aerial reorganization, each Aerial Series A
Common Share will be converted, at the same exchange ratio as the Aerial Common
Shares, into the right to receive shares of VoiceStream Holdings common stock.
TDS will not receive a premium or a discount on the conversion of such Aerial
Series A Common Shares into shares of VoiceStream Holdings common stock.
Furthermore, TDS may not elect to receive cash for any of TDS's Aerial Common
Shares or Aerial Series A Common Shares.
FRACTIONAL SHARES
No fractional shares of VoiceStream Holdings common stock will be issued
pursuant to the Aerial reorganization. In lieu of the issuance of any fractional
shares of VoiceStream Holdings
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common stock, cash equal to the product of such fractional share amount and the
closing price of VoiceStream Holdings common stock on the closing date of the
Aerial reorganization will be paid to holders in respect of each fractional
share of VoiceStream Holdings common stock that would otherwise be issuable.
Payments with respect to fractional shares may come from the sale of the
aggregate number of whole shares resulting from the foregoing.
ELECTION PROCEDURE; EXCHANGE OF CERTIFICATES
Following the closing of the Aerial reorganization, we will send a form of
election and letter of transmittal to Aerial stockholders. Elections may be made
by holders of Aerial Common Shares by delivering the form of election and letter
of transmittal to the exchange agent, Chase Mellon Shareholder Services L.L.C.
To be effective, a form of election and letter of transmittal must be properly
completed, dated, signed and submitted in the return envelope mailed therewith
to the exchange agent by the election deadline. The election deadline will be
specified in the election form. The election form and letter of transmittal must
be accompanied by (1) the certificates as to which the election is being made or
(2) an appropriate guarantee of delivery of the certificates as set forth in the
form of election from a firm that is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office or correspondent in the
United States, provided that such certificates are in fact delivered to the
exchange agent within three trading days after the date of execution of the
guaranty of delivery.
Failure to deliver certificates covered by any guaranty of delivery within
three trading days after the date of execution of such guaranty of delivery will
be deemed to invalidate any otherwise properly made Aerial Cash Election and
will be deemed to be an Aerial Stock Election. VoiceStream Holdings has the
discretion, which it may delegate in whole or in part to the exchange agent, to
determine whether any form of election and/or letter of transmittal has been
properly completed, signed and submitted or revoked and to disregard immaterial
defects in the form of election or letter of transmittal. The good faith
decision of VoiceStream Holdings or, if so delegated, the exchange agent, in
such matters will be conclusive and binding. Neither VoiceStream Holdings nor
the exchange agent is under any obligation to notify any person of any defect in
the form of election or letter of transmittal submitted to the exchange agent.
The exchange agent will also make all computations contemplated by the Aerial
reorganization agreement and, in the absence of manifest error, all such
computations will be conclusive and binding on the holders of shares of Aerial
common stock.
An Aerial stockholder who does not submit a form of election and letter of
transmittal to the exchange agent prior to the election deadline, or who submits
a form of election without the corresponding certificates or a guarantee of
delivery, will be deemed to have made the Aerial Stock Election. If any form of
election is defective in any manner such that the exchange agent cannot
reasonably determine the election preference of the Aerial stockholder
submitting such form of election, the Aerial stockholder will also be deemed to
have made the Aerial Stock Election.
TREATMENT OF AERIAL STOCK OPTIONS
Upon the approval by Aerial's stockholders of the Aerial reorganization,
each outstanding and unexercised option to purchase shares of Aerial common
stock will become immediately exercisable under its terms and such option will
be converted in the Aerial reorganization into an option to acquire shares of
VoiceStream Holdings common stock. Any such converted option will be fully
vested, but otherwise will have the same terms as the original Aerial option.
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The number of shares of VoiceStream Holdings common stock that a holder
will be entitled to purchase upon the exercise of such new option will be
determined by multiplying:
- the number of shares of Aerial common stock subject to the original
option; and
- the exchange ratio of 0.455, or as adjusted pursuant to the Aerial
reorganization agreement.
The exercise price for such options will be equal to:
- the exercise price under the original option, divided by
- the exchange ratio of 0.455, or as adjusted pursuant to the Aerial
reorganization agreement.
TREATMENT OF AERIAL RESTRICTED STOCK UNITS
Upon the approval by Aerial's stockholders of the Aerial reorganization
agreement, each outstanding restricted stock unit will become immediately vested
under its terms and will be paid promptly thereafter in cash or Aerial Common
Shares, at the discretion of the Chairman of Aerial.
TREATMENT OF VOICESTREAM STOCK OPTIONS
If the Omnipoint reorganization has not closed prior to the closing of the
Aerial reorganization, then upon the closing of the Aerial reorganization, each
outstanding and unexercised option to purchase shares of VoiceStream common
stock will be assumed by VoiceStream Holdings and converted into an option to
purchase shares of VoiceStream Holdings common stock. The number of shares of
VoiceStream Holdings common stock that a holder will be entitled to purchase
upon the exercise of such new option will be equal to the number of shares of
VoiceStream common stock subject to the original option. The exercise price for
such options will be equal to the exercise price under the original VoiceStream
option. The new option will be equal to the exercise price under the original
VoiceStream option. The new option will otherwise have the same terms and
conditions in effect immediately prior to the date the Aerial reorganization
becomes effective.
VOICESTREAM HOLDINGS BOARD
VoiceStream and VoiceStream Holdings have agreed to take the necessary
corporate action so that, at the closing of the Aerial reorganization, one
designee of TDS and one designee of Sonera will join the VoiceStream Holdings
board. See "VoiceStream Holdings Voting Agreements."
COVENANTS OF VOICESTREAM, VOICESTREAM HOLDINGS AND AERIAL
In the Aerial reorganization agreement, VoiceStream, VoiceStream Holdings,
and Aerial have agreed to take or refrain from taking certain actions. The
following summarizes these actions, which are also set forth in detail in the
Aerial reorganization agreement.
NO SOLICITATION OF ALTERNATIVE ACQUISITION PROPOSAL BY AERIAL
Aerial has agreed that it and its subsidiaries and their respective
officers, directors, employees, affiliates and advisors will not directly or
indirectly:
- take any action to solicit, initiate, facilitate or encourage any
alternative acquisition proposal;
- other than in the ordinary course of business and not related to an
alternative acquisition proposal, engage in any discussions or
negotiations with, or provide any non-public information or provide
access to any other party who Aerial knows is considering an alternative
acquisition proposal;
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- approve any transaction under the anti-takeover statutes of the DGCL or
approve any person becoming an "interested stockholder" under such
statute; or
- enter into any agreement with respect to an alternative acquisition
proposal.
The Aerial reorganization agreement does not prevent the Aerial board from
complying with the applicable rules relating to tender offers under the Exchange
Act; however, the Aerial board has agreed not to recommend that the Aerial
stockholders tender their shares in connection with any alternative acquisition
proposal consisting of a tender offer except to the extent the Aerial board by a
majority vote determines that such a recommendation is required to comply with
the fiduciary duties of the Aerial board under applicable Delaware law, after
receiving the advice of outside legal counsel. TDS would be prohibited from
tendering any of its shares pursuant to a tender offer. See "Special
Meetings -- Agreements to Vote in Favor of the Aerial Reorganization."
RECOMMENDATION BY AERIAL, VOICESTREAM AND VOICESTREAM HOLDINGS BOARDS
The board of directors of each party to the Aerial reorganization agreement
has agreed to recommend to its respective stockholders the adoption of, and
approval of the transactions contemplated by, the Aerial reorganization
agreement. Each board of directors has recommended unanimously that its
respective stockholders approve and adopt the Aerial reorganization agreement.
The Aerial board may modify or withdraw its recommendation of the Aerial
reorganization agreement in a manner adverse to VoiceStream only if:
- the Aerial board has determined in good faith that it is required to take
such action to comply with its fiduciary duties under Delaware law based
on advice of outside counsel;
- Aerial has given VoiceStream three business days' prior written notice
that it intends to take such action and has considered any changes
proposed by VoiceStream to the Aerial reorganization agreement to avoid
such action;
- Aerial has fully and completely complied with the requirements contained
in the Aerial reorganization agreement relating to non-solicitation of
acquisition proposals by Aerial; and
- Aerial has called a special Aerial stockholder meeting to vote on the
Aerial reorganization agreement.
The boards of Aerial and VoiceStream are each required to hold a meeting of
stockholders of Aerial and VoiceStream, respectively, to vote on the Aerial
reorganization, even if such board has modified or withdrawn its recommendation
of the Aerial reorganization.
CONDUCT OF AERIAL'S BUSINESS PENDING THE AERIAL REORGANIZATION
In general, the Aerial reorganization agreement requires Aerial and its
subsidiaries, until the earlier of the closing of the Aerial reorganization or
the termination of the Aerial reorganization agreement, to conduct their
business in the ordinary course consistent with past practice and to use their
reasonable best efforts to preserve intact their business organizations and
relationships with third parties. In addition, Aerial has agreed to some
specific restrictions, subject to certain exceptions described in the Aerial
reorganization agreement and the schedules thereto. With certain exceptions,
Aerial may not, without the prior written consent of VoiceStream:
- declare or pay dividends or make other similar distributions in respect
of its capital stock;
- redeem or repurchase any of its capital stock;
- split, combine or reclassify any of its capital stock or authorize the
issuance of any other securities;
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- issue, sell, pledge or otherwise encumber any shares of its capital
stock, other than pursuant to the Aerial long-term incentive plan, the
Aerial restricted stock plan or the TDS tax deferred savings (401(k))
plan or pursuant to an investment agreement with Sonera;
- amend its restated certificate of incorporation or by-laws;
- acquire any business or assets other than (i) in the ordinary course of
business which involve an aggregate purchase price not in excess of
$5,000,000 and (ii) certain budgeted capital expenditures;
- make any new capital expenditures other than those contemplated in
Aerial's 1999 budget or 2000 business plan;
- sell, lease, license or encumber any assets other than in the ordinary
course of business and which involve assets having a current value not in
excess of $5,000,000;
- increase the salaries payable to Aerial's directors, officers and
employees, except as required under employment agreements and except for
such increases that are in the ordinary course of business consistent
with past practices;
- enter into or amend any employment or severance agreements (including any
bonus, profit sharing, stock option, restricted stock or other deferred
compensation agreement) except, in each case, in the ordinary course of
business consistent with past practices;
- change its accounting methods or fiscal year;
- enter into or amend any material agreement;
- amend any of its securities;
- effect any corporate reorganization;
- incur any indebtedness;
- create any lien;
- enter into guaranties of any obligations;
- make any loan;
- enter into any agreement that would materially limit VoiceStream Holdings
from engaging in wireless business after the closing of the Aerial
reorganization;
- settle any material litigation or claim, except for the Sonera claim as
described below in "Background of the Events Relating to Sonera";
- make any material tax election or settle a material tax liability; or
- take any action which would make a representation or warranty untrue.
CONDUCT OF VOICESTREAM'S AND VOICESTREAM HOLDINGS' BUSINESS PENDING THE AERIAL
REORGANIZATION
Each of VoiceStream and VoiceStream Holdings also has agreed to certain
restrictions on it and its subsidiaries until either the closing of the Aerial
reorganization or the termination of the Aerial reorganization agreement. These
restrictions are independent of any restrictions imposed upon VoiceStream by the
Omnipoint reorganization agreement. Among other things, the Aerial
reorganization agreement includes restrictions on VoiceStream's and VoiceStream
Holdings' ability to:
- amend its organizational documents;
- amend, reclassify or split VoiceStream's or VoiceStream Holdings' capital
stock;
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- take any action that would delay the consummation of the Aerial
reorganization;
- change its accounting methods; or
- enter into or acquire any new material line of business that is not
strategically related to VoiceStream's and VoiceStream Holdings' current
business.
The Aerial reorganization agreement provides that, notwithstanding anything
in that agreement to the contrary, VoiceStream and VoiceStream Holdings may
enter into a subsequent transaction provided that such subsequent transaction
would not reasonably be expected to prevent, impair or materially delay the
transactions among VoiceStream, VoiceStream Holdings and Aerial. A subsequent
transaction is defined in the Aerial reorganization agreement as any transaction
whereby VoiceStream Holdings, VoiceStream or its subsidiaries would:
- acquire control or an investment in any entity in the wireless business;
- issue equity in connection with such an acquisition;
- enter into a strategic alliance or other commercial relationship; or
- be acting in the ordinary course of business consistent with past
practices;
provided, that in the case of the first three bullet points listed above,
VoiceStream or VoiceStream Holdings, as the case may be, must receive an opinion
from a national investment bank that the subsequent transaction is fair to its
stockholders, or to VoiceStream or VoiceStream Holdings.
ENFORCEMENT OF THIRD PARTY STANDSTILL AGREEMENTS
Subject to the fiduciary responsibilities of the Aerial board, Aerial has
agreed to enforce and not terminate, amend, modify or waive any standstill
provision of any confidentiality or standstill agreement between Aerial and
other parties entered into prior to the date of the Aerial reorganization
agreement in connection with the process previously conducted by Aerial to
solicit acquisition proposals for Aerial.
DISCLOSURE OF CERTAIN MATTERS
Aerial, VoiceStream and VoiceStream Holdings have each agreed to advise the
other of any event which results in the executive officers of Aerial,
VoiceStream or VoiceStream Holdings having a good faith belief that such change
or event has resulted in or is reasonably likely to result in a material adverse
effect on them or prevent or materially delay the consummation of the Aerial
reorganization.
QUALIFICATION FOR TAX PURPOSES
Each of VoiceStream, VoiceStream Holdings and Aerial has agreed to use its
reasonable best efforts to cause the Aerial reorganization to qualify as a
reorganization within the meaning of section 368(a) of the Code and/or as part
of a transaction described in section 351(a) of the Code.
STOCKHOLDER MEETINGS
Unless waived by Aerial, VoiceStream or VoiceStream Holdings, as the case
may be, must use its reasonable commercial efforts to coordinate the time and
place of its stockholder meeting to approve the Aerial reorganization with its
stockholder meeting being held to approve the Omnipoint reorganization. The
stockholders of VoiceStream or VoiceStream Holdings would vote on the Omnipoint
reorganization and the Aerial reorganization at this joint stockholder meeting.
In addition, Aerial and VoiceStream or VoiceStream Holdings, as the case may be,
will try to hold their respective stockholder meetings on the same day.
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Unless the Aerial reorganization agreement is terminated in accordance with
its terms, Aerial has agreed to submit the Aerial reorganization to a vote of
its stockholders at a special stockholders meeting required to be called and
held, even if Aerial's board determines at any time that the Aerial
reorganization is no longer advisable or recommends that its stockholders reject
the Aerial reorganization. At such stockholders meeting, pursuant to a
stockholder voting agreement, TDS, which holds approximately 98% of the voting
power of Aerial common stock, has agreed to vote for the Aerial reorganization
even if the Aerial board withdraws its recommendation of the Aerial
reorganization. Accordingly, the proposal to approve the Aerial reorganization
will be approved without regard to the vote of any other Aerial stockholder.
Unless the Aerial reorganization agreement is terminated in accordance with
its terms, VoiceStream or VoiceStream Holdings, as the case may be, has agreed
to submit the Aerial reorganization to a vote of its stockholders at a special
stockholders meeting required to be called and held, even if the board of
VoiceStream or VoiceStream Holdings, as the case may be, determines at any time
that the Aerial reorganization is no longer advisable or recommends that its
stockholders reject the Aerial reorganization. At this stockholders meeting,
pursuant to a stockholder voting agreement, certain stockholders of VoiceStream
and VoiceStream Holdings, who currently hold approximately 41% of the
VoiceStream common stock, have agreed to vote for the Aerial reorganization even
if the VoiceStream or VoiceStream Holdings board withdraws its recommendation of
the Aerial reorganization.
AERIAL SERIES A AND SERIES B NOTES, NOKIA CREDIT AGREEMENT AND NOKIA GUARANTY
Prior to or at the closing of the Aerial reorganization, VoiceStream
Holdings will, with the assistance of Aerial and TDS, acquire, repay and/or
amend the Aerial Series A zero coupon notes, the Aerial Series B zero coupon
notes and the Nokia credit agreement. In connection therewith, TDS will be
released from its guaranties and all liabilities thereunder.
BEST EFFORTS TO COMPLETE THE AERIAL REORGANIZATION
VoiceStream, VoiceStream Holdings and Aerial have agreed to cooperate with
each other and use their best efforts to take all actions and do all things
necessary or advisable under the Aerial reorganization agreement and applicable
laws to complete the Aerial reorganization and the other transactions
contemplated by the Aerial reorganization agreement.
EMPLOYEE BENEFITS MATTERS
From the closing of the Aerial reorganization through at least September
30, 2000, each of VoiceStream and VoiceStream Holdings has agreed to maintain
salaries and benefits for Aerial employees and officers at levels which are
substantially comparable to the levels in effect immediately prior to the
effective time of the Aerial reorganization. In addition, Aerial employees
eligible for a bonus will receive a bonus equal to the greater of the target
bonus level or the actual bonus earned through at least September 30 of the year
in which the Aerial reorganization occurs. Each of VoiceStream and VoiceStream
Holdings has also agreed to honor all severance, employment and similar
agreements in force as of the effective time, subject to the right to amend or
terminate such agreements in accordance with their terms.
INDEMNIFICATION AND INSURANCE OF AERIAL DIRECTORS AND OFFICERS
Each of VoiceStream and VoiceStream Holdings has agreed that, after the
effectiveness of the Aerial reorganization, VoiceStream and VoiceStream Holdings
will cause Aerial to:
- continue to indemnify all past and present officers and directors of
Aerial to the same extent that they are currently indemnified; and
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- for at least six years, continue to carry directors' and officers'
insurance covering the existing directors and officers of Aerial, except
that Aerial will not be required to pay more than 200% of the last annual
premium paid for such insurance.
TAX INDEMNIFICATION
The Aerial reorganization agreement provides that TDS will indemnify
VoiceStream and VoiceStream Holdings, without limitation for time, for all taxes
imposed on:
- the TDS consolidated tax group (other than Aerial and its subsidiaries)
for any taxable year;
- Aerial or its subsidiaries for any period ending on and including the
closing date; or
- VoiceStream and VoiceStream Holdings or any of their subsidiaries as a
result of any payment by TDS to VoiceStream or VoiceStream Holdings or
any of their subsidiaries pursuant to such tax indemnity.
Any indemnification payment made by TDS pursuant to its tax indemnification
of VoiceStream and VoiceStream Holdings will be reported as an adjustment to
purchase price, contribution to capital, or other nontaxable amount to the
extent there is substantial authority for such reporting position.
OTHER AGREEMENTS
In the Aerial reorganization agreement, VoiceStream, VoiceStream Holdings,
TDS, and/or Aerial have agreed to enter into several ancillary agreements, which
are described in more detail elsewhere in this document. These ancillary
agreements include the:
- debt replacement agreement;
- transition services agreement;
- TDS registration rights agreement;
- employee benefit plans separation agreement;
- Aerial stockholder voting agreement;
- Sonera indemnity agreement;
- VoiceStream stockholder voting agreement; and
- TDS investor agreement.
TERMINATION OF CERTAIN AGREEMENTS BETWEEN AERIAL AND TDS
In the Aerial reorganization agreement, Aerial has agreed to terminate the
following intercompany agreements at or prior to the closing of the Aerial
reorganization:
- the cash management agreement;
- the insurance cost sharing agreement;
- the intercompany agreement;
- the exchange agreement;
- the employee benefit plan agreement;
- the Aerial registration rights agreement; and
- tax allocation agreement.
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REPRESENTATIONS AND WARRANTIES OF VOICESTREAM, VOICESTREAM HOLDINGS AND AERIAL
The Aerial reorganization agreement contains substantially reciprocal
representations and warranties made by VoiceStream and VoiceStream Holdings,
jointly, and Aerial to each other. The most significant of these relate to:
- organization;
- capital structure;
- authority;
- required consents and approvals;
- SEC filed documents;
- absence of any material adverse change;
- information supplied;
- permits and compliance with laws;
- tax matters;
- liabilities;
- litigation;
- inapplicability of state takeover statutes;
- opinion of the respective financial advisors to VoiceStream and Aerial;
- financial brokers;
- requisite vote to approve the Aerial reorganization; and
- transactions with affiliates.
In addition, Aerial has made additional representations and warranties to
VoiceStream and VoiceStream Holdings relating to:
- subsidiaries;
- benefit plans, employees and employment practices;
- environmental matters;
- intellectual property; and
- material contracts.
In addition, VoiceStream and VoiceStream Holdings have jointly made
additional representations and warranties to Aerial relating to the ownership
and interim operations of VoiceStream Holdings' merger subsidiary.
The representations and warranties described above expire at the closing of
the Aerial reorganization and will not survive, except with respect to tax
indemnities as described in "Tax Indemnification" and with respect to the
dispute with Sonera, as described in "Sonera Indemnity."
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CONDITIONS TO THE COMPLETION OF THE AERIAL REORGANIZATION
MUTUAL CLOSING CONDITIONS
The obligations of VoiceStream and Aerial to complete the transactions
provided for in the Aerial reorganization agreement are subject to the
satisfaction or, to the extent legally permissible, waiver of the following
conditions:
- approval of the Aerial reorganization by the stockholders of Aerial;
- approval of the Aerial reorganization by the stockholders of VoiceStream
or VoiceStream Holdings, as the case may be;
- absence of an injunction or restraining order preventing the consummation
of the Aerial reorganization;
- listing of VoiceStream Holdings shares on the Nasdaq Stock Market;
- expiration or termination of the requisite waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976;
- effectiveness of the VoiceStream Holdings Form S-4 registration
statement;
- receipt of all necessary regulatory consents and approvals and, in the
case of the FCC consents and approvals, final orders;
- execution and delivery of the investor agreement between TDS and
VoiceStream Holdings; and
- consummation or termination of the Omnipoint reorganization; provided
that this condition will be deemed satisfied if the Omnipoint
reorganization has not been consummated or terminated by June 30, 2000
or, under certain circumstances, March 31, 2000.
ADDITIONAL AERIAL CONDITIONS
The obligations of Aerial to complete the transactions provided for in the
Aerial reorganization agreement are also subject to the satisfaction or, to the
extent legally permissible, waiver of the following conditions:
- performance by each of VoiceStream, VoiceStream Holdings and the merger
subsidiary of VoiceStream Holdings of the agreements required to be
performed by them pursuant to the Aerial reorganization agreement at or
prior to the closing;
- confirmation that at the closing, each of the representations and
warranties of VoiceStream, VoiceStream Holdings and the merger subsidiary
of VoiceStream Holdings contained in the Aerial reorganization agreement
are true and correct, except as would not be expected to have a material
adverse effect on Aerial, VoiceStream, VoiceStream Holdings or the
transactions contemplated by the Aerial reorganization agreement;
- receipt by Aerial of a tax opinion from its tax counsel;
- receipt by VoiceStream and VoiceStream Holdings of all requisite consents
or approvals under VoiceStream's, VoiceStream Holdings' and their
affiliates' debt instruments;
- termination of the intercompany services agreements;
- consummation of the transactions contemplated by the TDS Debt
Replacement;
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- repurchase, repayment and/or amendment of the Aerial Series A zero coupon
notes, the Series B zero coupon notes and the Nokia credit agreement and
the release and discharge of TDS as a guarantor thereunder;
- settlement and payment of all intercompany accounts;
- termination of the tax allocation agreement;
- execution and delivery of the VoiceStream Holdings voting agreement;
- absence of any amendments to the Omnipoint reorganization agreement or
transactions contemplated thereby, except for those which would not have
a material adverse effect on VoiceStream, VoiceStream Holdings or on the
transactions contemplated by the Aerial reorganization;
- execution and delivery by VoiceStream and VoiceStream Holdings of the TDS
registration rights agreement;
- receipt by Aerial of a legal opinion from FCC counsel to VoiceStream and
VoiceStream Holdings;
- receipt by Aerial of a legal opinion from corporate and state and
regulatory counsel to VoiceStream and VoiceStream Holdings; and
- absence of any continuing material adverse effect with respect to
VoiceStream and VoiceStream Holdings relating to the Year 2000 issues.
ADDITIONAL VOICESTREAM AND VOICESTREAM HOLDINGS CONDITIONS
The obligations of VoiceStream and VoiceStream Holdings to complete the
transactions provided for in the Aerial reorganization agreement are also
subject to the satisfaction or, to the extent legally permissible, waiver of the
following conditions:
- performance by Aerial of the agreements required to be performed by it
pursuant to the Aerial reorganization agreement at or prior to the
closing;
- confirmation that at the closing, each of the representations and
warranties of Aerial contained in the Aerial reorganization agreement are
true and correct, except as would not be expected to have a material
adverse effect on Aerial, VoiceStream and VoiceStream Holdings or the
transactions contemplated by the Aerial reorganization agreement;
- receipt by VoiceStream and VoiceStream Holdings of a tax opinion from its
tax counsel;
- receipt by VoiceStream and VoiceStream Holdings of a legal opinion from
FCC counsel to Aerial;
- receipt by VoiceStream and VoiceStream Holdings of a legal opinion from
corporate and state regulatory counsel to Aerial;
- receipt by Aerial of all requisite consents or approvals under Aerial's
debt instruments;
- receipt by VoiceStream and VoiceStream Holdings of tax certificates from
Aerial, TDS and Sonera;
- execution and delivery of the indemnity agreement;
- absence of any continuing material adverse effect with respect to Aerial
relating to the Year 2000 issues; and
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- exercise of statutory dissenters' rights with respect to no more than
7.5% of the shares of VoiceStream.
TERMINATION OF THE AERIAL REORGANIZATION AGREEMENT
RIGHT TO TERMINATE
The parties may terminate the Aerial reorganization agreement at any time
prior to the closing of the Aerial reorganization in any of the following ways:
- by the mutual written consent of VoiceStream, VoiceStream Holdings, the
merger subsidiary of VoiceStream Holdings and Aerial;
- by any of VoiceStream, VoiceStream Holdings or Aerial:
- if the Aerial reorganization is not consummated prior to the close of
business on September 17, 2000, provided that if the Aerial
reorganization has not closed only because any regulatory consents
have not been received, then such termination date shall be December
17, 2000; or
- in the event that any governmental entity shall have taken action to
permanently enjoin the Aerial reorganization;
- by VoiceStream or VoiceStream Holdings if the Aerial stockholders do not
approve the Aerial reorganization;
- by Aerial if the stockholders of VoiceStream or VoiceStream Holdings, as
the case may be, do not approve the Aerial reorganization; or
- by either VoiceStream or VoiceStream Holdings, as the case may be, or
Aerial for an uncured breach, following 30 days written notice thereof,
by the other party of any representation, warranty or covenant, except
for those that would not be expected to have a material adverse effect on
Aerial, VoiceStream, VoiceStream Holdings or the transactions
contemplated by the Aerial reorganization agreement.
TERMINATION FEE PAYABLE BY AERIAL
Aerial has agreed to pay VoiceStream and VoiceStream Holdings a cash amount
equal to $40,000,000 in the event that VoiceStream or VoiceStream Holdings
terminates the Aerial reorganization agreement due to an uncured breach,
following 30 days written notice thereof, by Aerial of any representation,
warranty or covenant, except for those that would not be expected to have a
material adverse effect on Aerial or the transactions contemplated by the Aerial
reorganization agreement.
In the event that such a termination fee becomes payable and Aerial does
not have sufficient funds at such time to pay the termination fee, TDS has
agreed to allow Aerial to finance the termination fee through an increase in the
TDS revolving credit agreement.
BACKGROUND OF THE AERIAL REORGANIZATION
The following describes certain background information that we believe is
necessary or useful for an understanding of the Aerial reorganization and the
related transactions, including the transactions involving the Series A zero
coupon notes, the Series B zero coupon notes, the Nokia credit agreement, the
TDS Debt Replacement, the TDS tax settlement agreement, the relationship between
TDS and Aerial and the arrangements with Sonera.
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BACKGROUND OF EVENTS RELATING TO FINANCING OF AERIAL
In 1991, Aerial was incorporated under Delaware law as a wholly-owned
subsidiary of TDS.
In 1995, Aerial acquired eight licenses from the FCC to provide PCS
services in the Minneapolis, Tampa-St. Petersburg-Orlando, Houston, Pittsburgh,
Kansas City, Columbus, Alaska and Guam MTAs. Following its acquisition of PCS
licenses, Aerial devoted its efforts to recruiting an experienced management
team, developing and executing a business plan, designing and constructing a PCS
network in each of its six MTAs and raising capital. Aerial sold its licenses
covering the Guam and Alaska MTAs in 1996. The acquisition of the licenses and
Aerial's initial development stage activities were funded by debt and equity
financing from TDS.
In April 1996, the Aerial certificate of incorporation was amended and
restated and Aerial was recapitalized in preparation for a public offering of
Aerial common stock. Immediately following the recapitalization and prior to the
public offering, TDS owned 19,086,000 Aerial Common Shares and 40,000,000 Aerial
Series A Common Shares, representing 100% of the Aerial common stock. Under the
Aerial restated certificate of incorporation, the Aerial Common Shares are
entitled to one vote per share and are entitled to elect 25% of the directors,
rounded up to the nearest whole number, and the Aerial Series A Common Shares
are entitled to 15 votes per share and are entitled to elect 75% of the
directors, rounded down to the nearest whole number.
In the public offering in April 1996, Aerial sold 12,250,000 Aerial Common
Shares, representing 17.2% of the Aerial common stock, at an initial offering
price of $17.00 per share. Immediately following the public offering, TDS owned
82.8% of the combined total of the outstanding Aerial common stock, including
60.9% of the outstanding Aerial Common Shares and 100% of the outstanding Aerial
Series A Common Shares, and controlled 98.1% of the combined voting power of
Aerial common stock. In connection with the initial public offering, Aerial
Common Shares were listed on the Nasdaq Stock Market. There is no public market
for the Aerial Series A Common Shares, but such shares are convertible on a
share-for-share basis into Aerial Common Shares. Aerial realized approximately
$195 million in connection with the public offering, after the payment of the
underwriters' commission. The net proceeds to Aerial from the public offering
were used to repay indebtedness to TDS and to partially finance the development,
construction and operation of Aerial's business.
In June 1996, Nokia Telecommunications Inc. provided Aerial with $200
million in financing for digital radio channel and switching infrastructure
equipment. Pursuant to an agreement with Nokia, Aerial issued to investors, in
tranches, 10-year unsecured zero coupon promissory notes, the proceeds of which
were paid to Nokia in satisfaction of borrowings by Aerial under the Nokia
agreement. On November 4, 1996, Aerial issued $226.2 million in aggregate
principal amount at maturity of Series A zero coupon notes due in 2006 for an
aggregate issue price of $100 million. On February 5, 1998, Aerial issued $220
million in aggregate principal amount at maturity of Series B zero coupon notes
due in 2008 for an aggregate issue price of $100 million. The obligations of
Aerial under the Series A zero coupon notes and the Series B zero coupon notes
are fully and unconditionally guaranteed by TDS in consideration for an annual
fee from Aerial of 3% of the amount guaranteed.
All of Aerial's MTAs launched service during the first half of 1997. With
the launch of service in its MTAs, Aerial transitioned from the development
stage to being an operating enterprise. Following this transition, significant
efforts to build out Aerial's network infrastructure and to establish a customer
base continued throughout 1997 and 1998.
On June 30, 1998, Aerial and Nokia entered into a credit agreement under
which Nokia agreed to provide financing to Aerial of up to $150 million in two
tranches of $75 million each for the purchase of network infrastructure
equipment and services from Nokia. The obligations of Aerial under the Nokia
credit agreement mature on June 30, 2000, and are fully and unconditionally
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guaranteed by TDS in consideration for an annual fee from Aerial of 3% of the
amount guaranteed. Any borrowings under the Nokia credit agreement must be used
to prepay the amount due under the TDS revolving credit agreement and
concurrently reduce by the same amount the authorized total line of credit
available to Aerial Operating Company under the TDS revolving credit agreement.
See "Arrangements and Transactions between TDS and Aerial -- TDS Revolving
Credit Agreement."
On September 8, 1998, pursuant to the terms of a purchase agreement dated
June 1, 1998, Sonera made a $200 million investment in Aerial Operating Company.
Sonera purchased approximately 2.4 million shares of common stock of Aerial
Operating Company, which represented a 19.4% equity interest in Aerial Operating
Company. See "Background of Events Relating to Sonera."
The majority of Aerial's cash requirements have been provided by TDS under
the TDS revolving credit agreement. See "Arrangements and Transactions between
TDS and Aerial -- TDS Revolving Credit Agreement."
Aerial anticipates that the continuing development of its PCS services will
require substantial capital over the next few years. As a result, Aerial
continues to have substantial financing requirements. These financing
requirements have previously been funded by third parties and by TDS, as
described above. As discussed below, beginning in the latter part of 1998, TDS
began to consider whether Aerial's financing requirements and the development of
its business should be financed entirely by parties other than TDS, and whether
this goal could be facilitated by a spin-off, merger, sale, business combination
transaction or other transaction or reorganization.
BACKGROUND OF EVENTS LEADING TO AERIAL REORGANIZATION
In the latter part of 1997, TDS developed a plan to reorganize TDS and its
subsidiaries, including Aerial, through the issuance of tracking stock by TDS.
In December 1997, TDS made an offer to acquire all of the Aerial Common Shares
that it did not own in exchange for a class of TDS tracking stock that would
represent the business of Aerial.
Between January and September 1998, TDS representatives attempted to
negotiate an agreement relating to its tracking stock offer with a special
committee of the Aerial board of directors. Beginning in mid-September 1998, TDS
management began to question the feasibility of the tracking stock proposal and
began to explore other alternative transactions.
In September and October 1998, TDS management held meetings and discussions
with TDS's financial advisors relating to various alternatives, including a
merger, sale or spin-off of Aerial. Based on these meetings, TDS developed a
proposal relating to the possible spin-off of Aerial as an alternative to the
tracking stock proposal, but left open the possibility for other alternatives,
including the sale or merger of Aerial. As part of the spin-off proposal, TDS
intended to discontinue providing additional financing to Aerial under the TDS
revolving credit agreement and to cause Aerial to obtain financing from parties
other than TDS on a stand-alone basis.
On November 30, 1998, representatives of TDS and Sonera met with
representatives of VoiceStream to discuss telecommunications industry trends,
potential consolidation in the GSM market, and the strategic direction of their
respective companies. TDS indicated to VoiceStream that it was considering
various alternatives concerning its investment in Aerial.
Over the next several weeks, VoiceStream, TDS, Aerial and Sonera each
independently began an internal analysis of possible transactions involving
VoiceStream, Aerial and Sonera.
On December 17, 1998, the TDS board of directors approved the proposal to
spin-off TDS's interest in Aerial and to consider other alternatives.
On December 18, 1998, TDS issued a press release announcing that it was
withdrawing its offer to exchange tracking stock for the outstanding Aerial
Common Shares and was pursuing a tax-free
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spin-off of its interest in Aerial, as well as reviewing other alternatives.
After Sonera became aware of the proposed spin-off, Sonera raised certain claims
relating to its investment in Aerial Operating Company. See "Background of
Events Relating to Sonera."
On December 28, 1998, VoiceStream and TDS, on behalf of itself and its
affiliates and subsidiaries, including Aerial, entered into a mutual
non-disclosure agreement.
On December 28, 1998, VoiceStream and Sonera entered into a mutual
non-disclosure agreement.
In December 1998 and January 1999, TDS and Sonera held conversations with
Omnipoint and another entity that might have a strategic interest in Aerial's
business ("Entity One") in order to determine if these parties had any interest
in a business combination transaction involving Aerial. Following these
conversations, Omnipoint notified TDS that it had no interest in a business
combination transaction with Aerial and, except for one additional conversation
after this notice, all conversations between TDS and Omnipoint ceased.
Representatives of TDS and Sonera held further discussions with representatives
of Entity One, but did not identify any significant common interest in a
business combination transaction.
Also, during the latter part of 1998 and the early part of 1999,
representatives of TDS and/or Aerial received unsolicited indications of
interest from certain parties relating to the acquisition by those parties of
individual markets from Aerial. Representatives of TDS and/or Aerial advised
such parties that Aerial did not have an interest in piecemeal sales of
individual markets, but invited such parties to sign a confidentiality agreement
and to consider a business combination transaction involving all of Aerial.
On January 28, 1999, as a result of TDS's announcement that it intended to
spin off its interest in Aerial, the Aerial board of directors adopted
resolutions establishing a special committee. The Aerial board of directors also
adopted resolutions establishing a finance committee to consider financing
matters in connection with the possible separation of Aerial from TDS through a
spin-off.
The Aerial board of directors believed that the appointment of the special
committee was appropriate under the circumstances, including the fact that TDS
owned over 80% of the common stock of Aerial, controlled approximately 98% of
the voting power of Aerial and had the power to elect all of the directors of
Aerial. The Aerial board also considered the fact that (1) eight of the 12
directors of Aerial are also directors and/or officers of, or are otherwise
affiliated with, TDS or its subsidiaries, including Aerial, (2) three of the
directors are trustees and/or beneficiaries of the TDS Voting Trust, which
controls TDS and (3) two of the directors are representatives of Sonera. The
members of the Aerial special committee were selected because they are neither
directors or officers of TDS or any of its subsidiaries, except that they are
independent directors of Aerial, nor beneficiaries or trustees of the TDS Voting
Trust, and because they are also not affiliated with Sonera.
The Aerial special committee was created to consider and make a
recommendation to the full Aerial board of directors with respect to (1) the
material aspects of any financing alternatives proposed by the Aerial finance
committee; (2) the material agreements, arrangements and transactions between
Aerial and TDS in connection with the financing alternatives and the spin-off;
and (3) any proposed material changes to the arrangements with Sonera. The
Aerial special committee was authorized to consider all material aspects of any
financing alternatives proposed by the Aerial finance committee and to make its
recommendation with respect thereto to the full board of directors together with
the Aerial finance committee.
The Aerial special committee is composed of Messrs. John D. Foster and
Thomas W. Wilson, Jr. Messrs. Foster and Wilson are independent members of the
Aerial board of directors.
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Both Mr. Foster and Mr. Wilson have been directors of Aerial since 1996. Mr.
Foster is the President of Vedra International Associates, a consulting firm
based in Florida. Prior to his association with that firm, Mr. Foster held a
number of senior management positions in domestic and international units of
AT&T Corporation over a period of approximately 30 years. Mr. Wilson is Chairman
of Information Resources, Inc., a Chicago based company which provides
information services to the consumer packaged goods industry. Prior to his
retirement in 1990, he was a Senior Partner of McKinsey & Company, where he was
employed for 24 years. He also serves on the board of directors of Productivity
Solutions, Inc.
The Aerial board of directors approved the reimbursement of Messrs. Foster
and Wilson for any out-of-pocket expenses incurred by them in connection with
their duties on the special committee and a fee of $2,000 apiece for each day on
which Mr. Foster and Mr. Wilson performed services in connection therewith.
The Aerial special committee was authorized to engage independent counsel
and financial advisors. Following its appointment, the Aerial special committee
interviewed prospective investment banking firms to advise the special committee
with respect to financial matters. The Aerial special committee engaged
Wasserstein Perella & Co., Inc., as its financial advisor, and engaged Fried,
Frank, Harris, Shriver & Jacobson as its legal advisor. Each of Wasserstein
Perella and Fried, Frank was selected due to its reputation and experience. In
addition, Fried, Frank was selected because it had also represented Messrs.
Foster and Wilson on the special committee related to the tracking stock
proposal.
The Aerial special committee was invited to participate in all meetings of
the Aerial finance committee and was kept apprised of the activities relating to
the proposed refinancing of Aerial, the proposed spin-off and the consideration
of alternate transactions, including a business combination involving Aerial.
In connection with the proposed spin-off, TDS intended to replace a
substantial amount of the debt owed by Aerial Operating Company to TDS with
equity of Aerial, refinance Aerial's capital structure, including the release of
TDS as guarantor of Aerial debt to third parties, amend or terminate various
agreements between TDS and Aerial, and enter into various new agreements
necessary in connection with the separation of TDS and Aerial, including
arrangements relating to taxes.
Although the anticipated debt replacement transaction would have provided
Aerial with additional equity that Aerial's financial advisors advised Aerial
was necessary in order for Aerial to complete a stand-alone financing, the
anticipated debt replacement transaction would also have provided TDS with
significant tax benefits by reducing its "excess loss account," or negative
stock basis, in the stock of Aerial. In addition to the tax benefits which would
have been provided to TDS, another consequence of the anticipated debt
replacement transaction was that Sonera would have had rights to subscribe to
additional equity of Aerial and of Aerial Operating Company at prices determined
with reference to the market price of Aerial Common Shares.
Beginning in early 1999, from time to time, representatives of TDS and
Aerial held meetings and conversations with representatives of Sonera in an
effort to resolve the claims raised by Sonera relating to its investment in
Aerial Operating Company. See "Background of Events Relating to Sonera." Some of
the meetings and conversations pertained solely to a settlement of such claims,
while others involved a resolution of such claims in the context of a
transaction involving Aerial, Sonera and VoiceStream.
On February 2, 1999, representatives of VoiceStream met with
representatives of TDS and Sonera and discussed the financial requirements of
Aerial and VoiceStream and a possible transaction involving Aerial, VoiceStream
and Sonera.
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In early 1999, TDS, the Aerial finance committee and the Aerial special
committee met many times for the purpose of exploring ways to finance Aerial on
an interim and permanent basis from sources other than TDS. However, due to the
unfavorable cost and terms of proposed interim financing alternatives, TDS and
the Aerial special committee agreed that TDS and Aerial would determine and
settle certain tax obligations from TDS to Aerial as a means of providing funds
to Aerial to meet its interim financing requirements.
Between February 22 and March 11, 1999, representatives of TDS and
representatives of the Aerial special committee negotiated the terms of a tax
settlement agreement that would determine and settle certain tax obligations
from TDS to Aerial under the tax allocation agreement between TDS and Aerial.
During the course of these negotiations, representatives of the Aerial special
committee requested TDS to agree to negotiate a "tag-along" right for the public
stockholders of Aerial in the event of a sale by TDS of its Aerial shares. TDS
refused, but agreed to include as a condition to the tax settlement agreement
that the Aerial board approve a resolution increasing the authority of the
Aerial special committee to consider and make a recommendation to the Aerial
board with respect to any proposal relating to the sale, merger, consolidation
or other business combination involving substantially all of the common stock or
assets of Aerial.
On March 12, 1999, after consulting with its legal and financial advisors,
the Aerial special committee approved the tax settlement agreement and
recommended that it be approved by the Aerial board of directors. Based on the
recommendation of the Aerial special committee and other factors, on March 12,
1999, the Aerial board of directors approved the tax settlement agreement. The
Aerial board also approved a resolution increasing the authority of the Aerial
special committee to consider any proposal relating to the sale, merger,
consolidation or other business combination involving substantially all of the
common stock or assets of Aerial, and to report to the Aerial board the
recommendation of the Aerial special committee with respect thereto.
On March 12, 1999, the TDS board of directors approved the tax settlement
agreement. Thereafter, the tax settlement agreement was executed by TDS, Aerial
and Aerial Operating Company, and TDS delivered the tax settlement payment of
$114.5 million to Aerial on March 15, 1999. See "Arrangements and Transactions
between TDS and Aerial -- Tax Allocation Agreement."
On March 12, 1999, representatives of VoiceStream and TDS discussed
valuation and financial requirements of VoiceStream and Aerial and a possible
business combination transaction involving Aerial and VoiceStream pursuant to
which stockholders of Aerial would receive VoiceStream common stock. No
agreements were reached in this meeting.
In its discussions with VoiceStream relating to a possible business
combination, TDS advised VoiceStream that it desired to replace a substantial
amount of the debt from Aerial Operating Company to TDS with equity of Aerial
prior to a business combination transaction. TDS desired to do this to eliminate
or reduce its excess loss account in the stock of Aerial for tax purposes.
However, in contrast to its effect in the context of the spin-off alternative,
this action would not result in a permanent tax savings to TDS in the context of
a business combination. The debt replacement transaction would not increase
TDS's aggregate tax basis in the stock and debt of Aerial and Aerial Operating
Company, but would merely transfer tax basis from the debt to the stock.
Accordingly, even if the debt replacement eliminated the excess loss account in
the stock of Aerial so that TDS's gains on the business combination were
entirely deferred, TDS would nonetheless have to recognize such gain on any
subsequent taxable disposition of its stock in the surviving entity for an
amount at least equal to the value received in the business combination.
On March 19, 1999, in order to permit Aerial formally to consider a
business combination transaction with various potential parties including
VoiceStream, Aerial delivered a notice to Sonera under the investment agreement
among Sonera, TDS, Aerial and Aerial Operating Company, stating
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that Aerial desired to enter into a disposition transaction as described in the
notice. Pursuant to the terms of the investment agreement, Sonera had a period
of 10 days to determine if it desired to invoke certain provisions of the
investment agreement requiring Aerial to negotiate exclusively with Sonera with
respect to such a transaction.
On March 29, 1999, Aerial received a notice from Sonera electing to invoke
those provisions of the investment agreement that required Sonera and Aerial to
negotiate exclusively with each other in good faith for 60 days with respect to
a disposition transaction. As a result, representatives of Aerial began
discussions with Sonera relating to a possible disposition transaction and
ceased negotiations with VoiceStream and other potential parties.
On March 31, 1999, representatives of VoiceStream and Sonera met to discuss
Sonera's possible investment in VoiceStream as a result of a possible
transaction with Aerial.
On April 20, 21 and 24, 1999, representatives of VoiceStream and Sonera met
and discussed strategic direction of their respective companies and the
strategic direction of and valuations for Aerial.
On April 29, 1999, Aerial entered into an engagement letter with Donaldson,
Lufkin & Jenrette. Pursuant to the engagement letter, Donaldson, Lufkin &
Jenrette agreed to provide financial advisory services to Aerial in connection
with the preparation and implementation of a financing plan and capital
structure for Aerial in the event of completion of the spin-off. In addition,
Donaldson, Lufkin & Jenrette agreed to provide financial services to Aerial with
respect to a sale, merger, consolidation or other business combination involving
all or at least a majority of the business, securities or assets of Aerial. The
services to be provided by Donaldson, Lufkin & Jenrette included the
identification and contact by Donaldson, Lufkin & Jenrette of parties that might
be interested in acquiring Aerial and the determination of the nature and extent
of any such interest. See "Aerial Fairness Opinion."
Following the execution of the engagement letter, discussions were held
between representatives of TDS, Aerial management and Donaldson, Lufkin &
Jenrette to identify parties that might be interested in a business combination
transaction with Aerial. Donaldson, Lufkin & Jenrette identified a total of 30
potential purchasers to be contacted to determine whether such parties would be
interested in pursuing discussions concerning an acquisition of Aerial. The
companies to be contacted were selected based on, among other things, (1) their
level of involvement in the wireless or telecommunications business, (2) the
likelihood of their having an interest in acquiring Aerial, and (3) their
ability to effect such an acquisition. The companies to be contacted included
primarily logical strategic acquirors, including those that had been in contact
with TDS and/or Aerial earlier, as discussed above.
On May 28, 1999, the 60-day period during which Aerial was required to
negotiate exclusively with Sonera with respect to a disposition transaction
expired without receipt by Aerial of an offer from Sonera relating to such a
transaction. As a result, Aerial was free to negotiate a disposition transaction
with other potential parties.
Although exclusive negotiations with Sonera ended and, as outlined below,
negotiations began with other potential purchasers, TDS and Aerial continued to
negotiate periodically with Sonera to resolve the claims raised by Sonera. These
discussions with Sonera included proposals to resolve such claims in the context
of a business combination transaction involving Aerial, Sonera and VoiceStream,
which transaction would be structured to achieve the mutual goal of TDS and
Sonera that TDS obtain an equity interest in Sonera and that Sonera obtain a
significant equity interest in VoiceStream.
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Following the expiration of Sonera's right of first negotiation on May 28,
1999, Donaldson, Lufkin & Jenrette contacted the 30 potential purchasers which
it had identified. Twenty-one potential purchasers contacted by Donaldson,
Lufkin & Jenrette indicated that they were not interested or did not respond to
inquiries. Nine of the 30 potential purchasers contacted by Donaldson, Lufkin &
Jenrette expressed an interest in receiving additional information about Aerial.
Each of these nine parties executed a confidentiality agreement.
In June 1999, following the receipt of executed confidentiality agreements,
Donaldson, Lufkin & Jenrette distributed a confidential information memorandum
to these nine parties. In the latter part of June and the early part of July
1999, representatives of Donaldson, Lufkin & Jenrette communicated with each of
the nine potential purchasers in order to invite such potential purchasers to
conduct due diligence with respect to Aerial, which included meetings with
management, and to make a bid. Three of the nine potential purchasers that
signed confidentiality agreements accepted the invitation to conduct due
diligence and meet with management. Over the course of the next several weeks,
Donaldson, Lufkin & Jenrette arranged for the three parties to conduct due
diligence and meet with management in Chicago, Illinois.
In early June 1999, representatives of VoiceStream and TDS, together with
their financial advisors, met to discuss possible transaction structures and
differences with respect to valuations of VoiceStream, Aerial and Sonera.
On June 16, 1999, VoiceStream and Sonera sent a proposal to TDS that
involved a complex, multi-step transaction pursuant to which, in effect, TDS
would receive Sonera equity, Sonera would receive TDS's equity interest in
Aerial, and VoiceStream would acquire Aerial, as a result of which Sonera would
own a large amount of VoiceStream equity. That proposal contemplated an exchange
ratio of 0.46 of a share of VoiceStream common stock per share of Aerial common
stock. Based on the VoiceStream share closing price of $23.69 on June 15, 1999,
the implicit transaction price per Aerial share in that proposal was
approximately $10.90. This proposal also contemplated (1) that the public
stockholders of Aerial would be entitled to elect to receive $14.00 in cash per
Aerial share in lieu of VoiceStream equity, (2) that Aerial Operating Company's
debt to TDS would be repaid within 18 months after closing, (3) that Sonera
would obtain certain strategic rights vis-a-vis VoiceStream, and (4) that Sonera
would provide a release of all of its claims against TDS and Aerial.
Despite efforts to negotiate mutually satisfactory terms in connection with
this and other proposals, TDS, Aerial and Sonera were unable to agree on a
transaction structured to permit TDS to obtain an equity interest in Sonera in
lieu of all or a portion of the equity interest that TDS would otherwise obtain
in VoiceStream.
On June 22, 1999, representatives of Sonera and VoiceStream met to discuss
the possible transaction among Aerial, Sonera and VoiceStream.
On June 23, 1999 Omnipoint and VoiceStream announced that they had executed
the Omnipoint reorganization agreement. See "The Omnipoint
Reorganization -- Background of the Omnipoint Reorganization."
In the latter part of July 1999, Donaldson, Lufkin & Jenrette asked the
three parties who conducted due diligence and Sonera and an additional party who
expressed an interest in making a bid, to deliver bids relating to a business
combination transaction with Aerial by August 12, 1999. Donaldson, Lufkin &
Jenrette requested that the bids remain open until September 9, 1999. Initial
drafts of a merger agreement and related transaction documents were delivered to
the five bidders and the bidders were asked to submit their proposed changes to
such documents along with their bids. Among other things, the draft merger
agreement contemplated that a purchaser would be fully indemnified with respect
to any loss or expense relating to the dispute with Sonera, on terms to be
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negotiated. Representatives of the Aerial special committee had urged TDS to
assume full responsibility for this indemnity.
Due to the developments relating to a possible business combination
transaction involving Aerial, other activities relating to the proposed
refinancing and spin-off of Aerial were postponed pending the resolution of this
process. As a result, Aerial was in need of additional financing pending the
resolution of the process relating to the exploration of a possible business
combination transaction. Accordingly, TDS, the Aerial finance committee and the
Aerial special committee considered various alternatives for interim financing
for Aerial. At the urging of the Aerial special committee, on July 22, 1999, TDS
agreed to increase the maximum amount available for borrowing by Aerial
Operating Company under the TDS revolving credit agreement from $650 million to
$775 million. This was expected to provide sufficient funds to permit Aerial to
meet its expected financing requirements into December 1999.
On August 6, 1999, the Aerial board of directors met and was apprised of
the activities and status relating to a possible business combination
transaction and the discussions with Sonera. Due to the conflicts of interest
raised by the possibility of Sonera making a bid relating to a possible business
combination transaction and by the dispute with Sonera, the Aerial board of
directors established a transaction committee consisting of all of its directors
other than the directors affiliated with Sonera. The Aerial transaction
committee was authorized to exercise the full authority of the Aerial board to
the extent permitted by law with respect to matters relating to any possible
business combination transaction and relating to the Sonera dispute. See
"Background of Events Relating to Sonera."
On August 12, 1999, VoiceStream and another party ("Entity Two") made
submissions relating to a business combination transaction involving Aerial,
which stated that they would remain open until September 9, 1999. Sonera and the
other two parties did not submit bids.
Entity Two submitted a letter of interest rather than a firm proposal.
Entity Two also did not deliver a mark-up of the merger agreement or the related
agreements, but promised to deliver these by August 18, 1999. VoiceStream
delivered a firm proposal, including a mark-up of the merger agreement and
related agreements.
The August 12, 1999 Entity Two proposal contemplated, among other things, a
conversion of all outstanding Aerial shares and share equivalents, other than
Sonera's share equivalents, into cash in a merger. The Entity Two proposal
indicated a per share price between the market value of Aerial's Common Shares
and a premium of 47% above such price. Based on the closing price for the Aerial
Common Shares of $13.25 on August 11, 1999, this implied a maximum per share
price of approximately $20.00. The Entity Two proposal also indicated that the
purchase price would be subject to adjustment for any changes in net debt
between March 31, 1999 and the closing date. The proposed cash transaction would
be taxable to stockholders. However, the Entity Two proposal indicated that
Entity Two was willing to discuss a deal structure that might be more tax
efficient to stockholders.
The August 12, 1999 VoiceStream proposal contemplated the issuance of
common stock of VoiceStream, or VoiceStream Holdings if the Aerial merger
occurred after completion of the Omnipoint transaction. VoiceStream proposed to
convert all outstanding shares of common stock of Aerial into shares of
VoiceStream or VoiceStream Holdings in a merger, including Sonera's Aerial
Operating Company shares if Sonera exercised its tag-along right under the
investment agreement. VoiceStream proposed a transaction which would qualify as
a tax-free reorganization. VoiceStream offered to exchange 0.4 of a share of
VoiceStream or VoiceStream Holdings common stock per share of common stock of
Aerial, or an aggregate of 34.4 million shares of VoiceStream or VoiceStream
Holdings. Although VoiceStream, through Sonera, had offered an exchange ratio of
0.46 of a VoiceStream share per Aerial share on June 16, 1999, VoiceStream
indicated that it believed the
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exchange ratio of 0.4 provided an attractive value to Aerial stockholders, in
light of recent developments. VoiceStream stated that, since the earlier
discussions, VoiceStream had added customers at a significantly faster pace than
Aerial and had entered into the agreement to acquire Omnipoint and that, as a
result, the value of its business had improved substantially. Based on the
closing price for VoiceStream common stock on August 11, 1999, the VoiceStream
offer implied a price of $15.60 per Aerial Common Share.
VoiceStream also proposed that between $300 million and $500 million of
Aerial Operating Company's debt to TDS would be converted into equity at $17.00
per share of Aerial common stock. In addition, VoiceStream proposed that Aerial
Operating Company would continue to owe approximately $300 million to TDS after
the closing until this amount was refinanced within 18 months after the closing.
VoiceStream also proposed that TDS solely provide an indemnity relating to the
Sonera dispute, without any indemnity obligation by the public stockholders of
Aerial.
The two proposals were reviewed and discussed by representatives of TDS and
Aerial and by the Aerial special committee and its representatives. The Aerial
special committee indicated that it would like Donaldson, Lufkin & Jenrette to
request VoiceStream to revise its proposal to include an election by the public
stockholders of Aerial to receive cash in lieu of VoiceStream common stock in an
amount per share of Aerial common stock equal to the product of the exchange
ratio and the market price of the VoiceStream common stock at the time the
transaction was announced. TDS and the Aerial special committee agreed that
VoiceStream should be requested to revise its proposal to provide that the price
for the debt replacement would also be based on the implied deal price based on
the market price of VoiceStream common stock. TDS also requested Donaldson,
Lufkin & Jenrette to advise VoiceStream that it should revise its proposal so
that the debt from Aerial Operating Company to TDS that would remain outstanding
would bear a market interest rate and be repaid within 12 months after the
closing. TDS also indicated that it would not agree to be solely responsible for
the indemnity relating to the Sonera dispute. The representatives of TDS and
Aerial also agreed to ask VoiceStream to add a collar mechanism to its bid.
On August 16, 1999, following review and discussions of the bids,
Donaldson, Lufkin & Jenrette contacted representatives of VoiceStream and Entity
Two. Donaldson, Lufkin & Jenrette advised representatives of VoiceStream that
there was another bidder that had a competitive bid and encouraged VoiceStream
to increase its bid and to make certain changes to its proposal, as described
above. Donaldson, Lufkin & Jenrette advised Entity Two that there was another
bidder and that Entity Two would have to make a more definitive proposal in
order to continue participation in the auction. Entity Two was also asked to
clarify aspects of its bid. Entity Two orally advised Donaldson, Lufkin &
Jenrette that it would agree not to reduce the purchase price for increases in
debt in the ordinary course and that its bid would be at least $20.00 per share,
subject to due diligence.
On August 17, 1999, VoiceStream delivered a letter which modified its
proposal. The revised VoiceStream proposal included a collar mechanism with a
fixed exchange ratio of 0.4 of a share of VoiceStream Holdings common stock per
Aerial share within a range of 25% above and below the VoiceStream stock price
of $40.875. Outside this range, the exchange ratio would float to a maximum of
0.45 and a minimum of 0.375, depending on VoiceStream's stock price, at which
points the exchange ratio would become fixed.
The revised VoiceStream bid also made other changes to its proposal.
VoiceStream offered to shorten the term of the Aerial debt owed to TDS that was
to remain outstanding to 12 months and proposed an interest rate for such debt
of LIBOR plus 2.5%, subject to increase by 50 basis points every six months if
not repaid in 12 months. The revised proposal also stated that VoiceStream
required certainty that $300 million of the debt owed to TDS would be converted
at the fixed price of $17.00. VoiceStream also objected to the complexity that
would be involved in having the public
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stockholders of Aerial contribute to the indemnity relating to the Sonera
dispute and reaffirmed its position that TDS should be solely responsible for
this obligation.
On August 17, 1999, Entity Two delivered a mark-up of a merger agreement
and related stockholder agreement. The mark-up of the merger agreement indicated
that Entity Two would be willing to offer stock in a transaction which would be
tax-free to Aerial stockholders. However, the letter accompanying the mark-up
indicated a stock transaction would require approval by Entity Two stockholders
and that this could not occur until mid-2000. The August 17 mark-up of the
merger agreement by Entity Two also reflected the conversion of all of Aerial's
common stock and common stock equivalents, including Sonera's shares if it
exercised its tag-along right.
On August 17, 1999, Donaldson, Lufkin & Jenrette prepared and presented an
analysis of both bids to the transaction committee of the Aerial board of
directors. Following discussion, the Aerial transaction committee asked
Donaldson, Lufkin & Jenrette to negotiate with both bidders.
At the encouragement of Donaldson, Lufkin & Jenrette, Entity Two
accelerated its activities and attempted to complete its due diligence so as to
be in a position to provide a firm offer and negotiate a transaction with Aerial
more promptly. Entity Two conducted due diligence and made site visits over the
next few days.
On August 18 and 19, 1999, representatives of TDS and Aerial met with
representatives of VoiceStream and made substantial progress in negotiating
various issues. Among other things, TDS agreed that it would assume sole
responsibility for the indemnity relating to the Sonera dispute.
On August 19, 1999, representatives of VoiceStream made a revised proposal,
which did not include any change in the exchange ratio or collar, and requested
that TDS and Aerial agree to negotiate exclusively with VoiceStream. The
representatives of TDS and Aerial responded that they could not recommend an
exclusive arrangement based on the terms proposed by VoiceStream.
In the evening of August 19, 1999, representatives of TDS and Aerial
proposed that VoiceStream agree to a fixed exchange ratio of 0.45 of a share of
VoiceStream Holdings common stock per Aerial share, without a collar. Based on
the closing price of VoiceStream common stock on that date, the exchange ratio
was equivalent to $18.62 per share of Aerial common stock. At the request of the
Aerial special committee, representatives of TDS and Aerial also proposed that
VoiceStream provide a cash election to the public stockholders. The Aerial
special committee had requested that the cash election be an amount per share of
Aerial common stock equal to the product of the exchange ratio and the value of
the VoiceStream common stock at the time the transaction is announced. In the
interest of reaching an agreement with VoiceStream, the representatives of TDS
and Aerial proposed that the public stockholder cash election be rounded to
$18.00 per share, which was slightly less than the then current implicit value
of $18.62 per share of Aerial common stock at the proposed exchange ratio.
Representatives of TDS and Aerial also proposed an alternative transaction with
an asymmetrical collar mechanism if VoiceStream was unwilling to provide a cash
option. Under the proposal made by representatives of TDS and Aerial, TDS would
agree to replace approximately $400 million to $450 million of Aerial debt to
TDS with Aerial equity at a price of $18.00 per share. Donaldson, Lufkin &
Jenrette advised VoiceStream that it would be able to recommend that TDS and
Aerial enter into exclusive negotiations with VoiceStream if VoiceStream agreed
to such terms.
Later that same evening, VoiceStream proposed that the exchange ratio be
0.41 of a share of VoiceStream Holdings common stock per Aerial share, which
would have a value of approximately $17.00 per share of Aerial common stock
based on the closing price of VoiceStream common stock on August 19, 1999.
Representatives of VoiceStream also proposed that the cash option be $17.00 per
Aerial share and that TDS pay $18.00 per share of Aerial common stock in the TDS
Debt
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Replacement. After this proposal was rejected by TDS and Aerial, representatives
of VoiceStream broke off negotiations.
The following day, on August 20, 1999, a representative of VoiceStream
called a representative of TDS and indicated that VoiceStream might agree to a
transaction at an exchange ratio of 0.425 of a share of VoiceStream Holdings
common stock per Aerial share. The TDS representative advised the VoiceStream
representative that this would not be sufficient to permit exclusive
negotiations or to present the transaction for approval to Aerial's board of
directors.
The following week, representatives of VoiceStream and TDS agreed that it
would be productive to continue exchanging and negotiating documents in order to
facilitate a possible transaction if the parties were ultimately able to reach
agreement on deal terms. Accordingly, counsel for VoiceStream and counsel for
TDS exchanged documents and held discussions over the following week relating to
a possible transaction.
On August 27, 1999, Entity Two sent a letter to representatives of Aerial
indicating a timetable for completing due diligence, obtaining approvals and
submitting a binding offer by mid-September. Following the delivery of this
letter, representatives of Entity Two and TDS held discussions in late August
and early September 1999 and exchanged comments on documents.
On September 7, 1999, a representative of Entity Two advised Donaldson,
Lufkin & Jenrette that it would require another two to four weeks to deliver a
firm proposal. This representative also indicated that the proposal would likely
be in the low to mid $20's per share of Aerial common stock.
Beginning on September 8, 1999, management and the legal and financial
advisors of TDS, Aerial and VoiceStream met in Chicago to negotiate and discuss
transaction structure issues. During this period, the parties negotiated the
substance of the Aerial reorganization agreement and related transaction
documents.
During these discussions, the parties discussed, among other things,
effecting the TDS Debt Replacement and pricing the Aerial Cash Election at
$18.00 per share of Aerial common stock, even though the implicit value of a
transaction had increased as a result of an increase in the market price of
VoiceStream stock.
On the evening of September 12, 1999, a representative of Aerial discussed
the pricing of the TDS Debt Replacement with a representative of VoiceStream.
The Aerial representative advised that TDS was willing to effect the TDS Debt
Replacement at the price determined by multiplying the market price of the
VoiceStream common stock by the agreed-upon exchange ratio, if VoiceStream would
agree to increase the exchange ratio so that it would issue the same number of
shares of VoiceStream common stock that would have been issued if TDS paid
$18.00 per share of Aerial common stock in that transaction. This change would
have had only a minor effect on the total value received by TDS in connection
with the Aerial reorganization, including from the TDS Debt Replacement, because
the higher exchange ratio as applied to the Aerial common stock owned by TDS
would substantially offset the increased price which TDS would pay in the TDS
Debt Replacement. Accordingly, TDS was indifferent to the alternatives of paying
a lower price in the TDS Debt Replacement or receiving a higher exchange ratio.
However, a higher exchange ratio would have increased the value of the
transaction to the public stockholders and a higher investment price for Sonera
would have made it less attractive to Sonera to provide additional funds to
Aerial and agree to settle its claims.
On the morning of September 13, 1999, representatives of VoiceStream
advised the representatives of TDS and Aerial that VoiceStream was agreeable in
concept to adjusting the exchange ratio in the manner suggested by the Aerial
representative the prior evening in return for a higher price in the TDS Debt
Replacement.
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On the evening of September 13, 1999, representatives of TDS, Aerial and
VoiceStream met and attempted to resolve open issues, including the exchange
ratio and certain concerns relating to the Omnipoint reorganization. The
representatives of TDS and Aerial proposed that the exchange ratio be adjusted
in the event that the Omnipoint reorganization did not occur. At the same
meeting, there was discussion about the price at which the TDS Debt Replacement
should occur. Representatives of TDS repeated that TDS would be willing to pay
the price determined by multiplying the market price of the VoiceStream common
stock by the agreed-upon exchange ratio. The representatives of VoiceStream
expressed the view that a debt replacement price higher than $18.00 per Aerial
share but less than that offered by TDS might be more appropriate, particularly
in light of the desirability of negotiating a settlement with Sonera pursuant to
which Sonera would commit to investing additional funds in Aerial. The
representatives of TDS also continued to request that VoiceStream agree to a
cash election equal to the price determined by multiplying the market price of
the VoiceStream common stock by the agreed-upon exchange ratio. The
representatives of VoiceStream expressed the view that the cash election should
be fixed at $18.00 rather than be equal to the implicit deal price.
On the morning of September 14, 1999, representatives of TDS, Aerial and
VoiceStream met again to attempt to resolve open issues, including the exchange
ratio. At that meeting, the representatives of VoiceStream offered an exchange
ratio of 0.449, which equated to a value of $25.14 per share of Aerial common
stock based on the closing price of VoiceStream common stock on September 13,
1999, and a cash election for the public stockholders of $18.00. VoiceStream
also proposed that the price of the TDS Debt Replacement be $22.00 per share of
Aerial common stock. The VoiceStream representatives also (1) offered to agree
to a formula pursuant to which the exchange ratio would be adjusted in the event
that the Omnipoint reorganization was terminated, (2) proposed a reduction in
the exchange ratio if there were more than a certain number of shares of common
stock and stock equivalents of Aerial outstanding at the effective time of the
merger, and (3) advised that all of the remaining open issues would need to be
resolved in VoiceStream's favor. In addition, the representatives of VoiceStream
advised that, if VoiceStream's proposal was not accepted, VoiceStream would
reconsider the exchange ratio it was offering, in light of the recent
significant increase in the market price of VoiceStream's stock. The
representatives of TDS and Aerial did not accept the proposed terms.
Later that day, Mr. LeRoy T. Carlson, Jr., President of TDS and Chairman of
Aerial, and other representatives of TDS and Aerial held a telephone
conversation with Mr. John W. Stanton, Chairman of VoiceStream, and other
representatives of VoiceStream, to determine whether VoiceStream had submitted
its best and final offer and to attempt to resolve the remaining open issues.
During this conversation, representatives of TDS and Aerial proposed an exchange
ratio of 0.46, which Mr. Stanton rejected. After further negotiation, Mr.
Stanton advised Mr. Carlson and the other representatives of TDS and Aerial that
VoiceStream would increase its offer to 0.455 of a share of VoiceStream common
stock per share of Aerial common stock. The exchange ratio of 0.455 equated to a
value of $25.48 per share of Aerial common stock based on the closing price of
VoiceStream common stock on September 13, 1999. Mr. Carlson indicated he would
present Mr. Stanton's proposal to the Aerial transaction committee.
Following this discussion, on September 14, 1999, Sonera was advised that
TDS, Aerial and VoiceStream were prepared to present the terms of a business
combination transaction to their respective boards of directors and invited
Sonera to consider entering into arrangements pursuant to which it would settle
its dispute with TDS and Aerial. As an inducement to Sonera to commit to invest
additional funds in Aerial, to settle its claims against TDS and Aerial, and to
modify its contractual arrangements with TDS and Aerial, Sonera was advised
that, in the context of such a settlement, it would be permitted to make its
additional investment at a price equivalent to $22.00
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per share of Aerial common stock, instead of at prices determined with reference
to the future public market price of Aerial Common Shares under the terms of the
investment agreement with Sonera.
In addition, representatives of TDS and Aerial advised representatives of
the Aerial special committee of the proposed terms of the Aerial reorganization.
The representatives of the Aerial special committee objected to the proposal
that TDS and Sonera would pay $22.00 per share of Aerial common stock in the TDS
Debt Replacement and the Sonera-Aerial Investment, respectively. Instead, the
representatives of the special committee suggested an increase in both the TDS
and Sonera investment price, or in the TDS investment price alone, in each case
with a corresponding increase in the exchange ratio or, alternatively, an
increase in the cash election price provided to the Aerial public stockholders.
The representatives of TDS decided to request once again that VoiceStream agree
to an increase in the exchange ratio and an increase in the price at which the
TDS Debt Replacement and the Sonera-Aerial Investment would be effected in a
manner that would keep the aggregate number of shares to be issued by
VoiceStream constant.
In connection with these discussions, TDS indicated that, while it was
prepared to pay a higher price in the TDS Debt Replacement if the Sonera
investment were made at the same price and there were a corresponding increase
in the exchange ratio, it was not prepared to pay more than Sonera and
effectively transfer additional value to Sonera. TDS indicated that in view of,
among other things, the cash election protection afforded to the public
stockholders, TDS's commitment to effect the TDS Debt Replacement irrespective
of the consummation of the merger at a price in excess of Aerial's historic and
current market prices, and its willingness to indemnify VoiceStream if Sonera
did not agree to settle its claims, it was not appropriate for TDS to transfer
additional value to Sonera.
Following this discussion, representatives of TDS and Aerial advised
representatives of VoiceStream of the objections of the Aerial special
committee. The representatives of TDS and Aerial suggested that VoiceStream
agree to increase the exchange ratio and increase the price at which the TDS
Debt Replacement and the Sonera-Aerial Investment would be effected in a manner
that would keep the aggregate number of shares to be issued by VoiceStream
constant. The representatives of VoiceStream refused. As a result, the
representatives of VoiceStream agreed to discuss the terms proposed by
VoiceStream directly with representatives of the Aerial special committee.
On the evening of September 14, 1999, representatives of VoiceStream spoke
to representatives of the Aerial special committee and explained VoiceStream's
rationale for requiring that the debt replacement agreement provide that TDS and
Sonera pay $22.00 per Aerial share and for refusing to further increase the
exchange ratio. Although the representatives of VoiceStream agreed that such a
change would not have any net effect on the number of shares or value being
delivered by VoiceStream, they pointed out that it would have the effect of
requiring Sonera to pay a higher price for its investment in the event that
Sonera agreed to acquire additional shares in Aerial and Aerial Operating
Company at the same price as TDS was investing under the debt replacement
agreement. The representatives of VoiceStream expressed a strong desire to
achieve a settlement of the dispute with Sonera pursuant to which Sonera would
commit to investing additional funds in Aerial and expressed their view that
allowing TDS to replace its Aerial Operating Company debt and Sonera to invest
at a price of $22.00 per share would facilitate the negotiation of such a
settlement. The representatives of VoiceStream also indicated that VoiceStream
was not prepared to increase the cash election price provided to the public
stockholders and that selling equity at a fixed price would be important in
assisting the combined company in meeting its future financing needs.
On September 15, 1999, representatives of Sonera met with representatives
of VoiceStream and advised them that although Sonera had issues with TDS and
Aerial, Sonera would be willing to go forward with a transaction and settle such
issues if, in addition to the Aerial-Sonera Investment, VoiceStream would permit
Sonera to acquire newly issued shares of VoiceStream Holdings common
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stock at a purchase price of approximately the per share market value of
VoiceStream common stock on September 15, 1999.
Following additional discussions, on September 16, 1999, representatives of
Sonera and VoiceStream agreed to present to their respective boards of directors
an agreement whereby, upon the closing of the Omnipoint reorganization, Sonera
would invest $500 million into VoiceStream Holdings by purchasing shares of
VoiceStream Holdings common stock at $57.00 per share. Such agreement would be
contingent upon the satisfactory settlement of the issues between Sonera, TDS
and Aerial.
On September 15, 1999, VoiceStream held a regularly scheduled meeting of
its board of directors. Among other matters discussed, Mr. Stanton reviewed the
strategic rationale for the proposed reorganization and members of senior
management presented further details. Goldman Sachs presented an analysis of the
proposed transaction. A lengthy discussion ensued.
Between September 15, 1999 and September 17, 1999, representatives of TDS,
Aerial and VoiceStream proceeded to complete the Aerial reorganization agreement
and related transaction documents reflecting the understanding of Messrs.
Carlson and Stanton. In addition, between September 15, 1999 and September 19,
1999, TDS, Aerial and Sonera negotiated the terms of the settlement agreement
and release and Sonera and VoiceStream negotiated the terms of the Sonera stock
subscription agreement, the Sonera investor agreement and the Sonera
registration rights agreement.
On the morning of September 17, 1999, the Aerial transaction committee met
with its legal and financial advisors to consider the proposed reorganization
agreement. The members of the Aerial special committee and their legal and
financial advisors participated in this meeting. At that meeting, Donaldson,
Lufkin & Jenrette made a financial presentation with respect to the proposed
Aerial reorganization. The representatives of Donaldson, Lufkin & Jenrette
discussed the status of the bid by Entity Two. Donaldson, Lufkin & Jenrette
advised the participants of the meeting regarding the risk that Entity Two might
ultimately not make a firm offer and the risk that VoiceStream might withdraw
from the process if it was extended. Donaldson, Lufkin & Jenrette also discussed
the terms of the TDS Debt Replacement, the Sonera Investments and the settlement
agreement and release. Donaldson, Lufkin & Jenrette delivered an oral opinion,
which was subsequently confirmed in writing, to the effect that, as of such
date, the consideration, defined as the Aerial Stock Election and the Aerial
Cash Election, to be received by the stockholders of Aerial, other than
VoiceStream, VoiceStream Holdings and Omnipoint and any of their respective
affiliates, in the Aerial reorganization was fair, from a financial point of
view, to such stockholders. A copy of the opinion of Donaldson, Lufkin &
Jenrette appears as Annex F hereto. At this meeting, the terms of the Aerial
reorganization agreement, the other transaction documents and the settlement
agreement and release with Sonera were reviewed with the Aerial transaction
committee by legal counsel. The meeting of the Aerial transaction committee was
then recessed to permit the Aerial special committee to meet and take action
with respect to the Aerial reorganization.
At that time, the Aerial special committee met with its legal and financial
advisors to consider the proposed reorganization agreement. At that meeting,
Wasserstein Perella made a financial presentation with respect to the proposed
Aerial reorganization. Wasserstein Perella delivered an oral opinion, which was
subsequently confirmed in writing, to the effect that, as of such date, the
consideration to be paid in the Aerial reorganization to the stockholders of
Aerial, other than TDS and Sonera, was fair to such stockholders from a
financial point of view. A copy of the opinion of Wasserstein Perella appears as
Annex G hereto. Following a number of questions from, and discussion among, the
members of the Aerial special committee and its legal and financial advisors,
the Aerial special committee determined to recommend that the Aerial transaction
committee and the full Aerial board of directors approve and adopt the Aerial
reorganization agreement.
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Immediately following the meeting of the Aerial special committee, the
meeting of the Aerial transaction committee was reconvened. The Aerial special
committee advised the Aerial transaction committee of its recommendation.
Following discussion, the Aerial transaction committee, among other things:
- approved and adopted the Aerial reorganization agreement and determined
that the Aerial reorganization was advisable and fair to and in the best
interests of Aerial and its stockholders;
- recommended that Aerial's board of directors approve and adopt the Aerial
reorganization agreement and the Aerial reorganization; and
- approved the other transaction documents related to the Aerial
reorganization and recommended that Aerial's board of directors approve
and adopt these documents.
The Aerial transaction committee also approved the terms of a proposed
settlement agreement and release with Sonera, as to which there was conceptual
agreement but no final contract. The approvals relating to the Aerial
reorganization agreement were independent of and not contingent on the execution
of the settlement agreement and release.
On September 17, 1999, following the meetings of the Aerial transaction
committee and the Aerial special committee, the Aerial board of directors met
with its legal and financial advisors to consider the proposed Aerial
reorganization agreement. The members of the Aerial special committee and their
legal and financial advisors participated in this meeting. At this meeting,
Donaldson, Lufkin & Jenrette made a financial presentation with respect to the
proposed Aerial reorganization. The representatives of Donaldson, Lufkin &
Jenrette discussed the status of the bid by Entity Two. Donaldson, Lufkin &
Jenrette advised the participants of the meeting regarding the risk that Entity
Two might ultimately not make a firm offer and the risk that VoiceStream might
withdraw from the process if it was extended. Donaldson, Lufkin & Jenrette also
discussed the terms of the TDS Debt Replacement, the Sonera Investments and the
settlement agreement and release. The Aerial board of directors received the
recommendation of the Aerial transaction committee and the Aerial special
committee and Donaldson, Lufkin & Jenrette delivered its oral opinion, which was
subsequently confirmed in writing, to the effect that, as of such date, the
consideration, defined as the Aerial Stock Election and the Aerial Cash
Election, to be received by the stockholders of Aerial, other than VoiceStream,
VoiceStream Holdings and Omnipoint and any of their respective affiliates, in
the Aerial reorganization was fair, from a financial point of view, to such
stockholders. A copy of the opinion of Donaldson, Lufkin & Jenrette appears as
Annex F hereto. At this meeting, the terms of the Aerial reorganization
agreement, the other Aerial reorganization transaction documents and the terms
of the proposed settlement agreement and release with Sonera were reviewed with
the Aerial board by legal counsel. Following a number of questions from, and
discussion among, the directors, the Aerial board, among other things:
- approved and adopted the Aerial reorganization agreement and determined
that the Aerial reorganization was advisable and fair to and in the best
interests of Aerial and its stockholders;
- recommended that Aerial's stockholders approve and adopt the Aerial
reorganization agreement and the Aerial reorganization; and
- approved the other Aerial reorganization transaction documents.
The Aerial board also approved and adopted the terms of the proposed
settlement agreement and release with Sonera, with the representatives of Sonera
on the board of directors abstaining with respect to action on this item due to
the conflict of interest presented by it. The approvals relating to the Aerial
reorganization agreement were independent of and not contingent on the execution
of the settlement agreement and release.
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Later in the day on September 17, 1999, the TDS board of directors also
approved and adopted the Aerial reorganization agreement, the TDS stockholder
agreement and the other Aerial reorganization transaction documents and approved
and adopted the terms of the proposed settlement agreement and release with
Sonera. Mr. Swanson abstained from the vote on the latter item due to the
conflict of interest presented by the fact that he is the Managing Director of
Sonera U.S., a subsidiary of Sonera.
On September 17, 1999, the VoiceStream board of directors held a meeting.
Goldman Sachs, investment advisors to VoiceStream, delivered its oral opinion,
which was subsequently confirmed in writing, that, as of September 17, 1999, the
consideration to be paid by VoiceStream pursuant to the Aerial reorganization
agreement was fair from a financial point of view to VoiceStream. After a
discussion, the board unanimously approved the proposed Aerial reorganization
and the execution and delivery of the Aerial reorganization agreement, and the
transactions contemplated thereby. The VoiceStream board also approved the
Sonera-VoiceStream Investment.
Following these meetings, after the close of trading on September 17, 1999,
the Aerial reorganization agreement, the TDS stockholder agreement, the
VoiceStream stockholder agreement, the debt replacement agreement and the
indemnity agreement were executed by the parties thereto. The executed
agreements were delivered on the evening of September 19, 1999, following the
approval of the parent stockholder agreement by Hutchison.
On September 20, 1999, prior to the commencement of trading on the Nasdaq
Stock Market, the governing board of Sonera approved the settlement agreement
and release, the Sonera investor agreement, the Sonera stock subscription
agreement and the Sonera registration rights agreement, and these agreements
were executed by the parties thereto as of September 17, 1999.
On September 20, 1999, prior to the commencement of trading on the Nasdaq
Stock Market, an announcement was made concerning the Aerial reorganization and
the related transactions.
BACKGROUND OF EVENTS RELATING TO SONERA
On September 8, 1998, pursuant to a purchase agreement among Sonera, TDS,
Aerial and Aerial Operating Company, Sonera purchased 2,410,482 shares of common
stock of Aerial Operating Company, representing approximately a 19.4% equity
interest in Aerial Operating Company, subject to adjustment under certain
circumstances, for an aggregate purchase price of $200 million. Under a related
investment agreement executed on September 8, 1998, Sonera has the right,
subject to adjustment under certain circumstances, to exchange each share of
Aerial Operating Company common stock which it owns for 6.72919 Aerial Common
Shares. Upon the exchange of all of the originally purchased shares of Aerial
Operating Company common stock, Sonera would have owned approximately an 18.4%
equity interest in Aerial, reflecting an equivalent purchase price of $12.33 per
Aerial Common Share. Under the purchase agreement, Sonera is required to return
for cancellation shares of Aerial Operating Company common stock if the average
price of the Aerial Common Shares, calculated as provided in the purchase
agreement, exceeds certain threshold prices. This cancellation has the effect of
increasing Sonera's purchase price for each share of Aerial Operating Company
common stock purchased by Sonera and increasing Sonera's per share equivalent
purchase price for Aerial Common Shares.
On November 24, 1998, TDS advised Sonera of TDS's intention to proceed with
a spin-off of Aerial. On December 18, 1998, TDS issued a press release
announcing its intention to spin off its equity ownership interest in Aerial, as
well as to review other alternatives, and to seek additional financing for
Aerial from sources other than TDS.
In a number of oral and written communications after Sonera became aware of
the proposed spin-off, Sonera objected to the proposed spin-off of Aerial as
inconsistent with the terms of Sonera's
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contractual arrangements with TDS and Aerial and asserted that TDS and Aerial
had misrepresented and failed to disclose certain material facts, as a result of
which Sonera had been induced to pay an excessive price for the Aerial Operating
Company common stock. As a result, Sonera requested the renegotiation of certain
matters relating to Sonera's investment in Aerial Operating Company, including
an adjustment in its purchase price.
Beginning in early 1999 and continuing from time to time through September
19, 1999, representatives of TDS and Aerial held meetings and conversations with
representatives of Sonera in an effort to resolve the claims raised by Sonera
relating to its investment in Aerial Operating Company. Some of the meetings and
conversations pertained solely to a settlement of such claims, while others
involved a resolution of such claims in the context of a transaction involving
Aerial, Sonera and VoiceStream. See "Background of the Aerial Reorganization."
After several meetings in February and March 1999 that were unsuccessful in
resolving the concerns raised by Sonera, counsel to Sonera raised the
possibility of litigation in the event that these concerns were not resolved to
Sonera's satisfaction.
In order to permit Aerial to consider a possible business combination
transaction, on March 19, 1999, Aerial delivered a notice to Sonera under the
investment agreement stating that Aerial desired to enter into a disposition
transaction as described in the notice. Pursuant to the terms of the investment
agreement, Sonera had a period of ten days to determine if it desired to invoke
certain provisions of the investment agreement requiring Aerial to negotiate
exclusively with Sonera with respect to such a transaction. On March 29, 1999,
Aerial received a notice from Sonera electing to invoke those provisions of the
investment agreement that required Sonera and Aerial to negotiate exclusively
with each other in good faith for 60 days with respect to a disposition
transaction. Between March 29, 1999 and May 28, 1999, Aerial and Sonera held
discussions and exchanged documents relating to a possible disposition
transaction and a resolution of the claims by Sonera. On May 28, 1999, the
60-day period during which Aerial was required to negotiate exclusively with
Sonera with respect to a disposition transaction expired without receipt by
Aerial of an offer from Sonera relating to such a transaction. As a result,
Aerial was free to negotiate a disposition transaction with other potential
parties.
Although exclusive negotiations with Sonera ended and negotiations began
with other potential purchasers, including negotiations directly with
VoiceStream, TDS and Aerial continued to negotiate periodically with Sonera to
resolve the claims raised by Sonera. However, TDS, Aerial and Sonera were unable
to reach a mutually satisfactory resolution of these claims prior to September
19, 1999.
On March 31, 1999, pursuant to the provisions contained in the investment
agreement, Sonera purchased 2,772 shares of Aerial Operating Company common
stock, bringing its total ownership in Aerial Operating Company to 2,413,254
shares of common stock.
The average price of Aerial Common Shares, calculated pursuant to the
purchase agreement, exceeded the initial threshold price of $9.50 for the twenty
consecutive trading day period ending on June 1, 1999. On June 8, 1999, Aerial
delivered the required notice of this event to Sonera. As a result, Sonera was
required to surrender 256,375 shares of Aerial Operating Company common stock
for cancellation on or before June 22, 1999.
On June 21, 1999, Sonera notified Aerial of its refusal to surrender for
cancellation any of the shares of Aerial Operating Company common stock pursuant
to the notice issued on June 8, 1999.
The average price of Aerial Common Shares exceeded the second threshold
price of $10.50 for the twenty consecutive trading day period ending on June 25,
1999. On July 7, 1999, Aerial delivered the required notice of this event to
Sonera. As a result, Sonera was required to surrender an additional 207,082
shares of Aerial Operating Company common stock for cancellation on or before
July 21, 1999.
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The average price of Aerial Common Shares exceeded the third threshold
price of $11.50 for the twenty consecutive trading day period ending on July 7,
1999. On July 14, 1999, Aerial delivered the required notice of this event to
Sonera. As a result, Sonera was required to surrender an additional 170,759
shares of Aerial Operating Company common stock for cancellation on or before
July 28, 1999.
The effect of these events was to decrease the number of shares of Aerial
Operating Company common stock that Sonera was entitled to own to 1,779,038
shares, which represents the equivalent of 11,971,485 Aerial Common Shares.
On July 22, 1999, Sonera notified Aerial of its refusal to surrender for
cancellation any of the shares of Aerial Operating Company common stock pursuant
to the notices of July 7 and July 14, 1999.
During the next several weeks, Aerial was involved in an auction process
relating to a possible business combination, as described under "Background of
Events Relating to Aerial Reorganization." As described in this section, Sonera
was a participant in this process.
As of September 17, 1999, Sonera, TDS, Aerial and Aerial Operating Company
executed the settlement agreement and release. See "Agreements Relating to the
Aerial Reorganization -- Settlement Agreement and Release."
RECOMMENDATIONS OF THE VOICESTREAM BOARD; REASONS FOR THE AERIAL REORGANIZATION
The VoiceStream board believes that combining VoiceStream's and Aerial's
resources will enable the combined company to be a stronger competitor in the
rapidly consolidating telecommunications industry. At various meetings of the
VoiceStream board held between February 2, 1999, and September 17, 1999, members
of VoiceStream's management made presentations concerning the business and
prospects of Aerial and the potential combination of Aerial and VoiceStream. At
a meeting held on September 17, 1999, VoiceStream's board received presentations
concerning, and reviewed the terms of, the Aerial reorganization agreement and
the related agreements with members of VoiceStream's management, its legal
counsel and its financial advisors. At the meeting held on September 17, 1999,
Goldman Sachs delivered its oral opinion, as of that date, that the merger
consideration to be paid by VoiceStream pursuant to the Aerial reorganization
agreement was fair from a financial point of view to VoiceStream and the
VoiceStream board determined that the Aerial reorganization proposal, the Aerial
reorganization agreement and the related transactions were fair to, and in the
bests interests of, VoiceStream stockholders. Accordingly, the VoiceStream board
approved the Aerial reorganization proposal, the Aerial reorganization agreement
and the related transactions. The board unanimously recommends that VoiceStream
stockholders approve the Aerial reorganization proposal at a special
stockholders meeting.
In reaching its determination to approve the VoiceStream merger proposal,
the Aerial reorganization agreement and the related transactions, the
VoiceStream board consulted with VoiceStream's financial and legal advisers and
senior management and considered a number of factors in addition to those set
forth above. The following summarizes the material factors that the VoiceStream
board considered:
- the current conditions and trends in the telecommunications industry,
including the likelihood that future mergers and acquisitions will
increase the size and strength of competitors;
- the extent and geographical scope of business operations, and
VoiceStream's continuing ability to compete against larger wireless
carriers;
- the need for significant capital resources to build out the combined
company's GSM systems;
- the consistency of the strategies that the two companies were pursuing;
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- the synergies which the combined company might realize, and the risks
that the synergies would not all be realized;
- the impact that the transaction would be expected to have on the combined
company's balance sheet, earnings and cash flow;
- the likelihood that VoiceStream and Aerial would be able to obtain the
necessary regulatory approvals to complete the Aerial reorganization, and
the likelihood that regulatory authorities would insist on conditions to
those approvals which could substantially reduce the benefits of the
Aerial reorganization;
- the impact the transaction would have on the tax-free status of the
spin-off of VoiceStream from Western Wireless and VoiceStream's
obligations under the tax sharing agreement with Western Wireless;
- the impact of the transaction on the combined company's ability to
maintain and enhance VoiceStream's reputation for delivering high-quality
services to customers;
- the impact of the transaction on the combined company's ability to
maintain a high-quality, highly-motivated work force;
- the impact of the transaction apart from and combined with the Omnipoint
reorganization;
- a review of the historical operating results of Aerial and VoiceStream
and the projected operating results of Aerial and VoiceStream,
individually and in combination;
- the fact that one member of VoiceStream Holdings' board would be
appointed by each of TDS and Sonera, subject to the approval of
VoiceStream Holdings, which approval cannot be unreasonably withheld, and
provided that the TDS appointee cannot be a director, officer or
affiliate of TDS;
- the effect of the TDS Debt Replacement and the assumption of certain
Aerial or Aerial Operating Company debt by VoiceStream or VoiceStream
Holdings, as the case may be;
- the effect of the Sonera-VoiceStream Investment and the Sonera-Aerial
Investment;
- the other potential major transactions which might be available to
VoiceStream either in addition to, or as alternatives to, the Aerial
reorganization, and the effect of the Aerial reorganization on the
ability of VoiceStream to pursue those transactions; and
- the opinion of VoiceStream's financial advisors that, as of the date of
such opinion, the consideration to be paid by VoiceStream pursuant to the
Aerial reorganization agreement was fair from a financial point of view
to VoiceStream stockholders.
The foregoing summary addresses the material facts, matters and information
considered by the VoiceStream board in connection with its deliberations on the
combination of Aerial and VoiceStream. In view of the variety of factors
considered, the VoiceStream board did not find it practical to and did not make
a specific assessment of or otherwise assign relative weights to the specific
facts, matters and information considered. The VoiceStream board adopted the
Aerial reorganization agreement and approved the transactions contemplated
thereby, in consideration of all of the facts, matters and information brought
to its attention.
Taking into account all of the material facts, matters and information,
including those described above, the VoiceStream board believes that the terms
of the Aerial reorganization agreement and the transactions provided for therein
are fair to and in the best interest of VoiceStream's stockholders.
THE VOICESTREAM BOARD UNANIMOUSLY RECOMMENDS THAT VOICESTREAM'S STOCKHOLDERS
VOTE "FOR" ADOPTION OF, AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY, THE
AERIAL REORGANIZATION AGREEMENT.
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VOICESTREAM FAIRNESS OPINION
Goldman Sachs has acted as financial advisor to VoiceStream in connection
with the Aerial reorganization. On September 17, 1999, Goldman Sachs delivered
its opinion to the VoiceStream board, subsequently confirmed in writing, that as
of the date of such opinion the Merger Consideration (as defined below) to be
paid by VoiceStream pursuant to the Aerial reorganization agreement is fair from
a financial point of view to VoiceStream stockholders. For purposes of this
description, "Merger Consideration" means (1) in the case of TDS and Sonera, the
right to receive the Conversion Number (as defined below) of shares of
VoiceStream Holdings common stock and (2) in the case of stockholders of Aerial
other than TDS or Sonera, the right to receive the Conversion Number of shares
of VoiceStream Holdings common stock or, at the election of such stockholders,
$18.00 in cash. The Conversion Number will be equal to 0.455; provided, however,
(1) in the event that (a) the Omnipoint reorganization agreement is terminated
or the transactions contemplated by the Omnipoint reorganization agreement are
not consummated by the Omnipoint End Date (as defined in the Aerial
reorganization agreement) and (b) the Closing Date Market Price (as defined in
the Aerial reorganization agreement) is less than $39.56, the Conversion Number
will be equal to the number determined by dividing $18.00 by the Closing Date
Market Price, but will not be greater than 0.50 or less than 0.455 (or, if
applicable, the quotient calculated as described in clause (2)); and (2) in the
event that the number of Adjusted Fully Diluted Shares exceeds 85,839,161 as of
the Effective Time (as defined in the Aerial reorganization agreement), the
Conversion Number will be equal to the number determined by dividing 39,056,818
by such number of Adjusted Fully Diluted Shares as of the Effective Time
(subject to further adjustment as described in clause (1), if applicable). In
addition, pursuant to the debt replacement agreement, debt of Aerial Operating
Company in the amount of $420 million held by TDS will be converted into shares
of Aerial common stock at a conversion price of $22.00. In addition, VoiceStream
has advised Goldman Sachs that Sonera will acquire 10.45 million shares of
Aerial common stock at a price of $22.00 per share.
The full text of the Goldman Sachs opinion is attached as Annex E to this
joint proxy statement-prospectus and is incorporated into this joint proxy
statement-prospectus by reference. Stockholders of VoiceStream are urged to, and
should, read such opinion in its entirety.
In connection with its opinion, Goldman Sachs reviewed:
- the Aerial reorganization agreement;
- the Omnipoint reorganization agreement;
- the debt replacement agreement;
- the registration statement on Form 10 of VoiceStream;
- the annual reports to stockholders and annual reports on Form 10-K of
Western Wireless for the three years ended December 31, 1998;
- the annual reports to stockholders and annual reports on Form 10-K of
Aerial for the two years ended December 31, 1998;
- certain interim reports to stockholders and quarterly reports on Form
10-Q of VoiceStream, Western Wireless and Aerial;
- certain other communications from VoiceStream, Western Wireless and
Aerial to their respective stockholders; and
- certain internal financial analyses and forecasts for VoiceStream
prepared by the management of VoiceStream, certain financial analyses and
forecasts for Aerial prepared by the
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management of VoiceStream and certain internal financial analyses and
forecasts for Aerial prepared by the management of Aerial (collectively,
the "Forecasts").
Goldman Sachs also held discussions with members of the senior management
of VoiceStream and Aerial regarding the strategic rationale for, and the
potential benefits of, the transactions contemplated by the Aerial
reorganization agreement and the past and current business operations, financial
condition and future prospects of their respective companies. In addition,
Goldman Sachs reviewed the reported price and trading activity for the
VoiceStream and Aerial common stock, compared certain financial and stock market
information for VoiceStream and Aerial with similar information for certain
other companies the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the United States
wireless communications industry specifically and in other industries generally
and performed such other studies and analyses as it considered appropriate.
Goldman Sachs assumed the accuracy and completeness of all of the financial
and other information reviewed by it for purposes of rendering its opinion.
Goldman Sachs assumed, with the consent of the VoiceStream board, that the
Forecasts had been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of VoiceStream and Aerial, as the case may be.
In addition, Goldman Sachs did not make an independent evaluation or appraisal
of the assets and liabilities of VoiceStream or Aerial or any of their
subsidiaries and Goldman Sachs was not furnished with any such evaluation or
appraisal. Goldman Sachs also took into account VoiceStream's view as to the
possible tax consequences of the transactions contemplated by the Aerial
reorganization agreement as described to Goldman Sachs by VoiceStream. Goldman
Sachs assumed that all material governmental, regulatory or other consents and
approvals necessary for the consummation of the transaction contemplated by the
Aerial reorganization agreement will be obtained without any adverse effect on
VoiceStream or Aerial or on the contemplated benefits of the transactions
contemplated by the Aerial reorganization agreement. The Goldman Sachs opinion
was provided for the information and assistance of the VoiceStream board in
connection with its consideration of the transactions contemplated by the Aerial
reorganization agreement. The Goldman Sachs opinion does not constitute a
recommendation as to how any holder of VoiceStream common stock should vote with
respect to such transactions.
The following is a summary of the material financial analyses presented by
Goldman Sachs to the VoiceStream board at the meeting of the VoiceStream board
on September 15, 1999, utilizing, however, the stock price information used by
Goldman Sachs with respect to its opinion dated September 17, 1999. Some of the
summaries of the financial analyses include information presented in tabular
format. The tables must be read together with the text accompanying each
summary.
SELECTED COMPANIES ANALYSIS
Goldman Sachs reviewed and compared certain financial and operating
information relating to VoiceStream and Aerial to corresponding information for
Microcell Telecommunications, Inc., Omnipoint, Powertel, Inc. and Sprint PCS.
The selected companies were chosen because they are publicly traded companies
with operations that for purposes of analysis may be considered similar to those
of VoiceStream and Aerial. The analysis was performed using share prices as of
September 17, 1999. Enterprise value for each of the companies is the sum of the
market capitalization for that company and its total debt, preferred stock and
minority interest, less cash and cash equivalents. Adjusted enterprise value for
each of the companies is the enterprise value for that company less the value of
its POPs not to be covered under the business plan for that company, valued at
$5.00 per POP. "POPs" are the number of persons within a license's converge area
and are derived from management estimates and public sources. "Covered POPs" are
the estimated number of POPs within the license area served by the operating
network. Weighted POPs are determined by
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multiplying the number of POPs in a 10 MHz license area by 0.25, the number of
POPs in a 20 MHz license area by 0.75 and the number of POPs in a 30 MHz license
area by one, and reflect the fact that licenses with greater MHz provide greater
bandwidth or capacity. License value for each of the companies is the difference
between enterprise value and cumulative capital expenditures. Finally, invested
capital is the sum of the cumulative capital expenditures and license costs
based on public sources.
The following chart summarizes the results of that analysis:
<TABLE>
<CAPTION>
SPRINT
AERIAL AERIAL* MICROCELL OMNIPOINT POWERTEL PCS VOICESTREAM
------- ------- --------- --------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Adjusted Enterprise
Value/2000 Covered POPs............ $106.32 $130.11 $73.48 $106.30 $124.29 $220.85 $203.12
License Value/2000
Covered POPs....................... 70.36 94.14 52.62 90.36 87.00 181.41 181.21
Adjusted Enterprise Value/Total
POPs............................... 91.07 111.44 45.90 51.96 109.44 176.76 83.35
License Value/Total POPs............. 60.27 80.64 31.43 41.89 76.17 144.36 71.66
Adjusted Enterprise Value/
Weighted POPs...................... 91.07 111.44 45.90 73.52 120.30 219.76 141.22
License Value/Weighted POPs.......... 60.27 80.64 31.43 59.27 83.73 179.48 121.42
PCS Enterprise Value/Invested
Capital............................ 2.5x 3.0x N/A 3.0x 2.3x 3.7x 6.0x
</TABLE>
- ---------------
* Aerial at the deal price based on an exchange ratio of 0.455 and the issuance
of an assumed 52.5 million shares of VoiceStream Holdings common stock.
DISCOUNTED CASH FLOW ANALYSIS
Goldman Sachs performed a discounted cash flow analysis comparing the range
of values for VoiceStream on a stand-alone basis based on VoiceStream
management's internal model for VoiceStream ("VoiceStream Case A") to a range of
values for Aerial on a stand-alone basis based on (1) Aerial management's
internal model for Aerial ("Aerial Case A") and (2) VoiceStream management's
internal model for Aerial ("Aerial Case B"). This analysis also compared the
range of values for VoiceStream on a stand-alone basis based on a model for
VoiceStream based on Goldman Sachs research ("VoiceStream Case B") to a range of
values for Aerial on a stand-alone basis based on a model for Aerial based on
Goldman Sachs research ("Aerial Case C").
The following tables present ranges of enterprise value and equity value
for each of the VoiceStream cases and each of the Aerial cases and the resulting
range of implied ownership of the combined company by VoiceStream stockholders,
assuming an all-stock transaction, based on forward 2008 EBITDA multiples for
VoiceStream and Aerial ranging from 9.0x to 13.0x and discount rates ranging
from 12% to 16%. Equity value of each of the companies represents the company's
enterprise value net of the book value of the company's outstanding net
indebtedness. "EBITDA," for purposes of the opinion, represents earnings before
interest, taxes, depreciation and amortization.
<TABLE>
<CAPTION>
VOICESTREAM AERIAL AERIAL
CASE A CASE A CASE B
--------------- --------------- ---------------
<S> <C> <C> <C>
Enterprise Value...................... $3,390 - $6,574 $2,147 - $3,808 $1,632 - $3,240
Equity Value.......................... 2,445 - 5,629 1,287 - 2,948 771 - 2,380
Implied VoiceStream Ownership......... N/A 65% - 66% 70% - 76%
</TABLE>
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<TABLE>
<CAPTION>
VOICESTREAM AERIAL
CASE B CASE C
--------------- ---------------
<S> <C> <C>
Enterprise Value....................................... $2,049 - $3,632 $1,087 - $2,076
Equity Value........................................... 1,104 - 2,687 226 - 1,216
Implied VoiceStream Ownership.......................... N/A 69% - 83%
</TABLE>
RELATIVE CONTRIBUTION ANALYSIS
Goldman Sachs performed contribution analyses of VoiceStream and Aerial to
the combined company based on various factors. The following table presents the
contribution analysis of VoiceStream and Aerial to the combined company's 1998
and estimated 1999 and 2000 revenue and subscribers and current total and
weighted POPs and estimated 2000 covered POPs. Revenue and subscriber
information for 1999 and 2000 and 2000 covered POPs for VoiceStream are from
VoiceStream management estimates and for Aerial are from Aerial management
estimates. The analysis is based upon the enterprise value of VoiceStream and
Aerial and, therefore, does not take into account the outstanding indebtedness
of either company.
<TABLE>
<CAPTION>
VOICESTREAM AERIAL
----------- ------
<S> <C> <C>
1998 Revenue................................................ 51% 49%
1999E Revenue............................................... 63 37
2000E Revenue............................................... 71 29
1998 Subscribers............................................ 51 49
1999E Subscribers........................................... 64 36
2000E Subscribers........................................... 67 33
Total POPs.................................................. 73 27
Weighted POPs............................................... 62 38
2000E Covered POPs.......................................... 56 44
</TABLE>
TRANSACTION PREMIUM ANALYSIS
Goldman Sachs compared the stock price of VoiceStream common stock and
Aerial common stock on the basis of the respective closing prices on September
17, 1999. Based on those stock prices and an assumed consideration per share of
Aerial common stock of a fraction of a share of VoiceStream common stock equal
to 0.455, the implied transaction price per share of Aerial common stock was
$25.51. Goldman Sachs also compared the historical stock prices of VoiceStream
common stock and Aerial common stock on the basis of the respective closing
stock prices per share on September 17, 1999, and the respective closing stock
prices and period averages or highs for the prior 10 days, three months and 52
weeks.
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The following table presents the premiums over the Aerial common stock
prices at such times or for such period implied by the assumed exchange ratio of
0.455 and (1) the VoiceStream common stock price at September 17, 1999 and (2)
the VoiceStream common stock price for comparable periods or dates:
<TABLE>
<CAPTION>
PREMIUM PAID
BASED ON PREMIUM PAID
VOICESTREAM BASED ON
SEPTEMBER 17, VOICESTREAM PRICE
1999 FOR COMPARABLE
DATE/PERIOD PRICE PERIODS/DATE
----------- ------------- -----------------
<S> <C> <C>
September 17, 1999....................................... 27.5% 27.5%
10-day average........................................... 37.0 27.7
3-month average.......................................... 74.1 23.3
52-week high............................................. 27.5 31.2
</TABLE>
The following table presents the premiums over the Aerial historical price
per POP implied by the assumed exchange ratio of 0.455 for estimated 2000
covered POPs and current total and weighted POPs, and compares that information
to the current price per VoiceStream POP:
<TABLE>
<CAPTION>
SEPTEMBER 17,
SEPTEMBER 17, IMPLIED PREMIUM TO 1999
AERIAL 1999 DEAL PRICE SEPTEMBER 17, VOICESTREAM PRICE PER
POPS PRICE PER PER AERIAL 1999 POPS VOICESTREAM
(IN MILLIONS) AERIAL POP POP AERIAL PRICE (IN MILLIONS) POP
------------- ------------- ---------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
2000 Covered POPs........ 24.2 $106.32 $130.11 22% 30.6 $203.12
Total POPs............... 28.3 91.07 111.44 22 77.3 83.35
Weighted Total POPs...... 28.3 91.07 111.44 22 45.6 141.22
</TABLE>
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analysis or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is directly comparable to
VoiceStream or Aerial or the Aerial reorganization. The analyses were prepared
solely for purposes of Goldman Sachs' providing its opinion to the VoiceStream
board that, as of the date of such opinion, the Merger Consideration to be paid
by VoiceStream Holdings pursuant to the Aerial reorganization agreement was fair
from a financial point of view to VoiceStream stockholders. The analyses do not
purport to be appraisals or necessarily reflect the prices at which the business
or securities actually may be sold. Analyses based upon forecasts of future
results, which are inherently subject to uncertainty, are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. As described above, Goldman Sachs'
opinion to the VoiceStream board was one of many factors taken into
consideration by the VoiceStream board in making its determination to approve
the Aerial reorganization agreement.
The foregoing summary describes material financial analyses used by Goldman
Sachs in connection with providing its opinion to VoiceStream's board of
directors on September 17, 1999, but does not purport to be a complete
description of the analysis performed by Goldman Sachs in connection with that
opinion. You should read the entire opinion of Goldman Sachs in Annex E.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. VoiceStream selected
Goldman
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Sachs as its financial advisor because it is a nationally recognized investment
banking firm that has substantial experience in transactions similar to the
Aerial reorganization.
Goldman Sachs is familiar with VoiceStream having provided certain
investment banking services to VoiceStream and its former parent, Western
Wireless, from time to time, including having acted as lead managing underwriter
of the initial public offering of 12.65 million shares of Western Wireless
common stock in May 1996; having acted as lead manager in the public offering of
$200 million aggregate principal amount of 10.5% senior subordinated notes due
June 2006, of Western Wireless in May 1996; having acted as lead manager in the
public offering of $200 million aggregate principal amount of 10.5% senior
subordinated notes due February 2007 of Western Wireless in October 1996; having
acted as lead manager in the public offering of 13.915 million shares of Western
Wireless common stock in April 1998; having acted as Western Wireless' financial
advisor in connection with the sale of 19.9% of the outstanding shares of
VoiceStream common stock to Hutchison (USA) in February 1998; and having acted
as VoiceStream's financial advisor in connection with, and having participated
in certain of the negotiations leading to, the Aerial reorganization agreement
and the Omnipoint reorganization agreement. Investment funds affiliated with
Goldman Sachs have a principal investment in VoiceStream in the amount of
9,730,208 shares of VoiceStream common stock and have the right to designate a
nominee for election to VoiceStream's board of directors. Terence O'Toole, a
managing director of Goldman Sachs, is a director of VoiceStream. In addition,
Goldman Sachs has provided certain investment banking services to Aerial from
time to time, including having acted as co-manager in the initial public
offering of 12.25 million shares of Aerial common stock in April 1996.
Goldman Sachs provides a full range of financial, advisory and securities
services and, in the course of its normal trading activities, may from time to
time effect transactions and hold securities, including derivative securities,
of VoiceStream and Aerial for its own account and for the accounts of customers.
As of September 10, 1999, Goldman Sachs had a short position in 4,061 shares of
Aerial common stock and a short position in 150 put contracts on Aerial common
stock. As of the same date and in addition to the principal investment referred
to above, Goldman Sachs had a long position of $8.5 million of VoiceStream bank
loans.
FEE ARRANGEMENT WITH GOLDMAN SACHS
Pursuant to a letter agreement dated October 7, 1998, VoiceStream engaged
Goldman Sachs to act as its financial advisor in connection with a potential
transaction involving Aerial or another third party. VoiceStream has agreed to
pay Goldman Sachs a transaction fee equal to $6,000,000 upon consummation of the
Aerial reorganization. VoiceStream has agreed to reimburse Goldman Sachs for its
reasonable out-of-pocket expenses, including attorney's fees, and to indemnify
Goldman Sachs against certain liabilities, including certain liabilities under
the federal securities laws.
RECOMMENDATIONS OF THE AERIAL BOARD; REASONS FOR THE REORGANIZATION
The Aerial board of directors has determined that the Aerial reorganization
agreement and the Aerial reorganization are advisable and are fair to, and in
the best interests of, Aerial and its stockholders. The Aerial board unanimously
recommends that the Aerial stockholders vote "FOR" approval and adoption of the
Aerial reorganization and the other transactions contemplated by the Aerial
reorganization agreement, regardless of whether or not the Omnipoint
reorganization is consummated.
The Aerial board believes that the completion of the Aerial reorganization
will substantially benefit both Aerial and its stockholders, whether or not the
Omnipoint reorganization is completed. In reaching its determination to approve
the Aerial reorganization, the Aerial board consulted with
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Aerial's financial and legal advisors, members of Aerial's senior management,
and representatives of TDS. In reaching its determination, the Aerial board
considered numerous factors, including:
- the equivalent cash value of $25.08 per share of Aerial common stock
represented by the proposed conversion of one share of Aerial common
stock into 0.455 share of VoiceStream common stock, as calculated based
on the closing market price of $55.125 per share of common stock of
VoiceStream on September 16, 1999;
- the 31% premium represented by that $25.08 equivalent cash value over the
closing market price of $19.125 per share of Aerial common stock on
September 16, 1999;
- the ability of Aerial's stockholders, other than TDS and Sonera, to elect
to receive cash in the amount of $18.00 per share of Aerial common stock
instead of receiving VoiceStream common stock;
- the historical market price of the Aerial common stock and Aerial's book
value and net asset value per share of Aerial common stock;
- the likelihood that the proposed Aerial reorganization would be
completed, considering, among other things, the likelihood of
satisfaction of the conditions to the Aerial reorganization contained in
the Aerial reorganization agreement, and the risks to Aerial if the
Aerial reorganization were not completed;
- the terms of the Omnipoint reorganization;
- the likelihood that the Omnipoint reorganization will be completed, and
the risks to Aerial if that transaction were not consummated;
- the effects on the Aerial reorganization of VoiceStream completing, or
failing to complete, the Omnipoint reorganization;
- the potential adjustment to the number of shares of VoiceStream common
stock to be received by those Aerial stockholders who elect to receive
VoiceStream common stock in the Aerial reorganization if the Omnipoint
reorganization does not close by June 30, 2000 and if the VoiceStream
common stock trades below a certain price per share level;
- the degree of consistency of the strategies that Aerial and VoiceStream,
as well as Omnipoint, are pursuing;
- the potential synergies that the combination of Aerial and VoiceStream,
including Omnipoint in the event that VoiceStream acquires Omnipoint,
might realize, and the risks that the synergies may not be fully
realized;
- the desirability of a business combination with VoiceStream and the
similarities between Aerial and VoiceStream, including Omnipoint in the
event that the Omnipoint reorganization is completed;
- the benefits expected to be achieved as a result of the Aerial
reorganization, including economies of scale, purchasing power, increased
footprint and financing;
- the impact that the Aerial reorganization would be expected to have on
the balance sheet, earnings and cash flow of the combined company;
- the impact of the Aerial reorganization on the ability of the combined
company to deliver high-quality services to customers;
- the impact of the Aerial reorganization on the ability of the combined
company to maintain a high-quality, highly-motivated work force;
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- the current extent and geographical scope of Aerial's business operations
compared to that of the combined company, including Omnipoint in the
event that the Omnipoint reorganization is completed;
- Aerial's ability to compete against larger wireless carriers compared to
the expected ability of the combined company, including Omnipoint in the
event that the Omnipoint reorganization is completed, to compete against
such carriers;
- the opportunity for the Aerial's stockholders who elect to receive and
hold VoiceStream common stock in the Aerial reorganization to continue to
retain an interest in the wireless telecommunications market through a
larger and more geographically diverse combined company;
- the current conditions and trends in the highly competitive
telecommunications and wireless industries, including the likelihood that
consolidation will continue to increase the size and strength of
competitors;
- the current general economic and market conditions, overall and
regionally;
- the historical financial condition, results of operations, and cash flows
of Aerial and the business and strategic objectives of Aerial;
- the familiarity of the Aerial board with the projected financial
condition, results of operations and cash flows and the business
prospects of Aerial, as well as the risks involved in achieving those
projections and prospects;
- the continuing need for significant financial resources to execute
Aerial's business plan and strategies and the likelihood that Aerial
would be able to obtain the necessary resources on a stand-alone basis,
as compared to the likelihood that the combined company would be able to
obtain the necessary resources following a business combination;
- the purchase by TDS, through the replacement of the debt of Aerial
Operating Company to TDS, and by Sonera, of an aggregate of $650 million
of stock from Aerial and Aerial Operating Company in connection with the
debt replacement agreement and the settlement agreement and release,
which would increase the capitalization of Aerial, regardless of whether
or not the proposed transaction with VoiceStream is consummated;
- the discussions of Aerial's management and financial and legal advisors
with other parties and other proceedings and events relating to the
consideration of a possible business combination involving Aerial;
- Aerial's management's views, and Aerial's financial advisor's advice to
the Aerial board, regarding the likelihood of a superior transaction;
- the detailed financial and valuation analyses presented to the Aerial
board by Aerial's financial advisor;
- the written opinion dated September 17, 1999, of Aerial's financial
advisor that, as of such date and based upon and subject to the various
considerations set forth in its opinion, the consideration, defined as
the Aerial Stock Election and the Aerial Cash Election, to be received by
the holders of shares of Aerial common stock, other than VoiceStream,
VoiceStream Holdings and Omnipoint and their respective affiliates,
pursuant to the Aerial reorganization agreement is fair to such holders
from a financial point of view;
- the terms and conditions of the proposed Aerial reorganization and the
course of the negotiations resulting in the execution thereof, including
the terms of the Aerial reorganization agreement that require Aerial to
call and hold a meeting of stockholders of Aerial even if the
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Aerial board withdraws or modifies its recommendation with respect to the
Aerial reorganization agreement;
- the recognition by the Aerial board that, under the terms of the Aerial
reorganization agreement, under certain circumstances in the event of
termination of the reorganization agreement, Aerial would be obligated to
pay VoiceStream a termination fee of $40,000,000;
- the absence of any financing condition in the Aerial reorganization
agreement;
- the recommendation of Aerial's management with respect to the Aerial
reorganization agreement;
- the recommendation of the Aerial special committee, which was represented
by independent legal counsel and independent financial advisors, and the
recommendation of the Aerial transaction committee with respect to the
Aerial reorganization;
- the decision by TDS, Aerial's majority stockholder, to enter into the
stockholder agreement with VoiceStream, and TDS's agreement in that
stockholder agreement to vote in favor of the adoption of and approval of
the Aerial reorganization;
- the strategic and financial alternatives available to Aerial, including
the alternative of operating as a separate company after a spin-off by
TDS;
- the tax treatment of the proposed Aerial reorganization to the
stockholders of Aerial;
- the careful consideration and extensive deliberations by the members of
the Aerial board regarding all information reasonably available to them
and which they believe is relevant to the Aerial reorganization
agreement; and
- the role of the special committee, and the active and direct role of the
transaction committee and the Aerial board in connection with the Aerial
reorganization agreement.
The foregoing summary addresses the material facts, matters and information
considered by the Aerial board in connection with its deliberations on the
combination of Aerial and VoiceStream. In view of the variety of factors
considered, the Aerial board did not find it practical to and did not make a
specific assessment of or otherwise assign relative weights to the specific
facts, matters and information considered. After considering all of the facts,
matters and information brought to its attention, the Aerial board, unanimously
by all directors participating in the meeting, adopted the Aerial reorganization
agreement and approved the transactions contemplated thereby.
Taking into account all of the material facts, matters and information,
including those described above, the Aerial board believes that the terms of the
Aerial reorganization agreement, including the related transactions, are fair to
and in the best interest of Aerial's stockholders.
THE AERIAL BOARD UNANIMOUSLY RECOMMENDS THAT AERIAL'S STOCKHOLDERS VOTE
"FOR" ADOPTION AND APPROVAL OF THE AERIAL REORGANIZATION AND THE OTHER
TRANSACTIONS CONTEMPLATED BY THE AERIAL REORGANIZATION AGREEMENT.
AERIAL FAIRNESS OPINION
Aerial engaged Donaldson, Lufkin & Jenrette to act as Aerial's financial
advisor in connection with the Aerial reorganization and to evaluate the
fairness to Aerial common stockholders, other than VoiceStream, VoiceStream
Holdings and Omnipoint, from a financial point of view, of the consideration to
be received by such stockholders pursuant to the terms of the Aerial
reorganization agreement. On September 17, 1999, Donaldson, Lufkin & Jenrette
delivered to the Aerial board of directors its oral opinion, which was
subsequently confirmed in writing, that, as of such date, and based on and
subject to the assumptions, limitations and qualifications as set forth in the
opinion, the
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merger consideration, defined as the Aerial Stock Election and the Aerial Cash
Election, to be received by the stockholders of Aerial other than VoiceStream,
VoiceStream Holdings and Omnipoint and any of their respective affiliates, was
fair to Aerial's stockholders from a financial point of view.
THE FULL TEXT OF THE DONALDSON, LUFKIN & JENRETTE OPINION IS ATTACHED
HERETO AS ANNEX F TO THIS JOINT PROXY STATEMENT-PROSPECTUS. THE SUMMARY OF THE
DONALDSON, LUFKIN & JENRETTE OPINION SET FORTH IN THIS JOINT PROXY
STATEMENT-PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF THE DONALDSON, LUFKIN & JENRETTE OPINION. AERIAL COMMON STOCKHOLDERS ARE
URGED TO READ THE DONALDSON, LUFKIN & JENRETTE OPINION CAREFULLY AND IN ITS
ENTIRETY FOR THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, OTHER MATTERS CONSIDERED
AND LIMITS OF THE REVIEW BY DONALDSON, LUFKIN & JENRETTE IN CONNECTION WITH SUCH
OPINION.
The Donaldson, Lufkin & Jenrette opinion was prepared for the Aerial board
and was directed only to the fairness from a financial point of view, as of the
date thereof, of the merger consideration to be received by the Aerial common
stockholders other than VoiceStream, VoiceStream Holdings and Omnipoint and any
of their respective affiliates, pursuant to the Aerial reorganization agreement.
The Donaldson, Lufkin & Jenrette opinion does not address the relative merits of
the Aerial reorganization, as contrasted with any other business strategies
being considered by the Aerial board, nor does it express any opinion as to the
Aerial board's decision to proceed with the Aerial reorganization. Donaldson,
Lufkin & Jenrette expressed no opinion as to the prices at which the VoiceStream
Holdings common stock will actually trade at any time. The Donaldson, Lufkin &
Jenrette opinion does not constitute a recommendation to any Aerial common
stockholder as to how such stockholder should vote on the Aerial reorganization
or whether such stockholder should elect to receive cash or stock.
Aerial selected Donaldson, Lufkin & Jenrette as its financial advisor
because it is an internationally recognized investment banking firm that has
substantial experience in the communications industry and is familiar with
Aerial and its business. As part of its investment banking business, Donaldson,
Lufkin & Jenrette is regularly engaged in the valuation of businesses and
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes.
In arriving at its opinion, Donaldson, Lufkin & Jenrette reviewed (1) the
Aerial reorganization agreement, (2) the TDS stockholder voting agreement, dated
the date of the Aerial reorganization agreement, among VoiceStream, TDS and
VoiceStream Holdings, (3) the debt replacement agreement, dated the date of the
Aerial reorganization agreement, among TDS, VoiceStream, VoiceStream Holdings,
Aerial Operating Company, and Aerial, (4) the indemnity agreement, dated the
date of the reorganization agreement, among TDS, Aerial Operating Company,
VoiceStream, VoiceStream Holdings and Aerial, (5) the VoiceStream stockholder
voting agreement, dated the date of the Aerial reorganization agreement, among
certain stockholders of VoiceStream, (6) a draft of the investor agreement to be
entered into by TDS, VoiceStream and VoiceStream Holdings at or prior to the
effective time of the Aerial reorganization, (7) a draft of the registration
rights agreement to be entered into by TDS and VoiceStream Holdings at or prior
to the effective time of the Aerial reorganization, and (8) the exhibits
thereto. Donaldson, Lufkin & Jenrette also reviewed financial and other
information that was publicly available, including certain research analysts'
projections for Aerial and VoiceStream (both on a standalone basis and pro forma
for the Omnipoint reorganization), or furnished to Donaldson, Lufkin & Jenrette
by Aerial and VoiceStream, including information provided during discussions
with their respective managements (which with respect to VoiceStream includes
VoiceStream management's comments on the research analyst projections referred
to above (such research analyst's projections, as commented on by management of
VoiceStream, the "Analyst Projections")). Included in the information provided
during discussions with management of Aerial were certain financial projections
of Aerial prepared by management of
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Aerial. In addition, Donaldson, Lufkin & Jenrette compared certain financial and
securities data of Aerial, VoiceStream and Omnipoint with various other
companies whose securities are traded in public markets, reviewed the historical
stock prices and trading volumes of Aerial common stock, VoiceStream common
stock and Omnipoint common stock, reviewed prices and premiums paid in certain
other business combinations and conducted such other financial studies, analyses
and investigations as Donaldson, Lufkin & Jenrette deemed appropriate for
purposes of rendering its opinion.
In rendering its opinion, Donaldson, Lufkin & Jenrette relied upon and
assumed the accuracy and completeness of all of the financial and other
information that was available to Donaldson, Lufkin & Jenrette from public
sources, that was provided to Donaldson, Lufkin & Jenrette by Aerial or
VoiceStream and their respective representatives, or that was otherwise reviewed
by Donaldson, Lufkin & Jenrette, and assumed that Aerial is not aware of any
information prepared by it or its advisors that might be material to Donaldson,
Lufkin & Jenrette's opinion that has not been made available to Donaldson,
Lufkin & Jenrette. With respect to the financial projections supplied to
Donaldson, Lufkin & Jenrette, Donaldson, Lufkin & Jenrette relied on
representations that they were reasonably prepared on the basis reflecting the
best currently available estimates and judgments of the management of Aerial as
to the future operating and financial performance of Aerial. With respect to the
Analyst Projections, Donaldson, Lufkin & Jenrette assumed that they were
prepared on a basis that does not materially differ from the view of management
of VoiceStream as to the future operating and financial performance of
VoiceStream. Donaldson, Lufkin & Jenrette did not assume any responsibility for
making any independent evaluation of any assets or liabilities or for making any
independent verification of any of the information reviewed by Donaldson, Lufkin
& Jenrette. Donaldson, Lufkin & Jenrette relied as to certain legal matters on
advice of counsel to Aerial.
The Donaldson, Lufkin & Jenrette opinion is necessarily based on economic,
market, financial and other conditions as they exist on, and on the information
made available to Donaldson, Lufkin & Jenrette as of, the date of the Donaldson,
Lufkin & Jenrette opinion. Although subsequent developments may have affected or
in the future may affect the Donaldson, Lufkin & Jenrette opinion, Donaldson,
Lufkin & Jenrette is under no obligation to update, revise or reaffirm its
opinion.
In preparing its opinion, Donaldson, Lufkin & Jenrette examined the implied
value of the Aerial common stock. In addition Donaldson, Lufkin & Jenrette
compared the relative value of Aerial common stock to the relative value of
VoiceStream common stock to evaluate the proposed exchange ratio. In analyzing
the value of the Aerial common stock, Donaldson, Lufkin & Jenrette conducted
several different analyses, including analyzing (1) the trading value of Aerial
common stock over the preceding 52-week period, (2) research analysts' price
targets, (3) public company equity comparables of Aerial, (4) comparable
precedent transactions involving wireless companies, (5) premiums paid in
previous mergers and acquisitions transactions, (6) the present value of
discounted cash flows and (7) research analysts' private market values of
Aerial. Donaldson, Lufkin & Jenrette's analysis of the exchange ratio involved
comparing the relative value of the common stock of Aerial to the relative value
of the common stock of VoiceStream pro forma for the Omnipoint reorganization
and on a stand-alone basis. The techniques used in comparing the relative values
included analyzing (1) market implied exchange ratios, (2) research analysts'
price targets, (3) public company equity comparables, (4) comparable precedent
transactions involving wireless companies, (5) the present value of discounted
cash flows, (6) research analysts' private market values and (7) the relative
contributions of Aerial and VoiceStream to a reorganized entity. Valuations for
Aerial common stock were derived based on approximately $846.1 million of net
debt and 85.9 million fully diluted shares as of June 30, 1999. Valuations for
VoiceStream common stock were derived based on approximately $2.9 billion of net
debt and 194.5 million fully diluted shares for VoiceStream pro forma for the
Omnipoint reorganization and $957.9 million of net debt and 100.4 million fully
diluted shares for VoiceStream on a stand-alone basis as of June 30, 1999. The
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following is a summary of the analyses contained in the presentation made by
Donaldson, Lufkin & Jenrette to the Aerial board on September 17, 1999 in
connection with the preparation of the Donaldson, Lufkin & Jenrette opinion:
ANALYSES OF AERIAL COMMON STOCK
Donaldson, Lufkin & Jenrette conducted the following analyses in evaluating
the consideration to be received by the public stockholders of Aerial.
STOCK PRICE HISTORY
To provide contextual data and comparative market data, Donaldson, Lufkin &
Jenrette examined the history of the trading prices of the Aerial common stock
and the trading prices of the Aerial common stock relative to an index of
comparable companies, each for the one-year period from September 16, 1998
through September 16, 1999. During this period, the Aerial common stock price
reached a high intra-day price of $20.25 and a low intra-day price of $1.63.
Donaldson, Lufkin & Jenrette noted that the price of the Aerial common stock
tracked the performance of an index of comparable companies during this period.
The companies included in the comparable company index were VoiceStream,
Omnipoint, Nextel, Sprint PCS, Powertel, Clearnet and Microcell. Finally,
Donaldson, Lufkin & Jenrette noted that in April 1996 the initial public
offering price of Aerial common stock was $17.00.
RESEARCH ANALYST PRICE TARGETS
Donaldson, Lufkin & Jenrette reviewed research published by Wall Street
research analysts since the announcement of the Omnipoint reorganization and
derived a range of implied equity values of $14.00 to $20.00 per Aerial share
based on their target prices for Aerial common stock.
PUBLIC COMPARABLES ANALYSIS
Donaldson, Lufkin & Jenrette analyzed selected historical and projected
operating information and valuation data for certain publicly traded wireless
companies. In addition, Donaldson, Lufkin & Jenrette reviewed Wall Street
research analyst comments on Aerial. Based on this analysis, Donaldson, Lufkin &
Jenrette concluded that Aerial's most comparable companies include VoiceStream,
on a stand-alone basis, Omnipoint, PowerTel, Clearnet and Microcell.
Donaldson, Lufkin & Jenrette compared the PCS enterprise value of each of
the comparable companies to the number of POPs and subscribers for each of the
comparable companies to derive a per POP and per subscriber multiple range for
the comparable companies. For purposes of Donaldson, Lufkin & Jenrette's
analysis, POPs includes covered POPs and POPs that are intended to be built.
Donaldson, Lufkin & Jenrette defined PCS enterprise value as the market value of
fully-diluted common equity plus the book value of long-term debt and the
liquidation value of outstanding preferred stock, if any, minus cash, the
proceeds from the exercise of outstanding options and warrants and the value of
certain other assets and investments. Donaldson, Lufkin & Jenrette then applied
the comparable company per POP and per subscriber multiples to corresponding
operating data for Aerial to derive implied PCS enterprise valuation ranges for
Aerial. Based on the above analysis, Donaldson, Lufkin & Jenrette derived an
implied equity reference range per share of Aerial common stock of $14.00 to
$24.00.
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COMPARABLE ACQUISITIONS ANALYSIS
Donaldson, Lufkin & Jenrette reviewed five selected control and non-control
acquisitions or proposed acquisitions involving wireless targets that Donaldson,
Lufkin & Jenrette deemed to be comparable to Aerial:
1. VoiceStream's proposed acquisition of Omnipoint;
2. Microsoft Corporation's investment in Nextel;
3. Bell Canada International's investment in Hansol PCS Co. Ltd.;
4. AirTouch's acquisition of US West Media Group's stake in PCS PrimeCo;
and
5. Hutchison Telecom Limited's acquisition of an interest in Western PCS (a
division of Western Wireless Corp.).
In examining these acquisitions, Donaldson, Lufkin & Jenrette derived a per
POP and per subscriber multiple range for the acquired companies based on each
company's PCS enterprise value as of the date of announcement of the
acquisition. Donaldson, Lufkin & Jenrette then applied the per POP and per
subscriber multiples to corresponding operating data for Aerial to derive
implied PCS enterprise valuation ranges for Aerial. Based on the above analysis,
Donaldson, Lufkin & Jenrette derived an implied equity reference range per share
of Aerial common stock of $10.00 to $20.00. Based solely on the per POP and per
subscriber multiples for the Omnipoint reorganization, which Donaldson, Lufkin &
Jenrette believed to be the transaction most similar to the Aerial
reorganization, Donaldson, Lufkin & Jenrette derived a reference range per share
of Aerial common stock of $15.00 to $20.00.
COMPARABLE PREMIUMS PAID ANALYSIS
Donaldson, Lufkin & Jenrette determined the implied premium over the common
stock trading prices as of one day, one week and four weeks prior to the
announcement date of comparable acquisitions announced since January 1, 1997
with enterprise values between $2 and $3.5 billion. From this analysis
Donaldson, Lufkin & Jenrette derived a reference range per share of Aerial
common stock from $10.00 to $25.00.
DISCOUNTED CASH FLOW ANALYSIS
Donaldson, Lufkin & Jenrette performed a discounted cash flow analysis of
Aerial for the period commencing December 31, 1999 and ending December 31, 2008
using projections and assumptions provided by Aerial's management. Donaldson,
Lufkin & Jenrette's discounted cash flow calculation is an analysis of the
present value of projected unlevered free cash flows and an estimated terminal
year enterprise value using the discount rates and terminal year EBITDA
multiples indicated below. The discounted cash flow value per share of Aerial
common stock was estimated using weighted average cost of capital discount rates
ranging from 11.5% to 13.5% and terminal multiples of estimated EBITDA for
Aerial's fiscal year ending 2008 ranging from 9.0x to 11.0x. From this analysis
Donaldson, Lufkin & Jenrette derived a reference range per share of Aerial
common stock from $15.00 to $25.00.
RESEARCH ANALYST PRIVATE MARKET VALUE
Donaldson, Lufkin & Jenrette reviewed private market valuations of Aerial
common stock as calculated by Wall Street research analysts since the
announcement of the Omnipoint reorganization. The range of private market values
derived for Aerial common stock was $16.00 to $22.00 per share.
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ANALYSES OF EXCHANGE RATIO
Donaldson, Lufkin & Jenrette conducted the following analyses in evaluating
the proposed exchange ratio.
MARKET IMPLIED EXCHANGE RATIO COMPARISON
Donaldson, Lufkin & Jenrette compared the price levels of VoiceStream
common stock to Aerial common stock from May 3, 1999 to September 16, 1999. The
relative price levels implied an exchange ratio pre-Omnipoint reorganization
announcement ranging from 0.299 to 0.449. The relative price levels implied an
exchange ratio post-Omnipoint reorganization announcement ranging from 0.256 to
0.475.
RELATIVE RESEARCH ANALYST PRICE TARGETS
Donaldson, Lufkin & Jenrette compared research analysts' price targets for
VoiceStream common stock to their price targets for Aerial common stock. With
respect to price targets for VoiceStream and Aerial, Donaldson, Lufkin &
Jenrette used price targets before and after the announcement of the Omnipoint
reorganization. For VoiceStream common stock, DLJ derived a reference range of
$30.00 to $44.00 pre-announcement and $50.00 to $65.00 post-announcement. For
Aerial common stock, DLJ derived a reference range of $9.00 to $13.00
pre-announcement and $14.00 to $20.00 post-announcement. The relative price
targets implied an exchange ratio pre-Omnipoint reorganization announcement
ranging from 0.205 to 0.433. The relative price targets implied an exchange
ratio post-Omnipoint reorganization announcement ranging from 0.215 to 0.4.
PUBLIC COMPARABLES ANALYSIS
Donaldson, Lufkin & Jenrette analyzed selected historical and projected
operating information and valuation data for certain publicly traded wireless
companies, including VoiceStream on a stand-alone basis and pro forma for the
Omnipoint reorganization. In addition, Donaldson, Lufkin & Jenrette reviewed
Wall Street research analyst comments on VoiceStream. Based on this analysis,
Donaldson, Lufkin & Jenrette concluded that, analyzing VoiceStream on a pro
forma basis, its most comparable companies are Sprint PCS and Nextel, which are
national wireless companies. Donaldson, Lufkin & Jenrette concluded that,
analyzing VoiceStream on a standalone basis, its most comparable companies
include a broad wireless group comprised of Sprint PCS, Nextel, Omnipoint,
Aerial, Powertel, Clearnet and Microcell.
Using the same methodology used to determine the public comparables implied
equity reference range per share of Aerial common stock, but using the companies
that Donaldson, Lufkin & Jenrette concluded were comparable to VoiceStream pro
forma for the Omnipoint reorganization, Donaldson, Lufkin & Jenrette derived an
implied equity reference range per share of VoiceStream common stock of $50.00
to $65.00. Comparing this reference range to the public comparables implied
equity reference range per share of Aerial common stock of $14.00 to $24.00,
Donaldson, Lufkin & Jenrette derived an implied exchange ratio pro forma for the
Omnipoint reorganization announcement ranging from 0.215 to 0.48.
Using the same methodology but using the companies that Donaldson, Lufkin &
Jenrette concluded were comparable to VoiceStream on a stand-alone basis and the
valuation data prior to the announcement of the Omnipoint reorganization,
Donaldson, Lufkin & Jenrette derived an implied equity reference range per share
of VoiceStream common stock of $25.00 to $45.00. Comparing this reference range
to the public comparables implied equity reference range per share of Aerial
common stock of $12.00 to $16.00 for the same period, Donaldson, Lufkin &
Jenrette derived an implied exchange ratio on a stand-alone basis ranging from
0.267 to 0.64.
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RELATIVE VALUATION BASED ON PRECEDENT TRANSACTIONS
Donaldson, Lufkin & Jenrette compared the implied equity reference range
per share of Aerial common stock based on the comparable acquisitions analysis
described above to the actual price of VoiceStream common stock both before and
after the announcement of the Omnipoint reorganization. To determine a relative
valuation on a pro forma basis, Donaldson, Lufkin & Jenrette compared the
comparable acquisitions implied equity reference range per share of Aerial
common stock of $10.00 to $20.00 to the price of VoiceStream common stock prior
to the delivery of the Donaldson, Lufkin & Jenrette opinion. The relative price
levels implied an exchange ratio ranging from 0.18 to 0.36 pro forma for the
Omnipoint reorganization. To determine a relative valuation on a stand-alone
basis, Donaldson, Lufkin & Jenrette compared the comparable acquisitions implied
equity reference range per share of Aerial common stock of $10.00 to $20.00 to
the trading price of VoiceStream common stock prior to the announcement of the
Omnipoint reorganization. The relative price levels implied an exchange ratio
ranging from 0.339 to 0.678 on a stand-alone basis. Comparing the price of
VoiceStream common stock prior to the delivery of the Donaldson, Lufkin &
Jenrette opinion to the implied equity range per share of Aerial common stock of
$15.00 to $20.00 based solely on the Omnipoint reorganization, implied an
exchange ratio ranging from 0.27 to 0.36 pro forma for the Omnipoint
reorganization. Comparing the price of VoiceStream common stock prior to the
announcement of the Omnipoint reorganization to the implied equity reference
range per share of Aerial common stock of $15.00 to $20.00 based solely on the
Omnipoint reorganization implied an exchange ratio ranging from 0.508 to 0.678.
DISCOUNTED CASH FLOW ANALYSIS
Donaldson, Lufkin & Jenrette performed a discounted cash flow analysis of
VoiceStream both on a stand-alone basis and pro forma for the Omnipoint
reorganization, for the period commencing December 31, 1999 and ending December
31, 2008, using the Analyst Projections.
The discounted cash flow value per share of VoiceStream common stock pro
forma for the Omnipoint reorganization was estimated using weighted average cost
of capital discount rates ranging from 10.0% to 12.0% and terminal multiples of
estimated EBITDA for VoiceStream's fiscal year ending December 31, 2008, ranging
from 11.0x to 13.0x. This analysis yielded a range of implied per share values
of $49.95 to $69.05.
The discounted cash flow value per share of VoiceStream common stock on a
stand-alone basis was estimated using weighted average cost of capital discount
rates ranging from 10.0% to 12.0% and terminal multiples of estimated EBITDA for
VoiceStream's fiscal year ending December 31, 2008, ranging from 9.0x to 11.0x.
This analysis yielded a range of implied per share values of $45.59 to $61.82.
The relative price levels implied exchange ratios ranging from 0.223 to
0.513 pro forma for the Omnipoint reorganization and from 0.249 to 0.563 on a
stand-alone basis.
RELATIVE VALUATION BASED ON RESEARCH ANALYST PRIVATE MARKET VALUE
Donaldson, Lufkin & Jenrette compared the value of VoiceStream common stock
to Aerial common stock based on research analysts' private market values for
VoiceStream and Aerial. The relative price levels implied exchange ratios
ranging from 0.287 to 0.396 pro forma for the Omnipoint reorganization and from
0.441 to 0.61 on a stand-alone basis.
CONTRIBUTION ANALYSIS
Donaldson, Lufkin & Jenrette conducted a contribution analysis which
compared the projected revenue for the years 2000 and 2001, number of
subscribers and intend-to-build, covered and total POPs Aerial is contributing
to the combined company relative to the VoiceStream contribution to these items.
Donaldson, Lufkin & Jenrette conducted this analysis for VoiceStream both pro
forma
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for the Omnipoint reorganization and on a stand-alone basis. Based on the
contribution analyses, Donaldson, Lufkin & Jenrette determined the implied
exchange ratios ranging from 0.35 to 0.7 pro forma for the Omnipoint
reorganization and from 0.4 to 0.8 on a stand-alone basis.
In addition to the above analysis, Donaldson, Lufkin & Jenrette noted to
the Aerial board that the stock price of VoiceStream has recently been and may
continue to be volatile.
The summary set forth above does not purport to be a complete description
of the analyses performed by Donaldson, Lufkin & Jenrette but describes, in
summary form, the material elements of the presentation made by Donaldson,
Lufkin & Jenrette to the Aerial board on September 17, 1999. The preparation of
a fairness opinion involves various determinations as to the most appropriate
and relevant methods of financial analysis and the application of these methods
to the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Each of the analyses conducted by Donaldson,
Lufkin & Jenrette was carried out in order to provide a different perspective on
the Aerial reorganization and to add to the total mix of information available.
Donaldson, Lufkin & Jenrette did not form a conclusion as to whether any
individual analysis, considered in isolation, supported or failed to support an
opinion as to fairness from a financial point of view. Rather, in reaching its
conclusions Donaldson, Lufkin & Jenrette considered the results of the analyses
in light of each other and ultimately reached its opinion based on the results
of all analyses undertaken in connection with its opinion taken together as a
whole. Accordingly, notwithstanding the separate factors summarized above,
Donaldson, Lufkin & Jenrette has indicated to Aerial that it believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without considering all analyses and
factors, could create an incomplete view of the evaluation process underlying
its opinion. The analyses performed by Donaldson, Lufkin & Jenrette are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
FEE ARRANGEMENTS WITH DONALDSON, LUFKIN & JENRETTE
Pursuant to the terms of an engagement agreement dated April 29, 1999,
Aerial agreed to pay (1) a fee of $2.5 million, of which $500,000 was paid on
June 30, 1999, and $2 million is payable on the earlier of December 31, 1999 or
the termination of the engagement letter by Aerial, (2) a fee of $1 million upon
delivery of the Donaldson, Lufkin & Jenrette opinion and an additional fee of
$250,000 for each update of a prior opinion delivered by Donaldson, Lufkin &
Jenrette and (3) additional cash compensation equal to 0.55% of the aggregate
value of outstanding Aerial common stock, treating any shares issuable upon
exercise of options, warrants or other rights of conversion as outstanding plus
the total amount of any debt assumed, acquired, remaining outstanding, retired
or defeased or preferred stock redeemed or remaining outstanding upon
consummation of the sale, merger, consolidation or other business combination
involving all or at least a majority of the business, securities or assets of
Aerial net of any cash or cash equivalents and short-term investment securities
with maturities less than 36 months, less the amounts payable pursuant to
clauses (1) and (2) above. In addition, Aerial agreed to reimburse Donaldson,
Lufkin & Jenrette, upon request by Donaldson, Lufkin & Jenrette from time to
time, for all out-of-pocket expenses, including the reasonable fees and expenses
of counsel, incurred by Donaldson, Lufkin & Jenrette in connection with its
engagement, and to indemnify Donaldson, Lufkin & Jenrette and certain related
persons against certain liabilities in connection with the engagement, including
liabilities under U.S. federal securities laws. Donaldson, Lufkin & Jenrette and
Aerial management negotiated the terms of the fee arrangement, and the Aerial
board was aware of such arrangement, including the fact that a significant
portion of the aggregate fee payable to Donaldson, Lufkin & Jenrette is
contingent upon consummation of the Aerial reorganization.
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<PAGE> 135
In the ordinary course of business Donaldson, Lufkin & Jenrette actively
trades the debt and equity securities of companies, including Aerial, TDS,
VoiceStream and Omnipoint, for its own account and for the accounts of customers
and may hold a long or short position in such securities at any time. Donaldson,
Lufkin & Jenrette has performed investment banking and other services for
Aerial, TDS, Omnipoint, Western Wireless and Hutchison in the past, including
(1) acting as the lead manager for an offering of convertible preferred stock of
Omnipoint in May 1998, (2) acting as a co-manager for an offering of Class A
Shares of Western Wireless in April, 1998, (3) acting as a co-manager for an
offering of Trust Originated Preferred Securities of TDS in February 1998, (4)
arranging a senior secured credit facility for Omnipoint in February 1998 and
(5) acting as financial advisor to Hutchison Telecom Limited in its purchase of
common stock of Western Wireless Corp. in October 1997, and has received usual
and customary compensation for such services.
RECOMMENDATIONS OF THE AERIAL SPECIAL COMMITTEE
The Aerial special committee, in determining to recommend approval of the
Aerial reorganization to the Aerial transaction committee and the Aerial board,
in addition to taking into account all of the factors considered by the Aerial
transaction committee and the Aerial board, reviewed and considered a financial
presentation by Wasserstein Perella to the Aerial special committee and the
opinion of Wasserstein Perella with respect to the fairness from a financial
point of view to the public stockholders of Aerial of the consideration provided
for in the Aerial reorganization agreement. See "Recommendations of the Aerial
Board; Reasons for the Aerial Reorganization."
In reaching its recommendation to approve the Aerial reorganization, the
Aerial special committee also considered the opportunity offered to TDS and
Sonera to purchase up to an aggregate of $650 million of equity of Aerial and
Aerial Operating Company at an equivalent price of $22.00 per share of Aerial
common stock, as compared to the implied transaction price of $25.08 based on
the exchange ratio and the closing market price of VoiceStream common stock on
September 16, 1999 of $55.13. In that connection, the Aerial special committee
took into account the following additional factors:
- its understanding that TDS desired to purchase, through the replacement
of a portion of Aerial Operating Company's outstanding indebtedness to
TDS, additional shares of Aerial common stock prior to consummation of
the Aerial reorganization, one effect of which would be to defer
imposition of tax on income equal to the amount of TDS's additional
investment in Aerial common stock until TDS disposed of shares of the
combined company;
- the fact that the Aerial reorganization is structured as a tax-free
exchange for all shareholders except those who elect to receive cash;
- its understanding that Sonera was interested in increasing its equity
interest in the combined company, including through the purchase of
Aerial and Aerial Operating Company common stock, and that in the event
TDS replaced debt with equity, Sonera would have certain purchase rights
to acquire, directly and indirectly, common equity in Aerial and Aerial
Operating Company based on the average market price of Aerial common
stock over two different periods subsequent to execution of the Aerial
reorganization agreement;
- the refusal of VoiceStream to price the TDS Debt Replacement and
Sonera-Aerial Investment at the implied deal price based on the exchange
ratio and the closing market price of VoiceStream common stock
immediately prior to either the announcement of the Aerial reorganization
or the effective date of the Aerial reorganization, with a corresponding
increase in the exchange ratio so as to keep the aggregate number of
shares of VoiceStream common stock to be issued in the Aerial
reorganization constant;
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- its understanding that had VoiceStream agreed to price the TDS Debt
Replacement and Sonera-Aerial Investment based on the closing market
price of VoiceStream common stock on September 16, 1999 and agreed to a
corresponding increase in the exchange ratio, the increased value per
share of Aerial common stock of such increased exchange ratio would have
been $0.82 assuming that the price of the TDS Debt Replacement and the
Sonera-Aerial Investment had been based on the closing market price of
VoiceStream common stock on September 16, 1999 (or $0.46 and ($0.44)
based on the respective 10-day and 30-day closing market price averages
of VoiceStream common stock through that date);
- the importance VoiceStream placed on settling of all of Sonera's claims
against Aerial prior to the effectiveness of the Aerial reorganization,
including Sonera's acceptance of the cancellation of a portion of its
shares of Aerial Operating Company pursuant to the Sonera purchase
agreement, and VoiceStream's view that the $22.00 price would induce
Sonera to settle those claims;
- the importance VoiceStream placed on the deleveraging effect that the TDS
Debt Replacement and Sonera-Aerial Investment would have on the combined
company, and VoiceStream's view that the $22.00 price would induce Sonera
to make an additional investment in Aerial;
- its understanding that, in view of, among other things, the cash election
protection afforded to the public shareholders, TDS's commitment to
effect the TDS Debt Replacement irrespective of the consummation of the
Aerial reorganization at a price in excess of Aerial's historic and then
current market prices, and TDS's willingness to indemnify VoiceStream and
VoiceStream Holdings if Sonera did not agree to settle its claims, TDS
was not prepared to pay a higher price in the TDS Debt Replacement than
the price VoiceStream proposed to offer to Sonera in the Sonera-Aerial
Investment, assuming a corresponding increase in the exchange ratio;
- the agreement by TDS to indemnify VoiceStream and VoiceStream Holdings
against all claims Sonera might assert against Aerial, including the
effect of the share cancellation provision in the purchase agreement with
Sonera, should Sonera not agree to settle those claims;
- the Aerial Cash Election option which provides $18.00 cash floor
protection to the Aerial public stockholders for each of their shares and
is not available to TDS or Sonera;
- the fact that VoiceStream insisted on, and TDS agreed to, an effective
lock-up of the Aerial stockholder vote, which made downside price
protection particularly important;
- the view of Donaldson, Lufkin & Jenrette of the value of the cash
election protection feature and the option valuation analysis presented
by Wasserstein Perella which, depending on the length of time to
consummation of the Aerial reorganization and various volatility
assumptions, indicated theoretical valuations for the cash election
protection feature; and
- the fact that the TDS Debt Replacement and the Sonera-Aerial Investment
is not conditioned upon consummation of the Aerial reorganization and, in
the event the Aerial reorganization is not consummated, would
meaningfully assist Aerial in meeting its future financing requirements.
AERIAL SPECIAL COMMITTEE FAIRNESS OPINION
Wasserstein Perella has acted as financial advisor to the Aerial special
committee in connection with the Aerial reorganization. On September 17, 1999,
Wasserstein Perella delivered its oral opinion to the Aerial special committee
to the effect that, as of such date, and based upon and subject to the
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assumptions and limitations set forth in the opinion, the merger consideration
provided by the Aerial reorganization agreement is fair from a financial point
of view to Aerial's public stockholders. Wasserstein Perella confirmed its oral
opinion by delivery to the Aerial special committee of a written opinion dated
September 17, 1999.
THE FULL TEXT OF THE WRITTEN OPINION OF WASSERSTEIN PERELLA, DATED
SEPTEMBER 17, 1999, IS ATTACHED AS ANNEX G TO THIS JOINT PROXY
STATEMENT-PROSPECTUS AND IS INCORPORATED INTO THIS JOINT PROXY
STATEMENT-PROSPECTUS BY REFERENCE. HOLDERS OF AERIAL'S COMMON STOCK ARE URGED
TO, AND SHOULD, READ THIS OPINION IN ITS ENTIRETY. WASSERSTEIN PERELLA'S OPINION
WAS DELIVERED FOR THE INFORMATION OF THE AERIAL SPECIAL COMMITTEE AND DOES NOT
CONSTITUTE A RECOMMENDATION AS TO HOW ANY HOLDER OF AERIAL'S COMMON STOCK SHOULD
VOTE WITH RESPECT TO THE AERIAL REORGANIZATION OR WHETHER ANY HOLDER OF AERIAL'S
COMMON STOCK SHOULD ELECT TO RECEIVE CASH IN LIEU OF SHARES OF VOICESTREAM
COMMON STOCK BASED ON THE EXCHANGE RATIO. THIS SUMMARY OF THE WASSERSTEIN
PERELLA OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF
THE OPINION.
In connection with rendering its opinion, Wasserstein Perella reviewed:
- the Aerial reorganization agreement;
- the Aerial stockholder voting agreement;
- the TDS debt replacement agreement;
- the VoiceStream stockholder voting agreement;
- the Sonera indemnity agreement;
- a draft of the TDS investor agreement;
- a draft of the TDS registration rights agreement;
- the exhibits to each of the agreements listed above;
- publicly available business and financial information relating to Aerial,
VoiceStream and Omnipoint for recent years and interim periods; and
- internal financial and operating information of Aerial, including
financial forecasts, analyses and projections prepared by or on behalf of
Aerial.
Wasserstein Perella also discussed with the Aerial special committee and
the managements of Aerial and VoiceStream this information and the business,
operations, assets, financial condition and future prospects of both companies.
In addition, Wasserstein Perella reviewed financial and stock market data
relating to Aerial, VoiceStream and Omnipoint and compared that data to similar
data for other publicly traded companies. Wasserstein Perella also reviewed and
considered the financial terms of recent acquisitions and business combination
transactions that it believed to be reasonably comparable to the Aerial
reorganization or otherwise relevant. Wasserstein Perella also performed other
financial studies, analyses and investigations and reviewed other information it
considered appropriate for purposes of its opinion.
In its review and analysis and in the formulation of its opinion,
Wasserstein Perella assumed and relied on the accuracy and completeness of all
the financial and other information provided to or discussed with it or publicly
available without assuming any responsibility for independent verification of
any of this information. Wasserstein Perella also assumed and relied on the
reasonableness and accuracy of the financial projections, forecasts and analyses
provided to it and assumed that these projections, forecasts and analyses were
reasonably prepared in good faith and on bases reflecting the best currently
available judgments and estimates of Aerial's management with respect to the
projections prepared by Aerial. VoiceStream did not provide forecasts or
projections of expected future performance to Wasserstein Perella, and
Wasserstein Perella's review of VoiceStream's
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expected future performance was limited to discussions with VoiceStream's
management of research analysts' projections of VoiceStream's future performance
both on a stand-alone basis and pro forma for the Omnipoint reorganization.
Wasserstein Perella assumed that these research analyst projections, as
qualified by the comments of VoiceStream management, had been prepared on a
basis that did not materially differ from the view of management of VoiceStream
as to the future operating and financial performance of VoiceStream. Wasserstein
Perella did not express any opinion with respect to these projections, forecasts
and analyses or the assumptions upon which they were based. Wasserstein Perella
did not review any of the books and records of Aerial or VoiceStream or conduct
or assume any responsibility for conducting a physical inspection of the
properties or facilities of Aerial or VoiceStream, or for making or obtaining an
independent valuation or appraisal of the assets or liabilities of Aerial or
VoiceStream, and no independent valuation or appraisal was provided to it.
Wasserstein Perella assumed that the Aerial reorganization will qualify as a tax
free reorganization for United States federal tax purposes and that obtaining
all necessary regulatory and other approvals and third-party consents required
for consummation of the merger will not have an adverse impact on Aerial or
VoiceStream or on the anticipated benefits of the Aerial reorganization.
Wasserstein Perella also assumed that the transactions described in the Aerial
reorganization agreement will be consummated without waiver or modification of
any of the material terms or conditions of the Aerial reorganization agreement
and that the final terms of those documents reviewed by Wasserstein Perella in
draft form will not differ in any material respect from the drafts provided to
it. Wasserstein Perella's opinion was necessarily based on economic and market
conditions and other circumstances as they existed and could be evaluated on
September 17, 1999. Wasserstein Perella did not express any opinion as to the
prices at which any securities of Aerial, VoiceStream or VoiceStream Holdings
will actually trade at any time. Wasserstein Perella's opinion was directed only
to the fairness from a financial point of view to the holders of common stock of
Aerial other than TDS and Sonera of the merger consideration provided for by the
Aerial reorganization agreement. Wasserstein Perella's opinion did not address
Aerial's underlying business decision to effect the transactions contemplated by
the Aerial reorganization agreement.
The following is a summary of the material financial analyses presented by
Wasserstein Perella to the Aerial special committee in connection with its
opinion. Some of the summaries of the financial analyses include information
presented in tabular format. The tables must be read together with the
accompanying text.
SUMMARY OF FINANCIAL ANALYSES
STOCK PRICE RATIO ANALYSIS
Wasserstein Perella calculated the ratios of the closing market price of
Aerial common stock to the closing market price of VoiceStream common stock for
each day in the period from May 3, 1999, the date on which VoiceStream became a
public company, through September 16, 1999, the last trading day prior to the
date of the Aerial reorganization agreement. Wasserstein Perella also compared
the mean market ratio during this period of 0.37 and the current market ratio on
September 16, 1999 of 0.35 to the exchange ratio of 0.455 provided for by the
Aerial reorganization agreement.
PURCHASE PRICE PREMIUM ANALYSIS
Wasserstein Perella reviewed trading prices of Aerial's common stock for
various dates and compared these trading prices to both the $18.00 per share
Aerial Cash Election price available to Aerial's public stockholders and the
$25.08 implied value of the VoiceStream common stock to be received by Aerial's
public stockholders based on an exchange ratio of 0.455 shares of VoiceStream
common stock per share of Aerial common stock and a closing price per share of
VoiceStream common stock on September 16, 1999 of $55.13. The following table
presents the results of this
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analysis and shows the premiums and discounts represented by the cash election
price and the implied value to the trading price of Aerial common stock on the
dates shown:
<TABLE>
<CAPTION>
PREMIUM/(DISCOUNT) OF
$18.00 AERIAL CASH PREMIUM OF $25.08
ELECTION PRICE TO IMPLIED VALUE OVER
DATE TRADING PRICE TRADING PRICE TRADING PRICE
---- ------------- --------------------- ------------------
<S> <C> <C> <C>
September 16, 1999.................. $19.13 (5.9)% 31.1%
August 31, 1999..................... 15.75 14.3 59.3
1 day prior to Omnipoint
reorganization announcement
(6/22/99)......................... 9.88 82.3 154.0
52-week high (9/2/99)............... 19.13 (5.9) 31.1
52-week low (10/8/98)............... 2.25 700.0 1014.8
</TABLE>
ANALYSIS OF CONTRIBUTION AND VALUE DISTRIBUTION
Wasserstein Perella analyzed the relative contributions of Aerial and
VoiceStream both with and without taking account of the pending Omnipoint
reorganization to the combined company utilizing various historical and
projected financial and operating information and compared these relative
contributions to the total enterprise values of Aerial and VoiceStream implied
by the exchange ratio and by the closing market price of VoiceStream common
stock on September 16, 1999 relative to the total enterprise value of the
combined company.
Wasserstein Perella noted that the total enterprise values of Aerial and
VoiceStream on this basis were 32.5% and 67.5%, respectively, of the total
enterprise value of the combined company without taking account of the pending
Omnipoint reorganization. Wasserstein Perella also noted that the total
enterprise values on this basis of Aerial and VoiceStream/Omnipoint on a
combined basis were 19.8% and 80.2%, respectively, of the total enterprise value
of the combined company.
Wasserstein Perella based its contribution analyses on research analysts'
estimates, as qualified by the comments of VoiceStream management, with respect
to VoiceStream, research analysts' estimates with respect to Omnipoint, and with
respect to Aerial, two sets of projections: the Aerial management case and the
Aerial sensitivity case. The Aerial management case was based on projections
provided to Wasserstein Perella by the management of Aerial. The Aerial
sensitivity case was based on discussions between and among Wasserstein Perella
and Aerial's management and the Aerial special committee. The Aerial sensitivity
case reflects, among other things, lower revenues than projected by Aerial's
management due to a lower number of gross subscriber additions and a higher
percentage of Aerial subscribers that disconnect their service during a period.
As used throughout this summary, "POPs" are the estimated number of persons
within the coverage area of a license granted by the FCC or similar authorities
in other jurisdictions. "Covered POPs" are the estimated number of POPs within
the license area served by a company's operating network. "Subscribers"
represent the number of persons who subscribe to the Company's services.
"Service revenues" are gross revenues from the sale of wireless services and
exclude revenues from the sale of equipment. "Enterprise value" for a company,
unless otherwise noted, is the sum of the market capitalization for that company
and its total debt, preferred stock and minority interest, less cash and cash
equivalents. Items of financial and operating data for a company that are
presented as being "proportionate" include, for entities which are less than
wholly owned by the company, a proportion of the entity's financial and
operating data equal to the company's ownership interest in the entity.
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Wasserstein Perella's comparison of the relative shares of the combined
entity's enterprise value to the relative contributions to the combined entity
of the historical and projected operating and financial items indicated below
(without taking account of the pending Omnipoint reorganization) is summarized
as follows:
<TABLE>
<CAPTION>
AERIAL MANAGEMENT CASE AERIAL SENSITIVITY CASE
----------------------- -----------------------
AERIAL VOICESTREAM AERIAL VOICESTREAM
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Total enterprise value................ 32.5% 67.5% 32.5% 67.5%
1999E proportionate POPs.............. 25.8 74.2 25.8 74.2
1999E proportionate covered POPs...... 52.5 47.5 52.5 47.5
2000E proportionate covered POPs...... 40.6 59.4 40.6 59.4
2001E proportionate covered POPs...... 33.8 66.2 33.8 66.2
6/30/99 proportionate subscribers..... 38.5 61.5 38.5 61.5
1999E proportionate subscribers....... 38.4 61.6 35.1 64.9
2000E proportionate subscribers....... 36.4 63.6 32.1 67.9
2001E proportionate subscribers....... 34.8 65.2 30.6 69.4
1999E proportionate service
revenues............................ 37.3 62.7 37.0 63.0
2000E proportionate service
revenues............................ 35.1 64.9 31.4 68.6
2001E proportionate service
revenues............................ 33.8 66.2 29.8 70.2
</TABLE>
Wasserstein Perella's comparison of the relative shares of the combined
entity's enterprise value to the relative contributions to the combined entity
of the historical and projected operating and financial items indicated below
(taking account of the pending Omnipoint reorganization) is summarized as
follows:
<TABLE>
<CAPTION>
AERIAL AERIAL
MANAGEMENT CASE SENSITIVITY CASE
--------------------- ---------------------
VOICESTREAM/ VOICESTREAM/
OMNIPOINT OMNIPOINT
AERIAL COMBINED AERIAL COMBINED
------ ------------ ------ ------------
<S> <C> <C> <C> <C>
Total enterprise value............................ 19.8% 80.2% 19.8% 80.2%
1999E proportionate POPs.......................... 13.8 86.2 13.8 86.2
1999E proportionate covered POPs.................. 22.9 77.1 22.9 77.1
2000E proportionate covered POPs.................. 19.0 81.0 19.0 81.0
2001E proportionate covered POPs.................. 16.2 83.8 16.2 83.8
6/30/99 proportionate subscribers................. 25.1 74.9 25.1 74.9
1999E proportionate subscribers................... 21.6 78.4 19.2 80.8
2000E proportionate subscribers................... 17.9 82.1 15.3 84.7
2001E proportionate subscribers................... 18.4 81.6 15.7 84.3
1999E proportionate service revenues.............. 28.2 71.8 27.9 72.1
2000E proportionate service revenues.............. 22.4 77.6 19.6 80.4
2001E proportionate service revenues.............. 20.1 79.9 17.2 82.8
</TABLE>
ANALYSIS OF VALUATION MULTIPLES
Wasserstein Perella calculated the total enterprise value of Aerial based
on both the $25.08 implied value at September 16, 1999 of the VoiceStream common
stock to be received by Aerial stockholders and the $18.00 per share Aerial Cash
Election price and then calculated the multiple of each of these enterprise
values to the items of financial and operating data for Aerial set forth in the
table below using projected revenue and EBITDA information from the Aerial
management case. Wasserstein Perella also calculated multiples with respect to
the same items of financial and operating data for Omnipoint using an enterprise
value of Omnipoint implied by the exchange ratio
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provided in the Omnipoint reorganization agreement and the stock price of
VoiceStream immediately prior to announcement of the Omnipoint reorganization
and an enterprise value of Omnipoint using trading multiples of Omnipoint at
September 16, 1999 and, in each case, based on financial and operating
information of Omnipoint derived from research analysts' estimates and other
publicly available information with respect to its financial and operating
performance. Wasserstein Perella also calculated multiples of enterprise value
with respect to the same items of financial and operating data for four publicly
traded companies in the wireless communications industry discussed below based
on those companies' market prices at September 16, 1999 and research analysts'
estimates and other publicly available information with respect to their
financial and operating performance. These Aerial selected companies, consisting
of Omnipoint, Powertel, Clearnet and Microcell were chosen by Wasserstein
Perella because they are publicly traded companies with operations that for
purposes of analysis may be considered similar to those of Aerial. Wasserstein
Perella compared the low and high multiples of these Aerial selected companies
and the valuation multiples for the Omnipoint reorganization and Omnipoint to
valuation multiples for the Aerial reorganization. This comparison is set forth
in the following table:
<TABLE>
<CAPTION>
MULTIPLES BASED ON
--------------------------------------------------------------------------------------
IMPLIED AERIAL AERIAL
OMNIPOINT SELECTED SELECTED
ENTERPRISE COMPANIES COMPANIES
VALUE ENTERPRISE ENTERPRISE
IMPLIED BASED VALUE VALUE
IMPLIED AERIAL IMPLIED OMNIPOINT ON BASED BASED
REORGANIZATION AERIAL CASH REORGANIZATION OMNIPOINT ON TRADING ON TRADING
ENTERPRISE ELECTION ENTERPRISE TRADING PRICE PRICE
VALUE (ON ENTERPRISE VALUE AT PRICE (9/16/99) - (9/16/99) -
9/16/99) VALUE ANNOUNCEMENT (9/16/99) LOW HIGH
-------------- ----------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Proportionate POPs...... $107.1 $85.4 $46.5 $65.3 $43.3 $111.1
Covered proportionate 133.9 106.7 78.6 110.3 83.8 147.4
POPs..................
Proportionate 8,673.1 6,914.7 7,340.3 10,306.5 3,315.0 10,306.5
subscribers
(6/30/99).............
1999E service 14.1x 11.3x 15.0x 21.0x 8.1x 21.0x
revenues..............
2000E service 9.3 7.4 8.2 11.6 4.8 11.6
revenues..............
2002E EBITDA............ 18.1 14.5 21.1 29.6 7.3 29.6
</TABLE>
VALUATION OF AERIAL
Wasserstein Perella analyzed the value of Aerial utilizing a number of
different valuation methodologies as set forth below.
Comparable Trading Analysis
Wasserstein Perella calculated a range of implied values per share for
Aerial by applying range of trading multiples at September 16, 1999 of
historical and projected financial and operating data for the Aerial selected
companies discussed above, derived from research analysts' estimates and other
publicly available information, and adjusted by Wasserstein Perella for the
purposes of this analysis, to operating and financial data for Aerial derived
from the Aerial management case. The low and the
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high of the range of implied values per share of Aerial common stock based on
the adjusted multiples of the items of financial and operating data shown below
are as follows:
<TABLE>
<CAPTION>
RANGE OF IMPLIED
VALUE PER AERIAL
SHARE BASED ON
AERIAL SELECTED
COMPANIES ADJUSTED
MULTIPLES
------------------
LOW HIGH
------- -------
<S> <C> <C>
Proportionate POPs.......................................... $ 7.98 $17.83
Covered proportionate POPs.................................. 16.19 24.07
Proportionate subscribers (6/30/99)......................... 10.19 22.35
2000E service revenues...................................... 12.60 23.94
2002E EBITDA................................................ 13.19 24.83
</TABLE>
Original Sonera Investment
In its valuation analysis of Aerial, Wasserstein Perella noted the original
effective per share price of $12.33 at which Sonera invested in Aerial in
September 1998 as well as the increased effective per share price of $16.68
resulting from cancellation of shares under the Sonera purchase agreement due to
the increase in Aerial's public market price over pre-negotiated levels.
VoiceStream/Omnipoint Transaction Analysis
Wasserstein Perella also analyzed the proposed Omnipoint reorganization and
calculated the implied value per share for Aerial based on applying the
valuation multiples of proportionate POPs, covered proportionate POPs and
proportionate subscribers for Omnipoint implied by the exchange ratio provided
in the Omnipoint reorganization agreement and the stock price of VoiceStream
immediately prior to announcement of the Omnipoint reorganization and implied by
the trading multiples of Omnipoint at September 16, 1999. This analysis
indicated an implied per Aerial share value based on multiples of proportionate
POPs, covered proportionate POPs and proportionate subscribers of:
<TABLE>
<CAPTION>
IMPLIED VALUE PER AERIAL SHARE BASED ON
MULTIPLES OF
---------------------------------------------
OMNIPOINT REORGANIZATION
VALUE AT ANNOUNCEMENT OMNIPOINT TRADING
(6/23/99) VALUE (9/16/99)
------------------------ -----------------
<S> <C> <C>
Proportionate POPs............................... $ 5.19 $11.37
Covered proportionate POPs....................... 10.57 18.90
Proportionate subscribers (6/30/99).............. 19.68 31.70
</TABLE>
Discounted Cash Flow Analysis
Wasserstein Perella performed a discounted cash flow analysis on Aerial
under each of the Aerial management case and the Aerial sensitivity case.
Wasserstein Perella calculated a net present value of free cash flows of Aerial
for the second half of 1999 through the end of 2008 using discount rates ranging
from 13% to 15%. Wasserstein Perella also calculated present values of implied
terminal values in the year 2008 based on multiples ranging from 10x EBITDA to
12x EBITDA and the same
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range of discount rates. Based on these calculations, Wasserstein Perella
derived implied values per share of Aerial common stock. The results of this
analysis are as follows:
<TABLE>
<CAPTION>
IMPLIED VALUE PER AERIAL
SHARE BASED ON
DISCOUNTED CASH FLOW
ANALYSIS
-------------------------
LOW HIGH
-------- --------
<S> <C> <C>
Management case............................................. $17.65 $28.00
Sensitivity case............................................ 11.40 19.94
</TABLE>
VALUATION OF VOICESTREAM
Wasserstein Perella analyzed the value of VoiceStream utilizing a number of
different valuation methodologies as set forth below.
Comparable Trading Analysis
Wasserstein Perella calculated a range of implied values per share for
VoiceStream and VoiceStream/Omnipoint on a combined pro forma basis by applying
a range of trading multiples at September 16, 1999 of historical and projected
financial and operating data for two publicly traded companies in the wireless
communications industry discussed below, based on those companies' market prices
at September 16, 1999 and research analysts' estimates and other publicly
available information with respect to their financial and operating performance,
and adjusted by Wasserstein Perella for purposes of this analysis, to operating
and financial data for VoiceStream and VoiceStream/Omnipoint. The VoiceStream
selected companies used for this analysis, consisting of Sprint PCS and Nextel,
were chosen by Wasserstein Perella because they are publicly traded companies
with operations that for purposes of analysis may be considered similar to those
of VoiceStream and VoiceStream/Omnipoint on a combined basis. The VoiceStream
and VoiceStream/Omnipoint operating and financial data were based on research
analysts' estimates of VoiceStream and Omnipoint, as qualified in the case of
VoiceStream by comments of VoiceStream management. The low and the high of the
range of implied values per share based on the adjusted multiples of the items
of financial and operating data shown below are as follows:
<TABLE>
<CAPTION>
RANGE OF IMPLIED VALUE
PER SHARE BASED ON
VOICESTREAM SELECTED
COMPANIES ADJUSTED
MULTIPLES:
VOICESTREAM
(STAND-ALONE)
----------------------
LOW HIGH
------ -------
<S> <C> <C>
Proportionate POPs.......................................... $50.93 $103.31
Covered proportionate POPs.................................. 26.40 41.79
Proportionate subscribers (6/30/99)......................... 40.55 51.67
2000E service revenues...................................... 35.39 50.35
2002E EBITDA................................................ 19.13 47.75
</TABLE>
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<TABLE>
<CAPTION>
RANGE OF IMPLIED VALUE
PER SHARE BASED ON
VOICESTREAM SELECTED
COMPANIES ADJUSTED
MULTIPLES:
VOICESTREAM/OMNIPOINT
(COMBINED)
----------------------
LOW HIGH
--- ----
<S> <C> <C>
Proportionate POPs.......................................... $55.79 $124.99
Covered proportionate POPs.................................. 57.28 92.14
Proportionate subscribers (6/30/99)......................... 39.16 53.21
2000E service revenues...................................... 27.57 44.78
2002E EBITDA................................................ 12.40 48.86
</TABLE>
Discounted Cash Flow Analysis
Wasserstein Perella performed a discounted cash flow analysis on
VoiceStream as a stand-alone company and on the basis of the proposed Omnipoint
reorganization. The analysis was based on research analysts' estimates of
VoiceStream and Omnipoint, as qualified in the case of VoiceStream by comments
of VoiceStream management. Wasserstein Perella calculated a net present value of
free cash flows of VoiceStream for the second half of 1999 through the end of
2007 using discount rates ranging from 13% to 15%. Wasserstein Perella also
calculated present values of implied terminal values for the year 2007 based on
multiples ranging from 10x EBITDA to 12x EBITDA and the same range of discount
rates. Based on these calculations, Wasserstein Perella derived implied values
per share of VoiceStream common stock. The results of this analysis are as
follows:
<TABLE>
<CAPTION>
IMPLIED VALUE PER
VOICESTREAM SHARE
BASED ON DISCOUNTED
CASH FLOW ANALYSIS
---------------------
LOW HIGH
--- ----
<S> <C> <C>
VoiceStream (stand-alone)................................... $26.85 $39.85
VoiceStream/Omnipoint....................................... 42.06 60.98
</TABLE>
ANALYSIS OF VARIOUS TERMS OF THE AERIAL REORGANIZATION AGREEMENT
Wasserstein Perella performed a number of different analyses to compare the
value of the Aerial Cash Election option to Aerial's public stockholders, the
collar protection in the Aerial reorganization agreement to all Aerial
stockholders, the TDS Debt Replacement price to TDS and the Sonera-Aerial
Investment price to Sonera.
Analysis of Stock Price History
Wasserstein Perella reviewed the recent stock price performance of
VoiceStream and Aerial based on an analysis of the average historical closing
prices of each company's common stock over various periods and determined the
value per share of Aerial common stock implied by the exchange
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<PAGE> 145
ratio of 0.455 and the average VoiceStream stock price over those periods in
relation to the average Aerial stock price over the same periods. The results of
this analysis are as follows:
<TABLE>
<CAPTION>
VALUE PER AERIAL
AERIAL VOICESTREAM SHARE IMPLIED BY
STOCK PRICE STOCK PRICE EXCHANGE RATIO
----------- ----------- -----------------
<S> <C> <C> <C>
9/16/99......................................... $19.125 $55.125 $25.082
10-day average.................................. 18.519 52.009 23.664
30-day average.................................. 16.008 45.193 20.563
60-day average.................................. 14.935 40.390 18.377
Average since VoiceStream spin-off (5/3/99 - 96
trading days)................................. 13.012 35.530 16.166
</TABLE>
Analysis of TDS Debt Replacement, Sonera-Aerial Investment, Aerial Cash
Election and Collar
Under the proposed terms of the TDS Debt Replacement transaction and the
Sonera-Aerial Investment, an additional 29.55 million shares of Aerial common
stock are to be issued to TDS and Sonera at $22.00 per share. As summarized in
the following table, Wasserstein Perella analyzed the value per share of a
potential change in the exchange ratio if the TDS Debt Replacement and
Sonera-Aerial Investment were to be effected at the implied deal price based on
the price at September 16, 1999 and the 10-day and 30-day averages of the
VoiceStream stock price, rather than at $22.00, assuming that the exchange ratio
was adjusted so that the same aggregate number of VoiceStream shares were issued
in all cases. The results of this analysis are as follows:
<TABLE>
<CAPTION>
DEAL PRICE BASED ON:
-------------------------------------------------------------
VOICESTREAM VOICESTREAM
VOICESTREAM STOCK 10-DAY STOCK PRICE 30-DAY STOCK PRICE
PRICE ON 9/16/99 AVERAGE AVERAGE
----------------- ------------------ ------------------
<S> <C> <C> <C>
Debt replacement/investment price per
share.............................. $25.08 $23.66 $ 20.56
Aerial shares to be issued at implied
deal conversion price (in
millions).......................... 25.92 27.47 31.61
Difference in number of Aerial shares
to be issued from 29.55 (in
millions).......................... 3.63 2.08 (2.07)
Potential change in exchange ratio to
keep total number of shares
fixed.............................. 0.015 0.008 (0.008)
Value per Aerial share of potential
change in exchange ratio........... $ 0.82 $ 0.46 $ (0.44)
</TABLE>
Wasserstein Perella also analyzed and compared the value of the Aerial Cash
Election option available to Aerial public stockholders to the value of the
downside price protection collar available to all Aerial stockholders.
Wasserstein Perella calculated a range of values representing the excess of the
theoretical value of the cash election option over the theoretical value of the
collar protection using Black Scholes option valuation methodology and
assumptions with respect to volatility ranging from 55% to 75% assuming the
Omnipoint reorganization merger closes and 75% to 95% assuming the Omnipoint
reorganization does not close and assumptions with respect to the length of time
until closing ranging from three to 15 months. Assuming consummation of the
Omnipoint reorganization,
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<PAGE> 146
the collar protection is inapplicable and, therefore, has no value. The results
of this analysis were as follows:
<TABLE>
<CAPTION>
EXCESS OF VALUE PER AERIAL SHARE OF CASH ELECTION PROTECTION OVER COLLAR
PROTECTION (ASSUMING CONSUMMATION OF OMNIPOINT REORGANIZATION)
- -------------------------------------------------------------------------
RANGE OF VALUE (BASED ON A
TIME UNTIL CLOSING VOLATILITY RANGE OF 55% TO 75%)
------------------ ------------------------------------
<S> <C>
3 months........................ $ .289 - $ .758
6 months........................ .778 - 1.623
9 months........................ 1.214 - 2.321
12 months....................... 1.592 - 2.901
15 months....................... 1.921 - 3.392
</TABLE>
<TABLE>
<CAPTION>
EXCESS OF VALUE PER AERIAL SHARE OF CASH ELECTION PROTECTION OVER COLLAR
PROTECTION (ASSUMING NON-CONSUMMATION OF OMNIPOINT REORGANIZATION)
- -------------------------------------------------------------------------
RANGE OF VALUE (BASED ON A
TIME UNTIL CLOSING VOLATILITY RANGE OF 75% TO 95%)
------------------ ------------------------------------
<S> <C>
3 months........................ $ .487 - $ .991
6 months........................ 1.247 - 2.137
9 months........................ 1.909 - 3.060
12 months....................... 2.477 - 3.822
15 months....................... 2.969 - 4.466
</TABLE>
Wasserstein Perella also analyzed and compared the potential benefit or
cost to TDS from the TDS Debt Replacement and from the collar protection, the
potential benefit or cost to Sonera from the Sonera-Aerial Investment and the
collar protection, and the potential benefit to Aerial public stockholders of
the Aerial Cash Election option, in various scenarios based on assumptions as to
the trading price of VoiceStream common stock at closing of the merger ranging
from $20.00 to $65.00. The per share benefits and costs were calculated for TDS
and Sonera on a pro forma basis for their acquisitions of additional Aerial
shares in the TDS Debt Replacement and Sonera-Aerial Investment, respectively,
and for the Aerial public stockholders on an actual basis. A summary of this
analysis is set forth below:
<TABLE>
<CAPTION>
BENEFIT FROM
BENEFIT (COST) COLLAR/CASH TOTAL BENEFIT PER SHARE
FROM INVESTMENT ELECTION (COST) BENEFIT/(COST)
----------------- ------------ ----------------- ----------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
TDS....................... $(246.3) - $144.6 $ 70.4 - $0 $(175.9) - $144.6 $(2.25) - $1.85
Sonera.................... $(134.9) - $ 79.2 $ 20.2 - $0 $(114.7) - $ 79.2 $(5.11) - $3.53
Aerial public
stockholders............ N/A $114.3 - $0 $ 114.3 - $ 0 $ 8.90 - $ 0
</TABLE>
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Wasserstein
Perella believes that one must consider its opinion, this summary and its
analyses as a whole. Selecting portions of this summary and the analyses,
without considering the analyses as a whole, would create an incomplete view of
the processes underlying the analyses and the opinion. In arriving at its
opinion, Wasserstein Perella considered the results of all of the analyses as a
whole. No company or transaction used in the above analyses as a comparison is
directly comparable to Aerial, VoiceStream or VoiceStream/Omnipoint on a
combined basis or the Aerial reorganization. The analyses were prepared solely
for the purposes of Wasserstein Perella's providing its opinion to the Aerial
special committee that as of such date,
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<PAGE> 147
and based upon and subject to the assumptions and limitations set forth in the
opinion, the merger consideration provided by the Aerial reorganization
agreement is fair from a financial point of view to Aerial's public
stockholders. No single factor or analysis was determinative of Wasserstein
Perella's fairness determination. Wasserstein Perella based the analyses on
assumptions that it deemed reasonable, including assumptions concerning general
business and economic conditions. Analyses based upon forecasts of future
results, which are inherently subject to uncertainty, are not necessarily
indicative of actual values or actual future results that any of the companies
or any combination of the companies might achieve, which values or results may
be significantly more or less favorable than suggested by such analyses.
Wasserstein Perella does not assume responsibility if future results are
materially different from those forecasted. Moreover, Wasserstein Perella's
analyses are not and do not purport to be appraisals or otherwise reflective of
the prices at which businesses or securities actually could be bought or sold.
Wasserstein Perella is an internationally recognized investment banking
firm and, as a customary part of its investment banking activities, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, underwritings, private placements, and valuations for
corporate and other purposes. The Aerial special committee selected Wasserstein
Perella because of its expertise and reputation.
In the ordinary course of its business, Wasserstein Perella may actively
trade the debt and equity securities of Aerial, VoiceStream and VoiceStream
Holdings for its own account and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in these securities.
FEE ARRANGEMENTS WITH WASSERSTEIN PERELLA
Pursuant to a letter agreement dated February 12, 1999, Aerial engaged
Wasserstein Perella to act as the exclusive financial advisor to the Aerial
special committee in connection with the then-proposed spin-off transaction and
other possible transactions. Under the terms of this letter agreement, which was
negotiated by the Aerial special committee and Wasserstein Perella, Aerial
agreed to pay Wasserstein Perella (1) an initial advisory fee of $1 million, (2)
an additional advisory fee of $1 million, payable in installments of $250,000
per two-month period until October 31, 1999, and (3) an additional financial
advisory and opinion fee in connection with the rendering of an opinion related
to the sale of Aerial equal to the greater of (1) $1 million (which amount
became payable on September 17, 1999 when Wasserstein Perella informed the
Aerial special committee that it was prepared to render its opinion), and (2) 1%
of the consideration to be received by Aerial's public stockholders in the
Aerial reorganization (which amount, to the extent it exceeds $1 million, is
contingent upon and payable upon consummation of the Aerial reorganization).
Based on the closing price of $55.13 per share of VoiceStream common stock on
September 16, 1999 and the exchange ratio, this additional financial advisory
and opinion fee would equal approximately $3.2 million. Aerial has also agreed
to reimburse Wasserstein Perella for its reasonable out-of-pocket expenses,
including fees and disbursements of its attorneys, and to indemnify Wasserstein
Perella and related persons against certain liabilities, including certain
liabilities under the federal securities laws.
AGREEMENTS RELATING TO THE AERIAL REORGANIZATION
VOICESTREAM STOCKHOLDERS VOTING AGREEMENT
Pursuant to a stockholders voting agreement, stockholders who currently
hold approximately 41% of the shares of VoiceStream Holdings common stock have
agreed to vote for the Aerial reorganization, even if the VoiceStream Holdings
board withdraws its support of the Aerial reorganization. See "The Special
Meetings -- Agreements to Vote in Favor of the Aerial Reorganization."
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<PAGE> 148
AERIAL STOCKHOLDER VOTING AGREEMENT
TDS, which holds approximately 98% of the total voting power of Aerial
common stock, has entered into a stockholder voting agreement pursuant to which
it has agreed to vote in favor of the Aerial reorganization even if the Aerial
board withdraws its support of the Aerial reorganization. See "The Special
Meetings -- Agreements to Vote in Favor of the Aerial Reorganization."
TDS INVESTOR AGREEMENT
In connection with the execution of the Aerial reorganization agreement,
TDS will enter into an investment agreement with VoiceStream Holdings. With
certain exceptions, this agreement will provide that, until September 17, 2004,
the beneficial ownership of VoiceStream Holdings common stock held by TDS and
its affiliates will not exceed 24.9% of the outstanding shares of VoiceStream
Holdings common stock; provided, however, that if the Aerial reorganization
occurs but the transactions contemplated by the Omnipoint reorganization have
not occurred, such beneficial ownership shall not exceed 28%.
Among other things, this agreement will also prohibit TDS and its
affiliates from, in certain circumstances, participating in a proxy contest,
tender offer, exchange offer or other transaction relating to a change of
control of VoiceStream Holdings.
TDS REGISTRATION RIGHTS AGREEMENT
TDS will receive demand and piggyback registration rights for the shares of
VoiceStream Holdings common stock it receives in the Aerial reorganization
pursuant to a registration rights agreement. The registration rights agreement
grants TDS or a holder of the registrable securities who agrees to be bound by
the terms of the registration rights agreement the following registration
rights:
- four demand registrations, to occur not more than once every nine months;
- one shelf registration per each holder of 15% or more of VoiceStream
Holdings common shares; and
- unlimited piggy-back registration rights.
The registration rights agreement terminates when there are no registrable
securities outstanding or if holders of such securities are provided with an
opinion from VoiceStream counsel to the effect that the holders may sell the
registrable securities without registration under the Securities Act.
DEBT REPLACEMENT AGREEMENT.
The debt replacement agreement provides for the replacement of a portion of
the debt owed by Aerial Operating Company to TDS under the TDS revolving credit
agreement with equity of Aerial, the issuance by Aerial Operating Company of
additional equity to Aerial, the issuance by each of Aerial and Aerial Operating
Company of additional equity to Sonera, the capitalization of certain
receivables owed to Aerial Operating Company by its subsidiaries and certain
modifications to the TDS revolving credit agreement. The settlement agreement
and release supplements the debt replacement agreement to the extent that it
specifies the amount of such equity issuances by Aerial and Aerial Operating
Company and streamlines the process with respect thereto.
Under the debt replacement agreement, as supplemented by the settlement
agreement and release, on November 1, 1999, TDS will assign to Aerial as a
contribution to capital $420 million of the debt owed by Aerial Operating
Company to TDS under the TDS revolving credit agreement in exchange for an
aggregate of 19,090,909 shares of Aerial common stock, at a purchase price of
$22.00 per share. The shares of Aerial common stock will consist of 6,166,758
Aerial Common Shares and 12,924,151 Aerial Series A Common Shares. Concurrently
with such issuance to TDS,
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<PAGE> 149
Aerial will issue 3,409,091 Aerial Common Shares to Sonera in exchange for a
cash payment by Sonera to Aerial of $75 million, which also represents a per
share purchase price of $22.00. Concurrently, certain modifications will be made
to the TDS revolving credit agreement.
Immediately after the completion of such equity issuances by Aerial, Aerial
will assign to Aerial Operating Company as a contribution to capital the $420
million of debt received from TDS and the $75 million cash payment received from
Sonera, in exchange for 3,343,642 shares of Aerial Operating Company common
stock. At the same time as such issuance to Aerial, Aerial Operating Company
will issue to Sonera 1,046,999 shares of Aerial Operating Company common stock
in exchange for a cash payment by Sonera to Aerial Operating Company of $155
million. The per share price to be paid by each of Aerial and Sonera for such
shares of Aerial Operating Company common stock will be $148.04, which
represents the $22.00 price per Aerial share multiplied by the applicable
exchange rate of 6.72919. Concurrently with such equity issuances by Aerial
Operating Company, Aerial Operating Company will contribute to each of its
subsidiaries, as a contribution to capital, all or a portion of the receivables
owed by such subsidiary to Aerial Operating Company. Because Aerial Operating
Company owns, directly or indirectly, 100% of each such subsidiary, no
additional shares or partnership interests will be issued to Aerial Operating
Company in exchange for such contributions.
As a result of such transactions, Aerial will issue an aggregate of $495
million in new equity and Aerial Operating Company will issue an aggregate of
$650 million in new equity, $420 million of debt previously owed by Aerial
Operating Company to TDS will be extinguished, the maximum commitment under the
TDS revolving credit agreement will be reduced from $775 million to $355 million
and debt previously owed to Aerial Operating Company by subsidiaries of Aerial
Operating Company will be extinguished. In addition, immediately after such
transactions, each of the interest rate and the default interest rate under the
TDS revolving credit agreement will be reduced and the guaranty issued by Aerial
in favor of TDS with respect to Aerial Operating Company's obligations under the
TDS revolving credit agreement will be terminated. At the closing of the Aerial
reorganization, the TDS revolving credit agreement will be amended and restated
to govern any debt owed by Aerial Operating Company to TDS at that time. See
"Agreements Relating to the Aerial Reorganization -- Amended and Restated Credit
Agreement."
AMENDED AND RESTATED CREDIT AGREEMENT.
Effective at the closing of the Aerial reorganization, TDS and Aerial
Operating Company will amend the TDS revolving credit agreement by entering into
the amended and restated credit agreement. The amended and restated credit
agreement will evidence any loans outstanding under the TDS revolving credit
agreement at that time and the maturity date of such loans will be one year
after the effective date of the amended and restated credit agreement. TDS will
have no commitment under the amended and restated credit agreement to make any
further loans to Aerial Operating Company. Aerial Operating Company will pay
interest in arrears on the unpaid principal amount of the loans at a per annum
rate equal to three-month LIBOR as reported in The Wall Street Journal ("LIBOR")
plus 3.50%, which interest will be due on the maturity date, or, if Aerial
Operating Company becomes obligated to make cash interest payments on other
indebtedness prior to the maturity date, on a quarterly basis. Overdue interest
and principal will bear interest at LIBOR plus 5.50%.
Aerial Operating Company may repay such loans under the amended and
restated credit agreement without premium or penalty from time to time, provided
that amounts repaid thereunder may not be reborrowed. In addition, the amended
and restated credit agreement provides for mandatory repayments from time to
time upon certain change of control events and to the extent of and concurrently
with the receipt by Aerial or Aerial Operating Company of net proceeds of asset
sales or certain other permitted dispositions to the extent such proceeds exceed
$50,000,000 from and
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<PAGE> 150
after the effective date of the amended and restated credit agreement. Each
subsidiary of Aerial Operating Company will unconditionally and irrevocably
guarantee all of Aerial Operating Company's obligations under the amended and
restated credit agreement. Aerial Operating Company's obligations under the
amended and restated credit agreement and each subsidiary's obligations under
its respective guarantee will be secured by a first-priority lien on and
security interest in substantially all of the personal property of Aerial
Operating Company and its subsidiaries. In addition, Aerial Operating Company
may create one or more subsidiaries for the limited purpose of holding a portion
of the collateral in which TDS will receive a security interest.
The amended and restated credit agreement will contain covenants which,
among other things, will restrict Aerial Operating Company's ability and the
ability of its subsidiaries, with certain exceptions, to: purchase, redeem or
declare dividends or distributions on stock; incur indebtedness; incur liens;
transact business with affiliates; make loans and investments; engage in
mergers, acquisitions or asset sales; and change the nature of their business.
The amended and restated credit agreement also requires Aerial Operating Company
and its subsidiaries to satisfy certain customary affirmative covenants and to
make certain customary indemnifications to TDS. In addition, the amended and
restated credit agreement contains customary events of default, including
payment defaults, breach of representations or warranties, covenant defaults,
defaults under or invalidity of collateral documents, certain material adverse
events, certain events of bankruptcy and insolvency, judgment defaults and
cross-default to certain other indebtedness.
SONERA INDEMNITY
VoiceStream, VoiceStream Holdings, Aerial, Aerial Operating Company and TDS
are parties to an indemnity agreement whereby TDS has agreed to indemnify
VoiceStream Holdings, its subsidiaries and affiliates, including Aerial, for
certain losses and expenses resulting from certain claims or lawsuits (an
"Indemnifiable Claim") existing now or in the future, asserted by Sonera or its
affiliates against VoiceStream Holdings, Aerial, Aerial Operating Company, their
respective affiliates or officers, directors, employees and agents, arising out
of or resulting from any alleged act or failure to act occurring prior to the
effective time of the Aerial merger, including certain losses and expenses
relating to the disputed shares which Sonera has previously refused to return
for cancellation or the number of shares of Aerial common stock which Sonera is
entitled to receive in exchange for shares of Aerial Operating Company in
connection with the exercise by Sonera of its tag-along right under the investor
agreement. The public stockholders of Aerial will not be required to contribute
to any indemnification payments made pursuant to the indemnity agreement. The
indemnity agreement provides for the following:
- TDS shall have no liability under the agreement for any claim or loss
thirty days after the applicable statute of limitation period expires
except for such claims or losses of which the indemnitees have given TDS
notice prior to such time;
- TDS has the right and obligation to control the litigation or settlement
of any Indemnifiable Claim by Sonera arising out of or resulting from any
alleged act or failure to act occurring prior to the effective time of
the Aerial reorganization;
- TDS has the right but not the obligation to control the litigation of any
Indemnifiable Claim by Sonera arising out of or resulting from any
alleged act or failure to act occurring prior to and after the effective
time of the Aerial reorganization, provided that if TDS elects to control
the litigation, it is responsible for the fees and costs of the
litigation including attorneys' fees; and
- TDS has the right to settle any Indemnifiable Claim or consent to any
judgement without the consent of the indemnitee unless such settlement or
judgement imposes a criminal penalty,
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<PAGE> 151
equitable remedy or a non-monetary condition which could reasonably
expected to have a material adverse effect on the business of the
indemnitee.
The indemnity agreement will be terminated if all claims by Sonera arising
out of or resulting from any alleged act or failure to act occurring through the
effective time of the Aerial reorganization are released at such effective time.
See "Sonera Settlement Agreement and Release" discussed below.
SONERA SETTLEMENT AGREEMENT AND RELEASE
Under the settlement agreement and release dated September 17, 1999 among
Sonera, TDS, Aerial and Aerial Operating Company, Sonera agreed to surrender for
cancellation 317,108 shares of Aerial Operating Company common stock,
representing one-half of the 634,216 disputed shares, on November 1, 1999, in
connection with the TDS Debt Replacement, without releasing its claims with
respect to such surrendered shares. Upon satisfaction of all of the conditions
to closing the Aerial reorganization, the remaining 317,108 shares of Aerial
Operating Company common stock will be surrendered for cancellation immediately
prior to the closing of the Aerial reorganization. At the closing of the Aerial
reorganization, each of Sonera and Sonera U.S., on the one hand, and TDS,
Aerial, Aerial Operating Company, VoiceStream and VoiceStream Holdings, on the
other hand, will release each other from all claims relating to actions
occurring through the date of the settlement agreement and release, including
all claims by Sonera to all of the disputed shares and, subject to certain
exceptions, will extend such release to actions occurring through the date of
the closing of the Aerial reorganization. Also at the closing of the Aerial
reorganization, each of the following agreements entered into in connection with
Sonera's original investment in Aerial Operating Company will be terminated: (1)
the purchase agreement, (2) the investment agreement, (3) the registration
rights agreement, (4) the management side letter, (5) the joint venture
agreement and (6) the supplemental agreement.
Under the settlement agreement and release, Sonera has exercised its
tag-along right in connection with the Aerial reorganization. As a result,
immediately prior to the closing of the Aerial reorganization, Sonera will
exchange 2,826,037 shares of Aerial Operating Company common stock for Aerial
Common Shares based on the exchange rate provided in the investment agreement
and after taking into account the cancellation of all of the disputed shares as
indicated above. Sonera is not obligated to make this exchange unless and until
all conditions to the closing of the Aerial reorganization have been satisfied
or waived. At the closing of the Aerial reorganization, Sonera will then
exchange 22,426,030 Aerial Common Shares, which includes the shares received by
Sonera upon exchange of its shares of Aerial Operating Company common stock, for
10,203,844 shares of VoiceStream Holdings common stock. The settlement agreement
and release also sets forth the agreement of the parties regarding certain
matters relating to the debt replacement agreement. See "Agreements Relating to
the Aerial Reorganization -- Debt Replacement Agreement."
TIMING OF CLOSING
The Aerial reorganization agreement provides that the closing of the Aerial
reorganization will occur concurrently with the closing or as soon as
practicable thereafter of the Omnipoint reorganization, subject to the
satisfaction of the conditions set forth in the Aerial reorganization agreement.
The Aerial reorganization agreement provides that if the Omnipoint
reorganization has not been consummated or terminated by June 30, 2000, or,
under certain circumstances, March 31, 2000, then the Aerial reorganization will
close on the fifth business day following the day on which the last of the
conditions set forth in the Aerial reorganization agreement has been satisfied
or waived, unless VoiceStream and Aerial agree to a different date. Upon closing
of the VoiceStream and Aerial mergers, the parties will file required
certificates of merger with the Secretary of State of
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<PAGE> 152
Delaware and the Secretary of State of Washington, at which time the VoiceStream
and Aerial mergers will be effective.
ACCOUNTING TREATMENT
The Aerial reorganization will be accounted for using the purchase method
of accounting with VoiceStream Holdings becoming the successor company to
VoiceStream and Aerial. Under the purchase method of accounting, the purchase
price will be allocated among the Aerial assets and liabilities. The excess of
purchase price over the fair value of the identifiable tangible assets and
liabilities acquired will be recorded as intangible assets and amortized on a
straight-line basis over a period not to exceed 40 years. The assets and
liabilities of VoiceStream will be reflected in our financial statements at
their historical cost basis. Earnings of VoiceStream Holdings subsequent to the
date of the Aerial reorganization will be reduced by the amortization of
intangible assets. See "VoiceStream Holdings Unaudited Pro Forma Condensed
Combined Financial Statements."
TRANSACTION COSTS
Anticipated non-recurring charges to VoiceStream Holdings as a result of
the Aerial reorganization are estimated to be approximately $41 million. This
includes transaction costs to be paid by Aerial of approximately $24 million
related to investment banking fees and $1.5 million related to legal, accounting
and other transaction fees which will be expensed as incurred by Aerial. This
total also includes non-recurring costs to be paid by VoiceStream of $6 million
related to investment banking fees, and $9.5 million related to legal,
accounting and employee separation costs, which will be considered as part of
the purchase price.
DISSENTERS' RIGHTS OF APPRAISAL
Holders of VoiceStream common stock who dissent from the VoiceStream merger
and follow certain statutory procedures have the right under the WBCA to demand
payment in cash for the fair value of their VoiceStream common stock, calculated
as of the day prior to the effective time. Aerial common stockholders do not
have appraisal rights under Delaware law. See "The Special
Meetings -- Dissenters' Rights of Appraisal" and Annexes I and J hereto which
set forth the text of the applicable sections of the WBCA and DGCL.
LITIGATION
On September 21, 1999, a party purporting to be an Aerial stockholder filed
a putative class action complaint on behalf of stockholders of Aerial in the
Court of Chancery of the State of Delaware in New Castle County. The complaint
names as defendants Aerial, TDS, certain directors of Aerial and TDS, and
VoiceStream. The complaint alleges a breach of fiduciary duties by the
defendants, including in connection with the proposed replacement of $420
million of debt owned by Aerial Operating Company to TDS with equity at $22.00
per share of Aerial common stock. The complaint alleges that TDS is receiving
benefits at the expense of Aerial's public stockholders and seeks to have the
Aerial reorganization enjoined or, if it is consummated, to have it rescinded
and to recover unspecified damages, fees and expenses. The defendants believe
that this lawsuit is without merit and intend to vigorously defend against this
lawsuit.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE AERIAL
REORGANIZATION
CONSEQUENCES OF THE VOICESTREAM MERGER
A summary of the material United States federal income tax consequences of
the VoiceStream merger is set forth under "The Omnipoint
Reorganization -- Material United States Federal Income Tax Consequences of the
Omnipoint Reorganization."
CONSEQUENCES OF THE AERIAL MERGER
The following is a summary of the material United States federal income tax
consequences of the Aerial merger to holders of Aerial common stock. It does not
discuss all aspects of United States federal income taxation that may be
important to you in light of your particular circumstances. For example, it does
not discuss tax consequences that may apply to you if you are a taxpayer that is
subject to special treatment under the federal income tax laws (for example, if
you are a bank, financial institution, broker-dealer, insurance company, foreign
person, or tax-exempt entity, or if you acquired your Aerial common stock by
exercising employee stock options or otherwise as compensation or through a
tax-qualified retirement plan). It also does not discuss any aspect of state,
local or foreign taxation. The summary assumes that you will hold your Aerial
common stock as a capital asset at the effective time of the Aerial merger, and
does not consider the tax consequences to you if, in addition to owning Aerial
common stock, you own stock of VoiceStream or of Omnipoint.
Sidley & Austin, counsel to Aerial, has delivered an opinion to the effect
that the description of the federal income tax consequences to holders of Aerial
common stock contained under this heading correctly summarizes the material
federal income tax consequences for such holders.
YOU ARE URGED TO CONSULT WITH YOUR OWN TAX ADVISOR CONCERNING THE TAX
CONSEQUENCES OF THE AERIAL MERGER TO YOU.
Consummation of the Aerial merger is conditioned upon, among other things,
Aerial having received the opinion of Sidley & Austin, dated the effective time
of the merger, stating that, on the basis of the facts, representations, and
assumptions set forth in such opinion, the merger will constitute either:
- a reorganization within the meaning of section 368(a) of the Code, to
which Aerial, VoiceStream Holdings and the VoiceStream subsidiary that is
a party to the Aerial merger will each be a party within the meaning of
section 368(b) of the Code, or
- part of a transaction described in section 351(a) of the Code.
This opinion will be based in part on certificates to be provided by officers of
Aerial and of VoiceStream Holdings and by certain large stockholders of Aerial,
VoiceStream and, in such counsel's discretion, Omnipoint.
Assuming that:
- the Aerial merger is consummated in accordance with the terms of the
Aerial reorganization agreement and as described in this joint proxy
statement-prospectus;
- the certificates referred to above will be received and will be true,
correct and complete at the effective time of the Aerial merger; and
- the assumptions set forth in the opinion referred to above will be true,
correct and complete at the effective time of the Aerial merger,
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it is the opinion of Sidley & Austin that, under current law, the Aerial merger
will constitute either:
- a reorganization within the meaning of section 368(a) of the Code, to
which Aerial, VoiceStream Holdings and the VoiceStream subsidiary that is
a party to the Aerial merger will each be a party within the meaning of
section 368(b) of the Code; or
- part of a transaction described in section 351(a) of the Code.
This conclusion is based on the Code, Treasury regulations promulgated
thereunder, administrative rulings and practice, and judicial precedent, all as
of the date hereof. All of these authorities are subject to change, possibly
with retroactive effect. Any change in any of these authorities or failure to
meet any of the conditions set forth above could alter the tax consequences to
Aerial and Aerial's stockholders discussed herein. The parties will not request,
and the Aerial merger is not conditioned upon, a ruling from the IRS as to any
of the United States federal income tax consequences of the Aerial merger. As a
result, there can be no assurance that the IRS will not disagree with or
challenge any of the conclusions concerning the Aerial merger set forth in this
discussion.
Consistent with the Aerial merger qualifying either as a reorganization
described in section 368(a) of the Code or as part of a transaction described in
section 351(a) of the Code, for United States federal income tax purposes:
- holders of Aerial common stock who do not elect to receive any cash in
the Aerial merger will not recognize gain or loss solely as a result of
the conversion of shares of Aerial common stock into shares of
VoiceStream Holdings common stock in the merger, except with respect to
cash, if any, received in lieu of fractional shares;
- each such holder's aggregate tax basis in the VoiceStream Holdings common
stock received in the Aerial merger (including any fractional share of
VoiceStream Holdings common stock for which cash is received) will be the
same as his or her aggregate tax basis in the Aerial common stock
surrendered in the merger;
- the holding period of the VoiceStream Holdings common stock received in
the Aerial merger by a holder of Aerial common stock will include the
holding period of Aerial common stock that he or she surrendered in the
Aerial merger; and
- no gain or loss will be recognized by Aerial, VoiceStream Holdings, or
the VoiceStream Holdings subsidiary which is a party to the Aerial merger
as a result of the Aerial merger.
A holder of Aerial common stock that elects to receive cash in the Aerial
merger will recognize gain, if any (but not loss, except as discussed below),
for United States federal income tax purposes. The amount of recognized gain
will be the lesser of:
- the excess of the fair market value of the VoiceStream common stock and
cash received in the Aerial merger over the stockholder's tax basis in
Aerial common stock surrendered in the merger; or
- the amount of cash the stockholder receives pursuant to the election to
receive cash.
This recognized gain will be capital gain and will be long-term capital gain if
the stockholder has held the Aerial common stock exchanged for cash for more
than one year at the effective time of the Aerial merger. The tax basis of the
VoiceStream Holdings common stock received in the merger generally will equal
the tax basis of the Aerial common stock surrendered, decreased by the amount of
cash received and increased by the amount of gain recognized. As in the case of
an Aerial stockholder who does not elect to receive cash, the holding period of
the VoiceStream Holdings common stock received will include the holding period
of the Aerial common stock surrendered. Determinations of the amount of
recognized gain, tax basis and holding period must be made separately for each
block of Aerial common stock surrendered. For this purpose, all of the cash and
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VoiceStream Holdings common stock received will generally be allocated
proportionately among the blocks of Aerial common stock surrendered.
A holder of Aerial common stock that elects to receive only cash in the
Aerial merger will generally recognize loss for United States federal income tax
purposes, equal to the excess, if any, of the stockholder's tax basis in Aerial
common stock surrendered in the merger over the amount of cash received. No loss
will be recognized, however, if the Aerial stockholder elects to receive some
VoiceStream Holdings common stock in addition to cash in the Aerial merger.
CONSEQUENCES OF THE AERIAL REORGANIZATION UNDER THE VOICESTREAM TAX SHARING
AGREEMENT
VoiceStream believes that the consequences of the Aerial reorganization
under the VoiceStream Tax Sharing Agreement should be the same as set forth
under the heading, "The Omnipoint Reorganization -- Consequences of the
Omnipoint Reorganization Under the VoiceStream Tax Sharing Agreement," whether
or not the Omnipoint reorganization has been previously consummated.
INTERESTS OF CERTAIN PERSONS IN THE AERIAL REORGANIZATION
VOICESTREAM AFFILIATED PERSONS
In considering the recommendation of the VoiceStream board with respect to
approval and adoption of the Aerial reorganization agreement, stockholders of
VoiceStream should be aware that some directors and officers of VoiceStream have
interests, set forth below, relating to the Aerial Reorganization that are in
addition to their interests as stockholders of VoiceStream.
VOICESTREAM DIRECTORS
Except for John L. Bunce, Jr., the current members of the VoiceStream
board, John W. Stanton, Robert R. Stapleton, Donald Guthrie, Mitchell R. Cohen,
Daniel J. Evans, Canning Fok, Jonathan M. Nelson, Terence M. O'Toole and Hans
Snook, are expected to become members of the VoiceStream Holdings board upon the
closing of the earlier of the Omnipoint reorganization or the Aerial
reorganization. Mr. Bunce has advised the board that he will resign prior to the
earlier of the closing of the Omnipoint reorganization and the closing of the
Aerial reorganization.
EQUITY BASED AWARDS
If the VoiceStream merger takes place at the time of the Aerial
reorganization, in accordance with the terms of the stock option plans
maintained by VoiceStream, all awards of stock options outstanding at the time
of the Aerial reorganization automatically will be converted into similar
options exercisable for shares of VoiceStream Holdings common stock on a
one-for-one basis. The vesting of these new VoiceStream Holdings options will
not be accelerated as a result of the transactions described in the Aerial
reorganization agreement.
AERIAL AFFILIATED PERSONS
In considering the recommendation of the Aerial board with respect to the
approval and adoption of the Aerial reorganization agreement, stockholders of
Aerial should be aware that certain directors and officers of Aerial have
interests, set forth below, relating to the Aerial reorganization that are in
addition to their interests as stockholders of Aerial.
AERIAL DIRECTORS
Certain directors of Aerial may be considered to have an interest in the
Aerial reorganization and the related transactions as (1) directors and/or
officers of TDS or its affiliates, (2) trustees or
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beneficiaries of the TDS voting trust, (3) officers of Aerial and/or (4)
officers or representatives of Sonera.
Directors of Aerial who are directors of TDS and officers of TDS or its
affiliates are: LeRoy T. Carlson, Chairman of TDS; LeRoy T. Carlson, Jr.,
President and CEO of TDS; Sandra L. Helton, Executive Vice President-Finance of
TDS; and James Barr III, President of TDS Telecom; and Rudolph E. Hornacek, Vice
President -- Engineering of TDS.
TDS has an interest in the Aerial reorganization because TDS will receive a
substantial number of shares of VoiceStream Holdings common stock in the Aerial
reorganization. Taking into consideration the TDS Debt Replacement, TDS would
receive 35,570,494 shares of VoiceStream Holdings common stock in the Aerial
reorganization, representing approximately 27% of the shares of VoiceStream
outstanding immediately following the Aerial reorganization, assuming the prior
or concurrent completion of the Omnipoint reorganization. In addition, pursuant
to the voting agreement to be entered into in connection with the Aerial
reorganization, TDS will have the power to nominate at least one person for
election as a director of VoiceStream Holdings. See "The VoiceStream Holdings
Voting Agreement."
TDS also has an interest in the Aerial reorganization pursuant to the
transactions contemplated by the related transaction documents, including the
TDS Debt Replacement.
See also "Arrangements and Transactions between TDS and Aerial" below for
other arrangements and transactions between TDS and Aerial which will be
terminated, amended or entered into in connection with the Aerial reorganization
agreement.
LeRoy T. Carlson, Jr., a director and the President of TDS, a director and
Chairman of Aerial and the son of LeRoy T. Carlson; and Walter C.D. Carlson, a
director of TDS and Aerial and the son of LeRoy T. Carlson and the brother of
LeRoy T. Carlson, Jr., are trustees and beneficiaries of the TDS voting trust.
LeRoy T. Carlson, Chairman and a director of TDS and a director of Aerial, is a
beneficiary of the TDS voting trust. Walter C.D. Carlson is a partner of the law
firm of Sidley & Austin, which is counsel to TDS and which has advised TDS
regarding the Aerial reorganization.
The TDS voting trust and its trustees and beneficiaries have an interest in
the Aerial reorganization because the TDS voting trust controls TDS, which has
the interests described above.
Directors of Aerial who are officers of Aerial or its affiliates are: LeRoy
T. Carlson, Jr., Chairman of Aerial; Don W. Warkentin; President of Aerial; and
J. Clarke Smith, Vice President -- Finance and Administration, and Treasurer and
CFO of Aerial. See "Indemnification and Insurance" and "Equity Based Awards and
Employment and Severance Agreements" below.
Pertti Miettunen and Matti Makkonen are directors of Aerial who are
representatives of Sonera. Sonera has an interest in the Aerial reorganization
as explained under "Background of Events Leading to the Aerial Reorganization"
and "Background of Events Relating to Sonera."
You are urged to carefully study and consider the Aerial reorganization in
light of the above interests.
The Aerial board was aware of the above interests. As discussed under
"Background of Events Leading to the Aerial Reorganization," in order to address
such interests, the Aerial board created a transaction committee that included
all directors other than the Sonera representatives and created a special
committee that included only the directors who were not affiliated with TDS or
Sonera.
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INDEMNIFICATION AND INSURANCE OF AERIAL DIRECTORS AND OFFICERS
The Aerial reorganization agreement requires VoiceStream Holdings to cause
Aerial to:
- continue to indemnify all past and present officers and directors of
Aerial to the same extent that they are currently indemnified; and,
- for at least six years following the effective time of the Aerial
reorganization, continue to carry directors' and officers' insurance
covering the existing directors and officers of Aerial that is no less
favorable with respect to the coverage and amount than that provided
under Aerial's existing insurance as of the effective time of the Aerial
reorganization agreement, except that Aerial will not be required to pay
more than 200% of the last annual premium for such insurance coverage.
EQUITY BASED AWARD AND EMPLOYMENT AND SEVERANCE AGREEMENTS
1996 Long-Term Incentive Plan
Under the terms of Aerial's 1996 long-term incentive plan, all outstanding
options granted under this plan will become fully exercisable and vested upon a
"change in control" of Aerial. In addition, upon a "change in control" Aerial
may convert each outstanding option into a substitute option. The approval by
Aerial stockholders of the Aerial reorganization will constitute a "change in
control" under the 1996 long-term incentive plan. The Aerial reorganization
agreement provides that each outstanding Aerial option will be converted into an
option to purchase the number of shares of VoiceStream Holdings common stock
determined by multiplying the number Aerial Common Shares subject to the option
by 0.455, at an exercise price equal to the exercise price of the Aerial option
divided by 0.455. However, if the exchange ratio is revised pursuant to the
Aerial reorganization agreement, this number will also change.
Retention Restricted Stock Unit Plan
Under the terms of Aerial retention restricted stock unit plan, all
outstanding stock unit awards granted under this plan will become fully vested
upon a "change in control" of Aerial. The Aerial retention restricted stock unit
plan provides that as of the date a participant's stock units become fully
vested, the participant is entitled to receive a payment, in the form of cash or
stock as determined by the chairman of Aerial, equal to (a) the closing price of
one Aerial Common Share on the Nasdaq Stock Market multiplied by (b) the number
of stock units awarded the participant. The approval by Aerial stockholders of
the Aerial reorganization will constitute a "change in control" under the
retention restricted stock unit plan and will cause all 431,000 restricted stock
units to become fully vested. Assuming the "change in control" occurs, the
amount payable to employees under the retention restricted stock unit plan will
be calculated based on the fair market value of the Aerial Common Shares on the
day that the Aerial reorganization agreement is approved by the Aerial
stockholders in accordance with the terms of the retention restricted stock unit
plan. Based on the market price of $26.66 per Aerial Common Share on September
20, 1999, the date of the announcement of the Aerial reorganization agreement,
the aggregate amount that would have been payable to employees under the
retention restricted stock unit plan would be approximately $11.5 million. The
decision on the form of payment has not been made.
Executive Severance Agreements
Aerial has entered into severance agreements with each of the executives
identified below which provide that in the event that the executive terminates
employment with Aerial within two years after a "change in control" other than
by reason of a "nonqualifying termination", the executive will be entitled to
receive a cash payment equal to the total of (1) the executive's salary through
the date of
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his or her termination, if not yet paid, (2) the executive's prorated target
bonus for the year in which the "change in control" occurs, if not yet paid, and
(3) an amount equal to the executive's highest annual base salary during the
12-month period prior to his or her termination of employment plus the
executive's target bonus for the year in which the "change in control" occurs,
multiplied by the base/bonus multiple next to the executive's name below. In
addition to this cash payment, Aerial is required to continue all medical,
accident, disability and life insurance policies in effect for the executive and
his or her dependents under the same terms in effect immediately prior to his or
her date of termination for the extended benefit period specified next to the
executive's name below. Finally, the executive will be entitled to outplacement
services not to exceed $12,000 in total cost. The total amount of payments to be
paid to an executive under a severance agreement will be reduced to the extent
such payments, when added with other payments to the executive, would exceed the
maximum amount deductible by Aerial, as determined under section 280G of the
Code.
<TABLE>
<CAPTION>
BASE/BONUS EXTENDED BENEFIT
NAME MULTIPLE PERIOD
---- ---------- ----------------
<S> <C> <C> <C>
D. Warkentin.................................... 2.25 27 months
C. Smith........................................ 1.5 18 months
D. Lowry........................................ 1.5 18 months
G. Ballard...................................... 1.5 18 months
C. Ogren........................................ 1.25 15 months
A. Fountaine.................................... 1.0 12 months
R. Rowe......................................... 1.0 12 months
S. Dailey....................................... 1.0 12 months
T. McDowell..................................... 1.0 12 months
B. O'Connor..................................... 1.0 12 months
D. Howe......................................... 1.0 12 months
M. Guerrieri.................................... 1.0 12 months
E. Branham...................................... 1.0 12 months
</TABLE>
The Aerial reorganization will constitute a "change in control" under the
severance agreements. For purposes of the severance agreements, a "nonqualifying
termination" means a termination of employment:
- by Aerial for "cause";
- by the executive for a reason other than "good reason";
- by reason of the executive's death; or
- by reason of the executive's disability.
"Cause" is defined as (1) a material breach by the executive of his or her
duties which do not differ materially from the executive's duties during the
90-day period immediately before the "change in control" and which is willful,
committed in bad faith or without the reasonable belief that such breach is in
the best interest of Aerial and which is not remedied within a reasonable time,
(2) the commission by the executive of a felony involving moral turpitude, (3)
the commission by the executive of theft, fraud, breach of trust or any act of
dishonesty involving Aerial or an affiliate of Aerial, or (4) a significant
violation by the executive of a duty of loyalty to Aerial or an affiliate of
Aerial. "Good reason" is defined as (1) the assignment of the executive to a
materially lower level of responsibility or status, (2) the failure to reelect
the executive to any significant officer or directorship with Aerial, (3) a
reduction in the executive's base salary or bonus opportunity (as in effect
immediately before the "change in control"), (4) the requirement that the
executive be based more than 30 miles from the executive's office at the time of
the "change in control" or the requirement that the executive increase his or
her business travel by 20% or more than the executive's travel
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obligations immediately prior to the "change in control", (5) the failure by
Aerial to continue the employee benefit plans or compensation plans in effect
immediately prior to the "change in control" or to establish substantially
comparable plans to such plans and the failure by Aerial to provide the
executive with welfare benefits substantially similar to those provided to the
executive immediately prior to the "change in control' or those provided to
peers of the executive employed by Aerial or its affiliates, or (6) the failure
by Aerial to obtain agreement from any successor to Aerial to assume to the
severance agreement from Aerial.
Special Retention Plan
The Aerial board has approved the special retention plan under which
certain designated employees, in two separate categories, are eligible to
receive certain specified benefits if they remain continuously employed by
Aerial or an affiliate of Aerial after a "change in control". Under the terms of
the special retention plan, a designated employee may receive the following
benefits:
- six-month retention bonus. If a designated employee remains employed by
Aerial or an affiliate of Aerial for six months after a "change in
control", the employee will receive a cash payment equal to one-half of
an amount determined by multiplying the employee's annual base salary
immediately before the "change in control" by either 75% or 50%,
depending on the category of the employee.
- twelve-month retention bonus. If a designated employee remains employed
by Aerial or an affiliate of Aerial for twelve months after a "change in
control", the employee will receive a cash payment equal to one-half of
an amount determined by multiplying the employee's annual base salary
immediately before the "change in control" by either 75% or 50%,
depending on the category of the employee.
- qualifying termination. If the employee is terminated by reason of a
"qualifying termination" during the twelve-month period beginning on the
"change in control" and the employee executes a general release, the
employee will receive the six-month retention bonus and the twelve-month
retention bonus to the extent such amounts have not already been paid to
the employee. The employee will also be eligible to receive outplacement
assistance services up to either $4,000 or $9,000, depending on the
category of the employee.
The Aerial reorganization will constitute a "change in control" under the
special severance plan. For purposes of the special retention plan, a
"qualifying termination" is a termination of the employee's employment for
reasons other than:
- by Aerial for "cause";
- by Aerial by reason of the employee's disability;
- the employee's death; or
- termination of employment by the employee for any reason other than "good
reason".
"Cause" is defined as (1) the refusal by the employee to perform his or her
duties, other than by reason of physical or mental illness, that are not
materially different from the employee's duties in the aggregate before the
"change in control", (2) the commission by the employee of a felony involving
moral turpitude, (3) the commission by the employee of theft, fraud, breach of
trust or any act of dishonesty involving Aerial or an affiliate of Aerial, or
(4) a significant violation by the employee of a duty of loyalty to Aerial or an
affiliate of Aerial. "Good reason" is defined as (1) the assignment of the
employee to a materially lower level of responsibility or status, (2) a
reduction in the employee's base salary or bonus opportunity, as in effect
immediately before the "change in control", or (3) the requirement that the
employee be based more than 30 miles from the employee's office at the time of
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the "change in control" or the requirement that the employee increase his or her
business travel by 20% or more than the employee's travel obligations
immediately prior to the "change in control".
Special Severance Plan
The Aerial board has approved the special severance plan under which
full-time, non-seasonal employees who are not covered by a severance agreement
or the special retention plan are eligible to receive a severance payment and
outplacement assistance if they are terminated during the six-month period after
a "change in control" by reason of a "qualifying termination". The amount of the
severance payment will be determined by the employee's employment category, the
employee's salary and the employee's years of service, up to a maximum of 26
weeks of the employee's salary.
The Aerial reorganization will constitute a "change in control" under the
special severance plan. For purposes of the special severance plan, a
"qualifying termination" is a termination of the employee's employment for
reasons other than:
- by Aerial for "cause";
- by Aerial by reason of the employee's disability;
- the employee's death; or
- termination of employment by the employee for any reason other than "good
reason".
"Cause" is defined as (1) the refusal by the employee to perform his or her
duties, other than by reason of physical or mental illness, that are not
materially different from the employee's duties in the aggregate before the
"change in control", (2) the commission by the employee of a felony involving
moral turpitude, (3) the commission by the employee of theft, fraud, breach of
trust or any act of dishonesty involving Aerial or an affiliate of Aerial, or
(4) a significant violation by the employee of a duty of loyalty to Aerial or an
affiliate of Aerial. "Good reason" is defined as (1) a reduction in the
employee's base salary or bonus opportunity, as in effect immediately before the
"change in control", or (2) the requirement that the employee be based more than
30 miles from the employee's office at the time of the "change in control".
The combined estimated cost of the severance agreements, the special
retention plan and the special severance plan is approximately $13 million.
Non-Compete Agreements
At the time of the Aerial reorganization, Aerial intends to enter into
non-competition agreements with Donald Warkentin, President and CEO, and Gary
Ballard, Vice President -- Sales of Aerial, pursuant to which Messrs. Warkentin
and Ballard would agree not to compete with Aerial for a period of one year
after the closing in consideration for an aggregate payment not to exceed
$250,000.
ARRANGEMENTS AND TRANSACTIONS BETWEEN TDS AND AERIAL
Currently, TDS owns all of the Aerial Series A Common Shares and
approximately 60% of the Aerial Common Shares, representing approximately 82.1%
of the Aerial common stock. By virtue of this ownership, TDS has the voting
power to elect all of the directors of Aerial and has approximately 98% of the
voting power in matters other than the election of directors. In addition, TDS
has a variety of contractual and other relationships with Aerial.
Following the Aerial reorganization, Aerial will be a wholly-owned
subsidiary of VoiceStream. However, TDS and Aerial have entered into, or will
enter into, other arrangements to facilitate the Aerial Reorganization.
These existing relationships and contemplated arrangements are described
below.
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AGREEMENTS RELATING TO THE AERIAL REORGANIZATION
In contemplation of the Aerial reorganization, TDS and Aerial have entered
or will enter into certain new arrangements. The following agreements have been
negotiated among TDS, Aerial and VoiceStream.
Employee Benefit Plans Separation Agreement
The employee benefit plans separation agreement provides that (1) effective
January 1, 2000, Aerial and its subsidiaries will establish, operate and
maintain separate employee benefit programs and procedures, (2) subject to
certain exceptions, TDS and Aerial will retain or assume any and all liabilities
under various employee benefit plans and arrangements with respect to any person
who, as of the time such liability was incurred, was an employee of TDS or
Aerial, respectively and (3) Aerial will establish certain employee benefit
plans corresponding to certain TDS employee benefit plans in which it
participates and procedures will be established, in accordance with applicable
fiduciary standards and laws, for the transfer of plan assets between the
resulting plans of TDS and Aerial. Neither TDS nor Aerial is required to
maintain any specific employee benefit plan and each such company may amend or
terminate any employee benefit plan in accordance with its terms or applicable
law.
Transition Services Agreement
After the Aerial reorganization, pursuant to a transition services
agreement between TDS and Aerial, TDS will provide to Aerial and VoiceStream
certain services and other benefits, including certain administrative and other
services similar to those that were provided to Aerial by TDS prior to the
Aerial reorganization. TDS will be compensated at rates negotiated between TDS
and VoiceStream.
Debt Replacement Agreement
See "Agreements Relating to the Aerial Reorganization -- Debt Replacement
Agreement."
Amended and Restated Credit Agreement
See "Agreements Relating to the Aerial Reorganization -- Amended and
Restated Credit Agreement."
CONTINUATION, AMENDMENT OR TERMINATION OF EXISTING AGREEMENTS BETWEEN TDS
AND AERIAL
The following paragraphs describe significant agreements that currently
exist between Aerial and TDS, and indicate whether such agreements will be
amended or terminated in connection with the Aerial reorganization. The
amendment or termination of such agreements was negotiated among TDS, Aerial and
VoiceStream and was approved by the Aerial special committee.
Tax Allocation Agreement
On September 8, 1998, Aerial, Aerial Operating Company and TDS entered into
an amended and restated tax allocation agreement. Under the terms of this tax
allocation agreement, Aerial and its subsidiaries agreed to continue to join in
filing consolidated federal income tax returns with TDS and certain affiliates
unless TDS's equity interest in Aerial falls below 80%. For tax years ended
prior to January 1, 1996, TDS has reimbursed Aerial for the federal income tax
savings reflected in the financial statements of the TDS affiliated group
resulting from the inclusion of Aerial and its subsidiaries in that group. TDS
has also reimbursed Aerial with respect to certain post-December 31, 1995,
obligations as described below.
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For tax years beginning after December 31, 1995, the tax allocation
agreement provides that Aerial is required to pay to TDS an amount equal to the
greater of the federal income tax liability of Aerial and its subsidiaries,
calculated as if they were a separate affiliated group, or the tax obtained by
applying the average federal income tax rate of the TDS affiliated group to the
taxable income of Aerial and its subsidiaries, calculated as if they were a
separate affiliated group. Under the tax allocation agreement, Aerial is
compensated, by an offset to amounts Aerial would otherwise be required to pay
to TDS for federal income taxes, for TDS's use of tax benefits at such time as
Aerial and its subsidiaries could utilize such benefits as a separate affiliated
group.
The tax allocation agreement states that, if Aerial and its subsidiaries
cease to be members of the TDS affiliated group and, for a subsequent year,
Aerial and its subsidiaries are required to pay a greater amount of federal
income tax than they would have paid if they had not been members of the TDS
affiliated group after December 31, 1995, TDS will reimburse Aerial for the
excess amount of tax, without interest. In determining the amount of
reimbursement, the tax allocation agreement states that any profits or losses
from new business activities acquired by Aerial or its subsidiaries after Aerial
leaves the TDS affiliated group will be disregarded. In addition, the tax
allocation agreement states that reimbursement will not be required if at any
time in the future Aerial becomes a member of another affiliated group in which
Aerial is not the common parent or fewer than 500,000 Series A Common Shares are
outstanding. The tax allocation agreement also states that reimbursement will
not be required on account of the income of any subsidiary of Aerial if more
than 50% of the voting power or assets of such subsidiary is held by a person or
group other than a person or group owning more than 50% of the voting power of
TDS.
Under the tax allocation agreement, rules similar to those described above
apply to any state or local franchise or income tax liabilities to which TDS and
Aerial and its subsidiaries are subject and which are required to be determined
on a unitary, combined or consolidated basis.
On March 12, 1999, Aerial and TDS entered into a tax settlement agreement
pursuant to which TDS made a payment to Aerial of $114.5 million on March 15,
1999. This payment represents a settlement of amounts that were anticipated to
be due from TDS to Aerial in the future under the tax allocation agreement due
to the use of Aerial losses by the TDS affiliated group for all periods ending
on or before December 31, 1999. The March 15, 1999, tax settlement payment to
Aerial was used to repay a portion of the existing Aerial Operating Company
indebtedness to TDS under the TDS revolving credit agreement, which facilitates
Aerial's interim financing plans. See "Revolving Credit Agreement." TDS
currently anticipates that it will owe to Aerial an additional amount of
approximately $21 million plus interest as a result of adjustments provided for
in the tax settlement agreement. In addition, Aerial has made a claim in the
amount of approximately $4.9 million dollars under the tax settlement agreement
on the grounds that the tax settlement agreement contains an error in the
application of the tax law. TDS disputes this claim, which will be withdrawn
under the Aerial reorganization agreement.
It is currently anticipated that Aerial will continue to be included in the
TDS affiliated group filing consolidated federal income tax returns of TDS
through and including the date of the Aerial reorganization. After the Aerial
reorganization, Aerial will no longer be a member of the TDS affiliated group.
In connection with the Aerial reorganization, the tax allocation agreement will
be terminated on the effective date of the Aerial reorganization. The tax
settlement agreement will continue in full force and effect in accordance with
its terms after the Aerial reorganization.
Intercompany Agreement
TDS and Aerial are parties to an intercompany agreement relating to certain
services, transactions and relationships between TDS and Aerial. The
intercompany agreement will be terminated in connection with the Aerial
reorganization. However, many of the services currently
155
<PAGE> 163
provided under the existing intercompany agreement will continue on a
transitional basis following the Aerial reorganization pursuant to the
transition services agreement.
Cash Management Agreement
Aerial is a party to a cash management agreement with TDS pursuant to which
Aerial deposits its excess cash with TDS for investment under TDS's cash
management programs. The cash management agreement will be terminated in
connection with the Aerial reorganization.
Insurance Cost Sharing Agreement
Pursuant to an insurance cost sharing agreement between TDS and Aerial,
Aerial and its subsidiaries, and their officers, directors and employees, are
afforded coverage under certain insurance policies purchased by TDS. The
insurance cost sharing agreement will be terminated in connection with the
Aerial reorganization. Certain arrangements currently provided under the
existing insurance cost sharing agreement will continue following the Aerial
reorganization pursuant to the transition services agreement.
Employee Benefit Plans Agreement
TDS and Aerial are parties to an employee benefit plans agreement relating
to certain arrangements between TDS and Aerial with respect to employee
benefits. The employee benefit plans agreement will be terminated in connection
with the Aerial reorganization. To the extent necessary, the arrangements under
the existing employee benefit plans agreement have been addressed in the
employee benefit plans separation agreement.
Exchange Agreement
Aerial and TDS are parties to an exchange agreement. The exchange agreement
grants TDS certain rights to subscribe to any issuance of Aerial Common Shares
or other securities of Aerial. The exchange agreement also restricts the
circumstances under which Aerial is entitled to claim that an opportunity,
transaction, agreement or other arrangement to which TDS or any person in which
TDS, or any person in which TDS has or acquires a financial interest, is or
shall become a party, should be the property of Aerial or its subsidiaries. In
addition, the exchange agreement provides that TDS or one of its affiliates,
other than Aerial, may acquire an FCC license to provide PCS services or acquire
control of any entity which has such a license, but that TDS is obligated to
offer to Aerial the opportunity to negotiate regarding the purchase by Aerial or
one of its subsidiaries of such license or business entity if the relevant FCC
license is for (1) an MTA or (2) a BTA which is located, in whole or in part, in
an MTA in which Aerial or one of its subsidiaries has a direct or indirect
interest. In addition, the exchange agreement gives Aerial a right of
negotiation with respect to any PCS interest which any other TDS entity desires
to sell.
In connection with the Aerial reorganization, the exchange agreement will
be terminated and cease to be of any effect.
Registration Rights Agreement
Under a registration rights agreement, Aerial has agreed, upon the request
of TDS, to file one or more registration statements in order to permit TDS to
offer and sell any debt or equity securities of Aerial that TDS may hold at any
time. This registration rights agreement will be terminated in connection with
the Aerial reorganization.
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<PAGE> 164
Revolving Credit Agreement
All of the outstanding financial obligations of Aerial and its subsidiaries
to TDS are incorporated under the revolving credit agreement between TDS and
Aerial Operating Company, as amended. Aerial has guaranteed the obligations of
Aerial Operating Company to TDS. Under the TDS revolving credit agreement,
Aerial Operating Company may borrow up to a maximum amount from TDS, which
amount is reduced by the amount of certain financing obtained by Aerial
Operating Company or Aerial, including the amount of any borrowings under the
Nokia credit agreement.
As of September 30, 1999, the maximum commitment under the TDS revolving
credit agreement was $775 million and the amount available for borrowing by
Aerial Operating Company under the TDS revolving credit agreement was
approximately $81 million.
On November 1, 1999, pursuant to the debt replacement agreement, $420
million of the amount outstanding under the TDS revolving credit agreement will
be replaced with equity and certain modifications will be made to the TDS
revolving credit agreement. As a result, the maximum commitment under the TDS
revolving credit agreement will be reduced from $775 million to $355 million.
Also on November 1, 1999, Sonera will invest an aggregate amount of $230 million
in Aerial and Aerial Operating Company. The funds invested by Sonera will be
used to repay outstanding debt under the TDS revolving credit agreement and will
be available to be drawn down by Aerial Operating Company under the TDS
revolving credit agreement between November 1, 1999, and the closing of the
Aerial reorganization. See "The Aerial Reorganization -- Agreements Relating to
the Aerial Reorganization -- Debt Replacement Agreement." Any debt outstanding
under the TDS revolving credit agreement at the closing of the Aerial
reorganization will continue to remain outstanding after the Aerial
reorganization pursuant to an amended and restated TDS revolving credit
agreement. See "The Aerial Reorganization -- Agreements Relating to the Aerial
Reorganization -- Amended and Restated Credit Agreement."
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<PAGE> 165
VOICESTREAM HOLDINGS VOTING AGREEMENT
VoiceStream has an existing agreement which governs the voting of its
principal stockholders. At the time the Omnipoint reorganization agreement was
entered into, the parties to the VoiceStream voting agreement, which were the
Hellman Entities, the Goldman Sachs Entities, the Stanton Entities, Providence
and certain of the Hutchison Entities, and certain principal stockholders of
Omnipoint, which were Allen & Co., MDCP, James J. Ross and entities affiliated
with Douglas G. Smith, agreed to enter into a new voting agreement which would
be effective on the closing of the Omnipoint reorganization and would apply to
VoiceStream Holdings.
Although the new VoiceStream Holdings voting agreement has not yet been
entered into, it is anticipated that the new agreement will provide, assuming
the Aerial reorganization has not been completed, that the parties thereto will
agree to vote their shares of VoiceStream Holdings common stock for the election
of 15 members of the VoiceStream Holdings board designated as follows:
- Mr. Stanton, as long as he is the chief executive officer of VoiceStream
Holdings or he beneficially owns at least 4,500,000 shares of VoiceStream
Holdings common stock;
- the following number of directors designated by the Hutchison Entities,
so long as they hold an aggregate of at least the indicated percentage of
outstanding, or number of shares, as applicable, of VoiceStream Holdings
common stock specified below (including shares of VoiceStream Holdings
common stock issuable to the Hutchison Entities upon conversion of the
Voice Stream Holdings Junior Preferred)
<TABLE>
<CAPTION>
PERCENTAGE
OR
NUMBER OF
NUMBER OF MEMBERS SHARES
----------------- ----------
<S> <C>
Four........................................................ 27.25%
Three....................................................... 20%
Two......................................................... 9,800,000
One......................................................... 4,500,000
</TABLE>
The Hutchison Entities will be entitled to designate additional directors
if the Hutchison Entities' aggregate ownership of VoiceStream Holdings
common stock and VoiceStream Junior Preferred exceeds certain thresholds
up to 50% board representation upon obtaining 50% equity ownership,
subject to FCC limitations on ownership or control by foreign persons;
- one member designated by the Goldman Sachs Entities, so long as the
Goldman Sachs Entities beneficially own at least 4,500,000 shares of
VoiceStream Holdings common stock;
- one member designated by majority vote of the Stanton Entities and
Providence (such designee being in addition to Mr. Stanton if he is then
serving on the board by reason of being the chief executive officer of
VoiceStream Holdings or the Stanton Entities' beneficial ownership of at
least 4,500,000 shares of VoiceStream Holdings common stock), so long as
the Stanton Entities and Providence collectively beneficially own at
least 4,500,000 shares of VoiceStream Holdings common stock. The Stanton
Entities have agreed that (1) so long as Mr. Stanton is serving as chief
executive officer of VoiceStream Holdings or he beneficially owns at
least 4,500,000 shares of VoiceStream Holdings common stock, (2) the
Stanton Entities and Providence collectively beneficially own at least
4,500,000 shares of VoiceStream Holdings common stock, and (3) Providence
beneficially owns at least 2,500,000 shares of VoiceStream Holdings
common stock, such member shall be designated by Providence;
- four members who were on the Omnipoint board prior to the Omnipoint
reorganization and who are selected by Omnipoint to serve during the
period from the closing of the Omnipoint
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<PAGE> 166
reorganization until and including the second annual meeting of
stockholders of VoiceStream Holdings taking place after the closing of
the Omnipoint reorganization; and
- the remaining members of the board to be selected by a majority of the
persons selected as described above.
At the time the Aerial reorganization agreement was entered into, the
parties to the VoiceStream voting agreement and TDS agreed to enter into an
agreement which would be effective on the closing of the Aerial reorganization
and would apply to VoiceStream Holdings. Although this agreement has not yet
been entered into, it is anticipated that it will provide that the parties
thereto will agree to vote their shares of VoiceStream Holdings common stock for
a board constituted as described above, with an additional member to be
designated by TDS so long as TDS owns at least 4,500,000 shares of VoiceStream
Holdings common stock; however, if TDS owns more than 9,800,000 shares of
VoiceStream Holdings common stock and Sonera owns less than 4,500,000 shares of
VoiceStream Holdings common stock, TDS will be entitled to designate two
additional members. This agreement would not cover, and TDS would not be
required to vote in favor of, the four Omnipoint designees as directors unless
the Omnipoint principal stockholders described above agree to enter into this
agreement and the Omnipoint reorganization has been completed.
At the time the stock purchase agreement for the Sonera-VoiceStream
Investment was entered into, the parties to the VoiceStream voting agreement and
Sonera agreed to enter into an agreement which would be effective on the closing
of the Omnipoint reorganization and would apply to VoiceStream Holdings.
Although this agreement has not yet been entered into, it is anticipated that it
will provide that the parties thereto will agree to vote their shares of
VoiceStream Holdings common stock for a board constituted as described above,
with an additional member to be designated by Sonera, so long as Sonera owns at
least 4,500,000 shares of VoiceStream Holdings common stock; however, if Sonera
owns more than 9,800,000 shares of VoiceStream Holdings common stock and TDS
owns less than 4,500,000 shares of VoiceStream Holdings common stock, Sonera
will be entitled to designate two additional members. This agreement would not
cover, and Sonera would not be required to vote in favor of, the four Omnipoint
designees as directors unless the Omnipoint principal stockholders described
above agree to enter into this agreement.
The parties to the VoiceStream voting agreement, TDS and Sonera have also
agreed to use reasonable efforts to include in one voting agreement among all of
the parties all of the above described rights and obligations; however, if all
the parties do not so agree to enter into one voting agreement, there will be
separate voting agreements as described above between the parties to the
VoiceStream voting agreement, on the one hand, and each of Sonera, TDS and the
principal stockholders of Omnipoint, on the other hand.
Prior to the Omnipoint reorganization, in connection with their acquisition
of shares of Omnipoint Series A Preferred, under certain circumstances,
VoiceStream and Hutchison PCS (USA) will have the right to jointly designate one
person to serve on the Omnipoint board of directors. This right is exercisable
only if they beneficially own at least 7 1/2% of Omnipoint's outstanding equity
securities and they have converted the Omnipoint Series A Preferred owned by
them into Omnipoint common stock.
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<PAGE> 167
THE INVESTMENTS
HUTCHISON INVESTMENTS
At the same time that we entered into the Omnipoint reorganization
agreement, Hutchison Telecommunications, Hutchison PCS (USA) and VoiceStream
Holdings entered into agreements providing for the Hutchison Investments. In the
Hutchison Investments, Hutchison PCS (USA) agreed to purchase shares of
VoiceStream Holdings common stock for a purchase price of $29.00 per share and
shares of VoiceStream Holdings Junior Preferred, for a purchase price of
$100,000 per share. The total purchase price of the VoiceStream Holdings common
stock and the VoiceStream Holdings Junior Preferred will be $957 million,
consisting of $807 million in cash and $150 million in shares of Omnipoint
Series A Preferred purchased by Hutchison PCS (USA) from Omnipoint under a
securities purchase agreement. The Omnipoint Series A Preferred (and all shares
of Omnipoint common stock obtained prior to the Omnipoint reorganization on
conversion of the Omnipoint Series A Preferred) will be exchanged at the closing
of the Omnipoint reorganization for VoiceStream Holdings common stock at a
conversion price of $29.00 per share. Hutchison PCS (USA) has the right to
determine the allocation between VoiceStream Holdings common stock and
VoiceStream Holdings Junior Preferred that it will hold so long as it holds at
least 18.6% of the total number of outstanding shares of VoiceStream Holdings
common stock immediately after the closing of the Omnipoint reorganization.
VoiceStream Holdings entered into the Hutchison Investments because it
believed that in order to successfully merge with Omnipoint, which was and
remains substantially leveraged, VoiceStream Holdings would need additional
equity. If the entire $957 million is used to purchase (or is converted into)
VoiceStream Holdings common stock, at the completion of the Omnipoint
reorganization, the total number of shares of VoiceStream Holdings common stock
purchased as part of the Hutchison Investments will be 33 million shares. After
giving effect to the Omnipoint reorganization, the Aerial reorganization, the
Hutchison Investments and the Sonera-VoiceStream Investment, the Hutchison
Entities would own 55,899,252 shares (approximately 25%) of VoiceStream Holdings
common stock. The consummation of the purchases under this subscription
agreement will take place in connection with the completion of the Omnipoint
reorganization.
The VoiceStream Holdings Junior Preferred has no voting rights, ranks
senior to the VoiceStream Holdings common stock but junior to any other series
or class of VoiceStream Holdings preferred stock which may be issued, provides
for a 2.5% cumulative dividend payable at maturity (40 years from the date of
issuance), and may not be redeemed by VoiceStream Holdings (other than a
mandatory redemption from a holder whose ownership of these shares may result in
the loss of a license or franchise from any governmental agency). The holders of
VoiceStream Holdings Junior Preferred cannot require VoiceStream Holdings to
redeem these shares prior to maturity. Upon conversion of the VoiceStream
Holdings Junior Preferred any cumulative dividend outstanding on the shares so
converted will be canceled. Upon a change of control of VoiceStream Holdings,
VoiceStream Holdings has the right to require the VoiceStream Holdings Junior
Preferred to be converted into VoiceStream Holdings common stock.
SONERA-VOICESTREAM INVESTMENT
On September 17, 1999, VoiceStream Holdings and Sonera entered into an
agreement providing for the Sonera-VoiceStream Investment. In the
Sonera-VoiceStream Investment, Sonera agreed to purchase at the closing of the
Omnipoint reorganization 8,771,930 shares of VoiceStream Holdings common stock
for an aggregate consideration of $500 million, at $57.00 per share. The Sonera-
VoiceStream Investment is desirable to us in light of the fact that Omnipoint is
substantially leveraged, and the Sonera-VoiceStream Investment will provide us
with additional capital.
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<PAGE> 168
SONERA-AERIAL INVESTMENT
As of September 17, 1999, TDS, Aerial, Aerial Operating Company and Sonera
entered into the settlement agreement and release providing for the
Sonera-Aerial Investment. In the Sonera-Aerial Investment, on November 1, 1999,
Sonera will invest an aggregate of $230 million in Aerial and Aerial Operating
Company at an equivalent price of $22.00 per share of Aerial common stock. In
this transaction, (1) Aerial will issue to Sonera 3,409,091 Aerial Common Shares
in consideration for $75 million, and (2) Aerial Operating Company will issue to
Sonera 1,046,999 shares of Aerial Operating Company common stock in
consideration for $155 million. See "Agreements Relating to the Aerial
Reorganization -- Debt Replacement Agreement" and "Sonera Settlement Agreement
and Release."
TDS DEBT REPLACEMENT
As of September 17, 1999, TDS, Aerial, Aerial Operating Company,
VoiceStream and VoiceStream Holdings entered into the debt replacement agreement
and TDS, Aerial, Aerial Operating Company and Sonera entered into the settlement
agreement and release, providing for the TDS Debt Replacement. In the TDS Debt
Replacement, on November 1, 1999, TDS will replace $420 million of debt owed by
Aerial Operating Company to TDS under the TDS revolving credit agreement with
Aerial equity at a price of $22.00 per share of Aerial common stock. In this
transaction, Aerial will issue to TDS an aggregate of 19,090,909 shares of
Aerial common stock in consideration for the assignment by TDS to Aerial of $420
million of debt under the TDS revolving credit agreement. See "Agreements
Relating to the Aerial Reorganization -- Debt Replacement Agreement" and "Sonera
Settlement Agreement and Release."
161
<PAGE> 169
FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
combine the historical consolidated balance sheets and statements of operations
of VoiceStream, Omnipoint and Aerial. These financial statements give effect to
each of the Omnipoint reorganization and the Aerial reorganization using the
purchase method of accounting for a business combination for both.
To aid you in your analysis of the financial aspects of each of these
reorganizations, both individually and combined, we have presented this set of
pro forma condensed combined financial statements demonstrating first, the
financial aspects of the Omnipoint reorganization on a stand-alone basis and
then, adding in the effect of the Aerial reorganization to demonstrate the
financial aspects of the combined reorganizations. We have also presented a set
of pro forma condensed combined financial statements demonstrating the financial
aspects of the Aerial reorganization on a stand-alone basis.
We derived this information from the audited consolidated financial
statements of VoiceStream, Omnipoint and Aerial for the year ended December 31,
1998 and from the unaudited consolidated financial statements of VoiceStream,
Omnipoint and Aerial as of and for the six months ended June 30, 1999. This
information is only a summary and you should read it in conjunction with the
historical financial statements and related notes contained in the annual
reports of VoiceStream, Omnipoint and Aerial and other information that has been
filed with the SEC and incorporated by reference. See "Where You Can Find More
Information."
The unaudited pro forma condensed combined statements of operations for the
six months ended June 30, 1999 and for the year ended December 31, 1998, assume
each reorganization was effected on January 1, 1998. The unaudited pro forma
condensed combined balance sheet as of June 30, 1999 gives effect to each
reorganization as if it had occurred on June 30, 1999. The accounting policies
of VoiceStream, Omnipoint and Aerial are substantially comparable. Certain
reclassifications have been made to Omnipoint's and Aerial's historical
presentation to conform to VoiceStream's presentation. These reclassifications
do not materially impact Omnipoint's or Aerial's operations or financial
position for the periods presented.
We are providing the unaudited pro forma condensed combined financial
information for illustrative purposes only. The companies may have performed
differently had they always been combined. You should not rely on the pro forma
combined financial information as being indicative of the historical results
that would have been achieved had the companies always been combined or the
future results that the combined company will experience after the
reorganizations.
162
<PAGE> 170
VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(OMNIPOINT REORGANIZATION ONLY AND OMNIPOINT REORGANIZATION AND AERIAL
REORGANIZATION)
JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
OMNIPOINT
COOK INLET REORGANIZATION VOICESTREAM
VOICESTREAM OMNIPOINT ADJUSTMENT ADJUSTMENTS AND OMNIPOINT AERIAL
----------- ----------- ---------- -------------- ------------- ----------
NOTE 1a NOTE 1b NOTE 2 NOTE 1c
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...... $ 32,360 $ 309,594 $ (513,008) Note 3 $1,354,146 $ 100,033
38,350 Note 3b
(18,000) Note 3e
807,000 Note 4
500,000 Note 9
197,850 Note 10
Short-term investments......... 25,778 25,778
Accounts receivable, net....... 51,632 56,764 $ (3,500) 104,896 29,059
Inventory...................... 18,068 35,866 53,934 9,998
Prepaid expenses and other
current assets............... 6,398 16,567 (1,400) 21,565 6,609
---------- ----------- --------- ---------- ---------- ----------
Total current assets....... 108,458 444,569 (4,900) 1,012,192 1,560,319 145,699
---------- ----------- --------- ---------- ---------- ----------
Property and equipment, net..... 679,738 1,051,150 (162,375) 1,568,513 569,252
Licensing costs and other
intangible assets, net......... 323,185 728,127 (226,747) 3,300,652 Note 3 4,132,367 328,003
7,150 Note 10
Investment in and advances to
unconsolidated affiliates...... 246,527 99,377 35,723 Note 3f 231,627 1,902
(150,000) Note 5, 8
Other assets.................... 13,473 28,617 (7,197) 34,893 810
---------- ----------- --------- ---------- ---------- ----------
$1,371,381 $ 2,252,463 $(301,842) $4,205,717 $7,527,719 $1,045,666
========== =========== ========= ========== ========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable............... $ 67,499 $ 115,851 $ (1,500) $ 181,850 $ 40,269
Accrued liabilities............ 73,829 177,289 (9,014) 242,104 22,991
Current portion of long-term
debt......................... 134,453 (5,658) 128,795 68,458
---------- ----------- --------- ---------- ----------
Total current
liabilities.............. 141,328 427,593 (16,172) 552,749 131,718
---------- ----------- --------- ---------- ----------
Long-term debt (Note 6)......... 1,025,000 2,470,371 (313,670) $ 205,000 Note 10 3,386,701 241,501
---------- ----------- --------- ---------- ---------- ----------
Deferred tax liability, net..... 17,456
----------
Contingencies (See Notes)
Minority interest............... 479
----------
VoiceStream Holdings Junior
Preferred...................... $ 650,400 Note 4 650,400
---------- ----------
Shareholders' equity (deficit):
Common stock and paid-in
capital...................... 1,039,926 312,712 28,000 1,534,216 Note 3 3,774,986 983,631
364,000 Note 3d
150,000 Note 5, 8
156,600 Note 4
(310,468) Note 7
500,000 Note 9
Series A Common Shares and
paid-in capital.............. 324,331
Omnipoint 7% Convertible
Preferred.................... 286,651 (286,651) Note 3b
Series A Preferred............. 300,000 (300,000) Notes 5, 8
Deferred compensation.......... (16,711) (11,076) 11,076 Note 7 (16,711)
Notes receivable from
shareholders................. (2,244) (2,244)
Accumulated deficit............ (818,162) (1,531,544) 1,531,544 Note 7 (818,162) (653,450)
---------- ----------- --------- ---------- ---------- ----------
Total shareholders' equity
(deficit)................ 205,053 (645,501) 28,000 3,350,317 2,937,869 654,512
---------- ----------- --------- ---------- ---------- ----------
$1,371,381 $ 2,252,463 $(301,842) $4,205,717 $7,527,719 $1,045,666
========== =========== ========= ========== ========== ==========
<CAPTION>
AERIAL VOICESTREAM,
REORGANIZATION OMNIPOINT AND
ADJUSTMENTS AERIAL
-------------- -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...... $ (68,458) Note 13 $ 1,370,221
Note
(15,500) 11h
Short-term investments......... 25,778
Accounts receivable, net....... 133,955
Inventory...................... 63,932
Prepaid expenses and other
current assets............... 28,174
----------- -----------
Total current assets....... (83,958) 1,622,060
----------- -----------
Property and equipment, net..... 2,137,765
Licensing costs and other
intangible assets, net......... 2,337,493 Note 11 6,797,863
Investment in and advances to
unconsolidated affiliates...... 233,529
Other assets.................... 35,703
----------- -----------
$ 2,253,535 $10,826,920
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable............... $ 222,119
Accrued liabilities............ 265,095
Current portion of long-term
debt......................... $ (68,458) Note 13 128,795
----------- -----------
Total current
liabilities.............. (68,458) 616,009
----------- -----------
Long-term debt (Note 6)......... 3,628,202
-----------
Deferred tax liability, net..... 17,456
-----------
Contingencies (See Notes)
Minority interest............... (479) Note 12
-----------
VoiceStream Holdings Junior
Preferred...................... 650,400
-----------
Shareholders' equity (deficit):
Common stock and paid-in
capital...................... 2,953,284 Note 11 6,751,970
Note
23,700 11g
(984,110) Note 12
479 Note 12
Series A Common Shares and
paid-in capital.............. (324,331) Note 12
Omnipoint 7% Convertible
Preferred....................
Series A Preferred.............
Deferred compensation.......... (16,711)
Notes receivable from
shareholders................. (2,244)
Accumulated deficit............ 653,450 Note 12 (818,162)
----------- -----------
Total shareholders' equity
(deficit)................ 2,322,472 5,914,853
----------- -----------
$ 2,253,535 $10,826,920
=========== ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
163
<PAGE> 171
VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(OMNIPOINT REORGANIZATION ONLY AND OMNIPOINT REORGANIZATION AND AERIAL
REORGANIZATION)
SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
OMNIPOINT VOICESTREAM
COOK INLET REORGANIZATION AND
VOICESTREAM OMNIPOINT ADJUSTMENT ADJUSTMENTS OMNIPOINT AERIAL
----------- --------- ------------- -------------- ----------- ---------
NOTE 1a NOTE 1b NOTE 2 NOTE 1c
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Subscriber revenues......... $ 137,971 $116,255 $(16,604) $ 237,622 $ 91,070
Roamer revenues............. 3,560 10,625 (1,114) 13,071 2,300
Equipment revenues.......... 30,351 26,838 (3,700) 53,489 13,433
License fees and engineering
services.................. 2,266 2,266
--------- --------- -------- --------- ---------
Total revenues........... 171,882 155,984 (21,418) 306,448 106,803
--------- --------- -------- --------- ---------
Operating expenses:
Cost of service............. 37,469 69,493 (11,320) 95,642 33,845
Cost of equipment sales..... 60,908 77,505 (12,500) 125,913 25,557
Cost of engineering
services.................. 1,686 1,686
Research and development.... 171 171
General and
administrative............ 48,396 73,252 (3,700) 117,948 66,251
Sales and marketing......... 85,806 74,486 (11,200) 149,092 34,122
Depreciation and
amortization.............. 55,414 93,467 (14,310) $ 78,414 Note 14 212,985 44,209
Stock based compensation.... 47,303 1,576 48,879
--------- --------- -------- -------- --------- ---------
Total operating
expenses............... 335,296 391,636 (53,030) 78,414 752,316 203,984
--------- --------- -------- -------- --------- ---------
Operating loss............... (163,414) (235,652) 31,612 (78,414) (445,868) (97,181)
--------- --------- -------- -------- --------- ---------
Other income (expense):
Interest and financing
expense, net.............. (38,352) (126,490) 16,111 6,471 Note 1a (142,260) (14,165)
Equity in net loss of
unconsolidated
affiliates................ (21,696) (3,006) (28,421) (781) Note 2 (53,904) (100)
Interest income and other,
net....................... 6,988 4,824 500 12,312 489
Minority share of loss...... 4,902
--------- --------- -------- -------- --------- ---------
Total other income
(expense).............. (53,060) (124,672) (11,810) 5,690 (183,852) (8,874)
--------- --------- -------- -------- --------- ---------
Loss before income
taxes.................. (216,474) (360,324) 19,802 (72,724) (629,720) (106,055)
Income tax benefit........... 113,230
--------- --------- -------- -------- --------- ---------
Net (loss) income........ $(216,474) $(360,324) $ 19,802 $(72,724) $(629,720) $ 7,175
========= ========= ======== ======== ========= =========
<CAPTION>
AERIAL VOICESTREAM
REORGANIZATION OMNIPOINT
ADJUSTMENTS AND AERIAL
-------------- -----------
<S> <C> <C> <C>
Revenues:
Subscriber revenues......... $ 328,692
Roamer revenues............. 15,371
Equipment revenues.......... 66,922
License fees and engineering
services.................. 2,266
----------
Total revenues........... 413,251
----------
Operating expenses:
Cost of service............. 129,487
Cost of equipment sales..... 151,470
Cost of engineering
services.................. 1,686
Research and development.... 171
General and
administrative............ 184,199
Sales and marketing......... 183,214
Depreciation and
amortization.............. $ 55,516 Note 14 312,710
Stock based compensation.... 48,879
-------- ----------
Total operating
expenses............... 55,516 1,011,816
-------- ----------
Operating loss............... (55,516) (598,565)
-------- ----------
Other income (expense):
Interest and financing
expense, net.............. (156,425)
Equity in net loss of
unconsolidated
affiliates................ (54,004)
Interest income and other,
net....................... 12,801
Minority share of loss...... (4,902) Note 16
-------- ----------
Total other income
(expense).............. (4,902) (197,628)
-------- ----------
Loss before income
taxes.................. (60,418) (796,193)
Income tax benefit........... 113,230
-------- ----------
Net (loss) income........ $(60,418) $ (682,963)
======== ==========
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Pro forma loss per common share calculation (Note 17):
Net loss................................................... $(629,720) $(682,963)
Preferred dividends attributable to VoiceStream Holdings
Junior Preferred......................................... (6,638) (6,638)
--------- ---------
Net loss attributable to common shareholders............... $(636,358) $(689,601)
========= =========
Weighted average common shares used in computing basic and
diluted loss per common share............................ 148,584 200,396
========= =========
Basic and diluted loss per common share.................... $ (4.28) $ (3.44)
========= =========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
164
<PAGE> 172
VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(OMNIPOINT REORGANIZATION ONLY AND OMNIPOINT REORGANIZATION AND AERIAL
REORGANIZATION)
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
OMNIPOINT VOICESTREAM
COOK INLET REORGANIZATION AND
VOICESTREAM OMNIPOINT ADJUSTMENT ADJUSTMENTS OMNIPOINT AERIAL
----------- ----------- ------------- -------------- ----------- ----------
NOTE 1A NOTE 1B NOTE 2 NOTE 1C
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Subscriber
revenues.......... $ 123,966 $ 127,594 $(15,681) $ 235,879 $ 121,160
Roamer revenues..... 3,506 9,999 (500) 13,005 3,231
Equipment
revenues.......... 40,490 26,616 (2,175) 64,931 31,514
License fees and
engineering
services.......... 4,784 4,784
--------- --------- -------- ----------- ----------
Total
revenues...... 167,962 168,993 (18,356) 318,599 155,905
--------- --------- -------- ----------- ----------
Operating expenses:
Cost of service..... 50,978 120,634 (16,442) 155,170 57,396
Cost of equipment
sales............. 77,071 100,074 (9,994) 167,151 87,715
Cost of engineering
services.......... 4,168 4,168
Research and
development....... 16,639 16,639
General and
administrative.... 75,343 128,031 (10,405) 192,969 139,458
Sales and
marketing......... 85,447 127,211 (19,300) 193,358 67,920
Depreciation and
amortization...... 83,767 129,043 (21,690) $ 156,828 Note 14 347,948 83,401
--------- --------- -------- --------- ----------- ----------
Total operating
expenses...... 372,606 625,800 (77,831) 156,828 1,077,403 435,890
--------- --------- -------- --------- ----------- ----------
Operating loss........ (204,644) (456,807) 59,475 (156,828) (758,804) (279,985)
--------- --------- -------- --------- ----------- ----------
Other income
(expense):
Interest and
financing expense,
net............... (47,258) (187,187) 30,569 13,140 Note 1a (190,736) (24,118)
Equity in net loss
of unconsolidated
affiliates........ (24,120) (11,879) (59,825) (1,563) Note 2 (97,387) (128)
Interest income and
other, net........ 8,616 3,206 1,264 13,086 1,324
Minority share of
loss.............. 23,620
--------- --------- -------- --------- ----------- ----------
Total other
income
(expense)..... (62,762) (195,860) (27,992) 11,577 (275,037) 698
--------- --------- -------- --------- ----------- ----------
Loss before
income
taxes......... (267,406) (652,667) 31,483 (145,251) (1,033,841) (279,287)
Income tax expense.... (2,579)
--------- --------- -------- --------- ----------- ----------
Net (loss)
income...... $(267,406) $(652,667) $ 31,483 $(145,251) $(1,033,841) (281,866)
========= ========= ======== ========= =========== ==========
<CAPTION>
AERIAL VOICESTREAM,
REORGANIZATION OMNIPOINT
ADJUSTMENTS AND AERIAL
-------------- ------------
<S> <C> <C> <C>
Revenues:
Subscriber
revenues.......... $ 357,039
Roamer revenues..... 16,236
Equipment
revenues.......... 96,445
License fees and
engineering
services.......... 4,784
-----------
Total
revenues...... 474,504
-----------
Operating expenses:
Cost of service..... 212,566
Cost of equipment
sales............. 254,866
Cost of engineering
services.......... 4,168
Research and
development....... 16,639
General and
administrative.... 332,427
Sales and
marketing......... 261,278
Depreciation and
amortization...... $ 111,032 Note 14 542,381
--------- -----------
Total operating
expenses...... 111,032 1,624,325
--------- -----------
Operating loss........ (111,032) (1,149,821)
--------- -----------
Other income
(expense):
Interest and
financing expense,
net............... (214,854)
Equity in net loss
of unconsolidated
affiliates........ (97,515)
Interest income and
other, net........ 14,410
Minority share of
loss.............. (23,620) Note 16
--------- -----------
Total other
income
(expense)..... (23,620) (297,959)
--------- -----------
Loss before
income
taxes......... (134,652) (1,447,780)
Income tax expense.... (2,579)
--------- -----------
Net (loss)
income...... $(134,652) $(1,450,359)
========= ===========
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Pro forma loss per common share calculation (Note 17):
Net loss.................................................. $(1,033,841) $(1,450,359)
Preferred dividends attributable to VoiceStream Holdings
Junior Preferred........................................ (13,275) (13,275)
----------- -----------
Net loss attributable to common shareholders.............. $(1,047,116) $(1,463,634)
=========== ===========
Weighted average common shares used in computing basic and
diluted loss per common share........................... 145,291 197,103
=========== ===========
Basic and diluted loss per common share................... $ (7.21) $ (7.43)
=========== ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
165
<PAGE> 173
VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(AERIAL REORGANIZATION ONLY)
JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
AERIAL
REORGANIZATION VOICESTREAM
VOICESTREAM AERIAL ADJUSTMENTS AND AERIAL
----------- ---------- -------------- -----------
NOTE 1a NOTE 1c
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........ $ 32,360 $ 100,033 $ (68,458) Note 13 $ 48,435
(15,500) Note 11h
Accounts receivable, net......... 51,632 29,059 80,691
Inventory........................ 18,068 9,998 28,066
Prepaid expenses and other
current assets................ 6,398 6,609 13,007
---------- ---------- ---------- ----------
Total current assets..... 108,458 145,699 (83,958) 170,199
---------- ---------- ---------- ----------
Property and equipment, net........ 679,738 569,252 1,248,990
Licensing costs and other
intangible assets, net........... 323,185 328,003 2,337,493 Note 11 2,988,681
Investment in and advances to
unconsolidated affiliates........ 246,527 1,902 248,429
Other assets....................... 13,473 810 14,283
---------- ---------- ---------- ----------
$1,371,381 $1,045,666 $2,253,535 $4,670,582
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable................. $ 67,499 $ 40,269 $ $ 107,768
Accrued liabilities.............. 73,829 22,991 96,820
Current portion of long-term
debt.......................... 68,458 $ (68,458) Note 13
---------- ---------- ---------- ----------
Total current
liabilities............ 141,328 131,718 (68,458) 204,588
---------- ---------- ---------- ----------
Long-term debt (Note 6)............ 1,025,000 241,501 1,266,501
---------- ---------- ---------- ----------
Deferred tax liability, net........ 17,456 17,456
---------- ----------
Contingencies (See Notes)
Minority interest.................. 479 (479) Note 12
---------- ----------
Shareholders' equity:
Common stock and paid-in
capital....................... 1,039,926 983,631 2,953,284 Note 11 4,016,910
23,700 Note 11g
(984,110) Note 12
479 Note 12
Series A Common Shares and
paid-in capital............... 324,331 (324,331) Note 12
Deferred compensation............ (16,711) (16,711)
Accumulated deficit.............. (818,162) (653,450) 653,450 Note 12 (818,162)
---------- ---------- ---------- ----------
Total shareholders'
equity................. 205,053 654,512 2,322,472 3,182,037
---------- ---------- ---------- ----------
$1,371,381 $1,045,666 $2,253,535 $4,670,582
========== ========== ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
166
<PAGE> 174
VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(AERIAL REORGANIZATION ONLY)
SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AERIAL
REORGANIZATION VOICESTREAM
VOICESTREAM AERIAL ADJUSTMENTS AND AERIAL
----------- --------- -------------- -----------
NOTE 1a NOTE 1c
<S> <C> <C> <C> <C> <C>
Revenues:
Subscriber revenues........... $ 137,971 $ 91,070 $ 229,041
Roamer revenues............... 3,560 2,300 5,860
Equipment revenues............ 30,351 13,433 43,784
--------- --------- ---------
Total revenues........ 171,882 106,803 278,685
--------- --------- ---------
Operating expenses:
Cost of service............... 37,469 33,845 71,314
Cost of equipment sales....... 60,908 25,557 86,465
General and administrative.... 48,396 66,251 114,647
Sales and marketing........... 85,806 34,122 119,928
Depreciation and 55,414 44,209 $ 55,516 Note 14 155,139
amortization...............
Stock based compensation...... 47,303 47,303
--------- --------- -------- ---------
Total operating 335,296 203,984 55,516 594,796
expenses...........
--------- --------- -------- ---------
Operating loss.................. (163,414) (97,181) (55,516) (316,111)
--------- --------- -------- ---------
Other income (expense):
Interest and financing (38,352) (14,165) (52,517)
expense, net...............
Equity in net loss of (21,696) (100) (21,796)
unconsolidated
affiliates.................
Interest income and other, 6,988 489 7,477
net........................
Minority share of loss........ 4,902 (4,902) Note 16
--------- --------- -------- ---------
Total other income
(expense).......... (53,060) (8,874) (4,902) (66,836)
--------- --------- -------- ---------
Loss before income (216,474) (106,055) (60,418) (382,947)
taxes..............
Income tax benefit.............. 113,230 113,230
--------- --------- -------- ---------
Net (loss) income..... $(216,474) $ 7,175 $(60,418) $(269,717)
========= ========= ======== =========
</TABLE>
<TABLE>
<S> <C>
Pro forma loss per common share calculation (Note 17):
Net loss attributable to common shareholders................ $(269,717)
=========
Weighted average common shares used in computing basic and
diluted loss per common
share..................................................... 147,357
=========
Basic and diluted loss per common share..................... $ (1.83)
=========
</TABLE>
See Note to Unaudited Pro Forma Condensed Combined Financial Statements.
167
<PAGE> 175
VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(AERIAL REORGANIZATION ONLY)
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AERIAL
REORGANIZATION VOICESTREAM
VOICESTREAM AERIAL ADJUSTMENTS AND AERIAL
----------- ---------- -------------- -----------
NOTE 1a NOTE 1c
<S> <C> <C> <C> <C> <C>
Revenues:
Subscriber revenues................ $ 123,966 $ 121,160 $ 245,126
Roamer revenues.................... 3,506 3,231 6,737
Equipment revenues................. 40,490 31,514 72,004
--------- --------- ---------
Total revenues............. 167,962 155,905 323,867
--------- --------- ---------
Operating expenses:
Cost of services................... 50,978 57,396 108,374
Cost of equipment sales............ 77,071 87,715 164,786
General and administrative......... 75,343 139,458 214,801
Sales and marketing................ 85,447 67,920 153,367
Depreciation and amortization...... 83,767 83,401 $ 111,032 Note 14 278,200
--------- --------- --------- ---------
Total operating expenses... 372,606 435,890 111,032 919,528
--------- --------- --------- ---------
Operating loss....................... (204,644) (279,985) (111,032) (595,661)
--------- --------- --------- ---------
Other income (expense):
Interest and financing expense,
net............................. (47,258) (24,118) (71,376)
Equity in net loss of
unconsolidated affiliates....... (24,120) (128) (24,248)
Interest income and other, net..... 8,616 1,324 9,940
Minority share of loss............. 23,620 (23,620) Note 16
--------- --------- --------- ---------
Total other income
(expense)............... (62,762) 698 (23,620) (85,684)
--------- --------- --------- ---------
Loss before income taxes... (267,406) (279,287) (134,652) (681,345)
Income tax expense................... (2,579) (2,579)
--------- --------- --------- ---------
Net loss................... $(267,406) $(281,866) $(134,652) $(683,924)
========= ========= ========= =========
</TABLE>
<TABLE>
<S> <C>
Pro forma loss per common share calculation (Note 17):
Net loss attributable to common shareholders................ $(683,924)
=========
Weighted average common shares used in computing basic and
diluted loss per common share............................. 144,199
=========
Basic and diluted loss per common share..................... $ (4.74)
=========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
168
<PAGE> 176
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
DESCRIPTION OF PRO FORMA REORGANIZATION TRANSACTIONS:
1a. Represents the historical financial position of VoiceStream adjusted for
the remaining $47.5 million of the $150 million Interim Investment acquired
by VoiceStream on October 1, 1999. The balance sheet has been adjusted for
this cash payment as a decrease in cash and cash equivalents and an
increase in investment in and advances to unconsolidated affiliates. The
statements of operations have been adjusted for interest and financing
expenses that would have been incurred due to the increase in borrowings of
$150 million. This adjustment assumes that VoiceStream purchases Omnipoint
Series A Preferred as of January 1, 1998 and incurs interest expense due to
an increase in borrowings to fund such purchase. The interest expense is
calculated on the total borrowing of $150 million for the six months ended
June 30, 1999 and for the year ended December 31, 1998 at a market interest
rate of 8.9% and 8.7%, respectively. This adjustment has been eliminated in
the Omnipoint reorganization columns to reflect the impact of this
transaction on a combined VoiceStream Holdings basis.
In the event that the Omnipoint reorganization is not completed or is
terminated, VoiceStream will continue to hold its shares of Omnipoint
Series A Preferred and the conversion price will be reduced to $18.50 per
share, under certain conditions.
1b. Represents the historical results of operations and financial position of
Omnipoint adjusted for the remaining portion of the $300 million Interim
Investment committed collectively by VoiceStream and Hutchison PCS (USA).
Each company purchased an additional 1,979 shares of Series A Preferred on
October 1, 1999 for an aggregate purchase price of $95 million which is
convertible at their option into shares of Omnipoint common stock at a
price of $24.00 per share. Therefore, this column includes the effects of
the $95 million portion of Interim Investment as an increase to cash and
cash equivalents and Series A Preferred. In addition to the adjustment for
the Interim Investment, certain reclassifications have been made to the
historical financial information for Omnipoint to conform to VoiceStream's
financial statement presentation. These reclassifications do not materially
impact Omnipoint's results of operations or financial position.
1c. Represents the historical financial position of Aerial adjusted for the
$230 million Sonera-Aerial Investment at $22.00 per share, the use of these
proceeds to pay down a portion of the Aerial debt to TDS and the TDS Debt
Replacement at $22.00 per share. Therefore, this column includes the
effects of these adjustments as follows (in thousands):
<TABLE>
<CAPTION>
HISTORICAL
AERIAL INTERIM AERIAL
JUNE 30, 1999 TRANSACTIONS SUBTOTAL
------------- ------------ --------
<S> <C> <C> <C>
Cash and cash equivalents...................... $ 4,445 $ 95,588 $100,033
Current portion of long-term debt.............. $622,870 $(554,412) $ 68,458
Common Shares and paid-in capital.............. $617,962 $ 365,669 $983,631
Series A Common Shares and paid-in capital..... $ 40,000 $ 284,331 $324,331
</TABLE>
The $420 million in Aerial equity has been allocated between Aerial Common
Shares ($135.7 million) and Aerial Series A Common Shares ($284.3 million)
as required by the TDS Debt Replacement. The entire $230 million
Sonera-Aerial Investment was assumed to be a purchase of Aerial common
stock.
169
<PAGE> 177
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Interest expense for the six months ended June 30, 1999 and the twelve
months ended December 31, 1998 has been reduced to reflect the TDS Debt
Replacement and the repayment of the remaining debt to TDS with the
proceeds of the Sonera-Aerial Investment.
Certain reclassifications have been made to the historical financial
information for Aerial to conform to VoiceStream's financial statement
presentation. These reclassifications do not materially impact Aerial's
results of operations or financial position.
2. These columns represent the deconsolidation and contribution of certain
operations, assets and liabilities related to two new joint venture
entities described below, which were previously consolidated in Omnipoint's
historical balance sheet and statement of operations. These adjustments
reflect a change to the equity method of accounting for the interest
because VoiceStream Holdings will have only a 49.9% ownership in the two
new joint venture entities.
Under the Designated Entity rules set forth by the FCC, VoiceStream
Holdings can not own or operate Omnipoint's C and F Block licenses. As a
result, immediately prior to the reorganization, the C and F Block licenses
and certain of the related operations, assets and liabilities are being
transferred to two new joint venture entities controlled by Cook Inlet.
Each of these joint venture entities, CIVS II and CIVS III, is expected to
qualify as a Designated Entity. CIVS II will own all C and F Block licenses
previously held by Omnipoint. CIVS III will own the C Block licenses
acquired by Omnipoint in the May FCC re-auction. VoiceStream Holdings
expects to enter into an agreement to provide technical services to each of
these joint venture entities.
Cook Inlet will contribute a total of $75 million in cash to these joint
venture entities for its 50.1% ownership and exchange rights. VoiceStream
Holdings will contribute a combination of non-cash assets and liabilities
for its 49.9% ownership. Cook Inlet will hold the majority of voting power
in each of these joint venture entities -- see also "Risk Factors -- We
will have to rely on joint venture entities that we will not control to
maintain PCS coverage and expand in selected markets." As part of this
transaction, Cook Inlet has certain rights, but not the obligation, to
exchange its joint venture interests into a total of 3,750,000 shares of
VoiceStream Holdings common stock for a 30 day period beginning five years
after the issuance date of the licenses held by CIVS II and III. For CIVS
II, this date is in the second quarter of 2002, and for CIVS III this date
is estimated to be not before 2004. These rights are conditioned upon the
FCC's Designated Entity rules and VoiceStream Holdings' legal ability to
own the C and F Block licenses at the time of the exchange under such
rules.
As mentioned above, each of the joint venture agreements, included rights
whereby Cook has the ability to exchange its investment in the joint
ventures for a fixed number of VoiceStream Holdings shares. Consistent with
Emerging Issues Task Force (EITF) 98-5, the fair value of the exchange
rights has been recorded as an increase to investment in and advances to
unconsolidated affiliates and additional paid in capital as of June 30,
1999. The fair value will be amortized over the life of these exchange
rights and such amortization has been reflected in the pro forma condensed
combined financial statements for the periods ended June 30, 1999 and
December 31, 1998.
For purposes of this pro forma presentation, it has been assumed that all
related vendor debt will be transferable to the joint ventures.
170
<PAGE> 178
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. The Omnipoint reorganization is expected to result in an allocation of the
purchase price to the tangible and intangible assets and liabilities of
Omnipoint. The transaction is not expected to result in an incremental
deferred tax liability. Such allocation reflects the estimated fair value
of the assets and liabilities acquired by VoiceStream Holdings based upon
information available at the date of the preparation of the accompanying
pro forma condensed combined financial statements. Such allocation will be
adjusted upon the final determination of such fair values. Management is
not aware of any circumstances that would cause the final purchase price
allocation to be significantly different from that which is reflected in
the accompanying pro forma condensed combined balance sheet. However,
actual valuations and allocations may differ from those reflected herein.
The aggregate purchase price was calculated as follows (in thousands,
except per share data):
<TABLE>
<S> <C>
Total common shares outstanding of Omnipoint -- Note 3a... 53,681
Assumed conversion of Omnipoint 7% Convertible
Preferred -- Note 3b.................................... 10,445
----------
Total estimated Omnipoint shares outstanding........... 64,126
VoiceStream Holdings exchange ratio per share............. 0.825
----------
Equivalent VoiceStream Holdings common shares............. 52,904
The Omnipoint conversion price -- Note 3c................ $ 29.00
----------
Subtotal............................................... $1,534,216
Cash consideration of $8 per share........................ 513,008
Fair value of liabilities of Omnipoint at June 30, 1999... 2,568,122
Option/warrant conversion costs -- Note 3d................ 364,000
Reorganization related costs -- Note 3e................... 18,000
----------
Total Consideration....................................... 4,997,346
Fair value of assets of Omnipoint acquired (excluding FCC
licenses) -- Note 3f.................................... 1,195,314
Fair value of FCC licenses acquired (net book value of
licenses equal to $501,380)............................. 829,560
----------
Preliminary goodwill...................................... $2,972,472
==========
</TABLE>
3a. Outstanding shares of Omnipoint common stock used for purposes of
this pro forma are as of August 31, 1999, the latest practicable
date.
3b. For purposes of this pro forma presentation we have assumed that all
of the 6,500,000 shares of Omnipoint 7% Convertible Preferred are
converted into 10,445,000 shares of Omnipoint common stock just
prior to the Omnipoint reorganization, and are exchanged as part of
the Omnipoint reorganization for 8,617,000 shares of VoiceStream
Holdings common stock. Assuming this conversion, the remaining
amounts previously deposited by Omnipoint into escrow to pay
dividends on these shares revert back to Omnipoint. As of June 30,
1999 the amount held in escrow was $38.4 million.
Our assumption that the holders of Omnipoint's 7% Convertible
Preferred would exercise their conversion option is based on the
fact that such conversion likely would
171
<PAGE> 179
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
result in more favorable tax treatment than conversion after closing
of the reorganization. If the holders of the Omnipoint 7% Preferred
were to choose to continue to hold their preferred stock in
Omnipoint, VoiceStream Holdings would report a minority interest on
its balance sheet and the accretion of dividends would be reported
as minority interest expense.
3c. The conversion price is based on the average closing price of
VoiceStream common stock a few days before and after the June 23,
1999 measurement date.
3d. Represents the fair value, based on a Black-Scholes valuation,
associated with the conversion of outstanding Omnipoint options and
warrants to equivalent options and warrants of VoiceStream Holdings
at the time of the reorganization based on the number of options and
warrants outstanding and the closing market price of VoiceStream as
of August 31, 1999, the latest practicable date. At the closing of
the Omnipoint reorganization, each outstanding and unexercised
option or warrant to purchase shares of Omnipoint's common stock
will be converted into an option or warrant to purchase shares of
VoiceStream Holdings common stock. The number of options and the
exercise prices will vary from the original grant based on
conversion provisions in the Omnipoint reorganization agreement
resulting in the intrinsic value of each option and warrant
remaining unchanged. Accordingly, pursuant to the provisions of EITF
90-9, "Changes to Fixed Employee Stock Option Plans As a Result of
Equity Restructuring," the estimated fair value of these options and
warrants has been recorded as additional purchase price.
3e. Anticipated reorganization costs to VoiceStream as a result of the
Omnipoint reorganization are estimated as follows (in thousands):
<TABLE>
<S> <C>
Investment banking fees............................. $ 14,000
Legal, accounting and printing fees................. 1,500
Employee separation costs........................... 2,500
--------
$ 18,000
========
</TABLE>
3f. Includes an adjustment to reflect the step-up of the investment in
the two new Cook Inlet joint venture entities, CIVS II and CIVS
III, over the historical net book value of the net assets
contributed.
4. This adjustment represents the additional investment in VoiceStream
Holdings by Hutchison PCS (USA) pursuant to the subscription agreement
dated as of June 23, 1999. Concurrent with the Omnipoint reorganization
agreement, Hutchison PCS (USA) has agreed to purchase shares of VoiceStream
Holdings common stock at $29.00 per share and VoiceStream Holdings Junior
Preferred for $100,000 per share for an aggregate price of $807 million.
Hutchison PCS (USA) has the right to determine the allocation between
VoiceStream Holdings common stock and Junior Preferred that it will hold so
long as it holds at least 18.6% of the total number of outstanding shares
of VoiceStream Holdings common stock at the closing of the Omnipoint
reorganization. For purposes of this pro forma presentation, we have
assumed Hutchison PCS (USA) will purchase $650.4 million representing 6,504
shares of VoiceStream Holdings Junior
172
<PAGE> 180
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Preferred and $156.6 million, representing 5.4 million shares, of
VoiceStream Holdings common stock.
The VoiceStream Holdings Junior Preferred provides for a 2.5% cumulative
dividend payable at maturity (40 years from the close of the Omnipoint
reorganization). Since the redemption of the VoiceStream Holdings Junior
Preferred is outside the control of VoiceStream Holdings, it has been
classified as mezzanine financing and has been excluded from shareholders'
equity.
5. Represents the elimination in consolidation of VoiceStream's $150 million
investment in Omnipoint prior to the Omnipoint reorganization.
6. Certain of the long-term debt agreements of Omnipoint contain provisions
which require Omnipoint to offer repayment of outstanding amounts when a
change of control occurs. Under certain agreements, Omnipoint is required
to offer to repay to the lenders amounts outstanding. Additionally, the
holders of the debt issued under certain of these agreements are entitled
to a prepayment premium. The pro forma condensed combined balance sheet
assumes that the lenders will not exercise the offer for Omnipoint to repay
amounts outstanding, and therefore, outstanding debt amounts have not been
reclassified as current. The aggregate amount of principal maturities
(including prepayment premiums, if any) of Omnipoint's long-term debt at
June 30, 1999, that will be assumed by VoiceStream Holdings if the holders
were to require or accept the offer of repayment are as follows (in
thousands):
<TABLE>
<S> <C>
Six months ending December 31, 1999..................... $2,121
Year ending December 31, 2000........................... 148
2001.................................................... 32
2002.................................................... 0
2003.................................................... 0
Thereafter.............................................. 0
------
$2,301
======
</TABLE>
The remaining outstanding long-term debt originating from Aerial after the
Aerial reorganization will consist only of the Aerial Series A zero coupon
notes and Series B zero coupon notes which are due in 2006 and 2008,
respectively.
7. Represents the elimination in consolidation of Omnipoint's historical
common stock and paid-in capital of $312.7 million, the recording of the
$2.2 million shareholder note receivable of Omnipoint to be carried forward
to VoiceStream Holdings, the elimination of Omnipoint's historical deferred
compensation of $11.1 million, and the elimination of Omnipoint's
historical accumulated deficit of $1.5 billion.
8. Represents the elimination in consolidation of VoiceStream's $150 million
Omnipoint Series A Preferred investment in Omnipoint and the conversion of
Hutchison's $150 million Omnipoint Series A Preferred investment to
VoiceStream Holdings common stock.
9. Represents the Sonera-VoiceStream Investment of $500 million in VoiceStream
Holdings common stock at $57.00 per share. This investment is independent
of the Aerial reorganization but contingent upon the closing of the
Omnipoint reorganization.
173
<PAGE> 181
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
10. Represents issuance by Omnipoint on September 17, 1999, of $205 million of
11 1/2% Senior Notes due September 15, 2009. Cash proceeds to Omnipoint of
approximately $197.9 million were net of underwriting discounts,
commissions and expenses of the offering.
11. The Aerial reorganization is expected to result in an allocation of the
purchase price to the tangible and intangible assets and liabilities of
Aerial. The transaction is not expected to result in an incremental
deferred tax liability. Such allocation reflects the estimated fair value
of the assets and liabilities acquired by VoiceStream Holdings based upon
information available at the date of the preparation of the accompanying
pro forma condensed combined financial statements. Such allocation will be
adjusted upon the final determination of such fair values. Management is
not aware of any circumstances that would cause the final purchase price
allocation, other than the movement of VoiceStream's stock price prior to
the closing of the reorganization and the resulting impacts, to be
significantly different from that which is reflected in the accompanying
pro forma condensed combined balance sheet. However, actual valuations and
allocations may differ from those reflected herein.
The aggregate purchase price was calculated as follows (in thousands,
except per share data):
<TABLE>
<S> <C>
Total Aerial common stock outstanding -- Note 11a........... 71,925
Additional Sonera-Aerial Investment -- Note 11b............. 10,455
TDS Debt Replacement -- Note 11c............................ 19,091
Conversion of Sonera shares of Aerial Operating Company to
Aerial common stock -- Note 11d........................... 11,971
Aerial restricted common stock -- Note 11e.................. 431
----------
Total estimated Aerial shares outstanding................. 113,873
VoiceStream Holdings exchange ratio per share............... 0.455
----------
Equivalent VoiceStream Holdings common stock................ 51,812
The Aerial conversion price -- Note 11f..................... $ 57.00
----------
Subtotal.................................................. $2,953,284
Fair value of liabilities of Aerial at June 30, 1999........ 390,675
Option conversion costs -- Note 11g......................... 23,700
Reorganization related costs -- Note 11h.................... 15,500
----------
Total Consideration....................................... 3,383,159
Fair value of assets of Aerial acquired (excluding FCC
licenses)................................................. 717,663
Fair value of FCC licenses acquired (net book value of
licenses equal to $328,003)............................... 561,700
----------
Preliminary goodwill........................................ $2,103,796
==========
</TABLE>
11a. Outstanding shares of Aerial common stock used for purposes of this
pro forma are as of August 31, 1999, the latest practicable date.
11b. Represents the additional shares of Aerial common stock assumed to be
purchased by Sonera in the $230 million Sonera-Aerial Investment at
$22.00 per share (see Note 1c).
11c. In connection with the TDS Debt Replacement, $420 million of debt to
TDS will be replaced with Aerial common stock at $22.00 per share
(see Note 1c).
174
<PAGE> 182
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
11d. Sonera's current investment in Aerial Operating Company of 1.8
million shares is converted prior to closing to Aerial shares using a
defined conversion ratio of 6.72919.
11e. Represents 431,000 shares of restricted common stock assumed to be
issued to certain Aerial employees upon shareholder approval of the
reorganization.
11f. The conversion price is based on the average closing price of
VoiceStream common stock a few days before and after September 20,
1999, the Aerial reorganization announcement date.
11g. Represents the fair value, based on a Black-Scholes valuation,
associated with the conversion of outstanding Aerial options to
equivalent options of VoiceStream Holdings at the time of the Aerial
reorganization based on the number of options outstanding and the
closing market price of VoiceStream as of August 31, 1999, the latest
practicable date. Upon stockholder approval of the Aerial
reorganization, each outstanding and unexercised Aerial option will
vest. Pursuant, to the provisions of EITF 90-9, since all Aerial
options vest upon the stockholder approval of the Aerial
reorganization, the estimated fair value of these options has been
recorded as additional purchase price.
11h. Anticipated reorganization costs to VoiceStream as a result of the
Aerial reorganization are estimated as follows (in thousands):
<TABLE>
<S> <C>
Investment banking fees................................ $ 6,000
Legal, accounting and printing fees.................... 1,400
Employee separation costs.............................. 8,100
-------
$15,500
=======
</TABLE>
12. Represents the elimination in consolidation of Aerial's historical minority
interest of $0.5 million, Aerial's Common Shares and paid-in capital of
$984.1 million, Aerial's Series A Common Shares of $324.3 million, and
Aerial's accumulated deficit of $653.4 million.
13. Current portion of long-term debt has been reduced to reflect the payoff of
the Nokia credit agreement of $68.5 million. Additionally, interest expense
for the six months ended June 30, 1999 and the 12 months ended December 31,
1998 has been reduced to reflect this payoff.
14. This adjustment represents the amortization of the additional purchase
price allocated to the FCC licenses and goodwill. FCC licenses are
amortized over a 40 year period and the goodwill is amortized over a
20-year period.
15. This adjustment represents the amortization of the difference between the
underlying net book value of the investment in the new Cook Inlet joint
venture entities and the fair value assigned to these investments. This
difference has been allocated between FCC licenses and goodwill and is being
amortized over 40 years and 20 years, respectively.
16. Represents the elimination of Aerial's historical minority interest loss,
resulting from Sonera's conversion of its equity Aerial Operating Company
to equity in Aerial prior to the Aerial reorganization.
175
<PAGE> 183
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
17. For purposes of calculating pro forma loss per share it has been assumed
that the Omnipoint reorganization and the Aerial reorganization will be
completed. Additionally, we have made the following assumptions:
(A) the Omnipoint 7% Convertible Preferred stockholders have converted all
of their shares to Omnipoint common stock as of January 1, 1998, which
will subsequently convert to VoiceStream Holdings common stock at the
0.825 conversion rate;
(B) Hutchison PCS (USA) has made only the initial $102.5 million
investment in Omnipoint Series A Preferred as of June 23, 1999, which
is exchangeable for 3.5 million shares of VoiceStream Holdings common
stock;
(C) Hutchison PCS (USA) will elect to purchase all VoiceStream Holdings
Junior Preferred for its $807 million investment, which contains a
2.5% dividend. For pro forma purposes, $531 million of the total $807
million is considered factually supportable for the calculation of the
accumulation of a 2.5% annual dividend payable at the end of 40 years;
(D) the restricted stock awards will be paid out in Aerial shares
immediately prior to the closing of the Aerial reorganization; and
(E) all public shareholders of Aerial will elect to take the stock
election.
The following summarizes the pro forma calculation of loss per share based on
these assumptions (in thousands, except per share data):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
VoiceStream weighted average common shares.................. 95,545 92,387
Conversion of Omnipoint outstanding common stock(1)......... 44,287 44,287
Conversion of Omnipoint 7% Convertible Preferred............ 8,617 8,617
Exchange of Omnipoint Series A Preferred.................... 135
Conversion of Aerial shares................................. 51,616 51,616
Aerial restricted stock units............................... 196 196
--------- -----------
Total weighted average common shares.............. 200,396 197,103
========= ===========
VoiceStream Holdings pro forma net loss..................... $(682,963) $(1,450,359)
VoiceStream Holdings Junior Preferred dividends............. (6,638) (13,275)
--------- -----------
Pro forma net loss attributable to common shareholders...... $(689,601) $(1,463,634)
========= ===========
Basic and diluted pro forma loss per common share........... $ (3.44) $ (7.43)
========= ===========
</TABLE>
- -------------------------
(1) Shares outstanding as of August 31, 1999.
176
<PAGE> 184
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The following summarizes the impact of a change in assumption A or C (assumption
B must occur based on the provisions of the subscription agreement):
<TABLE>
<CAPTION>
ASSUMPTION C
ASSUMPTION A CHANGES TO AN ELECTION
DOES NOT OCCUR OF 100% COMMON STOCK(1)
------------------------ ------------------------
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1999 1998 1999 1998
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
VoiceStream weighted average common
shares.................................. 95,545 92,387 95,545 92,387
Conversion of Omnipoint outstanding common
stock................................... 44,287 44,287 44,287 44,287
Conversion of Omnipoint 7% Convertible
Preferred............................... 8,617 8,617
Exchange of Omnipoint Series A
Preferred............................... 135 135
Hutchison additional investment........... 18,311 18,311
Conversion of Aerial shares............... 51,616 51,616 51,616 51,616
Aerial restricted stock units............. 196 196 196 196
--------- ----------- --------- -----------
Total common shares............. 191,779 188,486 218,707 215,414
========= =========== ========= ===========
VoiceStream Holdings unadjusted pro forma
net loss................................ $(682,963) $(1,450,359) $(682,963) $(1,450,359)
Omnipoint 7% Convertible
Preferred minority interest............. (10,459) (13,946)
VoiceStream Holdings Junior Preferred
dividend................................ (6,638) (13,275)
--------- ----------- --------- -----------
Pro forma net loss attributable to common
shareholders............................ $(700,060) $(1,477,580) $(682,963) $(1,450,359)
========= =========== ========= ===========
Basic and diluted pro forma loss per
common share............................ $ (3.65) $ (7.84) $ (3.12) $ (6.73)
========= =========== ========= ===========
</TABLE>
- ---------------
(1) For every 10% change in the amount of common stock elected to be taken by
Hutchison, the pro forma impact on net loss attributable to common
shareholders would increase by $6.0 million and $11.9 million for the
periods ended June 30, 1999 and December 31, 1998, respectively, and loss
per share would increase by $0.28 per share and $0.62 per share,
respectively.
In the event holders of Aerial restricted stock units receive cash instead
of stock, the loss per share would be unchanged for each of the periods ended
June 30, 1999 and December 31, 1998.
In the event Aerial's public shareholders elect to receive cash at $18.00
per share in lieu of VoiceStream Holdings common stock, the loss per share would
increase by $0.10 per share for the period ended June 30, 1999 and would
increase by $0.22 per share for the period ended December 31, 1998.
177
<PAGE> 185
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
CONTINGENCIES:
As a result of the reorganizations, VoiceStream may have to make
substantial tax indemnity payments to Western Wireless. In a spin-off
transaction effected on May 3, 1999, Western Wireless distributed its entire
80.1% interest in VoiceStream's common stock to its stockholders. Western
Wireless will recognize gain as a result of the spin-off, if the spin-off is
considered to be part of a plan or series of related transactions pursuant to
which one or more persons acquire, directly or indirectly, 50% or more of
VoiceStream's common stock -- a "prohibited plan." VoiceStream has agreed to
indemnify Western Wireless on an after-tax basis for any taxes, penalties,
interest and various other expenses incurred by Western Wireless if it is
required to recognize such gain. The amount of such gain that Western Wireless
would recognize would be equal to the difference between the fair market value
of VoiceStream common stock at the time of the spin-off and Western Wireless'
adjusted tax basis in such stock at that time.
In the absence of direct authority, and although the issue is not free from
doubt, VoiceStream believes that it should be able to establish that the
spin-off and VoiceStream Holding's acquisition of VoiceStream's stock pursuant
to the reorganizations, in conjunction with the related transactions and
Hutchinson's acquisition of its existing VoiceStream stock within two years
prior to the spin-off, are not pursuant to a prohibited plan. However, if the
IRS were to take the position that a prohibited plan did occur, the estimated
range of possible liability to VoiceStream Holdings, not including interest and
penalties, if any, is from zero to $400 million.
178
<PAGE> 186
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
VoiceStream common stock, Omnipoint common stock and Aerial common stock
are each listed on the Nasdaq Stock Market. Since the spin-off on May 3, 1999
VoiceStream common stock has traded under the ticker symbol "VSTR." Since its
listing in January of 1996, Omnipoint common stock has traded under the ticker
symbol "OMPT." Aerial Common Shares are traded under the ticker symbol "AERL"
and have been listed since April 1996. The following table sets forth, for the
periods indicated, the range of high and low closing prices of common stock.
<TABLE>
<CAPTION>
VOICESTREAM OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
---------------- ---------------- ----------------
HIGH LOW HIGH LOW HIGH LOW
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter................... n/a n/a $27.50 $ 9.75 $ 8.63 $ 5.38
Second Quarter.................. n/a n/a $16.63 $ 7.00 $ 9.50 $ 4.38
Third Quarter................... n/a n/a $23.75 $14.63 $ 9.63 $ 7.50
Fourth Quarter.................. n/a n/a $24.63 $19.00 $10.50 $ 7.13
1998
First Quarter................... n/a n/a $29.50 $21.38 $ 9.00 $ 6.69
Second Quarter.................. n/a n/a $29.75 $18.63 $ 7.81 $ 5.94
Third Quarter................... n/a n/a $25.00 $ 7.03 $ 6.75 $ 3.44
Fourth Quarter.................. n/a n/a $11.75 $ 5.00 $ 5.88 $ 2.25
1999
First Quarter................... n/a n/a $16.19 $10.00 $ 7.75 $ 5.25
Second Quarter.................. $33.06 $20.50 $29.00 $13.13 $13.50 $ 7.25
Third Quarter................... $68.75 $29.75 $62.19 $30.56 $29.44 $11.56
</TABLE>
On June 22, 1999, the last full trading day before the public announcement
of the proposed Omnipoint reorganization, the closing price of VoiceStream
common stock was $29.375 and the closing price of Omnipoint common stock was
$20.750. On September 17, 1999, the last full trading day before the public
announcement of the proposed Aerial reorganization, the closing price of
VoiceStream common stock was $56.06 and the closing price of Aerial common stock
was $20.00. On , 1999, the most recent practicable date prior to the
printing of this joint proxy statement-prospectus, the closing price was $
for VoiceStream common stock, $ for Omnipoint common stock and $ for
Aerial common stock. We urge you to obtain current market quotations prior to
making any decision with respect to the reorganization.
Following the reorganization, VoiceStream Holdings common stock will be
traded on the Nasdaq Stock Market under the ticker symbol "VSTR."
VoiceStream, Omnipoint and Aerial have not historically paid dividends to
their stockholders. VoiceStream Holdings does not anticipate paying dividends in
the near future.
179
<PAGE> 187
THE SPECIAL MEETINGS
This joint proxy statement-prospectus is being furnished to VoiceStream,
Omnipoint and Aerial stockholders in connection with the solicitation of proxies
by the board of directors of each company for use at the special meetings to
consider and vote upon the proposal to adopt, and approve the transactions
contemplated by, the Omnipoint reorganization agreement and the Aerial
reorganization agreement.
- The special meeting of the VoiceStream stockholders will be held on
, at , , at a.m., local time.
- The special meeting of the Omnipoint stockholders will be held on
, at the offices of Piper & Marbury L.L.P., at 1200 19th
Street, N.W., Washington, D.C., at a.m., local time.
- The special meeting of the Aerial stockholders will be held on
, at , , at a.m., local time.
The VoiceStream board and the Omnipoint board have approved the Omnipoint
reorganization agreement. The VoiceStream board and the Aerial board have
approved the Aerial reorganization agreement. Each board has determined that its
reorganization is fair to, and in the best interests of, its stockholders. The
VoiceStream board recommends that the stockholders of VoiceStream vote for the
proposal to adopt, and approve the transactions contemplated by, the Omnipoint
reorganization agreement and the Aerial reorganization agreement. The Omnipoint
board recommends that the stockholders of Omnipoint vote for the proposal to
adopt, and approve the transactions contemplated by, the Omnipoint
reorganization agreement. The Aerial board recommends that the stockholders of
Aerial vote for the proposal to adopt, and approve the transactions contemplated
by, the Aerial reorganization agreement. The reorganizations have also been
approved by the VoiceStream Holdings board.
VOICESTREAM RECORD DATE; QUORUM; VOTE REQUIRED
Only VoiceStream stockholders of record as of the close of business on
, 1999 will be entitled to notice of, and to vote at, the
VoiceStream special meeting. On the VoiceStream record date, there were
outstanding shares of VoiceStream common stock. Each holder of
VoiceStream common stock outstanding on the VoiceStream record date is entitled
to one vote for each share so held, exercisable in person or by properly
executed and delivered proxy, at the VoiceStream special meeting.
The presence of the holders of at least a majority of the shares of
VoiceStream common stock outstanding on the VoiceStream record date, whether
present in person or by properly executed and delivered proxy, will constitute a
quorum for the purposes of the VoiceStream special meeting. The holders of
record of at least two-thirds of the outstanding shares of VoiceStream common
stock must vote in favor of the proposal to adopt, and approve the transactions
contemplated by, the reorganization agreement relating to the first to occur of
the Omnipoint reorganization and the Aerial reorganization before the
VoiceStream merger can be effected.
Abstentions, failures to vote and broker non-votes will have the same
effect as a vote against the proposal for purposes of determining whether
VoiceStream obtains the requisite two-thirds vote. Stockholders of VoiceStream
can dissent from the proposal and, subject to strict compliance with certain
provisions of the WBCA receive in lieu of VoiceStream Holdings common stock the
"fair value" of their VoiceStream common stock in cash. See "The Special
Meetings -- Dissenters' Rights" and Annex I.
180
<PAGE> 188
OMNIPOINT RECORD DATE; QUORUM; VOTE REQUIRED
Only Omnipoint stockholders of record as of the close of business on
, 1999 will be entitled to notice of, and to vote at, the Omnipoint
special meeting. At the Omnipoint record date, there were outstanding
shares of Omnipoint common stock. Each holder of shares of
Omnipoint common stock outstanding on the Omnipoint record date is entitled to
one vote for each share so held, exercisable in person or by properly executed
and delivered proxy, at the Omnipoint special meeting.
The presence of the holders of at least a majority of the Omnipoint common
stock outstanding on the Omnipoint record date, whether present in person or by
properly executed and delivered proxy, will constitute a quorum for the purposes
of the Omnipoint special meeting. The holders of record of a majority of the
outstanding shares of Omnipoint common stock must vote in favor of the proposal
to adopt, and approve the transactions contemplated by, the Omnipoint
reorganization agreement before the Omnipoint merger can be effected.
Abstentions, failures to vote and broker non-votes will have the same
effect as a vote against the proposal for purposes of determining whether
Omnipoint obtains requisite majority. Certain stockholders of Omnipoint will
have the right to dissent from the proposal and, subject to strict compliance
with certain provisions of the DGCL, to receive in lieu of VoiceStream Holdings
common stock the "fair value" of their Omnipoint common stock in cash. See
"-- Dissenters' Rights of Appraisal" and Annex J.
AERIAL RECORD DATE; QUORUM; VOTE REQUIRED
Only Aerial stockholders of record as of the close of business on
, will be entitled to notice of, and to vote at, the Aerial
special meeting. At the Aerial record date, there were issued and outstanding
Aerial Common Shares and Series A Common Shares. No Aerial
Series B Common Shares or shares of preferred stock were outstanding. Each
holder of Aerial Common Shares issued and outstanding on the Aerial record date
is entitled to one vote for each share so held, exercisable in person or by
properly executed and delivered proxy, at the Aerial special meeting. The holder
of Aerial Series A Common Shares issued and outstanding on the Aerial record
date is entitled to fifteen votes for each share so held, exercisable in person
or by properly executed and delivered proxy, at the Aerial special meeting.
Accordingly, the voting power of the shares of Aerial Series A Common Shares was
votes, and the total voting power of all outstanding shares of Aerial
capital stock was votes on the Aerial record date.
The presence of the holders of at least a majority of the voting power on
the Aerial Common Shares and Aerial Series Common Shares issued and outstanding
on the Aerial record date, whether present in person or by properly executed and
delivered proxy, will constitute a quorum for the purposes of the Aerial special
meeting. The presence of TDS at the meeting will represent a quorum. The holders
of record of a majority of the voting power of the outstanding Aerial Common
Shares and Aerial Series A Common Shares, voting together as a single class,
must vote in favor of the proposal to adopt, and approve the transactions
contemplated by, the Aerial reorganization agreement before the Aerial merger
can be effected.
Abstentions, failures to vote and broker non-votes will have the same
effect as a vote against the proposal for purposes of determining whether Aerial
obtains the requisite majority.
181
<PAGE> 189
AGREEMENTS TO VOTE IN FAVOR OF THE OMNIPOINT REORGANIZATION
Concurrently with the execution of the Omnipoint reorganization agreement,
VoiceStream, Omnipoint, certain stockholders of VoiceStream and certain
stockholders of Omnipoint, entered into an agreement whereby (1) such Omnipoint
stockholders have agreed to vote or cause to be voted the number of shares of
Omnipoint common stock beneficially owned by them in favor of the proposal to
adopt, and approve the transactions contemplated by, the Omnipoint
reorganization agreement and against any alternative merger proposal or
acquisition proposal representing 15% or more of the stock or assets of
Omnipoint and its subsidiaries and (2) such VoiceStream stockholders have agreed
to vote or cause to be voted a specified of shares of common stock of
VoiceStream in favor of the proposal to adopt, and approve the transactions
contemplated by, the Omnipoint reorganization agreement.
From and after the date of such agreement through the earlier of the
effective time and the termination of the Omnipoint reorganization agreement,
each of the Omnipoint stockholders and the VoiceStream stockholders who signed
such agreement, has agreed, except in limited circumstances, not to sell or
otherwise dispose of more than 30% of the shares of Omnipoint common stock or
VoiceStream common stock, as the case may be, that are subject to such agreement
unless, as a condition to such sale, each transferee of any shares in excess of
30% of such shares agrees to be bound by certain provisions of the lock-up
agreement.
AGREEMENTS TO VOTE IN FAVOR OF THE AERIAL REORGANIZATION
Concurrently with the execution of the Aerial reorganization agreement, TDS
and VoiceStream entered into an agreement whereby TDS agreed to vote all shares
of Aerial common stock beneficially owned by TDS in favor of the Aerial
reorganization and against alternative transactions. Under this agreement, TDS
has also agreed not to transfer its shares of Aerial common stock. As of the
Aerial record date, TDS holds Aerial Common Shares and
Aerial Series A Common Shares, representing votes or approximately 98%
of the total voting power of the Aerial common stock. Accordingly, the Aerial
reorganization will be approved regardless of the vote of other Aerial
stockholders.
Concurrently with the execution of the Aerial reorganization agreement,
Aerial, VoiceStream, TDS and certain stockholders who currently hold
approximately 41% of the outstanding shares of VoiceStream common stock entered
into a stockholders voting agreement whereby such shareholders agreed to vote or
cause to be voted the number of shares of VoiceStream common shares beneficially
owned by them in favor of the Aerial reorganization, the approval and adoption
of the Aerial reorganization agreement and each of the transactions contemplated
in the Aerial reorganization agreement. Certain VoiceStream stockholders agreed
not to transfer their shares except as a condition to the transfer, the
transferee agreed to be bound by certain terms of the agreement.
SOLICITATION OF PROXIES
SOLICITATION OF VOICESTREAM PROXIES
The VoiceStream board is soliciting the accompanying proxy for use in
connection with the VoiceStream special meeting. See "-- VoiceStream Record
Date; Quorum; Vote Required." VoiceStream will bear its own expenses in
connection with the VoiceStream special meeting. In addition to solicitation of
proxies by mail, directors, officers and employees of VoiceStream may solicit
proxies for the VoiceStream special meeting either personally or by telephone,
telegram or other forms of communication. Such directors, officers and employees
will receive no special compensation for any solicitation. VoiceStream will
request brokerage houses, nominees, fiduciaries
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and other custodians to forward soliciting materials to beneficial owners and
will reimburse them for their customary charges and expenses. We request
VoiceStream stockholders to complete, date and sign the accompanying form of
proxy and return it to VoiceStream in the enclosed postage-paid envelope. When
the accompanying form of proxy is returned properly executed, the VoiceStream
common stock represented thereby will be voted at the VoiceStream special
meeting in accordance with the instructions received therein. If a stockholder
executes and returns a proxy without an indication as to how the shares of
VoiceStream common stock represented thereby are to be voted, such shares will
be voted in favor of approval and adoption of the VoiceStream merger.
VoiceStream stockholders should not send any stock certificates with their proxy
cards.
SOLICITATION OF OMNIPOINT PROXIES
The Omnipoint board is soliciting the accompanying proxy for use in
connection with the Omnipoint special meeting. See "Omnipoint Record Date;
Quorum; Vote Required." Omnipoint will bear its own expenses in connection with
the Omnipoint special meeting. In addition to solicitation of proxies by mail,
directors, officers and employees of Omnipoint may solicit proxies for the
Omnipoint special meeting either personally or by telephone, telegram or other
forms of communication. Such directors, officers and employees will receive no
special compensation for any solicitation. Omnipoint will request brokerage
houses, nominees, fiduciaries and other custodians to forward soliciting
materials to beneficial owners and will reimburse them for their customary
charges and expenses. We request Omnipoint stockholders to complete, date and
sign the accompanying form of proxy and return it to Omnipoint in the enclosed
postage-paid envelope. When the accompanying form of proxy is returned properly
executed, the Omnipoint common stock represented thereby will be voted at the
Omnipoint special meeting in accordance with the instructions received therein.
If a proxy is executed and returned without an indication as to how the shares
of Omnipoint common stock represented thereby are to be voted, such shares will
be voted in favor of approval and adoption of the Omnipoint merger. Omnipoint
stockholders should not send any stock certificates with their proxy cards.
SOLICITATION OF AERIAL PROXIES
The Aerial board is soliciting the accompanying Aerial stockholder proxy
for use in connection with the Aerial special meeting. See "Aerial Record Date;
Quorum; Vote Required." Aerial will bear its own expenses in connection with the
Aerial special meeting. In addition to solicitation of proxies by mail,
directors, officers and employees of Aerial may solicit proxies for the Aerial
special meeting either personally or by telephone, telegram or other forms of
communication. Such directors, officers and employees will receive no special
compensation for any solicitation. Aerial will request brokerage house,
nominees, fiduciaries and other custodians to forward soliciting materials to
beneficial owners and will reimburse them for their customary charges and
expenses. The Aerial board requests that Aerial stockholders complete, date and
sign the accompanying form of Aerial proxy and return it to Aerial in the
enclosed postage-paid envelope. When the accompanying form of proxy is returned
properly executed, the Aerial common stock represented thereby will be voted at
the Aerial special meeting in accordance with the instructions received. If a
proxy is executed and returned without an indication as to how the shares of
Aerial common stock represented thereby are to be voted, such shares will be
voted in favor of approval and adoption of the Aerial reorganization. Aerial
stockholders should not send any stock certificates with their proxy cards.
INFORMATION AGENT
VoiceStream, Omnipoint and Aerial have retained ChaseMellon Consulting
Services to aid in the solicitation of proxies and to verify certain records
related to the solicitations. ChaseMellon Consulting Services will receive a fee
of approximately $ as compensation for its services
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and reimbursement for its related out-of-pocket expenses. ChaseMellon Consulting
Services has been indemnified against certain liabilities arising out of or in
connection with its engagement.
OTHER MATTERS TO BE CONSIDERED
None of the VoiceStream board, the Omnipoint board or the Aerial board is
aware of any other matter which will be brought before the special meeting of
their respective company. If, however, other matters are presented at one of the
special meetings, proxies for that meeting will be voted in accordance with the
discretion of the holders of such proxies.
DISSENTERS' RIGHTS OF APPRAISAL
DISSENTERS' RIGHTS OF APPRAISAL OF VOICESTREAM COMMON STOCKHOLDERS
The following is a brief summary of the rights of VoiceStream common
stockholders to dissent from the proposals to adopt, and approve the
transactions contemplated by, the reorganization agreements, each of which
contemplate a merger by which a subsidiary of VoiceStream Holdings is merged
with and into VoiceStream and VoiceStream becomes a subsidiary of VoiceStream
Holdings. Dissenters have the right to receive cash equal to the "fair value" of
their VoiceStream common stock instead of receiving shares of VoiceStream
Holdings. This summary is not exhaustive and we encourage VoiceStream common
stockholders to read the applicable sections of Chapter 23B.13 of the WBCA,
which we have attached as Annex I to this joint proxy statement-prospectus.
ANY VOICESTREAM STOCKHOLDER CONTEMPLATING THE POSSIBILITY OF DISSENTING
FROM THE PROPOSAL TO ADOPT, AND APPROVE THE TRANSACTIONS CONTEMPLATED BY, THE
REORGANIZATION AGREEMENTS SHOULD CAREFULLY REVIEW THE TEXT OF ANNEX I,
PARTICULARLY THE SPECIFIED PROCEDURAL STEPS REQUIRED TO PERFECT DISSENTERS'
RIGHTS, WHICH ARE COMPLEX, AND SHOULD ALSO CONSULT SUCH STOCKHOLDER'S LEGAL
COUNSEL. A STOCKHOLDER WHO DOES NOT FULLY AND PRECISELY SATISFY THE PROCEDURAL
REQUIREMENTS OF THE WBCA WILL LOSE THESE RIGHTS.
The VoiceStream merger will occur at the time of the first to occur of the
Omnipoint reorganization or the Aerial reorganization. Since it is uncertain
which reorganization will occur first, VoiceStream common stockholders must vote
against both reorganizations if they intend to exercise their dissenters' rights
of appraisal in connection with the VoiceStream merger.
REQUIREMENTS FOR EXERCISING DISSENTERS' RIGHTS OF APPRAISAL
To exercise dissenters' rights of appraisal, a VoiceStream stockholder must
- file with VoiceStream before the vote is taken at the VoiceStream special
meeting written notice of his or her intent to demand the fair value for
his or her VoiceStream common stock if the VoiceStream merger is
consummated and becomes effective; and
- not vote his or her shares of VoiceStream common stock at the VoiceStream
special meeting in favor of the proposal to approve either the Omnipoint
reorganization agreement or the Aerial reorganization agreement.
A VoiceStream stockholder who does not satisfy each of these requirements
cannot exercise dissenters' rights and will be bound by the terms of the
VoiceStream merger as set forth in the reorganization agreement pursuant to
which the VoiceStream merger is effected.
Submission of a proxy which does not direct how the VoiceStream common
stock represented by that proxy is to be voted will constitute a vote in favor
of the VoiceStream merger and a waiver of
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statutory dissenters' rights. In addition, a VoiceStream stockholder's vote
against the proposal to approve the VoiceStream merger will not satisfy the
notice requirement referred to above. A stockholder must file the written notice
of the intent to exercise dissenter's rights with VoiceStream at: VoiceStream
Wireless Corporation, 3650 131st Ave. S.E., Bellevue, WA, 98006, Attn: Alan R.
Bender, Secretary.
APPRAISAL PROCEDURE
Within 10 days after the proposed VoiceStream merger, whether as part of
the Omnipoint reorganization or the Aerial reorganization, has been approved,
VoiceStream will send written notice to all stockholders who have given written
notice under the dissenters' rights provisions and not voted in favor of the
VoiceStream merger as described above. The notice will contain:
- the address where the demand for payment and certificates representing
shares of VoiceStream common stock must be sent and the date by which
they must be received;
- any restrictions on transfer of uncertificated shares that will apply
after the demand for payment is received;
- a form for demanding payment that states the date of the first
announcement to the news media or to stockholders of the proposed merger
and requires certification of the date the stockholder, or the beneficial
owner on whose behalf the stockholder dissents, acquired the VoiceStream
common stock (or an interest in it); and
- a copy of the provisions of the WBCA set forth in Annex I.
A VoiceStream stockholder who receives this notice and who wishes to assert
dissenters' rights must demand payment and deposit his or her VoiceStream
certificates within 30 days after such notice is given. A STOCKHOLDER WHO FAILS
TO MAKE DEMAND FOR PAYMENT OR DEPOSIT HIS OR HER VOICESTREAM CERTIFICATES WITHIN
SUCH 30-DAY PERIOD WILL LOSE THE RIGHT TO RECEIVE FAIR VALUE FOR HIS OR HER
SHARES UNDER THE DISSENTERS' RIGHTS PROVISIONS EVEN IF HE OR SHE FILED A TIMELY
NOTICE OF INTENT TO DEMAND PAYMENT.
Except as provided below, within 30 days of the later of the effective time
or VoiceStream's receipt of a valid demand for payment, VoiceStream will remit
to each dissenting stockholder who complied with the requirements of the WBCA
the amount VoiceStream estimates to be the fair value of such stockholder's
VoiceStream common stock, plus accrued interest. VoiceStream will include the
following information with the payment:
- certain financial data relating to VoiceStream;
- VoiceStream's estimate of the fair value of the shares and a brief
description of the method used to reach such estimate;
- a copy of Chapter 23B.13 of the WBCA; and
- a brief description of the procedures to be followed in demanding
supplemental payment.
For dissenting stockholders who were not the beneficial owner of the shares
of VoiceStream common stock before , 1999, VoiceStream may withhold
payment and instead send a statement setting forth its estimate of the fair
value of their shares and offering to pay such amount, with interest, as a final
settlement of such dissenting stockholder's demand for payment.
Any dissenting VoiceStream stockholder who is dissatisfied with his or her
payment or offer may, within 30 days of such payment or offer for payment,
notify VoiceStream in writing of their estimate
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of fair value of his or her shares and the amount of interest due and demand
payment thereof. If any dissenting stockholder's demand for payment is not
settled within 60 days after receipt by VoiceStream of his or her payment
demand, Chapter 23B.13.300 of the WBCA requires that VoiceStream commence a
proceeding in King County Superior Court and petition the court to determine the
fair value of the shares and accrued interest, naming all the dissenting
stockholders whose demands remain unsettled as parties to the proceeding.
The court may appoint one or more appraisers to receive evidence and make
recommendations to the court as to the amount of the fair value of the shares.
The fair value of the shares as determined by the court is binding on all
dissenting stockholders and may be less than, equal to or greater than the
market price of the VoiceStream Holdings common stock to be issued to non-
dissenting stockholders for their VoiceStream common stock if the VoiceStream
merger is consummated. If the court determines that the fair value of the shares
is in excess of the amount, if any, remitted by VoiceStream, then the court will
enter a judgment for cash in favor of the dissenting stockholders in an amount
by which the value determined by the court, plus interest, exceeds such amount
previously remitted.
The court shall determine the costs and expenses of the court proceeding
and assess them against VoiceStream, except that the court may assess part or
all of the costs against any dissenting stockholders whose actions in demanding
supplemental payments are found by the court to be arbitrary, vexatious or not
in good faith. If the court finds that VoiceStream did not substantially comply
with the relevant provisions of sections 23B.13.200 through 23B.13.280 of the
WBCA, the court may also assess the fees and expenses, if any, of attorneys or
experts as the court deems equitable against VoiceStream. The court may also
assess such fees and expenses against any party if the court finds that such
party has acted arbitrarily, vexatiously or not in good faith in bringing the
proceedings. The court may award, in its discretion, fees and expenses of an
attorney for the dissenting stockholders out of the amount awarded to such
stockholders, if it finds the services of the attorney were of substantial
benefit to the other dissenting stockholders, and that such fees should not be
assessed against VoiceStream.
A stockholder of record may assert dissenters' rights as to fewer than all
of the shares registered in such stockholder's name only if he or she dissents
with respect to all shares beneficially owned by any one person and notifies
VoiceStream in writing of the name and address of each person on whose behalf he
or she asserts dissenters' rights. The rights of such a partial dissenting
stockholder are determined as if the shares as to which he or she dissents and
his or her other shares were registered in the names of different stockholders.
Beneficial owners of VoiceStream common stock who desire to exercise dissenters'
rights themselves must obtain and submit the registered owner's written consent
at or before the time they file the notice of intent to demand fair value.
For purposes of the WBCA, "fair value" means the value of VoiceStream
common stock immediately before the effective time, excluding any appreciation
or depreciation in anticipation of the reorganization, unless exclusion would be
inequitable. Under section 23B.13.020 of the WBCA, a VoiceStream stockholder has
no right, at law or in equity, to set aside the approval and adoption of the
VoiceStream merger or the consummation of the reorganization except if such
approval, adoption or consummation fails to comply with the procedural
requirements of Chapter 23B.13 of the WBCA or Revised Code of Washington
sections 25.10.900 through 25.10.955, VoiceStream's Articles of Incorporation,
or Bylaws or was fraudulent with respect to such stockholder or VoiceStream.
DISSENTERS' RIGHTS OF APPRAISAL OF OMNIPOINT STOCKHOLDERS
The following is a summary of the principal steps that a stockholder of
Omnipoint must take to exercise appraisal rights. This summary does not purport
to be complete and we encourage all
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Omnipoint stockholders to read section 262 of the DGCL, which we have attached
as Annex J. Failure to take any one of the required steps may terminate the
stockholder's appraisal rights under the DGCL. BECAUSE OF THE COMPLEXITY OF THE
PROCEDURES IN EXERCISING APPRAISAL RIGHTS, STOCKHOLDERS WHO EXERCISE SUCH RIGHTS
SHOULD SEEK THE ADVICE OF LEGAL COUNSEL.
REQUIREMENTS FOR EXERCISING DISSENTERS' RIGHTS OF APPRAISAL
In order to exercise dissenters' rights of appraisal, a stockholder must
satisfy all of the following requirements. The stockholder:
- must not vote in favor of the proposal to adopt, and approve the
transactions contemplated by, the Omnipoint reorganization agreement;
- must hold his or her shares continuously through the effective date of
the Omnipoint merger;
- within 20 days after receiving a notice of entitlement to appraisal
rights, as described below, and before the taking of the vote on the
Omnipoint merger, must demand in writing from the surviving corporation
the appraisal of his or her shares; and
- if required by the court hearing the appraisal petition, submit stock
certificates representing the stockholder's Omnipoint common stock to the
Chancery Court for notation thereon of the pendency of the appraisal
proceedings.
FAILURE BY ANY STOCKHOLDER TO FULLY COMPLY WITH THE ITEMS LISTED ABOVE, AND
TO FOLLOW ALL INSTRUCTIONS IN THE APPRAISAL NOTICE AS DESCRIBED BELOW, MAY
RESULT IN TERMINATION OR WAIVER OF SUCH STOCKHOLDER'S APPRAISAL RIGHTS.
APPRAISAL PROCEDURE
Either before the effective time or within 10 days thereafter, Omnipoint
will notify each of the stockholders entitled to appraisal rights of the
approval of the Omnipoint merger, the effective date of the Omnipoint merger (if
notice is sent after the effective date) and that appraisal rights are available
for any or all of the stockholder's shares of Omnipoint (the "Appraisal
Notice"). The Appraisal Notice will include a copy of section 262 of the DGCL.
Omnipoint will send the Appraisal Notice to the stockholder at his or her
address as it appears on the records of Omnipoint. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the Appraisal
Notice, demand in writing from Omnipoint the appraisal of his or her shares.
Such demand will be sufficient if it reasonably informs Omnipoint of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of his or her Omnipoint common stock. An Omnipoint stockholder who
elects to exercise appraisal rights must mail or deliver the written demand for
appraisal to Omnipoint at the address indicated in the Appraisal Notice.
Within 120 days after the effective date of the Omnipoint merger, Omnipoint
or any stockholder who has elected appraisal rights and satisfied the criteria
listed above may file a petition in the Chancery Court demanding a determination
of the value of the stock held by all dissenting stockholders. At any time
within 60 days after the effective time, any stockholder shall have the right to
withdraw the demand for appraisal and to accept the terms offered in the
reorganization agreement. If, within the 120-day period, neither Omnipoint nor
any stockholder has filed a petition, all rights to appraisal will cease and all
of the dissenting stockholders who owned Omnipoint common stock will become
entitled to receive the consideration to be received under the Omnipoint
reorganization agreement, without interest.
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Within 120 days after the effective time, each stockholder who has complied
with the requirements of section 262(a) and (d) is, upon written request to
Omnipoint, entitled to receive from Omnipoint a statement setting forth the
aggregate number of shares not voted in favor of the Omnipoint merger and with
respect to which demands for appraisal have been received and the aggregate
number of holders of such shares. Omnipoint must mail the information to the
requesting stockholder by the later of (1) 10 days after receipt of the request
by Omnipoint or (2) 130 days after the effective time.
If a stockholder files a petition with the Chancery Court, Omnipoint will
file a verified list of all stockholders who have demanded appraisal rights and
with whom Omnipoint has not agreed as to the value of their shares. Thereafter,
the Chancery Court will notify all those stockholders on the list as to the time
and place of the hearing upon the petition to determine the stockholders who
have become entitled to appraisal rights and thereafter to appraise the shares,
determining their fair value exclusive of any element of value arising from the
accomplishment or expectation of the Omnipoint merger, plus a fair rate of
interest, if any. In determining the fair value and rate of interest, the
Chancery Court shall consider all relevant factors. The court may permit
discovery. Any stockholder who appears on the list submitted by Omnipoint in the
preceding paragraph may participate fully in all proceedings.
The Chancery Court will direct the payment of the fair value of the shares,
together with interest, if any, by Omnipoint to the stockholders who are
entitled to such payment upon the surrender of the certificates representing
such stock to Omnipoint. The costs of the proceeding may be determined by the
Chancery Court and assessed against the parties as the Chancery Court deems
equitable. From and after the effective time, any stockholder who has demanded
appraisal rights shall thereafter neither be entitled to vote such stock for any
purpose nor be entitled to the payment of dividends or other distributions on
the stock (except those payable to stockholders of record at a date which is
prior to the effective time).
Omnipoint stockholders considering seeking appraisal should keep the
following in mind:
- the fair value of their Omnipoint common stock determined under section
262 could be more, the same, or less than the consideration receivable
pursuant to the Omnipoint reorganization agreement;
- Omnipoint stockholders who exercise dissenters' rights will not become
stockholders of VoiceStream Holdings; and
- Omnipoint stockholders receiving cash upon the exercise of appraisal
rights may recognize gain or loss for income tax purposes.
NO DISSENTERS' RIGHTS OF APPRAISAL FOR AERIAL STOCKHOLDERS
Aerial stockholders will not have dissenters' rights of appraisal as a
result of the Aerial reorganization. A copy of the relevant provisions of the
DGCL is set forth in Annex J.
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BUSINESS OF VOICESTREAM HOLDINGS
VoiceStream Holdings was incorporated in June 1999 as a Delaware
corporation to act as the parent company for certain business combinations
involving VoiceStream. We have not conducted any activities other than in
connection with our organization and the reorganizations. Upon consummation of
both the Omnipoint reorganization and the Aerial reorganization, VoiceStream,
Omnipoint and Aerial will be subsidiaries of VoiceStream Holdings. Upon the
closing of the first to occur of the Omnipoint reorganization or the Aerial
reorganization, we will change our name to VoiceStream Wireless Corporation.
Our business initially will be the combined current businesses of
VoiceStream and either or both of Aerial and Omnipoint, and our assets will be
the current assets of VoiceStream, either or both of Omnipoint and Aerial and
their subsidiaries, subject to the contribution of certain assets in the CIRI
Transactions. The operations and assets of, and our relationship with, CIRI are
more fully described in "The Business of VoiceStream Holdings After the
Reorganizations; Relationship with Cook Inlet -- Joint Ventures in Which We Hold
Interests" below.
While we believe that the reorganizations will create a strong national
competitor in the wireless communications industry, we will be subject to the
same competition issues described in the most recent reports on Form 10-K of
Omnipoint and Aerial and Form 10/A of VoiceStream, and subject to the risks
detailed in "Risk Factors."
Since the announcement of the reorganizations, we have been analyzing the
operations of Aerial, Omnipoint and VoiceStream and developing strategies and
plans to combine and integrate various aspects of the respective businesses of
VoiceStream, Omnipoint and Aerial.
BACKGROUND -- THE WIRELESS COMMUNICATIONS INDUSTRY
OVERVIEW
Wireless communications systems use a variety of radio frequencies to
transmit voice and data. Broadly defined, the wireless communications industry
includes one-way radio applications, such as paging or beeper services, and
two-way radio applications, such as cellular, PCS and ESMR networks. Each such
application is licensed in a distinct radio frequency block.
Since its introduction in 1983, wireless service has grown dramatically. As
of December 31, 1998, according to the CTIA there were over 69 million wireless
subscribers in the United States, representing a penetration rate of 25.3%.
In the wireless communications industry, there are two principal frequency
bands licensed by the FCC for transmitting two way voice and data signals,
"cellular" and "PCS." Cellular systems are generated at 824 to 899 MHz and can
be either analog or digital. Although all cellular systems provide analog
capabilities, digital technology has been introduced by most carriers in urban
markets. Analog technology has several limitations, including lack of privacy
and limited capacity. Digital systems convert voice or data signals into a
stream of digits that is compressed before transmission, enabling a single radio
channel to carry multiple simultaneous signal transmissions. This enhanced
capacity, along with improvements in digital signaling, allows digital-based
wireless technologies to offer new and enhanced services, such as greater call
privacy, and robust data transmission features, such as "mobile office"
applications (including facsimile, electronic mail and wireless connections to
computer/data networks, including the Internet). See "-- Operation of Wireless
Communications Systems."
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PCS is a term commonly used in the United States to describe a portion of
radio spectrum from 1850 to 1990 MHz. This portion of radio spectrum is to be
used by PCS licensees to provide wireless communications services. PCS spectrum
was auctioned by the FCC in six frequency blocks (A-F) beginning with the A and
B Blocks in late 1994 and 1995. In late 1995 and in 1996 the C Block was
auctioned and the FCC concluded simultaneous auctions of the D, E and F Blocks
in 1997. In 1999, the FCC reauctioned portions of the C, D, E and F Blocks that
were returned or not purchased in previous auctions. PCS competes directly with
existing cellular telephone, paging and specialized mobile radio services. PCS
also includes features that are not generally offered by analog cellular
providers, such as data transmissions to and from portable computers, advanced
paging services and facsimile services. In addition, wireless providers may
eventually offer mass market wireless local loop applications in competition
with wired local communications services. See "-- Governmental Regulation" for a
discussion of the FCC auction process and allocation of wireless licenses.
OPERATION OF WIRELESS COMMUNICATIONS SYSTEMS
Wireless communications system service areas, whether cellular or PCS, are
divided into multiple cells. Due to the frequencies on which they operate, a
single cell in a cellular system generally transmits over a wider radius than a
comparable PCS cell. In both cellular and PCS systems, each cell contains a
transmitter, a receiver and signaling equipment (collectively referred to as the
"cell site"). The cell site is connected by microwave or landline telephone
lines to a switch that uses computers to control the operation of the wireless
communications system for the entire service area. The system controls the
transfer of calls from cell to cell as a subscriber's handset travels,
coordinates calls to and from handsets, allocates calls among the cells within
the system and connects calls to the local landline telephone system or to a
long distance telephone carrier. Wireless communications providers establish
interconnection agreements with local exchange carriers and interexchange
carriers, thereby integrating their system with the existing landline
communications system.
Because the signal strength of a transmission between a handset and a cell
site declines as the handset moves away from the cell site, the switching office
and the cell site monitor the signal strength of calls in progress. When the
signal strength of a call declines to a predetermined level, the switching
office may "hand off" the call to another cell site where the signal strength is
stronger. If a handset leaves the service area of a cellular or PCS system, the
call is disconnected unless there is a technical connection with the adjacent
system.
Wireless system operators normally agree to provide service to subscribers
from other compatible wireless systems who are temporarily located in or
traveling through their service areas in a practice called "roaming." Agreements
among system operators provide that the carrier that normally provides services
to the roaming subscriber pays the serving carrier at rates prescribed by the
serving carrier. Analog cellular handsets are functionally compatible with
cellular systems in all markets within the United States. As a result, analog
cellular handsets may be used wherever a subscriber is located, as long as a
cellular system is operational in the area and necessary roaming arrangements
exist. Although PCS and cellular systems utilize similar technologies and
hardware, they operate on different frequencies and use different technical and
network standards. Dual mode handsets, however, make it possible for users of
one type of system to "roam" on a different type of system outside of their
service area.
PCS systems operate under one of three principal digital signal
transmission technologies, or standards, that have been deployed by various
operators and vendors for use in PCS systems: GSM, TDMA or CDMA. GSM is the most
widely used digital wireless standard in the world, serving over
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170 million subscribers in approximately 130 countries. A benefit associated
with GSM technology is its use of an open system architecture that allows
operators to purchase network equipment from a variety of vendors that share
standard interfaces for operation.
GSM and TDMA are both based upon time-division of spectrum and are
currently incompatible with each other and with CDMA. Accordingly, a subscriber
of a system that utilizes GSM technology is currently unable to use a GSM
handset when traveling in an area not served by GSM-based PCS operators, unless
the subscriber carries a dual-mode handset that permits the subscriber to use
the analog cellular system in that area. Under a memorandum of understanding
between GSM operators in the United States and Canada and the association of
TDMA operators in the United States and Canada, there are plans to promote the
interoperability of GSM and TDMA standards.
The TDMA-based PCS standard offers the same features and services offered
by the TDMA-based digital cellular standard currently in use by certain cellular
operators in the United States, including AT&T Wireless. Both the CDMA- and
TDMA-based PCS standards use a closed system architecture that will limit PCS
operators' choices of equipment vendors. The CDMA standard is the most widely
adopted digital standard in the United States. CDMA-based PCS systems offer the
same features and services offered by CDMA-based cellular systems.
THE BUSINESS OF VOICESTREAM HOLDINGS AFTER THE REORGANIZATIONS
After the reorganizations, we will be a leading PCS provider in the United
States, owning and operating fully digital PCS networks in 22 major markets as
follows:
<TABLE>
<CAPTION>
VOICESTREAM OMNIPOINT AERIAL
----------- --------- ------
<S> <C> <C>
Denver New York Houston
Seattle/Tacoma Boston Tampa/Orlando
Phoenix/Tucson Indianapolis Minneapolis
Honolulu Detroit Kansas City
Portland Miami Columbus
Boise Pittsburgh
Salt Lake City
El Paso
Albuquerque
Oklahoma City
Des Moines
</TABLE>
In addition, VoiceStream is currently constructing PCS networks in San
Antonio and Austin, which it expects to be operational in the fourth quarter of
1999. VoiceStream Holdings, through its subsidiaries, will also own equity
interests in various joint venture entities that operate PCS networks using the
VoiceStream brand or affiliation, including four joint venture entities
controlled by Cook Inlet. Following the Omnipoint reorganization, these joint
venture entities collectively will control 146 broadband PCS licenses which
cover 90 million persons and operate in several major markets including
Philadelphia and Tulsa. Five additional joint venture entities in which
VoiceStream Holdings will hold equity interests will operate under local brand
names. Together with joint venture entities in which we hold interests, after
the reorganizations, we will have access to 333 licenses covering over 200
million persons and 77% of the geography of the continental United States, and
we will serve more than 1.5 million customers through more than 6,200
operational cell sites.
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Our goal is to establish our service offerings as one of the best values in
wireless and achieve significant market penetration, particularly in the fast
growing "new to wireless" segment. Our value message will continue to be
delivered through VoiceStream's existing "Get More" marketing campaign, whereby
customers get "more" airtime in the form of large bundled minutes, "more"
meaningful features designed to complement today's lifestyles and "more"
knowledgeable and responsive customer service. Our marketing message will use
advertising media and direct marketing in an attempt to build a dominant brand
and establish a reputation as a superior value service provider. This marketing
message is delivered with a celebrity spokesperson -- Jamie Lee Curtis.
VoiceStream believes her unique appeal crosses all major demographic groups.
After the reorganizations, we will continue to offer the services offered
by VoiceStream, Omnipoint and Aerial, which include advanced data capabilities,
voice and text messaging, privacy and security using smart card technology,
caller ID and global roaming. We also expect to continue providing and
developing our prepaid wireless products. Our services will be sold through an
extensive distribution network featuring national and local dealers,
company-owned stores and a direct sales force.
We will continue to employ the GSM digital standard for our PCS systems. We
believe GSM has significant cost advantages over competing technologies, due in
part to an open architecture that allows greater flexibility in selecting from a
larger group of proven North American, European and Asian equipment vendors and
options.
VoiceStream, Omnipoint and Aerial collectively have entered into roaming
agreements with substantially all of the licensees that have deployed the GSM
standard in North America, and are members of the GSM Alliance, an organization
of North American GSM service providers whose members hold licenses that cover
substantially all of the United States population and serve over 2,400 North
American cities. Such agreements allow our subscribers to roam on these
carriers' PCS systems, and vice versa. In addition, VoiceStream has entered into
roaming agreements with cellular carriers which, together with roaming
agreements with GSM carriers, will permit our subscribers with dual-mode
capability to roam in substantially all areas across the United States.
VoiceStream, Omnipoint and Aerial also have reciprocal roaming agreements with a
variety of international carriers which enable their subscribers with compatible
handsets to roam in most countries of the world.
STRATEGY
Following completion of the reorganizations, our strategy will be to
efficiently consolidate the operations and marketing of VoiceStream, Omnipoint
and Aerial under the VoiceStream brand name, and to:
- Penetrate the rapidly growing, broad consumer segment by offering the
best value. We will seek to penetrate the consumer segment of the market,
particularly in the fast growing "new to wireless" segment, by providing
the best value in wireless with more minutes, more features and more
services for the money than the competition at attractive price points,
and establishing our compelling "Get More" marketing message.
- Establish brand differentiation of our proprietary VoiceStream brand. We
expect to gain brand differentiation and awareness of our marketing
message by promoting the VoiceStream brand with our celebrity
spokesperson, Jamie Lee Curtis. Our marketing employs the comprehensive
use of television, radio, print, outdoor and sponsorship media to
establish our reputation as a superior value service provider.
192
<PAGE> 200
- Achieve cost efficiencies through centralization and size. We plan to
continue to centralize key functions such as customer care and sales. Our
size should also enable us to purchase network and subscriber equipment
at favorable pricing and financing terms.
- Build high quality networks with extensive coverage. We plan to continue
to construct our networks to provide high capacity and excellent call
quality. In addition, we will seek to launch VoiceStream branded networks
with substantial geographic coverage in and around the metropolitan
markets that we serve.
- Offer robust features that capitalize on the advantages of GSM
technology. We expect to continue to offer the most robust set of
features available in connection with GSM technology. Users of GSM
currently enjoy a feature set not currently available with other widely
deployed broadband standards, that includes wireless e-mail, voice and
text messaging, privacy and security using smart card technology, caller
ID, and global roaming.
- Sell through an extensive and balanced distribution network. We plan to
sell our products and services through an extensive and balanced
distribution network featuring national and local dealers, company owned
stores and our sales force.
- Acquire PCS licenses and systems opportunistically. VoiceStream,
Omnipoint and Aerial have acquired their current licenses in a
disciplined fashion, paying what they believe have been attractive
prices. We will continue to seek opportunities to acquire additional PCS
licenses, systems and/or operators which are additive to our current
footprint or further the availability of GSM service in North America.
MARKETS AND SYSTEMS
If both the Omnipoint and Aerial reorganizations occur, we will own,
collectively with joint venture entities in which we have interests, 333
broadband PCS licenses covering over 200 million persons and approximately 77%
of the geography of the continental United States, and we will serve more than
1.5 million customers. See "-- Governmental Regulation; Licensing of PCS
Systems."
If only the Omnipoint reorganization is completed, we will own,
collectively with joint venture entities in which we have interests, 327
licenses covering over 175 million persons and approximately 69% of the
geography of the continental United States, and we will serve more than 1.1
million customers.
If only the Aerial reorganization is completed, we will own, collectively
with joint venture entities in which we have interests, 171 licenses covering
over 116 million persons and approximately 66% of the geography of the
continental United States, and we will serve more than 0.9 million customers.
The following tables set forth the licenses we and the joint venture
entities in which we have interests, will hold, together with the populations
covered by such licenses, and distinguishes the licenses presently held by
VoiceStream, Omnipoint and Aerial, and joint ventures in which VoiceStream,
Omnipoint or Aerial hold interests or in which we will hold interests. Depending
on the completion of either or both of the reorganizations, the licenses which
we and the joint ventures in which we have interests hold will cover all or a
mixture of the following license areas. Unless the context otherwise requires,
when used herein, with respect to a licensed area, "persons" and "population"
are interchangeable and refer to the aggregate number of persons located in such
licensed area. Persons and population data are estimated for 1999 based upon
1998 estimates by Claritas adjusted by VoiceStream Holdings by applying
Claritas' growth factors from 1997 to 1998.
193
<PAGE> 201
VOICESTREAM LICENSES
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
DENVER
Casper-Gillette...................................... 140,000 B 30 MHz
Cheyenne............................................. 109,000 B 30 MHz
Colorado Springs..................................... 513,000 B 30 MHz
Denver............................................... 2,478,000 B 30 MHz
Fort Collins......................................... 231,000 B 30 MHz
Grand Junction....................................... 233,000 B 30 MHz
Greeley.............................................. 160,000 B 30 MHz
Pueblo............................................... 299,000 B 30 MHz
Rapid City........................................... 194,000 B 30 MHz
Riverton............................................. 49,000 B 30 MHz
Rock Springs......................................... 59,000 B 30 MHz
Scottsbluff.......................................... 101,000 B 30 MHz
----------
4,566,000
SEATTLE
Olympia-Centralia.................................... 327,000 E 10 MHz
Seattle-Tacoma....................................... 3,090,000 E 10 MHz
----------
3,417,000
PHOENIX
Flagstaff............................................ 119,000 D 10 MHz
Nogales.............................................. 40,000 D 10 MHz
Phoenix.............................................. 3,191,000 D 10 MHz
Prescott............................................. 153,000 D 10 MHz
Sierra Vista-Douglas................................. 114,000 D 10 MHz
Tucson............................................... 807,000 D 10 MHz
Yuma................................................. 126,000 D 10 MHz
----------
4,550,000
PORTLAND
Bend................................................. 141,000 A 30 MHz
Coos Bay-North Bend.................................. 84,000 A 30 MHz
Eugene-Springfield................................... 312,000 A 30 MHz
Klamath Falls........................................ 81,000 A 30 MHz
Longview............................................. 96,000 A 30 MHz
Medford-Grants Pass.................................. 249,000 A 30 MHz
Portland............................................. 2,041,000 A 30 MHz
Roseburg............................................. 103,000 A 30 MHz
Salem-Albany......................................... 514,000 A 30 MHz
----------
3,621,000
SALT LAKE CITY
Logan................................................ 101,000 A 30 MHz
Provo-Orem........................................... 358,000 A 30 MHz
Salt Lake City....................................... 1,554,000 A 30 MHz
St. George........................................... 129,000 A, E 40 MHz
Boise-Nampa.......................................... 538,000 A 30 MHz
Idaho Falls.......................................... 211,000 A 30 MHz
Pocatello............................................ 102,000 A 30 MHz
Twin Falls........................................... 158,000 A 30 MHz
----------
3,151,000
</TABLE>
194
<PAGE> 202
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
EL PASO-ALBUQUERQUE
Albuquerque.......................................... 792,000 A 30 MHz
Carlsbad............................................. 54,000 A 30 MHz
Farmington-Durango................................... 194,000 A 30 MHz
Gallup............................................... 141,000 A 30 MHz
Las Cruces........................................... 240,000 A 30 MHz
Roswell.............................................. 79,000 A 30 MHz
Santa Fe............................................. 204,000 A 30 MHz
El Paso.............................................. 772,000 A 30 MHz
----------
2,476,000
OKLAHOMA CITY
Ada.................................................. 54,000 A 30 MHz
Ardmore.............................................. 88,000 A 30 MHz
Enid................................................. 85,000 A, E 40 MHz
Lawton-Duncan........................................ 173,000 A 30 MHz
McAlester............................................ 53,000 A 30 MHz
Oklahoma City........................................ 1,391,000 A, E 40 MHz
Ponca City........................................... 46,000 A, E 40 MHz
Stillwater........................................... 76,000 A, E 40 MHz
----------
1,966,000
DES MOINES-QUAD CITIES
Burlington........................................... 137,000 A 10 MHz
Cedar Rapids......................................... 280,000 A 10 MHz
Clinton-Sterling..................................... 146,000 A 10 MHz
Davenport-Moline..................................... 427,000 A 10 MHz
Des Moines(1)........................................ 776,000 A 10/30 MHz
Dubuque.............................................. 177,000 A 10 MHz
Fort Dodge........................................... 126,000 A 10 MHz
Iowa City............................................ 122,000 A 10 MHz
Marshalltown......................................... 56,000 A 10 MHz
Mason City........................................... 116,000 A 10 MHz
Ottumwa.............................................. 123,000 A 10 MHz
Sioux City........................................... 341,000 A 10 MHz
Waterloo-Cedar Falls................................. 259,000 A 10 MHz
----------
3,086,000
HONOLULU
Hilo................................................. 142,000 A 30 MHz
Honolulu............................................. 866,000 A 30 MHz
Kahului-Wailuku-Lahaina.............................. 123,000 A 30 MHz
Lihue................................................ 57,000 A 30 MHz
----------
1,188,000
SAN ANTONIO
San Antonio.......................................... 1,805,000 D 10 MHz
DALLAS-FORT WORTH
Abilene.............................................. 256,000 D 10 MHz
Amarillo............................................. 407,000 D 10 MHz
Austin............................................... 1,188,000 D 10 MHz
Big Spring........................................... 35,000 D 10 MHz
</TABLE>
195
<PAGE> 203
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
Brownwood............................................ 62,000 D 10 MHz
Clovis............................................... 80,000 E 10 MHz
Hobbs................................................ 56,000 D 10 MHz
Lubbock.............................................. 404,000 E 10 MHz
Midland.............................................. 122,000 D, E 20 MHz
Odessa............................................... 217,000 D, E 20 MHz
Paris................................................ 91,000 D 10 MHz
San Angelo........................................... 165,000 D 10 MHz
----------
3,083,000
ST. LOUIS
Cape Girardeau....................................... 188,000 E 10 MHz
Carbondale-Marion.................................... 218,000 E 10 MHz
Columbia............................................. 208,000 E 10 MHz
Jefferson City....................................... 156,000 D 10 MHz
Kirksville........................................... 56,000 E 10 MHz
Mount Vernon......................................... 122,000 D 10 MHz
Poplar Bluff......................................... 155,000 D 10 MHz
Quincy-Hannibal...................................... 180,000 D 10 MHz
Rolla................................................ 93,000 D 10 MHz
St. Louis............................................ 2,822,000 E 10 MHz
West Plains.......................................... 75,000 D 10 MHz
----------
4,273,000
TULSA
Coffeyville.......................................... 61,000 D 10 MHz
WICHITA
Hutchinson........................................... 124,000 D 10 MHz
Salina............................................... 143,000 D 10 MHz
Wichita.............................................. 652,000 D 10 MHz
----------
919,000
CHICAGO
Jacksonville......................................... 71,000 E 10 MHz
CINCINNATI-DAYTON
Dayton-Springfield................................... 1,209,000 E 10 MHz
CLEVELAND
Ashtabula............................................ 102,000 E 10 MHz
Canton-New Philadelphia.............................. 526,000 E 10 MHz
Cleveland-Akron...................................... 2,964,000 E 10 MHz
East Liverpool-Salem................................. 111,000 E 10 MHz
Erie................................................. 278,000 E 10 MHz
Mansfield............................................ 226,000 E 10 MHz
Meadville............................................ 89,000 E 10 MHz
Sandusky............................................. 140,000 E 10 MHz
Sharon............................................... 122,000 E 10 MHz
Youngstown-Warren.................................... 480,000 E 10 MHz
----------
5,038,000
KANSAS CITY
Manhattan-Junction City.............................. 110,000 D 10 MHz
LITTLE ROCK
Fayetteville-Springdale.............................. 292,000 E 10 MHz
</TABLE>
196
<PAGE> 204
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
Fort Smith........................................... 311,000 D 10 MHz
Harrison............................................. 87,000 D 10 MHz
Hot Springs.......................................... 132,000 D 10 MHz
Jonesboro-Paragould.................................. 174,000 E 10 MHz
Little Rock.......................................... 920,000 D 10 MHz
Pine Bluff........................................... 148,000 D 10 MHz
Russellville......................................... 93,000 E 10 MHz
----------
2,157,000
MILWAUKEE
Milwaukee............................................ 1,789,000 D 10 MHz
MINNEAPOLIS-ST. PAUL
Aberdeen............................................. 87,000 D 10 MHz
Bemidji.............................................. 64,000 D 10 MHz
Bismarck............................................. 127,000 E 10 MHz
Fargo................................................ 307,000 E 10 MHz
Grand Forks.......................................... 208,000 D 10 MHz
Huron................................................ 54,000 D 10 MHz
Mitchell............................................. 84,000 D 10 MHz
Sioux Falls.......................................... 232,000 D 10 MHz
Watertown............................................ 76,000 D 10 MHz
Willmar-Marshall..................................... 84,000 E 10 MHz
Worthington.......................................... 96,000 D 10 MHz
----------
1,419,000
OMAHA
Grand Island......................................... 148,000 E 10 MHz
Hastings............................................. 72,000 E 10 MHz
Lincoln.............................................. 332,000 E 10 MHz
McCook............................................... 34,000 E 10 MHz
Norfolk.............................................. 112,000 E 10 MHz
North Platte......................................... 85,000 E 10 MHz
----------
783,000
RICHMOND-NORFOLK
Danville............................................. 168,000 E 10 MHz
Lynchburg............................................ 161,000 E 10 MHz
Martinsville......................................... 90,000 E 10 MHz
Norfolk-VA Beach..................................... 1,763,000 E 10 MHz
Richmond-Petersburg.................................. 1,202,000 E 10 MHz
Staunton-Waynesburo.................................. 107,000 E 10 MHz
----------
3,491,000
SAN FRANCISCO-SAN JOSE
San Francisco........................................ 6,965,000 E 10 MHz
SPOKANE-BILLINGS
Billings............................................. 307,000 E 10 MHz
Bozeman.............................................. 77,000 E 10 MHz
Butte................................................ 67,000 D 10 MHz
Great Falls.......................................... 164,000 E 10 MHz
Helena............................................... 67,000 D 10 MHz
Kalispell............................................ 72,000 D 10 MHz
Kennewick-Pasco...................................... 189,000 D 10 MHz
Lewiston-Moscow...................................... 123,000 E 10 MHz
Missoula............................................. 164,000 D 10 MHz
</TABLE>
197
<PAGE> 205
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
Walla Walla-Pendleton................................ 169,000 D 10 MHz
----------
1,399,000
----------
VOICESTREAM TOTAL...................................... 62,593,000
==========
</TABLE>
- -------------------------
(1) VoiceStream contributed portions of the Des Moines MTA license to Iowa
Wireless (defined below). As a result, we will own 30 MHz of the license for
certain counties within the Des Moines BTA but only 10 MHz for the remainder
of the Des Moines BTA.
OMNIPOINT LICENSES
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
NEW YORK
New York............................................... 18,572,000 A, D 40 MHz
Albany................................................. 1,042,000 A, E 40 MHz
Hartford............................................... 1,103,000 A 30 MHz
New Haven.............................................. 976,000 A 30 MHz
Syracuse............................................... 782,000 A 30 MHz
Allentown.............................................. 714,000 A 30 MHz
Scranton............................................... 659,000 A 30 MHz
Poughkeepsie........................................... 429,000 A 30 MHz
Burlington............................................. 395,000 A 30 MHz
New London............................................. 358,000 A 30 MHz
Binghamton............................................. 338,000 A 30 MHz
Elmira................................................. 313,000 A 30 MHz
Watertown.............................................. 303,000 A 30 MHz
Utica.................................................. 288,000 A 30 MHz
Glens Falls............................................ 122,000 A, E 40 MHz
Stroudsburg............................................ 128,000 A 30 MHz
Plattsburgh............................................ 115,000 A 30 MHz
Oneonta................................................ 108,000 A 30 MHz
Rutland................................................ 99,000 A 30 MHz
Ithaca................................................. 96,000 A 30 MHz
----------
26,940,000
CHICAGO
Elkhart................................................ 256,000 E 10 MHz
Galesburg.............................................. 74,000 E 10 MHz
----------
330,000
DETROIT
Muskegon............................................... 221,000 E 10 MHz
Adrian................................................. 99,000 E 10 MHz
Detroit................................................ 5,020,000 E 10 MHz
Flint.................................................. 513,000 E 10 MHz
Grand Rapids........................................... 1,043,000 E 10 MHz
Jackson................................................ 204,000 E 10 MHz
Toledo................................................. 777,000 D 10 MHz
Petoskey............................................... 100,000 D 10 MHz
Findlay-Tiffin......................................... 152,000 D, E 20 MHz
Lima................................................... 251,000 D, E 20 MHz
Mt. Pleasant........................................... 129,000 E 10 MHz
Saginaw-Bay City....................................... 636,000 E 10 MHz
Lansing................................................ 519,000 E 10 MHz
----------
9,664,000
</TABLE>
198
<PAGE> 206
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
BOSTON-PROVIDENCE
Springfield-Holyoke.................................... 659,000 D 10 MHz
Bangor................................................. 321,000 E 10 MHz
Pittsfield............................................. 134,000 E 10 MHz
Hyannis................................................ 232,000 D 10 MHz
Portland-Brunswick..................................... 495,000 D 10 MHz
Manchester-Nashua-Concord.............................. 582,000 D, E 20 MHz
Worcester-Fitchburg-Leominster......................... 726,000 D, E 20 MHz
Waterville-Augusta..................................... 168,000 D, E 20 MHz
Boston................................................. 4,259,000 D, E 20 MHz
Keene.................................................. 115,000 D, E 20 MHz
Presque Isle........................................... 75,000 D, E 20 MHz
Providence-Pawtucket-New Bedford-Fall River............ 1,502,000 D 10 MHz
Lewiston-Auburn........................................ 215,000 E 10 MHz
----------
9,483,000
WASHINGTON-BALTIMORE
Fredericksburg......................................... 159,000 D 10 MHz
Hagerstown-Chambersburg-Martinsburg.................... 353,000 D 10 MHz
Salisbury.............................................. 178,000 D, E 20 MHz
Washington, DC......................................... 4,516,000 E 10 MHz
Charlottesville........................................ 217,000 E 10 MHz
Cumberland............................................. 159,000 E 10 MHz
----------
5,582,000
MIAMI-FT. LAUDERDALE
Miami-Ft. Lauderdale................................... 3,743,000 E 10 MHz
ST. LOUIS
St. Louis.............................................. 2,822,000 D 10 MHz
Mt. Vernon-Centralia................................... 122,000 E 10 MHz
Columbia............................................... 208,000 D 10 MHz
Kirksville............................................. 56,000 D 10 MHz
Quincy-Hannibal........................................ 180,000 E 10 MHz
----------
3,388,000
INDIANAPOLIS
Kokomo-Logansport...................................... 185,000 D 10 MHz
Bloomington-Bedford.................................... 237,000 E 10 MHz
Indianapolis........................................... 1,468,000 E 10 MHz
Lafayette.............................................. 267,000 E 10 MHz
Marion................................................. 107,000 E 10 MHz
Terre Haute............................................ 246,000 E 10 MHz
Vincennes-Washington................................... 94,000 E 10 MHz
Columbus............................................... 154,000 E 10 MHz
----------
2,758,000
BUFFALO-ROCHESTER
Rochester.............................................. 1,143,000 D 10 MHz
Olean-Bradford......................................... 243,000 D, E 20 MHz
Jamestown-Dunkirk...................................... 183,000 E 10 MHz
----------
1,569,000
LITTLE ROCK
El Dorado-Magnolia-Camden.............................. 103,000 E 10 MHz
</TABLE>
199
<PAGE> 207
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
WICHITA
Salina................................................. 143,000 E 10 MHz
Hutchinson............................................. 124,000 E 10 MHz
----------
267,000
----------
OMNIPOINT TOTAL........................................ 63,827,000
==========
</TABLE>
AERIAL LICENSES
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
COLUMBUS
Athens.................................................... 131,000 B 30 MHz
Chillicothe............................................... 103,000 B 30 MHz
Columbus.................................................. 1,622,000 B 30 MHz
Marion.................................................... 96,000 B 30 MHz
Parkersburg............................................... 181,000 B 30 MHz
Zanesville................................................ 187,000 B 30 MHz
----------
2,320,000
HOUSTON
Beaumont.................................................. 457,000 A 30 MHz
Bryan..................................................... 165,000 A 30 MHz
Houston................................................... 4,793,000 A 30 MHz
Lake Charles.............................................. 278,000 A 30 MHz
Lufkin.................................................... 156,000 A 30 MHz
Victoria.................................................. 164,000 A 30 MHz
----------
6,013,000
KANSAS CITY
Emporia................................................... 46,000 B 30 MHz
Joplin.................................................... 235,000 B 30 MHz
Kansas City............................................... 2,000,000 B 30 MHz
Lawrence.................................................. 93,000 B 30 MHz
Manhattan-Junction City................................... 110,000 B 30 MHz
Pittsburg-Parsons......................................... 90,000 B 30 MHz
St. Joseph................................................ 190,000 B 30 MHz
Sedalia................................................... 89,000 B 30 MHz
Topeka.................................................... 253,000 B 30 MHz
----------
3,106,000
MINNEAPOLIS
Aberdeen.................................................. 87,000 B 30 MHz
Bemidji................................................... 64,000 B 30 MHz
Bismarck.................................................. 127,000 B 30 MHz
Brainerd.................................................. 94,000 B 30 MHz
Dickinson................................................. 36,000 B 30 MHz
Duluth.................................................... 408,000 B 30 MHz
Eau Claire................................................ 189,000 B 30 MHz
Fargo..................................................... 307,000 B 30 MHz
Fergus Falls.............................................. 126,000 B 30 MHz
Grand Forks............................................... 208,000 B 30 MHz
Huron..................................................... 54,000 B 30 MHz
Ironwood.................................................. 32,000 B 30 MHz
</TABLE>
200
<PAGE> 208
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
Mankato................................................... 247,000 B 30 MHz
Minneapolis............................................... 3,142,000 B 30 MHz
Minot..................................................... 121,000 B 30 MHz
Mitchell.................................................. 84,000 B 30 MHz
Rochester................................................. 241,000 B 30 MHz
St. Cloud................................................. 279,000 B 30 MHz
Sioux Falls............................................... 232,000 B 30 MHz
Watertown................................................. 76,000 B 30 MHz
Williston................................................. 26,000 B 30 MHz
Willmar-Marshall.......................................... 125,000 B 30 MHz
Worthington............................................... 96,000 B 30 MHz
----------
6,401,000
PITTSBURGH
Altoona................................................... 225,000 B 30 MHz
Clarksburg................................................ 193,000 B 30 MHz
Du Bois................................................... 126,000 B 30 MHz
Fairmont.................................................. 57,000 B 30 MHz
Indiana................................................... 89,000 B 30 MHz
Johnstown................................................. 235,000 B 30 MHz
Morgantown................................................ 107,000 B 30 MHz
New Castle................................................ 95,000 B 30 MHz
Oil City.................................................. 105,000 B 30 MHz
Pittsburgh................................................ 2,455,000 B 30 MHz
Steubenville.............................................. 135,000 B 30 MHz
Wheeling.................................................. 212,000 B 30 MHz
----------
4,034,000
TAMPA
Daytona Beach............................................. 476,000 A 30 MHz
Lakeland.................................................. 456,000 A 30 MHz
Melbourne................................................. 471,000 A 30 MHz
Ocala..................................................... 243,000 A 30 MHz
Orlando................................................... 1,528,000 A 30 MHz
Sarasota.................................................. 571,000 A 30 MHz
Tampa..................................................... 2,466,000 A 30 MHz
----------
6,211,000
----------
AERIAL TOTAL.............................................. 28,085,000
==========
</TABLE>
201
<PAGE> 209
RELATIONSHIP WITH COOK INLET -- JOINT VENTURES IN WHICH WE HOLD INTERESTS
Following completion of the Omnipoint reorganization, we will hold
interests in four joint venture entities ultimately controlled by Cook Inlet.
These entities will hold C and F Block PCS licenses to operate in a variety of
markets, as described below. Because the C and F Block licenses issued by the
FCC have been reserved initially for small businesses under current FCC rules,
we are precluded under current FCC rules from holding controlling interests in
such licenses until at least five years after issuance. Cook Inlet and its
subsidiaries qualify to hold such licenses and also qualify for additional
benefits available to a small business under FCC rules. Following completion of
the Omnipoint reorganization, we will have agreements with each of the four
joint venture entities that allow them to operate under the VoiceStream name
with our technical assistance in all markets where we do not also hold PCS
licenses. We expect that all markets owned by joint venture entities controlled
by Cook Inlet will operate under the VoiceStream brand name. In markets where we
also directly hold PCS licenses, we will have agreements with such entities
allowing equipment leasing, resale and roaming, enabling each of us to operate
on the systems constructed for the markets, and we expect that we will retain
rights to operate using the VoiceStream brand name. In any markets where a joint
venture entity controlled by Cook Inlet operates using the VoiceStream brand
name and we subsequently obtain a license to operate in such market, we may not
be able to operate under the VoiceStream brand name.
For discussion of pending litigation that may affect Cook Inlet's C Block
licenses, see "Risk Factors -- We will be subject to extensive government
regulation, any changes in which could affect our build-out plan or financial
performance."
- Cook Inlet/VoiceStream PV/SS PCS, LP
Cook Inlet/VoiceStream PV/SS PCS, LP ("Cook Inlet PCS"), formerly Cook
Inlet/Western Wireless PV/SS PCS, LP, is a Delaware limited partnership formed
in November 1995. We will hold a 49.9% limited partnership interest in Cook
Inlet PCS. Cook Inlet PCS began operations in the Tulsa market in June 1997, in
the Phoenix/Tucson market in November 1998 and in the Seattle/ Tacoma and
Spokane markets in February 1999. Cook Inlet PCS has not yet finalized its
construction plans for the other licenses it owns. Cook Inlet PCS owns FCC
licenses to provide wireless communications services in the following 19 BTA
license areas. See "-- Governmental Regulation; Licensing of PCS Systems."
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
CINCINNATI-DAYTON
Cincinnati.............................................. 2,139,000 F 10 MHz
DALLAS-FORT WORTH
Temple-Killeen.......................................... 354,000 F 10 MHz
EL PASO-ALBUQUERQUE
El Paso................................................. 772,000 F 10 MHz
KANSAS CITY
Pittsburg-Parsons....................................... 90,000 F 10 MHz
PHOENIX
Phoenix................................................. 3,191,000 F 10 MHz
Tucson.................................................. 807,000 F 10 MHz
----------
3,998,000
</TABLE>
202
<PAGE> 210
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
SEATTLE
Aberdeen................................................ 91,000 C 15 MHz
Bellingham.............................................. 161,000 F 10 MHz
Bremerton............................................... 242,000 C 15 MHz
Port Angeles............................................ 93,000 C 15 MHz
Seattle-Tacoma.......................................... 3,090,000 F 10 MHz
Wenatchee............................................... 211,000 C 15 MHz
Yakima.................................................. 259,000 C 15 MHz
----------
4,147,000
SPOKANE-BILLINGS
Spokane................................................. 733,000 C 15 MHz
Walla Walla-Pendleton................................... 169,000 C 15 MHz
----------
902,000
TULSA
Bartlesville............................................ 47,000 C 15 MHz
Coffeyville............................................. 61,000 C 15 MHz
Muskogee................................................ 159,000 C 15 MHz
Tulsa................................................... 910,000 C 15 MHz
----------
1,177,000
----------
COOK INLET PCS TOTAL...................................... 13,579,000
==========
</TABLE>
- Cook Inlet/VoiceStream PCS LLC
CIVS was formed on February 12, 1999. We will hold a 49.9% membership
interest in CIVS. CIVS participated in the recently completed FCC reauction of
C, D, E and F Block licenses and was the high bidder on the following 28 BTA
licenses.
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
CHICAGO
Chicago................................................. 8,617,000 C 30 MHz
Champaign-Urbana........................................ 218,000 C 30 MHz
Decatur-Effingham....................................... 247,000 C 30 MHz
Jacksonville............................................ 71,000 C 15 MHz
Kankakee................................................ 135,000 C 30 MHz
Mattoon................................................. 62,000 C 30 MHz
Michigan City-La Porte.................................. 109,000 C 30 MHz
Rockford................................................ 444,000 C 30 MHz
Springfield............................................. 278,000 C 30 MHz
----------
10,181,000
DALLAS
Dallas-Fort Worth....................................... 5,121,000 C 30 MHz
Longview-Marshall....................................... 315,000 C 30 MHz
Shreveport.............................................. 582,000 C 30 MHz
Texarkana............................................... 263,000 C 30 MHz
Tyler................................................... 301,000 C 30 MHz
Waco.................................................... 293,000 C 30 MHz
----------
6,875,000
LITTLE ROCK
El Dorado-Magnolia...................................... 103,000 C 30 MHz
</TABLE>
203
<PAGE> 211
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
MINNEAPOLIS
Aberdeen................................................ 87,000 C 30 MHz
NEW ORLEANS
Baton Rouge............................................. 667,000 C 30 MHz
Hammond................................................. 105,000 C 30 MHz
Lafayette-New Iberia.................................... 530,000 C 30 MHz
----------
1,302,000
OMAHA
Omaha................................................... 965,000 C 15 MHz
PHOENIX
Flagstaff............................................... 119,000 C 30 MHz
Prescott................................................ 153,000 C 30 MHz
Sierra Vista-Douglas.................................... 114,000 C 30 MHz
Yuma.................................................... 126,000 C 30 MHz
----------
512,000
ST. LOUIS
Cape Girardeau.......................................... 188,000 C 30 MHz
Poplar Bluff............................................ 155,000 C 30 MHz
Rolla................................................... 93,000 C 30 MHz
----------
436,000
----------
CIVS TOTAL................................................ 20,461,000
==========
</TABLE>
- Cook Inlet/VoiceStream GSM II PCS, LLC
CIVS II was formed in anticipation of the Omnipoint reorganization. We will
hold a 49.9% membership interest in CIVS II. Pursuant to the purchase agreement
by and between CIVS II and Omnipoint, CIVS II will acquire BTA licenses and
certain associated assets and liabilities for the following 54 BTA markets, as
well as certain FCC Wireless Communications Services licenses:
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
DETROIT
Battle Creek............................................ 239,000 F 10 MHz
Adrian.................................................. 99,000 F 10 MHz
Detroit................................................. 5,020,000 F 10 MHz
Flint................................................... 513,000 F 10 MHz
Grand Rapids............................................ 1,043,000 F 10 MHz
Jackson................................................. 204,000 F 10 MHz
Lansing................................................. 519,000 F 10 MHz
Toledo.................................................. 777,000 F 10 MHz
----------
8,414,000
BOSTON-PROVIDENCE
Presque Isle............................................ 75,000 F 10 MHz
Providence-Pawtucket-
New Bedford-Fall River.................................. 1,502,000 F 10 MHz
----------
1,577,000
MIAMI-FT. LAUDERDALE
Miami-Ft. Lauderdale.................................... 3,743,000 F 10 MHz
W. Palm Beach-Boca Raton................................ 1,078,000 F 10 MHz
----------
4,821,000
</TABLE>
204
<PAGE> 212
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
INDIANAPOLIS
Anderson................................................ 181,000 F 10 MHz
Muncie.................................................. 180,000 F 10 MHz
Richmond................................................ 104,000 F 10 MHz
Columbus................................................ 154,000 F 10 MHz
Terre Haute............................................. 246,000 F 10 MHz
Vincennes-Washington.................................... 94,000 F 10 MHz
----------
959,000
ST. LOUIS
Cape Girardeau-Sikeston................................. 188,000 F 10 MHz
Carbondale-Marion....................................... 218,000 F 10 MHz
Jefferson City.......................................... 156,000 F 10 MHz
Poplar Bluff............................................ 155,000 F 10 MHz
Rolla................................................... 93,000 F 10 MHz
Springfield............................................. 631,000 F 10 MHz
West Plains............................................. 75,000 F 10 MHz
----------
1,516,000
WICHITA
Wichita................................................. 652,000 F 10 MHz
CHARLOTTE-GREENSBORO-GREENVILLE-RALEIGH
Goldsboro-Kinston....................................... 237,000 F 10 MHz
DALLAS-FT. WORTH
Waco.................................................... 293,000 F 10 MHz
PHILADELPHIA
Atlantic City........................................... 339,000 C 15 MHz
Dover................................................... 293,000 C 15 MHz
Philadelphia-Wilmington-
Trenton................................................. 5,975,000 C 15 MHz
Reading................................................. 355,000 C 15 MHz
----------
6,962,000
ATLANTA
Albany-Tifton........................................... 342,000 F 10 MHz
Augusta................................................. 567,000 F 10 MHz
Macon-Warner Robins..................................... 641,000 F 10 MHz
Savannah................................................ 719,000 F 10 MHz
----------
2,269,000
CINCINNATI-DAYTON
Williamson-Pikeville.................................... 185,000 F 10 MHz
DENVER
Colorado Springs, CO.................................... 513,000 F 10 MHz
RICHMOND-NORFOLK
Norfolk-Virginia Beach-
Newport News............................................ 1,763,000 F 10 MHz
PUERTO RICO-USVI
San Juan................................................ 2,170,000 F 10 MHz
</TABLE>
205
<PAGE> 213
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
BIRMINGHAM
Birmingham.............................................. 1,304,000 F 10 MHz
Gadsden................................................. 184,000 F 10 MHz
Decatur................................................. 143,000 F 10 MHz
Huntsville.............................................. 511,000 F 10 MHz
----------
2,142,000
PORTLAND
Coos Bay-North Bend..................................... 84,000 F 10 MHz
DES MOINES-QUAD CITIES
Des Moines.............................................. 775,000 F 10 MHz
SAN ANTONIO
San Antonio............................................. 1,805,000 F 10 MHz
NASHVILLE
Nashville............................................... 1,665,000 F 10 MHz
CHICAGO
Benton Harbor........................................... 161,000 F 10 MHz
Danville................................................ 110,000 F 10 MHz
Ft. Wayne............................................... 684,000 F 10 MHz
Peoria.................................................. 463,000 F 10 MHz
South Bend-Mishawaka.................................... 350,000 F 10 MHz
----------
1,768,000
WASHINGTON-BALTIMORE
Baltimore............................................... 2,533,000 F 10 MHz
----------
CIVS II TOTAL............................................. 43,103,000
==========
</TABLE>
- Cook Inlet/VoiceStream GSM III PCS, LLC
CIVS III was formed in anticipation of the Omnipoint reorganization. We
will hold a 49.9% membership interest in CIVS III. Pursuant to the purchase
agreement dated as of June 23, 1999, by and between CIVS III and Omnipoint, CIVS
III will acquire licenses and license applications for the following 34 BTA
markets:
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
CHICAGO
Elkhart................................................... 256,000 C 30 MHz
Benton Harbor............................................. 161,000 C 30 MHz
Ft. Wayne................................................. 684,000 C 30 MHz
South Bend-Mishawaka...................................... 350,000 C 15 MHz
----------
1,451,000
</TABLE>
206
<PAGE> 214
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
DETROIT
Adrian*................................................... 99,000 C 15 MHz
Detroit*.................................................. 5,020,000 C 30 MHz
Flint*.................................................... 513,000 C 30 MHz
Grand Rapids*............................................. 1,043,000 C 15 MHz
Jackson*.................................................. 204,000 C 15 MHz
Kalamazoo*................................................ 371,000 C 30 MHz
Muskegon*................................................. 221,000 C 15 MHz
Alpena.................................................... 67,000 C 30 MHz
Battle Creek*............................................. 239,000 C 15 MHz
Sault Ste. Marie.......................................... 56,000 C 30 MHz
----------
7,833,000
BOSTON-PROVIDENCE
Bangor.................................................... 321,000 C 15 MHz
Pittsfield................................................ 134,000 C 30 MHz
Springfield-Holyoke....................................... 659,000 C 30 MHz
Lebanon-Claremont......................................... 175,000 C 30 MHz
----------
1,289,000
ST. LOUIS
Mt. Vernon-Centralia*..................................... 122,000 C 30 MHz
St. Louis*................................................ 2,822,000 C 30 MHz
----------
2,944,000
INDIANAPOLIS
Kokomo-Logansport......................................... 185,000 C 15 MHz
BUFFALO-ROCHESTER
Rochester................................................. 1,143,000 C 30 MHz
Buffalo-Niagara Falls..................................... 1,200,000 C 30 MHz
----------
2,343,000
WICHITA
Salina.................................................... 143,000 C 30 MHz
PHILADELPHIA
Harrisburg................................................ 687,000 C 30 MHz
Lancaster................................................. 456,000 C 30 MHz
York-Hanover.............................................. 464,000 C 30 MHz
----------
1,607,000
CLEVELAND
Ashtabula................................................. 102,000 C 30 MHz
Canton-New Philadelphia................................... 526,000 C 30 MHz
E. Liverpool-Salem........................................ 111,000 C 30 MHz
Erie...................................................... 278,000 C 30 MHz
Mansfield................................................. 226,000 C 30 MHz
Sandusky*................................................. 140,000 C 15 MHz
Youngstown-Warren......................................... 480,000 C 30 MHz
----------
1,863,000
----------
CIVS III TOTAL.............................................. 19,658,000
==========
</TABLE>
- -------------------------
* License has not yet been issued by the FCC.
207
<PAGE> 215
OTHER JOINT VENTURE ENTITIES IN WHICH WE WILL HOLD INTERESTS FOLLOWING THE
FIRST TO OCCUR OF THE OMNIPOINT REORGANIZATION AND THE AERIAL
REORGANIZATION
Following the first to occur of the completion of the Omnipoint
reorganization and the Aerial reorganization, we will hold interests in the
following joint venture entities.
- Iowa Wireless
Iowa Wireless Services, L.P. ("Iowa Wireless") is a Delaware limited
partnership ultimately controlled by Iowa Network Services, Inc., an Iowa
corporation. We will hold a 38% limited partnership interest in Iowa Wireless.
Iowa Wireless began operations in certain markets in 1998.
Iowa Wireless owns FCC licenses to provide wireless communications services
in the following 13 BTA license areas. See "-- Governmental Regulation;
Licensing of PCS Systems."
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
DES MOINES-QUAD CITIES
Burlington............................................... 137,000 A, D 40 MHz
Cedar Rapids............................................. 280,000 A 20 MHz
Clinton-Sterling......................................... 146,000 A, D 40 MHz
Davenport-Moline......................................... 427,000 A 20 MHz
Des Moines(1)............................................ 207,000 A 20 MHz
Dubuque.................................................. 177,000 A 20 MHz
Fort Dodge............................................... 126,000 A 20 MHz
Iowa City................................................ 122,000 A 20 MHz
Marshalltown............................................. 56,000 A, D 40 MHz
Mason City............................................... 116,000 A, D 40 MHz
Ottumwa.................................................. 123,000 A 20 MHz
Sioux City............................................... 341,000 A 20 MHz
Waterloo-Cedar Falls..................................... 259,000 A 20 MHz
---------
IOWA WIRELESS TOTAL........................................ 2,517,000
=========
</TABLE>
- -------------------------
(1) VoiceStream contributed portions of the Des Moines MTA license to Iowa
Wireless. As a result, we will own 30 MHz of the license for certain
counties within the Des Moines BTA but only 10 MHz for the remainder of the
Des Moines BTA. The remaining 20 MHz is owned by Iowa Wireless.
- STPCS
STPCS is a Delaware limited liability company ultimately controlled by
STPCS Investment, LLC. We will hold an 18% membership interest in STPCS. STPCS,
through its wholly owned subsidiaries, owns seven FCC licenses to provide
wireless communications services in the following seven BTA markets. See
"-- Governmental Regulation; Licensing of PCS Systems."
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
SAN ANTONIO
Brownsville-Harlingen.................................... 353,000 D, F 20 MHz
Corpus Christi........................................... 556,000 D 10 MHz
Eagle Pass-Del Rio....................................... 120,000 F 10 MHz
Laredo................................................... 215,000 D 10 MHz
McAllen.................................................. 594,000 D 10 MHz
---------
1,838,000
</TABLE>
208
<PAGE> 216
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
HOUSTON
Victoria................................................. 164,000 F 10 MHz
---------
STPCS TOTAL................................................ 2,002,000
=========
</TABLE>
OTHER JOINT VENTURES IN WHICH WE WILL HOLD AN INTEREST FOLLOWING THE
OMNIPOINT REORGANIZATION
- D&E/Omnipoint Wireless Joint Venture, LLC
D&E/Omnipoint Wireless Joint Venture, LLC is a Delaware limited liability
company formed in September 1997. We will hold a 50% interest in this entity to
which Omnipoint has committed to contribute licenses for several western
Pennsylvania BTA markets. The company launched service in the markets in
September 1997.
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
PHILADELPHIA
York-Hanover............................................. 464,000 E 10 MHz
Harrisburg............................................... 687,000 D 10 MHz
Lancaster................................................ 456,000 E 10 MHz
---------
1,607,000
</TABLE>
- NPI-Omnipoint Wireless, LLC
NPI Omnipoint Wireless, LLC is a Delaware limited liability company formed
in March 1999. We will hold a 30% interest in this joint venture entity to which
Omnipoint has committed to contribute licenses for several central Michigan
BTAs. The company launched service in the markets in the Spring of 1999.
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
DETROIT
Grand Rapids(1).......................................... 1,043,000 E 10 MHz
Mount Pleasant........................................... 129,000 E 10 MHz
Muskegon................................................. 221,000 E 10 MHz
Saginaw-Bay City(1)...................................... 636,000 E 10 MHz
---------
2,029,000
</TABLE>
- -------------------------
(1) Omnipoint has agreed to contribute portions of the Grand Rapids and
Saginaw-Bay City BTA licenses to NPI-Omnipoint Wireless, LLC. As a result,
Omnipoint will own the E Block licenses for certain counties within the
Grand Rapids and Saginaw-Bay City BTAs, and NPI-Omnipoint Wireless, LLC will
own the E block licenses for the remainder of the counties in the Grand
Rapids and Saginaw-Bay City BTA.
OTHER JOINT VENTURES IN WHICH WE WILL HOLD AN INTEREST FOLLOWING THE AERIAL
REORGANIZATION
Following completion of the Aerial reorganization, we will hold interests
in the following joint venture entities:
- Wireless Alliance, LLC
Wireless Alliance, LLC ("WALLC") is a Minnesota limited liability company
formed in November 1996. We will hold a 30% interest in WALLC. The company
launched service in 1998.
209
<PAGE> 217
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
MINNEAPOLIS (1)
Duluth................................................... 408,000 B 20 MHz
Grand Forks.............................................. 208,000 B 20 MHz
Fargo.................................................... 307,000 B 20 MHz
Sioux Falls.............................................. 232,000 B 20 MHz
</TABLE>
- -------------------------
(1) Aerial contributed to WALLC 20 MHz of the 30 MHz of the above BTAs within
the Minneapolis MTA license in exchange for its ownership interest in WALLC.
- Access Plus, LLC
A GSM infrastructure agreement between a wholly-owned subsidiary of Aerial
Operating Company and Access Plus, LLC, provides for the build-out of the
Brainerd BTA portion of Aerial's Minneapolis MTA and the sharing of revenues
generated by this venture.
PRODUCTS AND SERVICES
We will continue to provide a variety of wireless products and services
designed to match a range of needs for business and personal use. VoiceStream,
Omnipoint and Aerial currently offer several distinct services and features in
their PCS systems, including:
- Enhanced Features. Our systems will continue to offer caller
identification, call hold, call waiting, voice mail and alpha-numeric
paging, as well as custom calling features such as conference calling and
call forwarding.
- Messaging and Wireless Data Transmission. Our systems will continue to
allow for two-way messaging to and from subscribers' handsets. This
facilitates a number of messaging and internet-related services which are
currently offered by VoiceStream, Omnipoint and Aerial, such as the
receipt of wireless e-mail, and which may be offered in the future, such
as Web browsing.
- Call Security and Privacy. Sophisticated encryption algorithms provide
increased call security, encouraging users to make private, business and
personal calls with significantly lower risk of eavesdropping than on
analog-based systems.
- Smart Card. "Smart" cards, programmed with the user's billing information
and a specified service package, allow subscribers to obtain PCS
connectivity automatically, simply by inserting their smart cards into
compatible PCS handsets.
- Prepaid Wireless. Our systems will continue to offer prepaid wireless
services in many of our markets.
- Over-the-Air Activation and Over-the-Air Subscriber Profile
Management. VoiceStream, Omnipoint and Aerial are able to transmit
changes in the subscriber's feature package, including mobile number
assignment and personal directory numbers, directly to the subscriber's
handset.
- Roaming. Subscribers are able to roam throughout the United States and
many countries in the world, on other GSM handsets. VoiceStream has
entered into roaming agreements with many analog cellular carriers which
allow customers with dual-mode handsets to roam on most cellular systems
in the United States. Dual-mode handsets allow roaming onto analog
cellular systems.
210
<PAGE> 218
MARKETING, SALES AND CUSTOMER SERVICE
Our sales and marketing strategy is to generate continued subscriber growth
and increased subscriber revenues. In addition, we will continue to target a
customer base which we believe is likely to generate higher monthly service
revenues, while attempting to achieve a low cost of adding new subscribers.
- Marketing. We will continue to market our PCS products and services under
the proprietary VoiceStream brand name. Our objective is to develop brand
recognition of VoiceStream through substantial advertising and direct
marketing in each of our PCS markets. We may continue to use the
Omnipoint brand for select services.
In marketing our PCS services, we will concentrate our marketing efforts
primarily on the consumer market that benefits from VoiceStream's existing
"Get More" proposition. This emphasizes that consumers get more for their
money from VoiceStream's enhanced features, privacy, customer service and
competitive pricing of these services. We will also promote to businesses
who benefit from integrated voice messaging, wireless data transmission,
and enhanced features and services. We intend to feature our celebrity
spokesperson -- Jamie Lee Curtis -- in our advertising campaign.
- Sales. We will continue to sell our products and services through a
combination of direct and indirect channels. As a combined entity, we
will operate company-owned retail sales locations and utilize a direct
sales force. Our training programs will provide our sales employees with
an in-depth understanding of our system, products and services so that
they, in turn, can provide extensive information to prospective
customers. Sales commissions generally are linked both to subscriber
revenue and subscriber retention, as well as to activation levels.
We believe that our local sales offices will provide the physical presence
in local markets necessary to position us as a quality local service
provider, and give us greater control over both our costs and the sales
process. We will also utilize indirect sales through an extensive network
of national and local merchant and specialty retailers. We intend to
continue to use a combination of direct and indirect sales channels, with
the mix depending on the retail needs of each particular market.
In addition, we will act as a retail distributor of handsets and maintain
inventories of handsets. Although subscribers generally are responsible
for purchasing or otherwise obtaining their own handsets, VoiceStream,
Omnipoint and Aerial have historically sold handsets below cost to respond
to competition and general industry practice and expect to continue to do
so in the future.
- Customer Service. Superior customer service is a significant element of
our operating philosophy. We are committed to attracting and retaining
subscribers by providing consistently superior customer service. We will
continue to maintain a highly sophisticated monitoring and control system
and a well-trained staff of customer service personnel to handle both
routine and complex questions as they arise, 24 hours a day, 365 days a
year.
We will continue to implement credit check procedures at the time of sale
and continuously monitor customer churn (the rate of subscriber attrition). We
believe that we can minimize our churn rate through an outreach program
implemented through our sales force and customer service personnel. This program
will not only enhance subscriber loyalty, but also increase add-on sales and
customer referrals. The outreach program will also allow the sales staff to
check customer satisfaction, as well as to offer additional calling features,
such as voice mail and call forwarding.
211
<PAGE> 219
SUPPLIERS AND EQUIPMENT VENDORS
We will not manufacture any of the handsets or network equipment used in
our operations. The high degree of compatibility among different manufacturers'
models of handsets and network equipment will allow us to continue to design,
construct and operate our systems without being dependent upon any single source
of such equipment. The handsets and network equipment used in VoiceStream's,
Omnipoint's and Aerial's operations are available for purchase from multiple
sources, and we anticipate that such equipment will continue to be available in
the foreseeable future. VoiceStream, Omnipoint and Aerial currently purchase
handsets primarily from Motorola Inc., Ericsson Inc., Mitsubishi Wireless
Communications, Inc. and Nokia. We will deploy network equipment primarily from
Ericsson, Nortel Networks Inc., Nokia and Siemens Information and Communications
Networks, Inc.
COMPETITION
Competition for subscribers among wireless licensees is based principally
upon the services and features offered, the technical quality of the wireless
systems, customer service, system coverage, capacity and price. Under current
FCC rules, there may be up to seven PCS licensees in each geographic area in
addition to the two cellular licensees. Also, SMR dispatch system operators have
constructed digital mobile communications systems on existing SMR frequencies,
referred to as ESMR, in many cities throughout the United States, including some
of the markets in which we will operate.
We will operate in highly competitive markets. Our principal competitors
will be the cellular service providers in our markets, many of which have been
operational for a number of years, and national PCS providers, some of which
offer service plans which may be difficult for us to compete against or offer on
attractive terms. We will also compete with paging, dispatch and conventional
mobile telephone companies, resellers and landline telephone service providers
in our PCS markets. Many of our competitors have significantly greater financial
and technical resources than those available to us and provide comparable
services in competition with our PCS systems. These competitors include Vodafone
AirTouch, AT&T Wireless, Bell Atlantic, GTE Mobilnet, Nextel, Sprint PCS and US
West. Potential users of wireless systems may also find their communications
needs satisfied by other current and developing technologies. One or two-way
paging or beeper services that feature voice messaging and data display as well
as tone only service may be adequate for potential subscribers who do not need
to speak to the caller. In the future, wireless service may also compete more
directly with traditional landline telephone service providers.
GSM systems are not deployed in all areas of the United States. As a
result, our subscribers may not be able to conveniently use PCS services while
roaming in areas outside our markets. Further, our principal PCS competitors use
standards other than GSM. For example, US West and Sprint PCS use the CDMA
standard and AT&T Wireless uses the TDMA standard. Systems using the CDMA and
TDMA standards cover more areas of the United States than do GSM systems.
Therefore, our competitors deploying such systems have a competitive advantage
in this regard.
A reseller provides wireless service to customers but does not hold an FCC
license or own facilities. The reseller buys blocks of wireless telephone
numbers and capacity from a licensed carrier and resells service through its own
distribution network to the public. Thus, a reseller is both a customer of a
wireless licensee's services and also a competitor of that licensee. Several
small resellers currently operate in competition with VoiceStream's, Omnipoint's
and Aerial's systems. The resale requirement is set to expire November 24, 2002.
212
<PAGE> 220
In the future, we expect to face increased competition from entities
providing similar services using other communications technologies. While some
of these technologies and services are currently operational, others are being
developed or may be developed in the future.
At the end of 1996, the FCC transferred 200 MHz of spectrum previously
allocated to federal government use to the private sector. In April of 1997, the
FCC auctioned 30 MHz of spectrum for wireless communications services, which can
provide fixed or mobile telecommunications service. Omnipoint purchased nine
licenses as a result of such auction, all of which will be contributed to CIVS
II. In late 1997, the FCC also auctioned 10 MHz of spectrum for specialized
mobile radio service, another competitor with PCS service. Moreover, in 1998,
the FCC auctioned more than 1000 MHz of spectrum for local multipoint
distribution service. VoiceStream acquired 16 licenses as a result of such
auction. During 1998 and 1999, the FCC auctioned spectrum in the 220 MHz band.
The FCC also has announced its intent to auction additional spectrum that may be
used to provide fixed and mobile services, including 25 MHz of spectrum for the
general wireless communications service plus spectrum in the 39 MHz band. We
cannot foresee how technological progress or economic incentive will affect
competition from this new spectrum. In all instances, the FCC reserves the right
to amend or repeal its service regulations and auction schedule.
INTELLECTUAL PROPERTY
VoiceStream holds federal trademark registration of the marks "VoiceStream"
and "VoiceStream and Design," and has registered or applied for various other
trade and service marks with the United States Patent and Trademark Office. As
of June 30, 1999, Omnipoint had 63 United States patents, 10 foreign patents, 57
United States and 73 foreign pending patent applications, 12 United States and
102 foreign trademarks, and 27 United States and 83 pending foreign trademark
applications. As of September 17, 1999, Aerial had one pending United States
patent, eight United States trademarks and six common law trademarks. Upon the
closing of both reorganizations, we will hold all such intellectual property.
ORGANIZATION
We will hold our FCC licenses and conduct all operations through a number
of direct and indirect wholly-owned subsidiaries and through certain affiliates.
Indirect wholly-owned subsidiaries of VoiceStream are the 49.9% limited partner
of Cook Inlet PCS, the 38% limited partner of Iowa Wireless, the 18% member of
STPCS, and a 49.9% ownership in CIVS. In three BTAs, VoiceStream and Cook Inlet
PCS each own a license for 10 MHz of PCS spectrum that are the subject of
agreements allowing each of VoiceStream and Cook Inlet PCS to operate on the PCS
systems built by VoiceStream in those BTAs. Wholly-owned subsidiaries of
Omnipoint are the 50% member of D&E/Omnipoint Wireless Joint Venture, LLC and
the 30% member of NPI-Omnipoint Wireless, LLC and will hold 49.9% membership
interests in CIVS II and CIVS III. A wholly-owned subsidiary of Aerial Operating
Company owns a 30% membership interest in Wireless Alliance, LLC. Additionally,
a GSM infrastructure agreement between a wholly-owned subsidiary of Aerial
Operating Company and Access Plus, LLC, provides for the build-out of a portion
of Aerial's Minneapolis MTA and the sharing of the revenues generated by this
venture. Furthermore, Aerial Operating Company owns 100 limited partnership
interest units, representing, as of December 31, 1998, a 3.8% partnership
interest, in GSM Capital Limited Partnership, a venture capital fund whose
objective is to invest in early stage companies providing products and services
to GSM PCS operators. Aerial Operating Company also has, as of December 31,
1998, a 9.6% membership interest in North American GSM Alliance, LLC.
213
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GOVERNMENTAL REGULATION
The FCC regulates the licensing, construction, operation, acquisition and
sale of cellular and PCS systems in the United States pursuant to the
Communications Act.
LICENSING OF PCS SYSTEMS
In order to increase competition in wireless communications, promote
improved quality and service and make available the widest possible range of
wireless services, federal legislation was enacted directing the FCC to allocate
radio frequency spectrum for PCS by competitive bidding. A PCS system operates
under a protected geographic service area license granted by the FCC for a
particular market on one of six frequency blocks allocated for broadband PCS
service. The FCC has divided the United States and its possessions and
territories into PCS markets made up of 493 BTAs and 51 MTAs. Each MTA consists
of at least two BTAs. As many as seven licenses are issued in each PCS service
area. The FCC has allocated 120 MHz of radio spectrum in the 2 GHz band for
licensed PCS services. The FCC divided the 120 MHz of spectrum into six
individual blocks, each of which is allocated to serve either MTAs or BTAs. The
spectrum allocation includes two 30 MHz blocks (A and B Blocks) licensed for
each of the 51 MTAs, one 30 MHz block (C Block) (which has been split in some
BTAs into two 15 MHz blocks) licensed for each of the 493 BTAs, and three 10 MHz
blocks (D, E and F Blocks) licensed for each of the 493 BTAs. A PCS license has
been or will be awarded for each MTA or BTA in every block, for a total of more
than 2,000 licenses.
Under the FCC's current rules specifying spectrum ownership limits
affecting broadband PCS licensees, no person or entity may hold an attributable
interest in licenses for more than 45 MHz of PCS, cellular and SMR services
regulated as CMRS where there is significant overlap in any geographic area
(significant overlap will occur when at least 10% of the population of the PCS
licensed service area is within the CGSA and/or SMR service area, as defined by
the FCC). In an order released September 22, 1999, the Commission raised the
aggregation limit for licensees serving rural areas (defined as cellular RSAs)
to 55 MHz. For purposes of this spectrum limit, any controlling ownership
interest shall be "attributable," as will any equity interest of 20% or more
(however, 40% or more applies (1) if the ownership interest is held by a small
business, or (2) if the interest is held by an entity with a non-controlling
interest in a PCS licensee that is a small business or (3) is held by a passive
institutional investor). Furthermore, the officers and directors of any licensee
shall be considered to have an attributable interest in each entity with which
they are associated. This means that Western Wireless's ownership of cellular
licenses will be attributed to VoiceStream Holdings (because of some common
officers and directors) and Cook Inlet PCS's PCS licenses will be attributed to
VoiceStream Holdings (because of VoiceStream's equity interest). Western
Wireless owns cellular licenses serving markets that are wholly or partially
within the Denver MTA and the Oklahoma City MTA, resulting in Western Wireless
exceeding the FCC's spectrum cap restrictions described above. Western Wireless
has filed waiver requests with the FCC with respect to both MTAs, both of which
are pending, and has been allowed to delay compliance with the restriction until
the FCC rules on the waiver requests. It may be necessary to supplement these
waiver requests in light of the September 22, 1999 order. In the event that
spectrum cap restrictions are not waived, either VoiceStream Holdings or Western
Wireless will be obligated to divest sufficient portions of their markets in the
Denver and Oklahoma City MTAs to come into compliance with the rules.
The licenses of Omnipoint will also be attributed to VoiceStream after the
Omnipoint reorganization, as will the Aerial licenses after the Aerial
reorganization. This attribution will cause the spectrum cap to be exceeded in
St. Louis, Rolla, Poplar Bluff and Cape Girardeau-Sikeston, Missouri, Salina,
Kansas and Mt. Vernon, Illinois. Temporary waivers of the spectrum cap have been
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sought by VoiceStream and Omnipoint in the context of their FCC applications for
approval of the Omnipoint reorganization. If any of these waivers are not
granted, either VoiceStream Holdings or Western Wireless will be obligated to
divest sufficient portions of their spectrum in these markets to come into
compliance with the rules. VoiceStream Holdings does not believe the spectrum
cap or any action Western Wireless or VoiceStream Holdings may be required to
take to comply therewith will have a material adverse effect on VoiceStream
Holdings due to the relatively minor geographic overlaps.
We do not expect that the Aerial reorganization will close prior to the
Omnipoint reorganization. Should this occur, however, TDS's interest will rise
to approximately 24%, assuming an exchange ratio of 0.455, making U.S. Cellular
licenses attributable to VoiceStream Holdings and causing overlap problems which
otherwise could be avoided. In this event, VoiceStream Holdings will seek
temporary waivers of the spectrum cap for affected markets. If these waivers are
not granted, other action will need to be taken to comply with the spectrum cap
rules, including the possible sale by TDS of sufficient shares of VoiceStream
common stock to reduce its interest below 20% or the divestiture of portions of
spectrum in certain markets.
All PCS licenses are granted for a ten-year term, at the end of which they
must be renewed. The FCC has adopted specific standards to apply to PCS
renewals, under which the FCC will award a renewal expectancy to a PCS licensee
that (1) has provided substantial service during its past license term and (2)
has substantially complied with applicable FCC rules and policies and the
Communications Act. All 30 MHz PCS licensees, including VoiceStream and
Omnipoint, must construct facilities with a signal level sufficient to provide
adequate service to at least one-third of the population of their service area
within five years of their initial license grants and to two-thirds of the
population within ten years. All 10 MHz and 15 MHz PCS licensees, including
VoiceStream and Omnipoint, must construct facilities with a signal level
sufficient to provide adequate service to at least one-quarter of the population
in their licensed service area within five years of their initial license
grants, or make a showing of substantial service in their licensed service area
within five years of their initial license grants. Licensees that fail to meet
the coverage requirements may be subject to forfeiture of the license.
FCC rules restrict the voluntary assignments or transfers of control of C
and F Block licenses. During the first five years of the license term,
assignments or transfers affecting control are permitted only to assignees or
transferees that meet the eligibility criteria for participation in the
entrepreneur block auction at the time the application for assignment or
transfer of control is filed, or if the proposed assignee or transferee holds
other licenses for C and F Blocks and, at the time of receipt of such licenses,
met the same eligibility criteria. Any transfers or assignments during the
entire ten year initial license term are subject to an unjust enrichment penalty
of acceleration of any installment payment plans should the assignee or
transferee not qualify for the same benefits. Any transfers or assignments
during the first five years of the initial license term are subject to an unjust
enrichment penalty of forfeiture of bidding credits. In the case of the C and F
Blocks, the FCC will conduct random audits to ensure that licensees are in
compliance with the FCC's eligibility rules. Violations of the Communications
Act or the FCC's rules could result in license revocations, forfeitures or
fines.
For a period of up to 10 years after the grant of a PCS license (subject to
extension), a PCS licensee will share spectrum with existing licensees that
operate certain fixed microwave systems within its license area. To secure a
sufficient amount of unencumbered spectrum to operate our PCS systems
efficiently and with adequate population coverage, we will need to relocate many
of these incumbent licensees. In an effort to balance the competing interests of
existing microwave users and newly authorized PCS licensees, the FCC adopted (1)
a transition plan to relocate such microwave operators to other spectrum blocks
and (2) a cost sharing plan so that if the relocation of an incumbent benefits
more than one PCS licensee, the benefiting PCS licensees will share the cost of
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the relocation. Initially, this transition plan allowed most microwave users to
operate in the PCS spectrum for a two-year voluntary negotiation period and an
additional one-year mandatory negotiation period. The FCC has shortened the
voluntary negotiation period by one year (without lengthening the mandatory
negotiation period) for PCS licensees in the C, D, E and F Blocks. For public
safety entities dedicating a majority of their system communications for police,
fire or emergency medical services operations, the voluntary negotiation period
is three years, with an additional two year mandatory negotiation period.
Parties unable to reach agreement within these time periods may refer the matter
to the FCC for resolution, but the incumbent microwave user is permitted to
continue its operations until final FCC resolution of the matter. The transition
and cost sharing plans expire on April 4, 2005, at which time remaining
incumbents in the PCS spectrum will be responsible for their costs to relocate
to alternate spectrum locations.
Cellular and PCS systems are subject to certain Federal Aviation
Administration regulations respecting the location, lighting and construction of
transmitter towers and antennae and may be subject to regulation under the
National Environmental Policy Act and the environmental regulations of the FCC.
State or local zoning and land use regulations will also apply to our
activities. We will use, among other facilities, common carrier point to point
microwave facilities to connect cell sites and to link them to the main
switching office. These facilities are separately licensed by the FCC and are
subject to regulation as to technical parameters and service.
VoiceStream, Omnipoint and Aerial have purchased their PCS licenses from
private parties and the federal government. They have used a combination of debt
and equity financing to acquire such licenses. Some joint ventures in which they
hold an interest have utilized financing from the federal government to the
extent available.
TRANSFERS AND ASSIGNMENTS OF PCS LICENSES
The Communications Act and FCC rules require the FCC's prior approval of
the assignment or transfer of control of a license for a PCS system. In
addition, the FCC has established transfer disclosure requirements that require
licensees who transfer control of or assign a PCS license within the first three
years of their license term to file associated contracts for sale, option
agreements, management agreements or other documents disclosing the total
consideration that the licensee would receive in return for the transfer or
assignment of its license. Non-controlling interests in an entity that holds a
PCS license or PCS system generally may be bought or sold without FCC approval.
Any acquisition or sale by us of PCS interests may also require the prior
approval of the Federal Trade Commission and the Department of Justice, if over
a certain size, as well as state or local regulatory authorities having
competent jurisdiction.
FCC rules restrict the voluntary assignments or transfers of control of C
and F Block licenses. During the first five years of the license term,
assignments or transfers affecting control are permitted only to assignees or
transferees that meet the eligibility criteria for participation in the C and F
Block auctions at the time the application for assignment or transfer of control
is filed, or if the proposed assignee or transferee holds other licenses for C
and F Blocks and, at the time of receipt of such licenses, met the same
eligibility criteria. Any transfers or assignments during the entire ten year
initial license term are subject to an unjust enrichment penalty of acceleration
of any installment payment plans should the assignee or transferee not qualify
for the same benefits. Any transfers or assignments during the first five years
of the initial license term are subject to an unjust enrichment penalty of
forfeiture of bidding credits. In the case of the C and F Blocks, the FCC has
authority to conduct random audits to ensure that licensees are in compliance
with the FCC's eligibility rules. Violations of the Communications Act or the
FCC's rules could result in license revocations, forfeitures or fines.
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FOREIGN OWNERSHIP
Under the Communications Act, no more than 25% of an FCC licensee's capital
stock may be indirectly owned or voted by non-United States citizens or their
representatives, by a foreign government, or by a foreign corporation, absent an
FCC finding that a higher level of alien ownership is not inconsistent with the
public interest. In November 1997, the FCC adopted new rules, effective in
February 1998, in anticipation of implementation of the WTO Agreement. Formerly,
potential licensees had to demonstrate that their markets offered effective
competitive opportunities in order to obtain authorization to exceed the 25%
indirect foreign ownership threshold. Under the new rules, this showing now only
applies to non-WTO members. Applicants from WTO Agreement signatories have an
"open entry" standard: they are presumed to offer effective competitive
opportunities. However, the FCC reserves the right to attach additional
conditions to a grant of authority, and, in the exceptional case in which an
application poses a very high risk to competition, to deny the application. The
limitation on direct foreign ownership in an FCC licensee remains fixed at 20%,
with no opportunity to increase the percentage, and is unaffected by the FCC's
new rules. VoiceStream has applied for and received FCC approval for foreign
ownership of up to 49.9%. VoiceStream has requested from the FCC that they apply
the level of permissible alien ownership in VoiceStream and its operating
subsidiaries set forth in the June 4, 1999 Public Notice to VoiceStream Holdings
and the additional operating subsidiaries that it will acquire as part of the
reorganizations. Following the reorganizations, indirect foreign ownership of
FCC licenses that we control will be less than 49.9%.
The WTO Agreement also obligates signatories to open their domestic
telecommunications markets to foreign investment and foreign corporations. The
WTO Agreement will increase investment and competition in the United States,
potentially leading to lower prices, enhanced innovation and better service. At
the same time, market access commitments from WTO Agreement signatories will
provide United States service suppliers opportunities to expand abroad.
TELECOMMUNICATIONS ACT OF 1996 AND OTHER RECENT INDUSTRY DEVELOPMENTS
On February 8, 1996, the Telecommunications Act was signed into law,
substantially revising the regulation of communications. The goal of the
Telecommunications Act is to enhance competition and remove barriers to market
entry, while deregulating the communications industry to the greatest extent
possible. To this end, local and long-distance communications providers will,
for the first time, be able to compete in the other's market, and telephone and
cable companies will likewise be able to compete in each other's markets. To
facilitate the entry of new carriers into existing markets, the
Telecommunications Act imposes certain interconnection requirements on incumbent
carriers. Additionally, all telecommunications providers are required to make an
equitable and nondiscriminatory contribution to the preservation and advancement
of universal service. We cannot predict the outcome of the FCC's rulemaking
proceedings to promulgate regulations to implement the new law or the effect of
the new regulations on cellular service or PCS, and there can be no assurance
that such regulations will not adversely affect our business or financial
condition.
The Telecommunications Act codifies the policy that non-regional Bell
operating company CMRS providers will not be required to provide equal access to
long distance carriers, and relieved such CMRS providers of their existing equal
access obligations. The FCC, however, may require CMRS carriers to offer
unblocked access (i.e., implemented by the subscriber's use of a carrier
identification code or other mechanisms at the time of placing a call) to the
long distance provider of a subscriber's choice. The FCC has terminated its
inquiry into the imposition of equal access requirements on CMRS providers.
On July 26, 1996, the FCC released a Report and Order establishing
timetables for making emergency 911 services available by cellular, PCS and
other mobile service providers, including
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"enhanced 911" services that provide the caller's telephone number, location and
other useful information. Cellular and PCS providers must be able to process and
transmit 911 calls (without call validation), including those from callers with
speech or hearing disabilities. If a cost recovery mechanism is in place and a
Public Service Answering Point requests and is capable of processing the
caller's telephone number and location information, cellular, PCS, and other
mobile service providers must relay a caller's automatic number identification
and cell site location, and by 2001 they must be able to identify the location
of a 911 caller within 125 meters in 67% of all cases. State actions
incompatible with the FCC rules are subject to preemption. On December 1, 1997,
the FCC required wireless carriers to transmit all 911 calls without regard to
validation procedures intended to identify and intercept calls from
non-subscribers. Then, in an order released June 9, 1999, the FCC adopted rules
requiring that analog cellular phones include a separate capability for
processing 911 calls that permit these calls to be handled, where necessary, by
either cellular carrier in the area. The new rule only applies to new analog
cellular handsets not to existing handsets or to PCS or SMR services.
On August 1, 1996, the FCC released a Report and Order expanding the
flexibility of cellular, PCS and other CMRS providers to provide fixed as well
as mobile services. Such fixed services include, but need not be limited to,
"wireless local loop" services, e.g., to apartment and office buildings, and
wireless backup to PBXs and local area networks, to be used in the event of
interruptions due to weather or other emergencies. The FCC has not yet decided
how such fixed services should be regulated, but it has proposed a presumption
that they be regulated as CMRS services.
On August 8, 1996, the FCC released its order implementing the
interconnection provisions of the Telecommunications Act. The FCC's decision is
lengthy and complex and is subject to petitions for reconsideration and judicial
review (as described below), and its precise impact is difficult to predict with
certainty. However, the FCC's order concludes that CMRS providers are entitled
to reciprocal compensation arrangements with LECs and prohibits LECs from
charging CMRS providers for terminating LEC-originated traffic. Under the rules
adopted by the FCC, states must set arbitrated rates for interconnection and
access to unbundled elements based upon the LECs' long-run incremental costs,
plus a reasonable share of forward-looking joint and common costs. In lieu of
such cost-based rates, the FCC has established proxy rates to be used by states
to set interim interconnection rates pending the establishment of cost-based
rates. The FCC has also permitted states to impose "bill and keep" arrangements,
under which CMRS providers would make no payments for LEC termination of calls
where LECs and CMRS providers have symmetrical termination costs and roughly
balanced traffic flows. However, the FCC has found no evidence that these
conditions presently exist. The relationship of these charges to the payment of
access charges and universal service contributions has not yet been resolved by
the FCC. LECs and state regulators filed appeals of the interconnection order,
which were consolidated in the United States Court of Appeals for the Eighth
Circuit. The Court vacated many of the rules adopted by the FCC, including those
rules governing the pricing of interconnection services, but specifically
affirmed the FCC rules governing interconnection with CMRS providers. In January
1998, the United States Supreme Court agreed to review the Eighth Circuit
decision. In January 1999, the United States Supreme Court reversed many aspects
of the Eighth Circuit's judgment, holding that:
- the FCC has general jurisdiction to implement the Telecommunications
Act's local competition provisions;
- the FCC's rules governing unbundled access are consistent with the
Telecommunications Act, except for Rule 319, which gives requesting
carriers blanket access to network elements; and
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- the "pick and choose" rule is a reasonable interpretation of the
Telecommunications Act. The FCC on remand adopted a new standard for
determining which network elements the incumbents must unbundle. Applying
the revised standard, the FCC reaffirmed that incumbents must provide
unbundled access to six of the original seven network elements that it
required unbundled in its original order in 1996 (operator and directory
assistance services are no longer required). As a result of the Supreme
Court vacating and remanding the Eighth Circuit's ruling that the FCC
lacked authority to set local pricing standards, the Eighth Circuit will
have to decide whether the FCC's total-element long-run incremental cost
methodology for setting interconnection and unbundled network element
rates violates the Telecommunications Act.
In its implementation of the Telecommunications Act, the FCC established
new federal universal service rules, under which wireless service providers for
the first time are eligible to receive universal service subsidies, but also are
required to contribute to both federal and state universal service funds. For
the third quarter of 1999, the FCC's universal service assessments amount to
0.99% of interstate and intrastate telecommunications revenues for schools and
libraries and an additional 2.94% of interstate telecommunications revenues for
high cost and low income support mechanisms. Various parties challenged the
FCC's universal service rules, and the cases were consolidated in the United
States Court of Appeals for the Fifth Circuit. The court affirmed most of the
FCC's decisions regarding its implementation of the high-cost support system but
remanded for further consideration the FCC's decision to assess contributions
from carriers based on both international and interstate revenues. The court
also reversed (1) the requirement that incumbent local exchange carriers recover
their contributions from access charges and (2) the blanket prohibition on
additional state eligibility requirements for carriers receiving high-cost
support. Additionally, the Court reversed the rule prohibiting local telephone
service providers from disconnecting low-income subscribers. Finally, the Court
concluded that the FCC exceeded its jurisdictional authority when it assessed
contributions for "schools and libraries" programs based on the combined
intrastate and interstate revenues of interstate telecommunications providers
and when it asserted its jurisdictional authority to do the same on behalf of
high-cost support.
The FCC has adopted rules on telephone number portability which will enable
subscribers to migrate their landline and cellular telephone numbers to a PCS
carrier and from a PCS carrier to another service provider. Various parties have
challenged the number portability requirements as they apply to CMRS providers.
These challenges are still pending at the FCC and in the courts. We cannot
predict the outcome of such challenges. In February 1999, the FCC extended the
deadline for CMRS carriers to implement service provider local number
portability until November 24, 2002.
EMPLOYEES AND LABOR RELATIONS
VoiceStream, Omnipoint and Aerial consider their labor relations to be good
and, to their knowledge, none of their employees is covered by a collective
bargaining agreement.
As of August 31, 1999, VoiceStream employed a total of 2,521 people in the
following areas:
<TABLE>
<CAPTION>
NUMBER OF
CATEGORY EMPLOYEES
-------- ---------
<S> <C>
Sales and marketing......................................... 766
Engineering................................................. 358
General and administrative, including customer service...... 1,397
</TABLE>
Until early 2000, due to the spin-off, Western Wireless and VoiceStream are
generally making their employees available to each other as necessary to support
their activities in areas including
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accounting, tax and legal advice and services and human resources. The party
rendering these services will be entitled to receive from the other, upon the
presentation of invoices therefor, payment for its reasonable costs and expenses
incurred in providing such services.
As of August 31, 1999, Omnipoint employed a total of 2,069 people in the
following areas:
<TABLE>
<CAPTION>
NUMBER OF
CATEGORY EMPLOYEES
-------- ---------
<S> <C>
Sales and marketing......................................... 514
Engineering................................................. 384
General and administrative, including customer service...... 1,171
</TABLE>
As of August 31, 1999, Aerial employed a total of 1,976 people in the
following areas:
<TABLE>
<CAPTION>
NUMBER OF
CATEGORY EMPLOYEES
-------- ---------
<S> <C>
Sales and marketing......................................... 741
Engineering................................................. 290
General and administrative, including customer service...... 945
</TABLE>
PROPERTIES
In addition to the direct and attributable interests in PCS licenses and
other similar assets discussed in this joint proxy statement-prospectus, we will
maintain our principal executive offices on leased premises in Bellevue,
Washington. We will also lease our customer service centers located in the
following cities:
<TABLE>
<CAPTION>
VOICESTREAM OMNIPOINT AERIAL
----------------------- ----------------------- -------------------
<S> <C> <C>
Albuquerque, New Mexico Bethlehem, Pennsylvania Kansas City, Kansas
Fort Lauderdale,
Bellingham, Washington Florida Tampa, Florida
</TABLE>
We, along with our subsidiaries and affiliates, lease and own locations for
inventory storage, microwave, cell site and switching equipment, sales and
administrative offices, and retail stores.
LEGAL PROCEEDINGS
Except as otherwise described in this joint proxy statement-prospectus, we
do not believe that there are any material, pending legal proceedings to which
any of VoiceStream Holdings, VoiceStream, Omnipoint or Aerial or any of their
subsidiaries or affiliates is a party or to which any of their property is
subject which, if adversely decided, would have a material adverse effect on
their financial position, results of operations or cash flows. For discussion of
certain legal proceedings relating to FCC license grants, see "-- Government
Regulation." For a discussion of certain legal proceedings relating to the
Aerial reorganization, see "The Aerial Reorganization -- Litigation."
EXECUTIVE OFFICERS AND DIRECTORS
After the reorganizations, all executive officers of VoiceStream and one
executive officer of Omnipoint will become executive officers of VoiceStream
Holdings. VoiceStream Holdings will also have a board of directors consisting of
17 directors. Directors will be elected to serve until they resign or are
removed, or are otherwise disqualified to serve, or until their successors are
elected and qualified. The board of directors of VoiceStream Holdings will
appoint the executive officers. No
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family relationships exist among any of the anticipated executive officers and
directors of VoiceStream Holdings. Certain stockholders of VoiceStream,
Omnipoint and Aerial are also expected to enter into one or more voting
agreements. See "VoiceStream Holdings Voting Agreement."
The names, ages and positions of the anticipated executive officers and
directors of VoiceStream Holdings are listed below along with their business
experience for the past five years. Mr. Stanton, and, until May 3, 2002, Messrs.
Guthrie and Bender, may serve as officers of VoiceStream Holdings, VoiceStream
and Western Wireless. It is anticipated that they will divide their time between
VoiceStream Holdings and VoiceStream, on the one hand, and Western Wireless, on
the other.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John W. Stanton...................... 44 Chairman, Chief Executive Officer and
Director
Robert R. Stapleton.................. 41 President and Director
Douglas G. Smith(1).................. 45 Vice Chairman and Director
Donald Guthrie....................... 44 Vice Chairman and Director
Cregg B. Baumbaugh................... 42 Executive Vice President -- Finance,
Strategy and Development
Alan R. Bender....................... 44 Executive Vice President, General
Counsel and Secretary
Robert P. Dotson..................... 39 Senior Vice President -- Marketing
Timothy R. Wong...................... 43 Senior Vice President -- Engineering
Patricia L. Miller................... 36 Vice President, Controller and
Principal Accounting Officer
Mitchell R. Cohen.................... 35 Director
Daniel J. Evans...................... 74 Director
Richard L. Fields(1)................. 43 Director
Canning Fok.......................... 48 Director
Jonathan M. Nelson................... 43 Director
Terence M. O'Toole................... 41 Director
James N. Perry, Jr.(1)............... 39 Director
James J. Ross(1)..................... 61 Director
Hans Snook........................... 51 Director
Susan M.F.W. Chow(2)................. Director
Frank J. Sixt(2)..................... Director
[INSERT SONERA DIRECTOR](3).......... Director
</TABLE>
- ------------------------
(1) To become a director upon completion of the Omnipoint reorganization.
(2) To become a director upon the first to occur of the Omnipoint reorganization
and the Aerial reorganization.
(3) To become a director upon completion of the Omnipoint reorganization. In
addition, pursuant to the TDS stockholder agreement, TDS will have the right
to designate at least one director of VoiceStream Holdings, as described
under "VoiceStream Holdings Voting Agreement." TDS has not at this time
determined who it will propose to designate.
John W. Stanton has been a director of VoiceStream since February 1998, and
has been Chief Executive Officer and Chairman of VoiceStream since its formation
in 1994. Mr. Stanton has also been a director, Chief Executive Officer and
Chairman of Western Wireless and its predecessors since 1992. Mr. Stanton served
as a director of McCaw Cellular from 1986 to 1994, and as a director of LIN
Broadcasting from 1990 to 1994, during which time it was a publicly-traded
company. From 1983 to 1991, Mr. Stanton served in various capacities with McCaw
Cellular, serving as Vice-
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Chairman of the Board of McCaw Cellular from 1988 to September 1991 and as Chief
Operating Officer of McCaw Cellular from 1985 to 1988. Mr. Stanton is also a
member of the board of directors of Advanced Digital Information Corporation and
Columbia Sportswear, Inc. In addition, Mr. Stanton is a trustee of Whitman
College, a private college.
Robert R. Stapleton has been a director of VoiceStream since April 1999 and
President of VoiceStream since its formation in 1994. Effective April 1998, Mr.
Stapleton became responsible for all operations of VoiceStream. Mr. Stapleton
was President of Western Wireless and one of its predecessors from 1992 to May
1999. From 1989 to 1992, he served in various positions with General Cellular,
including Chief Operating Officer and Vice President of Operations. From 1984 to
1989, Mr. Stapleton was employed by mobile communications subsidiaries of
Pacific Telesis, Inc., which now are affiliated with Vodafone AirTouch.
Douglas G. Smith founded Omnipoint in June 1987 and has continuously served
as its Chairman, President and Chief Executive Officer. From 1985 to 1987, he
was one of four professionals in a small venture capital fund focusing on
opportunities in the electronic information industry. From 1980 to 1985, he
founded and managed the Investment Data Systems Division of Strategic
Information (a division of Ziff-Davis Publishing).
Donald Guthrie has been a director of VoiceStream since April 1999 and has
been Vice Chairman since February 1998. He has also served as Vice Chairman of
Western Wireless since November 1995. From February 1997 to April 1999, he also
served as the Chief Financial Officer of Western Wireless. From 1986 to October
1995, he served as Senior Vice President and Treasurer of McCaw Cellular and,
from 1990 to October 1995, he served as Senior Vice President -- Finance of LIN
Broadcasting.
Cregg B. Baumbaugh has been Executive Vice President -- Finance, Strategy
and Development of VoiceStream since May 3, 1999. He served as Senior Vice
President -- Corporate Development of VoiceStream and Western Wireless from 1994
to May 1999. From November 1989 through May 1999, he has served in various
positions with Western Wireless and its predecessor, including Vice
President -- Business Development. From 1986 to 1989, Mr. Baumbaugh was employed
by The First Boston Corporation.
Alan R. Bender has been Executive Vice President, General Counsel and
Secretary of VoiceStream since May 3, 1999. He also holds such positions with
Western Wireless. From 1990 to May 1999, he held various positions with Western
Wireless, VoiceStream and their respective predecessors, including serving as
Senior Vice President and General Counsel and Secretary since 1994. From 1988 to
1990, Mr. Bender was Vice President and Senior Counsel of Equitec Financial
Group, Inc., a subsidiary of PacifiCorp Inc.
Robert P. Dotson has been Senior Vice President -- Marketing and Sales of
VoiceStream since May 3, 1999. From 1996 to May 1999, he served as Vice
President -- Marketing of VoiceStream and Western Wireless. Previously, Mr.
Dotson held various marketing positions with PepsiCo's KFC restaurant group,
serving as Senior Director of Concept Development from 1994 to 1996, Director of
International Marketing from 1993 to 1994, Divisional Marketing Director from
1991 to 1993 and Manager of New Product Development and Base Business Marketing
from 1989 through 1991.
Timothy R. Wong has been Senior Vice President -- Engineering of
VoiceStream since May 3, 1999. From 1996 to May 1999, he served as Vice
President -- Engineering of VoiceStream and Western Wireless. From 1990 to 1995,
Mr. Wong held various positions at US WEST Cellular, serving as Executive
Director -- Engineering and Operations from 1994 to 1995, Director of Wireless
Systems Engineering in 1993, Manager of International Wireless Engineering in
1992 and Manager -- Systems Design from 1990 to 1991.
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Patricia L. Miller has been Vice President, Controller and Principal
Accounting Officer of VoiceStream since May 3, 1999. From 1998 to May 1999, she
served as Controller and Principal Accounting Officer of VoiceStream and Western
Wireless. From 1993 to 1997, Ms. Miller held various accounting positions with
Western Wireless. Prior to 1993, Ms. Miller held various accounting positions
with a subsidiary of Weyerhaeuser Company.
Mitchell R. Cohen has been a director of VoiceStream since February 1998.
He has also been a director of Western Wireless since its formation in 1994. Mr.
Cohen was a director of General Cellular from March 1992 to December 1995. Mr.
Cohen is a Managing Director of Hellman & Friedman, having joined Hellman &
Friedman as an associate in July 1989. From 1986 to 1989, Mr. Cohen was employed
by Shearson Lehman Hutton, Inc. Mr. Cohen currently is a director of Advanstar,
Inc.
Daniel J. Evans has been a director of VoiceStream since February 1998. He
has also been a director of Western Wireless since 1997. Mr. Evans is the
Chairman of Daniel J. Evans Associates, a consulting firm. From 1965 through
1977, Mr. Evans was Governor of the State of Washington. In 1983 he was
appointed and then elected to the United States Senate to fill the seat of the
late Senator Henry M. Jackson. He serves as a director of Flow International
Corporation, Puget Sound Energy, Tera Computer Company, and serves on the Board
of Regents of the University of Washington.
Richard L. Fields has served as a Director of Omnipoint since September
1991. Since February 1994, Mr. Fields has been a Managing Director and Executive
Vice President of Allen & Co., and prior to such time he was a Vice President of
Allen & Co.
Canning Fok has been a director of VoiceStream since February 1998. For
more than five years, Mr. Fok has been Group Managing Director of Hutchison, and
Chairman of Orange plc. Other appointments include Chairman of Hutchison
Telecommunications (Australia) Limited, Deputy Chairman of Hongkong Electric
Holdings Ltd. and Cheung Kong Infrastructure Holdings Ltd., and Director of
Cheung Kong (Holdings) Ltd. Mr. Fok is a chartered accountant.
Jonathan M. Nelson has been a director of VoiceStream since February 1998.
He has also been a director of Western Wireless since its formation in 1994. Mr.
Nelson has been President and Chief Executive Officer of Providence Equity
Partners Inc., an investment advisor, since its inception in 1995 and is a
Member of Providence Equity Partners L.L.C. which is the general partner of
Providence Equity Partners L.P. and Providence Equity Partners II L.P. He is
also Co-Chairman of Providence Ventures Inc., an investment advisor, and a
managing general partner of Providence Ventures L.P. which is the general
partner of the general partner of Providence Media Partners L.P., a venture
capital fund. Since 1986, Mr. Nelson has been a Managing Director of
Narragansett Capital, Inc., a private management company for three separate
equity investment funds. Mr. Nelson is currently a director of AT&T Canada.
Terence M. O'Toole has been a director of VoiceStream since February 1998.
He has also been a director of Western Wireless since it was formed in 1994. Mr.
O'Toole joined Goldman Sachs in 1983 and became a Vice President in 1987, a
general partner in 1992 and a Managing Director in 1996. He is currently a
director of AMF Bowling, Inc. and Amscan Holdings, Inc.
James N. Perry, Jr. has been a Director of Omnipoint since August 1993. In
January 1993, he became Vice President of MDCP. Previously, Mr. Perry served in
various positions at First Capital Corporation of Chicago and its affiliates.
Mr. Perry currently serves as a director of Allegiance Telecom, Inc. and
Clearnet Communications, Inc.
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<PAGE> 231
James J. Ross has been Vice-Chairman of the Omnipoint board since 1989. Mr.
Ross is a private venture investor. Since February 1995, Mr. Ross has been Of
Counsel in the law firm of Becker Ross Stone DeStefano & Klein and prior to such
time, he was a partner at such firm.
Hans R. Snook has been a director of VoiceStream since February 1998. For
more than five years, Mr. Snook has been Group Managing Director of Orange plc,
a telecommunications service provider in the United Kingdom, and a director of a
separate affiliate of Hutchison.
Susan Mo Fong Woo Chow has been an Executive Director of Hutchison since
1993 and Deputy Group Managing Director since 1998 of Hutchinson. She is also a
Director of Orange plc and Hongkong Electric Holdings Ltd. and an Executive
Director of Cheung Kong Infrastructure Holdings Ltd.
Frank John Sixt has been an Executive Director of Hutchison since 1991 and
Group Finance Director since 1998 of Hutchison. He is also an Executive Director
of Cheung Kong (Holdings) Limited and Cheung Kong Infrastructure Holdings Ltd.
and a Director of Orange plc and Hongkong Electric Holdings Ltd.
[INSERT NEW SONERA DIRECTOR]
Each of the following individuals will be selected by Omnipoint to become
members of the VoiceStream Holdings board pursuant to the reorganization
agreement: Douglas G. Smith, Richard L. Fields, James J. Ross and James N.
Perry. See "VoiceStream Holdings Voting Agreement." The remaining members of the
VoiceStream Holdings board will be elected pursuant to a voting agreement.
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<PAGE> 232
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
VoiceStream Holdings will assume all compensation for those executive
officers of VoiceStream and Omnipoint who become executive officers of
VoiceStream Holdings. The following table summarizes the compensation for
services rendered during 1998 for VoiceStream's Chief Executive Officer and its
next four most highly compensated executive officers, as well as Douglas G.
Smith, in his capacity as Chairman, President and CEO of Omnipoint (collectively
referred to herein as the "Named Executive Officers"). Prior to VoiceStream's
spin-off from Western Wireless, Western Wireless paid, and VoiceStream
reimbursed Western Wireless for, all such executive compensation which was
attributable to time spent and services rendered for VoiceStream. Such
compensation arrangement is expected to continue between VoiceStream Holdings
and Western Wireless with respect to Messrs. Stanton, Guthrie and Bender for so
long as they continue to split their time and responsibilities between
VoiceStream Holdings, VoiceStream and Western Wireless.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
-------------------------
ANNUAL COMPENSATION RESTRICTED ALL OTHER
---------------------------------- STOCK COMPEN-
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) OPTIONS(1) AWARDS($)(2) SATION($)
- --------------------------- ----------- --------- -------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
John W. Stanton(3)....... 1998 193,542 400,000 954 521,250 367,974(4)
Chairman and Chief
Executive Officer
Robert R. Stapleton...... 1998 165,667 200,000 124,407 260,625 186,487(4)
President and Director
Douglas G. Smith......... 1998 262,115 129,375 n/a n/a 31,820(5)
Vice Chairman and
Director
Donald Guthrie(3)........ 1998 165,667 150,000 57,263 260,625 186,487(4)
Vice Chairman and
Director
Cregg B. Baumbaugh....... 1998 145,321 110,000 66,350 173,750 125,992(4)
Executive Vice
President -- Finance,
Strategy and Development
Alan R. Bender(3)........ 1998 145,321 110,000 38,175 173,750 125,992(4)
Executive Vice President,
General Counsel, and
Secretary
</TABLE>
- -------------------------
(1) The options were granted as a result of the conversion of Western Wireless
options granted during 1998 to each of the VoiceStream Named Executive
Officers, excluding Douglas G. Smith. Omnipoint did not grant any options to
Mr. Smith during 1998.
(2) The shares are restricted until predetermined performance goals are met,
including achieving predetermined levels of subscribers and achieving
predetermined levels of cash flow.
(3) Mr. Stanton, and until May 3, 2002 Messrs. Guthrie and Bender, will divide
their time and responsibilities between VoiceStream and Western Wireless,
and their compensation will be shared appropriately.
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<PAGE> 233
(4) VoiceStream made payments to cover the taxes related to the grant of
restricted shares and paid matching contributions to VoiceStream's 401(k)
Profit Sharing Plan and Trust.
(5) Includes amounts reimbursed in connection with a supplemental benefit
program and premiums on life insurance.
GRANTS OF STOCK OPTIONS
As part of the spin-off, each of Messrs. Stanton, Guthrie and Bender and
the VoiceStream directors (excluding Messrs. Fok and Snook) received a number of
options to purchase VoiceStream common stock, based upon the number of options
to purchase Western Wireless common stock held by each individual prior to the
spin-off.
Those who held vested options to purchase Western Wireless common stock
received an equal number of vested options to purchase VoiceStream common stock
which are governed by the VoiceStream 1999 Management Incentive Stock Option
Plan (See "-- Stock Option Plan"). The following table summarizes VoiceStream
options granted as a result of the conversion of Western Wireless options
granted during 1998 to each of the VoiceStream Named Executive Officers,
excluding Douglas G. Smith. Omnipoint did not grant any options to Mr. Smith
during 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------------- ------------ ----------- --------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John W. Stanton....... 954 0.10% $9.25 January 1, 2008 $ 5,549 $ 14,064
Robert R. Stapleton... 124,407 13.7% $9.25 January 1, 2008 $723,710 $1,834,023
Donald Guthrie........ 57,263 6.3% $9.25 January 1, 2008 $333,115 $ 844,178
Cregg B. Baumbaugh.... 66,350 7.3% $9.25 January 1, 2008 $385,976 $ 978,140
Alan R. Bender........ 38,175 4.2% $9.25 January 1, 2008 $222,074 $ 562,780
</TABLE>
- -------------------------
(1) These options have terms of ten years from the date of grant, January 1,
1998, and become exercisable as to 25% of the shares on the first
anniversary and an additional 25% every year thereafter until such options
are fully exercisable.
(2) Potential realizable value is based on an assumption that the stock price of
the VoiceStream common stock appreciates at the annual rate shown
(compounded annually) from the date of grant until the end of the option
term. These numbers are calculated based on the requirements of the
Securities and Exchange Commission and do not reflect VoiceStream's estimate
of future stock price performance.
DIRECTOR COMPENSATION
Following the completion of the first to occur of the reorganizations, each
director of VoiceStream Holdings who is not also an employee of VoiceStream
Holdings or any of its subsidiaries will receive an annual retainer fee of
$ and an attendance fee of $ for each meeting of the
VoiceStream Holdings board, and of each of the committees of the VoiceStream
Holdings board he or she attends, other than committee meetings occurring on a
date on which a board meeting is scheduled. All directors also will be
reimbursed for reasonable travel and other out-of-pocket expenses incurred by
them in attending board or committee meetings.
226
<PAGE> 234
VoiceStream Holdings may, from time to time and in the sole discretion of
the VoiceStream Holdings board, grant additional options to directors under
VoiceStream Holdings' 1999 Management Incentive Stock Option Plan, which is
described below. It is currently intended that all grants under such plan will
be in addition to any annual fees to be paid to directors.
DIRECTOR COMMITTEES
VoiceStream Holdings intends to establish a Compensation Committee, Audit
Committee and Executive Committee at the first meeting of the board of directors
held following the closing of the first to occur of the reorganizations.
EMPLOYMENT AGREEMENTS
Mr. Stanton and, until May 3, 2002, Messrs. Guthrie and Bender, will divide
their time and responsibilities between VoiceStream Holdings and Western
Wireless pursuant to their existing employment agreements with Western Wireless.
Their employment agreements and the existing employment agreements between
VoiceStream and each of Messrs. Stapleton and Baumbaugh provide for annual base
salaries of $295,000, $215,000, $170,000, $235,000 and $170,000, respectively,
and provide each executive officer an opportunity to earn an annual bonus, as
determined by the respective board of directors, targeted at 100%, 70%, 60%, 80%
and 60%, respectively, of annual base compensation. It is expected that Western
Wireless will pay, and VoiceStream Holdings will reimburse Western Wireless, for
all executive compensation for Messrs. Stanton, Guthrie and Bender which is
attributable to time spent and services rendered for VoiceStream Holdings.
The foregoing employment agreements also provide that the contracting
employee may be terminated by VoiceStream Holdings or Western Wireless, as the
case may be, at any time, with or without cause (as such term is defined in the
employment agreements); however, in the event of an involuntary termination (as
defined therein) for other than cause (1) such executive officer will be
entitled to receive a severance payment in an amount equal to any accrued but
unpaid existing annual targeted incentive bonus through the date of termination,
12 months of such executive's then base compensation, and an amount equal to 12
months of such executive's existing annual targeted incentive bonus, (2) the
employer will, at its expense, make all specified insurance payment benefits on
behalf of such executive officer and his or her dependents for 12 months
following such involuntary termination and (3) with respect to any stock options
previously granted to each executive officer which remain unvested at the time
of involuntary termination, there shall be immediate vesting of that portion of
each such grant of any unvested stock options equal to the product of the total
number of such unvested options under such grant multiplied by a fraction, the
numerator of which is the sum of the number of days from the date on which the
last vesting of options under such grant occurred to and including the date of
termination plus 365, and the denominator of which is the number of days
remaining from the date on which the last vesting of options under such grant
occurred to and including the date on which the final vesting under such grant
would have occurred absent the termination. Mr. Stapleton's agreement provides
for an immediate vesting of all options upon his involuntary termination. Among
other things, an executive officer's death or permanent disability will be
deemed an involuntary termination for other than cause. In addition, each
employment agreement provides for full vesting of all stock options granted upon
a change of control (as such term is in the stock option agreements with the
executive officer).
Pursuant to the terms of each of these employment agreements, each
executive officer agrees that during such executive officer's employment and for
one year following the termination of such executive officer's employment for
any reason, such executive officer will not engage in a business which is
substantially the same as or similar to the business of his employer and which
competes
227
<PAGE> 235
within the applicable commercial mobile radio services markets serviced by his
employer. Mr. Stanton's agreement provides that such prohibition shall not
preclude Mr. Stanton's investment in other companies engaged in the wireless
communications business or his ability to serve as a director of other companies
engaged in the wireless communications business, in each case subject to his
fiduciary duties as a director.
Mr. Smith is party to an employment agreement with Omnipoint. This
agreement will be assumed by VoiceStream Holdings as of the effective time of
the reorganization. Mr. Smith's employment agreement currently provides for an
annual base salary of $300,000, and a target bonus of up to $300,000. If Mr.
Smith resigns from his position for good reason or is terminated without cause,
he will be entitled to a lump sum severance payment equal to the sum of his full
annual salary and target bonus for the 12 months preceding his resignation or
termination. In such event, Mr. Smith also will be entitled to an additional
amount, equivalent to the severance payment, but paid out in equal installments
over the 12-month period that begins commencing one year after Mr. Smith's
termination. All of Mr. Smith's outstanding options will vest upon the earliest
of his termination without cause, resignation for good reason, or one year after
the date that either the Omnipoint reorganization is completed or the Omnipoint
reorganization agreement is terminated.
Under the terms of Mr. Smith's employment agreement, Mr. Smith has agreed
that during the term of his employment and for a period of up to two years after
the cessation of his employment under this agreement, he will not directly or
indirectly engage in the business of providing wireless personal communication
or data services in any geographic area served by Omnipoint.
INDEMNIFICATION AGREEMENTS
VoiceStream Holdings intends to enter into an indemnification agreement
with each of its executive officers and directors, which will be separate from
such executive officer's employment agreement with VoiceStream, VoiceStream
Holdings or Western Wireless, as the case may be. Pursuant to this
indemnification agreement, VoiceStream Holdings will indemnify the executive
officer or director against certain liabilities arising by reason of the
executive officer's or the director's affiliation with VoiceStream Holdings.
BENEFIT AND COMPENSATION PLANS
VoiceStream Holdings will establish benefit and compensation plans
substantially similar to those presently maintained by VoiceStream. These plans,
which are described below, will replace and assume the obligations of (1)
VoiceStream's management incentive stock option plan, employee stock purchase
plan and restricted stock plan, (2) Omnipoint's stock option plan, amended and
restated employee stock purchase plan and omnibus stock plan, and (3) Aerial's
long-term incentive plan, employee stock purchase plan and retention restricted
stock unit plan. Each of these plans will give VoiceStream, Omnipoint and Aerial
employees credit for service as VoiceStream, Omnipoint or Aerial employees, as
the case may be.
1999 MANAGEMENT INCENTIVE STOCK OPTION PLAN
The management incentive plan will provide an incentive for key personnel
of VoiceStream Holdings and its subsidiaries to generate stockholder value. The
management incentive plan will provide for the granting to key employees of
incentive stock options within the meaning of section 422 of the Code, and for
the granting of nonqualified stock options to directors, key employees and/or
consultants of VoiceStream Holdings and its subsidiaries. Unless terminated
sooner, the management incentive plan will terminate automatically ten years
from the date of the
228
<PAGE> 236
closing of the reorganization. A total of approximately 20,000,000 shares of
common stock will be reserved for issuance pursuant to the management incentive
plan. If both reorganizations are completed, VoiceStream Holdings expects that
options to acquire 13,415,319 shares of common stock will be outstanding under
the management incentive plan.
The management incentive plan will be administered by the VoiceStream
Holdings board or a committee appointed by the VoiceStream Holdings board to
administer the plan. The VoiceStream Holdings board or committee so appointed
shall have full power and authority to administer and interpret the plan. Such
powers will include authority to determine the directors, employees and
consultants to be granted stock options under the plan, to determine the size,
type, and applicable terms and conditions of grants to be made to such
directors, employees and consultants and to determine a time when stock options
will be granted. During all times in which VoiceStream Holdings is subject to
the periodic reporting requirements of the Exchange Act, each member of the
board who participates in administration must be a "non-employee director" as
that term is defined in Rule 16b-3 of the Exchange Act.
The exercise price of all nonqualified and incentive stock options granted
under the management incentive plan shall be, unless otherwise determined by the
VoiceStream Holdings board, the fair market value of the common stock prior to
the date of grant, as determined by the VoiceStream Holdings board in accordance
with the management incentive plan and any applicable option agreement. Payment
of such exercise price may be made by cash, check, promissory note, surrender of
common stock having a fair market value equal to the exercise price of the
option, or in accordance with procedures for a "cashless exercise" as may be
established from time to time by VoiceStream Holdings and the brokerage firm, if
any, designated by VoiceStream Holdings to facilitate exercises of options and
sales of common stock under the management incentive plan.
1999 EMPLOYEE STOCK PURCHASE PLAN
It is anticipated that the purchase plan will authorize the issuance of
1,500,000 shares of common stock to participating employees. The purchase plan
will consist of ten separate consecutive six-month offerings commencing on each
November 1 and May 1. The purchase plan will terminate upon the earliest of the
following:
- 6 years from the date of the first to occur of the Omnipoint
reorganization or the Aerial reorganization;
- the date of the filing of a Statement of Intent to Dissolve (as defined
in the purchase plan) by VoiceStream Holdings or the effective date of a
merger or consolidation wherein VoiceStream Holdings is not to be the
surviving corporation, which merger or consolidation is not between or
among corporations related to VoiceStream Holdings;
- the date the board acts to terminate the purchase plan; or
- the date when all of the shares reserved for issuance under the purchase
plan have been purchased.
The purchase plan will be administered by the VoiceStream Holdings board,
which may engage a designated stock brokerage or financial services firm to
assist in the administration. The VoiceStream Holdings board will be vested with
full authority to make, administer, and interpret rules and regulations
necessary to administer the purchase plan. The VoiceStream Holdings board may
delegate any or all of its administrative duties to a committee composed of two
or more members of the VoiceStream Holdings board.
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<PAGE> 237
Persons regularly employed by VoiceStream Holdings or any of its
subsidiaries on the commencement date of an offering period and who either (1)
have been so employed for at least three months or (2) were employed by
Omnipoint, Aerial or any of their subsidiaries on the closing date of the
reorganization, will be eligible to participate in the purchase plan. Employees
who would immediately after the grant own 5% or more of the total combined
voting power or value of VoiceStream Holdings' capital stock or any subsidiary
will not be eligible to participate in the purchase plan. No participant shall
be allowed to subscribe for any shares under the purchase plan to accrue at a
rate that exceeds $25,000 of the fair market value of such shares (determined at
the time such right to subscribe is granted) for each calendar year in which
such right to subscribe is outstanding. In addition, absent a contrary
determination by the VoiceStream Holdings board, no employee may withhold
payroll deductions for the purchase of common stock under the purchase plan in
excess of either (1) $10,200 in any calendar year, or (2) 10% of such employee's
total annual compensation. An employee's rights under the purchase plan
terminate upon voluntary withdrawal from the purchase plan, or when the employee
ceases employment for any reason.
The VoiceStream Holdings board will set the purchase price per share at an
amount not less than the lower of (1) 85% of the fair market value of the shares
on the commencement date, or the nearest subsequent business day; (2) 85% of the
fair market value of the shares on the ending date, or the nearest prior
business day; or (3) 85% of the fair market value of the shares on the purchase
date. In the absence of any other determination by the VoiceStream Holdings
board, the purchase price will be 85% of the fair market value of the shares on
the purchase date.
At the time the enrollment agreement is filed by an eligible employee and
for so long as the participant participates in the purchase plan, the
participant shall authorize VoiceStream Holdings to make payroll deductions as
specified in the enrollment agreement. A participant's payroll deductions shall
be credited to that participant's account and on each of one or more purchase
dates during an offering, each participant shall be deemed to have carried out
the right to purchase, and shall be deemed to have purchased at the purchase
price, the number of full shares that may be purchased with such participant's
account.
1999 EXECUTIVE RESTRICTED STOCK PLAN
The restricted stock plan will be created to promote the interests of
VoiceStream Holdings by allowing the grant or sale of restricted VoiceStream
Holdings common stock to key executives of VoiceStream Holdings. It is
anticipated that 200,000 shares of restricted common stock will be authorized
for issuance to selected executives of VoiceStream Holdings under the Restricted
Stock Plan. Any stock issued under the plan that is forfeited by the grantee
shall not be available for reissue under the plan. The restricted stock plan
will terminate ten years after the closing of the reorganization, unless the
VoiceStream Holdings board terminates it sooner.
The VoiceStream Holdings board will administer the restricted stock plan.
The VoiceStream Holdings board may delegate any or all of its administrative
duties to a committee composed of three or more members of the VoiceStream
Holdings board, provided that each member of such committee must be a
"non-employee director" as defined in Rule 16b(3) of the Exchange Act and an
"outside director" as defined in section 162(m) of the Code. The VoiceStream
Holdings board or committee so appointed shall have full power and authority to
administer and interpret the plan. Such powers include authority to determine to
which employees to grant rights under the plan, to determine the size, type, and
applicable terms and conditions of grants to be made to such employees and to
determine the restrictions applicable to stock granted under the plan, subject
to the terms of the plan.
The VoiceStream Holdings board will set the purchase price per share of
stock issued under the restricted stock plan. If there is no purchase price, the
offer shall be treated as a restricted stock
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<PAGE> 238
bonus. The restrictions applicable to stock granted under the restricted stock
plan are established in the discretion of the VoiceStream Holdings board, and
may include forfeiture upon failure of certain conditions, including continued
employment by VoiceStream Holdings for designated time periods and the meeting
of designated performance goals. The determination of whether such conditions
have been met will be made solely by the VoiceStream Holdings board. Offers of
restricted stock to the five most highly compensated employees of VoiceStream
Holdings may, in order to comply with section 162(m) of the Code, be designated
"special performance awards" and if so designated shall be subject to specific
performance goals specified in the plan. No employee may be granted restricted
stock in excess of 33.33% of the remaining stock reserved for issuance under the
plan.
PRO FORMA BENEFICIAL OWNERSHIP OF VOICESTREAM HOLDINGS COMMON STOCK
The following table sets forth certain information with respect to the pro
forma beneficial ownership of VoiceStream Holdings taking into consideration
three possible alternatives: (1) only the Omnipoint reorganization is completed;
(2) only the Aerial reorganization is completed; and (3) both reorganizations
are completed. The table shows the pro forma beneficial ownership for each of
the three alternatives by (1) the holders of 5% or more of the outstanding
VoiceStream Holdings common stock; (2) the individuals who will be directors of
VoiceStream Holdings; (3) the Named Executive Officers; and (4) all VoiceStream
Holdings executive officers and directors as a group. The columns labeled
"Omnipoint" and "Both" assume that: (1) all VoiceStream common stock will be
exchanged for VoiceStream Holdings common stock on a one-for-one basis; (2) all
Omnipoint common stock will be exchanged for VoiceStream Holdings common stock
based on the Omnipoint Standard Election; (3) all outstanding options and
warrants to acquire Omnipoint or VoiceStream common stock will convert to
VoiceStream Holdings options or VoiceStream Holdings warrants, respectively; and
(4) the closing price of VoiceStream common stock on the last day is $75.00,
which may or may not be the actual Closing Date Market Price. The columns
labeled "Aerial" and "Both" assume that: (1) all VoiceStream common stock will
be exchanged for VoiceStream Holdings common stock on a one-for-one basis; (2)
all Aerial common stock will be exchanged for VoiceStream Holdings common stock
based on the Aerial Stock Election and an exchange ratio of 0.455 of a share of
VoiceStream Holdings common stock for each share of Aerial common stock; (3) all
outstanding options to acquire VoiceStream common stock will convert to
VoiceStream Holdings options; and (4) all outstanding options to acquire Aerial
common stock will convert to immediately exercisable options to purchase shares
of VoiceStream Holdings common stock based on an exchange ratio of 0.455 of a
share of VoiceStream Holdings common stock for each share of Aerial common
stock. A person or entity is considered to "beneficially own" any shares (1)
over which such person or entity exercises sole or shared voting or investment
power or (2) which such
231
<PAGE> 239
person or entity has the right to acquire at any time within 60 days (e.g.,
through the exercise of options or warrants).
<TABLE>
<CAPTION>
OMNIPOINT AERIAL BOTH
--------------------------- --------------------------- ---------------------------
SHARES OF SHARES OF SHARES OF
COMMON STOCK PERCENT COMMON STOCK PERCENT COMMON STOCK PERCENT
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OWNED OWNED OWNED OWNED OWNED OWNED
---------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Hutchison Whampoa Limited
22nd Floor, Hutchison House
10 Harcourt Road
Hong Kong(2)(3)(4)............ 55,899,252 29.35% 22,899,252 15.52% 55,899,252 23.08%
The Goldman Sachs Group, L.P.
and related investors(3)(4)(5)
85 Broad Street, 19th Floor
New York, NY 10004............ 9,799,279 5.83 9,799,279 6.64 9,799,279 4.46
Telephone and Data Systems,
Inc.(6)
30 N. LaSalle Street, Suite
4000
Chicago, IL 60602............. -- -- 35,570,494 24.10 35,570,494 16.18
Sonera Ltd.(7)
Fin-00051-Tele
Sturenkatu 16, Helsinki
Finland....................... 8,771,930 5.22 10,203,844 6.92 18,975,774 8.63
John W. Stanton and Theresa E.
Gillespie(3)(4)(8)
3650 131st Ave. SE
Bellevue, WA 98006............ 6,555,411 3.90 6,561,463 4.44 6,561,463 2.98
Douglas G. Smith(9)
3 Metrocenter, Suite 400
Bethesda, MD 20814............ 6,180,945 3.67 -- -- 6,180,945 2.81
Richard L. Fields(10)
711 Fifth Avenue
New York, New York 10022...... 2,607,857 1.54 -- -- 2,607,857 1.18
James N. Perry, Jr.(11)
Three First National Plaza
Suite 1330
Chicago, IL 60602............. 5,131,329 3.05 -- -- 5,131,329 2.33
Cregg B. Baumbaugh(4)........... 234,808 * 234.808 * 234,808 *
Alan R. Bender(4)............... 224,938 * 224,938 * 224,938 *
James J. Ross(12)............... 1,497,299 * -- -- 1,497,299 *
Robert R. Stapleton(4).......... 644,269 * 644,269 * 644,269 *
Donald Guthrie(4)............... 370,228 * 370,228 * 370,228 *
Mitchell R. Cohen(4)............ 39,170 * 39,170 * 39,170 *
Daniel J. Evans(4).............. 2,750 * 2,750 * 2,750 *
Jonathan M. Nelson(4)........... 223,537 * 223,537 223,537 *
Terence M. O'Toole(4)(13)....... 9,799,279 5.83 9,799,279 6.64 9,799,279 4.46
Canning Fok(2)(14).............. 55,899,252 29.35 22,899,252 15.52 55,899,252 23.08
Hans R. Snook(2)(14)(15)........ 55,899,252 29.35 22,901,982 15.52 55,901,982 23.08
Susan M.F.W. Chow(2)(14)........ 55,899,252 29.35 22,899,252 15.52 55,899,252 23.08
Frank J. Sixt(2)(14)............ 55,899,252 29.35 22,899,252 15.52 55,899,252 23.08
[Sonera director(10)]........... 8,771,930 5.22 10,203,844 6.92 18,975,744 8.63
All VoiceStream Holdings
executive officers and
directors as a group
(22 persons)(4)(17)........... 98,315,633 51,338,889 108,528,259
</TABLE>
- -------------------------
Notes to Beneficial Ownership Table
* Less than 1% of the outstanding shares of common stock.
(1) Computed in accordance with Rule 13d-3(d)(1) of the Exchange Act.
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<PAGE> 240
(2) Includes shares of common stock issuable upon conversion of VoiceStream
Holdings Junior Preferred.
(3) Parties or affiliates of parties to a voting agreement. See "The Special
Meetings -- Agreement to Vote in Favor of the Reorganization."
(4) Includes aggregate exercisable options, within 60 days of August 26, 1999,
to purchase VoiceStream common stock; does not include unexercisable
options. May include stock jointly or separately owned with or by a spouse.
Options granted to Mr. Cohen are held for the benefit of HFCP; options
granted to Mr. Nelson are held for the benefit of Providence; and options
granted to Mr. O'Toole are held for the benefit of GS Group.
(5) Based on (i) 8,986,738 shares of VoiceStream common stock held of record by
GS Capital, (ii) 470,401 shares of VoiceStream common stock held of record
by Stone Street, (iii) 273,069 shares of VoiceStream common stock held of
record by Bridge Street Fund, and (iv) 68,821 shares of VoiceStream common
stock held of record by the GS Group. Each of GS Capital, Stone Street and
Bridge Street is an investment limited partnership, the general partner,
the managing general partner or the managing partner of which is an
affiliate of GS Group. GS Group disclaims beneficial ownership of shares
held by such investment partnerships to the extent partnership interests in
such partnerships are held by persons other than GS Group and its
affiliates.
(6) Includes shares of VoiceStream common stock issuable in exchange for Aerial
common stock acquired in connection with the TDS Debt Replacement.
(7) Includes shares of VoiceStream common stock acquired in the Sonera
Investments.
(8) Mr. Stanton and Ms. Gillespie are husband and wife. Their pro forma
beneficial ownership takes into account (i) 1,686,069 shares of VoiceStream
common stock held of record by PN Cellular, which is substantially owned
and controlled by Mr. Stanton and Ms. Gillespie, (ii) 1,274,519 shares of
VoiceStream common stock held of record by Stanton Communications
Corporation which is substantially owned and controlled by Mr. Stanton and
Ms. Gillespie, (iii) 3,152,774 shares of VoiceStream common stock held by
Mr. Stanton and Ms. Gillespie, as tenants in common, (iv) 164,437 shares of
VoiceStream common stock held of record by The Stanton Family Trust; (v)
90,000 shares and 15,000 shares of VoiceStream common stock held of record
by each of Mr. Stanton and Ms. Gillespie, respectively, pursuant to Western
Wireless' 1997 Executive Restricted Stock Plan. Mr. Stanton and Ms.
Gillespie are married and share voting and investment power with respect to
the shares jointly owned by them, as well as the shares held of record of
PN Cellular, Stanton Communication Corporation and The Stanton Family
Trust; and (vi) 13,300 shares of Aerial common stock held by Mr. Stanton
and Ms. Gillespie as tenants in common.
(9) Takes into account 279,510 shares of Omnipoint common stock issuable upon
exercise of Mr. Smith's outstanding Omnipoint options, 26,169 shares of
Omnipoint common stock owned by Mr. Smith's minor children, 3,942,069
shares of Omnipoint common stock held by Avance Capital, a sole
proprietorship, and 544,301 shares held in a trust. Mr. Smith does not
exercise voting or investment power over, and disclaims beneficial
ownership of, the shares held in the trust. Mr. Smith has voting and
investment power with respect to the other shares.
(10) Takes into account 2,230,216 shares of Omnipoint common stock owned by
Allen & Co. (including 1,211,771 shares issuable upon exercise of
outstanding Omnipoint warrants held by Allen & Co.) and 115,297 shares of
Omnipoint common stock issuable upon exercise of outstanding Omnipoint
warrants. Mr. Fields is a Managing Director of Allen & Co. Of such
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<PAGE> 241
amounts, Mr. Fields does not exercise voting or investment power over, and
disclaims beneficial ownership of the 1,211,771 shares issuable upon
exercise of outstanding warrants which are held by Allen & Co.
(11) Takes into account 213,514 shares of Omnipoint common stock issuable upon
exercise of outstanding Omnipoint warrants. All of such shares and
Omnipoint warrants are held of record by MDCP. Mr. Perry is a member of
the L.P. Committee. which manages MDCP. Mr. Perry may therefore be deemed
to share investment control with respect to the shares of Omnipoint common
stock owned by MDCP and may therefore be deemed to have beneficial
ownership of shares of Omnipoint common stock owned by MDCP.
(12) Takes into account 782,977 shares of Omnipoint common stock issuable upon
exercise of outstanding Omnipoint options held by Mr. Ross and 240,157
shares of Omnipoint common stock held in trust for Mr. Ross' children. As a
result, Mr. Ross may be deemed to be the beneficial owner of such shares.
(13) Mr. O'Toole, who is a managing director of Goldman Sachs, disclaims
beneficial ownership of shares of VoiceStream common stock, which may be
deemed to be beneficially owned by GS Group, except to the extent of his
pecuniary interest therein.
(14) Takes into account the fact that Messrs. Fok, Snook may each be deemed to
be the owner of the 22,899,252 shares of VoiceStream common stock owned by
Hutchison, as Mr. Fok is the Group Managing Director of Hutchison and Mr.
Snook is the Group Managing Director of an affiliate of Hutchison and a
Director of a separate affiliate of Hutchison [insert explanation for
additional two Hutchison directors]. Each of Mr. Fok and Mr. Snook disclaim
beneficial ownership of shares held by Hutchison to the extent interests in
Hutchison are held by persons other than such individual.
(15) Includes 6,000 shares of Aerial common stock held by members of Mr. Snook's
immediate family.
(16) Takes into account the fact that [Sonera director] may be deemed to be the
owner of the shares of VoiceStream Holdings common stock that will be owned
by Sonera in the event the Omnipoint reorganization and/or the Aerial
reorganization is completed.
(17) In determining the aggregate number of shares owned by VoiceStream Holdings
executive officers and directors, shares of VoiceStream common stock,
Omnipoint common stock and Aerial common stock as to which such executive
officers and directors share voting or investment power have not been
duplicated.
BUSINESS OF VOICESTREAM, OMNIPOINT AND AERIAL
For information regarding the historical operations of VoiceStream,
Omnipoint and Aerial, see "Where You Can Find More Information."
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<PAGE> 242
CERTAIN LEGAL INFORMATION
DESCRIPTION OF VOICESTREAM HOLDINGS CAPITAL STOCK
The following is a description of the terms of the capital stock of
VoiceStream Holdings based on and qualified in its entirety by its restated
certificate of incorporation, which is attached to this joint proxy
statement-prospectus as Annex H.
At the closing of the reorganizations, the authorized capital stock of
VoiceStream Holdings will consist of 400,000,000 shares of common stock, par
value $0.001 per share, and 5,000,000 shares of preferred stock, par value
$0.001. There is no VoiceStream Holdings preferred stock outstanding. As a
result of the reorganization, following closing of the reorganization, assuming
that the Hutchison Entities do not convert their shares of VoiceStream Holdings
Junior Preferred there will be 139,880,716 shares of VoiceStream Holdings common
stock outstanding, with approximately 550 holders of record, and
shares of VoiceStream Holdings Junior Preferred by Hutchison.
As of the effective time, VoiceStream Holdings will have issued options to
acquire approximately 13 million shares of its common stock in exchange for
options issued by VoiceStream and Omnipoint for VoiceStream and Omnipoint common
stock, respectively. See "-- Benefit And Compensation Plans." There are no other
rights outstanding to acquire VoiceStream Holdings' capital stock.
VoiceStream Holdings has never declared a cash dividend with respect to its
capital stock and does not anticipate paying any dividends on its capital stock
in the foreseeable future. The declaration and payment of dividends by
VoiceStream Holdings will be subject to the discretion of VoiceStream Holdings'
board and certain restrictions on paying dividends contained in our debt
instruments. Any determination as to the payment of dividends in the future will
depend upon results of operations, capital requirements, restrictions in loan
agreements or agreements issued in connection with the sale of VoiceStream
Holdings' securities, if any, and such other factors as VoiceStream Holdings'
board of directors may deem relevant.
COMMON STOCK
VoiceStream Holdings common stock has one vote per share. Holders of the
common stock have no preemptive, subscription or sinking fund rights, except
that pursuant to an agreement with VoiceStream Holdings, Hutchison PCS (USA) has
a preemptive right entitling it to acquire a portion of any newly issued equity
securities of VoiceStream Holdings on the same terms and conditions as such
equity securities are being issued to other holders such that Hutchison PCS
(USA) shall be able to retain the same percentage ownership of VoiceStream
Holdings as existed immediately prior to such issuance. The preemptive right
does not apply to any issuances of equity securities in connection with a public
sale of equity securities by VoiceStream; stock dividends; mergers, acquisitions
or other merger agreements in which the then-current stockholders of VoiceStream
would continue to be the only stockholders of VoiceStream or which is effected
to carry out an acquisition transaction; or issuances of equity to employees.
Subject to preferences that may be applicable to any then-outstanding
VoiceStream Holdings preferred stock, holders of VoiceStream Holdings common
stock will be entitled to receive ratably such dividends as may be declared by
the VoiceStream Holdings board out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of VoiceStream Holdings,
holders of VoiceStream Holdings common stock will be entitled to share ratably
in all remaining assets after payment of liabilities and the liquidation
preference of any then-outstanding VoiceStream Holdings preferred stock.
235
<PAGE> 243
PREFERRED STOCK
VoiceStream Holdings' Articles of Incorporation authorize it to issue
5,000,000 shares of its preferred stock, which may be issued from time to time
in one or more classes or series or both upon authorization by the VoiceStream
Holdings board. The VoiceStream Holdings board, without further approval of the
stockholders, is authorized to fix the dividend rights and terms, conversion
rights, voting rights, redemption rights and terms, liquidation preferences and
any other rights, preferences, privileges and restrictions applicable to each
class or series of VoiceStream Holdings preferred stock. The issuance of
VoiceStream Holdings preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could, among other
things, adversely affect the voting power of the holders of VoiceStream Holdings
common stock and, under certain circumstances, make it more difficult for a
third party to gain control of VoiceStream Holdings, discourage bids for
VoiceStream Holdings common stock at a premium or otherwise adversely affect the
market price of the VoiceStream Holdings common stock.
At the time of closing of the Omnipoint reorganization, VoiceStream
Holdings will designate shares of preferred stock as VoiceStream
Holdings Junior Preferred. shares of the VoiceStream Holdings Junior
Preferred will be sold at $100,000 per share to Hutchison PCS (USA) as part of
the Hutchison Investments. The VoiceStream Holdings Junior Preferred will have
no par value, will be convertible to VoiceStream Holdings common stock at $29.00
per share, and will bear interest of 2.5% which is cumulative and payable 40
years from the date of issue if the VoiceStream Holdings Junior Preferred has
not prior to that time been converted to VoiceStream common stock. VoiceStream
Holdings has no current plans to issue any preferred stock other than shares of
its Junior Preferred.
Pursuant to an agreement with Hutchison PCS (USA), VoiceStream Holdings has
agreed for a period of five years that it will not issue any equity security
which provides the holders thereof with any extraordinary or special voting
rights or any right to veto any action of VoiceStream Holdings, unless such
issuance is approved in writing in advance by a director appointed by Hutchison
PCS (USA).
COMPARISON OF STOCKHOLDER RIGHTS
VOICESTREAM STOCKHOLDERS
Upon consummation of the Omnipoint Reorganization or the Aerial
Reorganization, whichever occurs first, the stockholders of VoiceStream will
become stockholders of VoiceStream Holdings whose rights will cease to be
defined and governed by the WBCA, and instead will be defined and governed by
the DGCL. In addition, VoiceStream stockholders' rights will no longer be
defined and governed by VoiceStream's certificate of incorporation and bylaws.
Instead, each VoiceStream stockholder will become a new stockholder of
VoiceStream Holdings, whose rights as a stockholder will be defined and governed
by VoiceStream Holdings' certificate of incorporation and bylaws, as amended
from time to time. While the rights and privileges of stockholders of a Delaware
corporation are, in many instances, comparable to those of a stockholder of a
Washington corporation, there are certain differences. These differences,
described below, arise from differences between Delaware and Washington law,
between the DGCL and the WBCA, and between the VoiceStream articles of
incorporation and bylaws and the VoiceStream Holdings certificate of
incorporation and bylaws.
236
<PAGE> 244
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
AMENDMENT TO
CERTIFICATE/ ARTICLES
OF INCORPORATION....... Under the DGCL, amendments to a The WBCA authorizes a corporation's
corporation's certificate of board of directors to make various
incorporation require the approval of changes to its articles of
the board of directors and stockholders incorporation without stockholder
holding a majority of the outstanding action. These so-called housekeeping
shares entitled to vote on such changes include changes of corporate
amendment and a majority of the name, the number of outstanding shares
outstanding stock of each class to effectuate a stock split or stock
entitled to vote on such amendment as a dividend in the corporation's own
class, unless a is specified in the shares, and the par value of its stock
certificate of incorporation or by (the latter two only if there is one
other provisions of the DGCL. class of stock). With respect to other
VoiceStream Holdings' certificate of changes to the articles of
incorporation does not specify a incorporation, the board of directors
greater proportion, except that holders must recommend amendments to the
of not less than two-thirds of the stockholders, unless the board of
"Total Voting Power," as defined in the directors determines that because of a
VoiceStream Holdings articles, must conflict of interest or other special
approve an amendment if the amendment circumstances it should make no
provides that: recommendation and communicates the
basis for its determination to the
- stockholders shall have preemptive stockholders with the amendment. In
rights to acquire additional shares; addition, a majority of all the votes
entitled to be cast by any voting group
- stockholders shall have cumulative entitled to vote on the change must
voting rights; approve the change unless another
proportion is specified in the articles
- VoiceStream Holdings cannot redeem of incorporation, by the board of
shares when the holding of such directors as a condition to its
shares may result in the loss of any recommendation or by provisions of the
license or franchise from a WBCA. The VoiceStream articles do not
governmental agency to conduct any specify another proportion, except that
portion of VoiceStream's Holdings holders of not less than two-thirds of
business; or the "Total Voting Power," as defined in
the VoiceStream articles, must approve
- less than two-thirds vote is enough an amendment if the amendment provides
to approve any amendment listed in that:
bullets one through three.
- stockholders shall have preemptive
rights to acquire additional shares;
- stockholders shall have cumulative
voting rights;
- VoiceStream cannot redeem shares when
the holding of such shares may result
in the
</TABLE>
237
<PAGE> 245
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
loss of any license or franchise from
a governmental agency to conduct any
portion of VoiceStream's business; or
- less than two-thirds vote is enough
to approve any amendment listed in
bullets one through three.
RIGHT TO CALL SPECIAL
MEETING OF
STOCKHOLDERS......... Under the DGCL, the board of directors The WBCA provides that the board of
or any other person authorized to do so directors, holders of at least 10% of
in the corporation's certificate of all the votes entitled to be cast on
incorporation or the bylaws may call a any issue proposed to be considered at
special meeting of stockholders. The the proposed special meeting, or other
VoiceStream Holdings bylaws authorize persons authorized to do so by the
the president, the board or the articles of incorporation or bylaws of
stockholders entitled to cast at least the corporation, may call a special
one-fifth of the votes which all meeting of stockholders. However, the
stockholders are entitled to cast at WBCA allows the right of stockholders
such a meeting, to call a special to call a special meeting to be limited
meeting. or denied to the extent provided in the
articles of incorporation. The
VoiceStream articles deny this right by
providing that a special meeting of
stockholders may only be called by the
board of directors or by a duly
designated committee of the board.
ANTI-TAKEOVER
PROVISIONS AND
INTERESTED
STOCKHOLDER.......... Section 203 of the DGCL prohibits a The WBCA prohibits a "target
Delaware corporation from engaging in a corporation," with certain exceptions,
"business combination" with an from engaging in certain "significant
"interested stockholder" for three business transactions" with a person or
years following the date that such group of persons who beneficially owns
person becomes an interested 10% or more of the voting securities of
stockholder. With certain exceptions, a target corporation (an "Acquiring
an interested stockholder is a person Person") for a period of five years
or group who or which owns 15% or more after the acquisition of such
of the corporation's outstanding voting securities, unless the transaction or
stock or is an affiliate or associate acquisition of shares is approved by a
of the corporation and was the owner of majority of the members of the target
15% or more of such voting stock at corporation's board of directors prior
to the date of the
</TABLE>
238
<PAGE> 246
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
any time within the three years prior acquisition. Significant business
to the date on which it is sought to be transactions include, among others,
determined whether such person is an merger or consolidation with,
interested stockholder. disposition of assets to or with, or
issuance or redemption of stock to or
For purposes of Section 203, the term from, the Acquiring Person; termination
"business combination" is defined of 5% or more of the employees of the
broadly to include: target corporation employed in
Washington State as a result of the
- mergers of the corporation or any Acquiring Person's acquisition of 10%
direct or indirect majority-owned or more of the shares; issuance,
subsidiary (for purposes of this transfer or redemption of shares,
section a "subsidiary") with or options, warrants or rights to acquire
caused by the interested stockholder; shares to or by an Acquiring Person,
except for a dividend, distribution or
- sales or other dispositions to the redemption paid or made pro rata to all
interested stockholder (except stockholders; liquidation or
proportionately with the dissolution of a target corporation,
corporation's other stockholders) of proposed by or pursuant to an agreement
assets of the corporation or a with an Acquiring Person; a
subsidiary equal to 10% or more of reclassification of securities proposed
the aggregate market value of the by or recapitalization of a target
corporation's consolidated assets or corporation proposed by or pursuant to
its outstanding stock; an agreement with an Acquiring Person,
that has the effect of increasing the
- the issuance or transfer by the proportionate share of the outstanding
corporation or a subsidiary of stock shares of a class of voting shares that
of the corporation or such subsidiary is owned by an Acquiring Person; or
to the interested stockholder (except allowing the Acquiring Person to
for certain transfers in a conversion receive any disproportionate benefit of
or exchange or a pro rata loans, advances, guarantees, pledges,
distribution or certain other or other financial assistance or tax
transactions, none of which increase credits or other tax advantages, as a
the interested stockholder's stockholder. Target corporations
proportionate ownership of any class include every domestic corporation, if:
or series of the corporation's or
such subsidiary's stock); - the corporation has a class of voting
shares registered with the SEC
- a transaction involving the pursuant to section 12 or 15 of the
corporation or a subsidiary that Exchange Act; or
directly or indirectly increases the
interested stockholder's - the corporation's articles of
proportionate share of the stock or incorporation have been amended to
convertible securities of the provide that such a corporation shall
corporation or such subsidiary; or be subject to the provisions of RCW
Chapter 23B.19, if the corporation
- receipt by the interested stockholder did not have a class
(except proportionately as a
stockholder), directly or
</TABLE>
239
<PAGE> 247
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
indirectly, of any loans, advances, of voting shares registered with the
guarantees, pledges, or other SEC on the effective date of that
financial benefits provided by or amendment.
through the corporation or a
subsidiary. VoiceStream currently meets these
standards and is subject to this
The three-year moratorium imposed on statute. A corporation may not "opt
business combinations by Section 203 out" of this statute. The statute
does not apply if: exempts shares acquired prior to March
23, 1988.
- prior to the date on which such
stockholder becomes an interested
stockholder, the board of directors
approves either the business
combination or the transaction which
resulted in the person becoming an
interested stockholder;
- the interested stockholder owns 85%
of the corporation's voting stock
outstanding upon consummation of the
transaction which made him or her an
interested stockholder (excluding
from the 85% calculation shares owned
by directors who are also officers of
the corporation and shares held by
employee stock plans which do not
permit employees to decide
confidentially whether to accept a
tender or exchange offer); or
- on or after the date on which such
person becomes an interested
stockholder, the board approves the
business combination and it is also
approved at a stockholder meeting by
at least 66 2/3% of the voting stock
not owned by the interested
stockholder.
The section does not apply if the
business combination is proposed prior
to the consummation or abandonment of
and subsequent to the earlier of the
public announcement or the notice
required under Section 203 of a
proposed transaction which:
- constitutes certain (1) mergers
</TABLE>
240
<PAGE> 248
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
or consolidations, (2) sales or other
transfers of assets having an
aggregate market value equal to 50%
or more of either the aggregate
market value of the corporation's
assets determined on a consolidated
basis or the aggregate market value
of all the corporation's outstanding
stock, or (3) a proposed tender or
exchange offer for 50% or more of the
corporation's outstanding stock;
- is with or by a person who was either
not an interested stockholder during
the last three years or who became an
interested stockholder with the
approval of the corporation's board
of directors; and
- is approved or not opposed by a
majority of the board members elected
prior to any person becoming an
interested stockholder during the
previous three years (or their chosen
successors).
The restrictions contained in this
section also shall not apply if:
- the corporation does not have a class
of voting common stock listed on a
national securities exchange,
authorized for quotation on the
Nasdaq Stock Market, or held of
record by more than 2,000
stockholders, unless any of the
foregoing results from action taken,
directly or indirectly, by an
interested stockholder or from a
transaction in which the person
becomes an interested stockholders;
or
- a stockholder becomes an interested
stockholder inadvertently and as soon
as practicable divests sufficient
shares to no longer be an interested
stockholder and
</TABLE>
241
<PAGE> 249
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
would not have been an interested
stockholder but for the inadvertent
acquisition.
A Delaware corporation may elect not to
be governed by Section 203 by a
provision of its original certificate
of incorporation or an amendment
thereto or to the bylaws, which
amendment must be approved by majority
stockholder vote and may not be further
amended by the board of directors. Such
an amendment is not effective until 12
months following its adoption unless
the corporation has never had a class
of voting stock listed on a national
securities exchange, authorized for
quotation on the Nasdaq Stock Market,
or held of record by more than 2,000
stockholders and has not elected in its
original certificate or any amendment
to be governed by this section.
VoiceStream Holdings' Certificate of
Incorporation and Bylaws do not contain
an election not to be governed by
Delaware's anti-takeover statute.
MERGERS, SALES OF
ASSETS AND OTHER
TRANSACTIONS........... Under the DGCL, the board of directors Under the WBCA, a merger or share
and the holders of a majority of the exchange of a corporation must be
outstanding stock of the corporation approved by the affirmative vote of a
entitled to vote thereon must approve a majority of directors when a quorum is
merger or consolidation. The DGCL does present, and approved by each voting
not require approval of stockholders of group entitled to vote separately on
a constituent corporation surviving a the plan by two-thirds of all the votes
merger (unless the corporation provides entitled to be cast on the plan by that
otherwise in its certificate of voting group, unless another proportion
incorporation) if: is specified in the articles of
- the reorganization agreement does not incorporation. VoiceStream's Articles
amend the certificate of do not specify another proportion. The
incorporation of the surviving WBCA also provides that the
corporation; stockholders of the surviving
corporation need not approve certain
- each share of stock of the surviving mergers if:
corporation outstanding before the
merger is an identical outstanding or - the articles of incorporation will
treasury share of such corporation not change in the merger, except for
after the merger; specified permitted amendments;
</TABLE>
242
<PAGE> 250
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
and
- no change occurs in the number,
- the number of shares to be issued by designations, preferences,
the surviving corporation in the limitations, and relative rights of
merger does not exceed 20% of the shares held by those stockholders who
shares outstanding immediately prior were stockholders prior to the
to the merger. merger;
- the number of voting shares
outstanding immediately after the
merger, plus the voting shares
issuable as a result of the merger,
will not exceed the authorized voting
shares specified in the surviving
corporation's articles of
incorporation immediately prior to
the merger; and
- the number of participating shares
outstanding immediately after the
merger, plus the number of
participating shares issuable as a
result of the merger, will not exceed
the authorized participating shares
specified in the corporation's
articles of incorporation immediately
prior to the merger.
The WBCA also provides that, in
general, a corporation may sell, lease,
exchange, or otherwise dispose of all,
or substantially all, of its property,
other than in the usual and regular
course of business or dissolve if the
board of directors recommends the
proposed transaction to the
stockholders and the stockholders
approve the transaction by two-thirds
of all the votes entitled to be cast in
the transaction, unless another
proportion is specified in the articles
of incorporation. The VoiceStream
Articles do not specify another
proportion.
</TABLE>
243
<PAGE> 251
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
TRANSACTIONS WITH
OFFICERS OR
DIRECTORS.............. Under the DGCL, certain contracts or The WBCA sets forth a safe harbor for
transactions in which one or more of a transactions between a corporation and
corporation's directors or officers has one or more of its directors. A
an interest are not void or voidable conflicting interest transaction may
solely because of such interest if not be enjoined, set aside or give rise
either: to damages if:
- the stockholders or the board of - it is approved by a majority of
directors approve in good faith any qualified directors (but no fewer
such contract or transaction after than two);
full disclosure of the material
facts; or - it is approved by the affirmative
vote of the majority of all qualified
- the contract or transaction is "fair" shares after notice and disclosure to
as to the corporation at the time it the stockholders; or
was approved. If board approval is
sought, the contract or transaction - at the time of commitment, the
must be approved by a majority of the transaction is established to have
disinterested directors (even though been fair to the corporation. For
less than a majority of a quorum). purposes of this provision, a
"qualified director" is one who does
not have either: (1) a conflicting
interest respecting the transaction;
or (2) a familial, financial,
professional, or employment
relationship with a second director
who does have a conflicting interest
respecting the transaction, which
relationship would, in the
circumstances, reasonably be expected
to exert an influence on the first
director's judgment when voting on
the transaction. "Qualified shares"
are defined generally as shares other
than those beneficially owned, or the
voting of which is controlled, by a
director (or an affiliate of the
director) who has a conflicting
interest respecting the transaction.
APPRAISAL OR
DISSENTERS' RIGHTS..... Under the DGCL, a stockholder of a Under the WBCA, a stockholder is
corporation participating in certain entitled to dissent from and, upon
corporate mergers or consolidations perfection of his appraisal right, to
may, under varying circumstances, be obtain fair value of his shares in the
entitled to appraisal rights pursuant event of certain corporate actions.
to which such stockholder may receive Among these actions are certain
cash in the amount of the fair market mergers, consolidations, share
value of his shares in lieu of the exchanges, sales of substantially all
consideration he or assets of the corporation, and
</TABLE>
244
<PAGE> 252
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
she would otherwise receive in the amendments to the corporation's
transaction. Such appraisal rights are articles of incorporation that
not available: materially and adversely affect
stockholder rights.
- with respect to the sale, lease or
exchange of all or substantially all
of the assets of a corporation;
- with respect to a merger or
consolidation by a corporation the
shares of which are either listed on
a national securities exchange or
designated as a national market
system security on an interdealer
quotation system by the National
Association of Security Dealers, Inc.
or are held of record by more than
2,000 holders if such stockholders
receive only shares of the surviving
corporation, or shares of any other
corporation (which are either listed
on a national securities exchange or
designated as a national market
system security on an interdealer
quotation system by the National
Association of Securities Dealers,
Inc. or held of record by more than
2,000 holders) plus cash in lieu of
fractional shares, or any combination
thereof; or
- to stockholders of a corporation
surviving a merger if no vote of the
stockholders of the surviving
corporation is required to approve
the merger because the reorganization
agreement does not amend the existing
certificate or incorporation, each
share of the surviving corporation
outstanding prior to the merger is an
identical outstanding or treasury
share after the merger, and the
number of shares to be issued in the
merger does not exceed 20% of the
shares of the surviving corporation
outstanding immediately prior to the
merger and if certain other
conditions are met.
DIVIDENDS.............. The DGCL permits a corporation to Under the WBCA, a corporation may make
declare and pay dividends out of a distribution in cash or
</TABLE>
245
<PAGE> 253
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
statutory surplus or, if there is no in property to its stockholders upon
surplus, out of net profits for the the authorization of its board of
fiscal year in which the dividend is directors unless, after giving effect
declared and/or for the preceding to such distribution:
fiscal year as long as the amount of
capital of the corporation following - the corporation would not be able to
the declaration and payment of the pay its debts as they become due in
dividend is not less than the aggregate the usual course of business; or
amount of the capital represented by
the issued and outstanding stock of all - the corporation's total assets would
classes having a preference upon the be less than the sum of its total
distribution of assets. In addition, liabilities plus, unless the articles
Delaware law generally provides that a of incorporation permit otherwise,
corporation may redeem or repurchase the amount that would be needed, if
its shares only if such redemption or the corporation were to be dissolved
repurchase would not impair the capital at the time of the distribution, to
of the corporation. To date, satisfy the preferential rights upon
VoiceStream Holdings has not paid cash dissolution of stockholders whose
dividends on its capital stock. preferential rights are superior to
those receiving the distribution. To
date, VoiceStream has not paid cash
dividends on its capital stock.
LIMITATION OF LIABILITY
OF DIRECTORS........... Under the DGCL, a corporation may adopt The WBCA provides that a corporation's
a provision in its articles of articles of incorporation may include a
incorporation eliminating or limiting, provision that eliminates or limits the
with certain exceptions, the personal personal liability of a director to the
liability of a director to the corporation or its stockholders for
corporation or its stockholders for monetary damages for conduct as a
monetary damages for breach of the director. However, the provision may
director's fiduciary duty as a not eliminate or limit liability of a
director. The VoiceStream Holdings director for acts or omissions that
Certificate of Incorporation eliminates involve intentional misconduct by a
the liability of directors to the director, a knowing violation of law by
fullest extent permissible under a director, for unlawful distributions,
Delaware law. Under Delaware law, or for any transaction from which the
however, VoiceStream Holdings is not director will personally receive a
allowed to eliminate or limit director benefit in money, property, or services
monetary liability for: to which the director is not legally
entitled. VoiceStream's Articles adopt
- breaches of the director's duty of this standard.
loyalty to the corporation or its
stockholders;
- acts or omissions not in good faith
or involving intentional misconduct
or a knowing violation of law;
</TABLE>
246
<PAGE> 254
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
- unlawful dividends, stock repurchases
or redemptions; or
- transactions from which the director
received an improper personal
benefit.
INDEMNIFICATION OF
OFFICERS AND
DIRECTORS.............. Under the DGCL, a corporation may not Under the WBCA, if authorized by the
indemnify any director, officer, articles of incorporation, a bylaw
employee or agent made or threatened to adopted or ratified by stockholders, or
be made party to any threatened, a resolution adopted or ratified,
pending, or completed proceeding unless before or after the event, by the
such person acted in good faith and in stockholders, a corporation has the
a manner such person reasonably power to indemnify a director or
believed to be in or not opposed to the officer made a party to a proceeding,
best interests of the corporation, and, or advance or reimburse expenses
with respect to any criminal incurred in a proceeding, under any
proceedings, had no reasonable cause to circumstances, except that no such
believe that his or her conduct was indemnification shall be allowed on
unlawful. The DGCL also establishes account of:
several mandatory rules for
indemnification. - acts or omissions of the directors
finally adjudged to be intentional
In the case of a proceeding by or in misconduct or a knowing violation of
the right of the corporation to procure the law;
a judgment in its favor (e.g., a
stockholder derivative suit), a - conduct of the director finally
corporation may indemnify an officer, adjudged to be an unlawful
director, employee or agent if such distribution; or
person acted in good faith and in a
manner such person reasonably believed - any transaction with respect to which
to be in or not opposed to the best it was finally adjudged that such
interests of the corporation; provided, director personally received a
however, that no person adjudged to be benefit in money, property, or
liable to the corporation may be services to which the director was
indemnified unless, and only to the not legally entitled. Written
extent that, the Delaware Court of commentary by the drafters of the
Chancery or the court in which such WBCA, which has the status of
action or suit was brought determines legislative history, specifically
upon application that, despite the indicates that a corporation may
adjudication of liability but in view indemnify its directors and officers
of all the circumstances of the case, for amounts paid in settlement of
such person is fairly and reasonably derivative actions, provided that the
entitled to indemnity for such expenses director's or officer's conduct does
which such court deems proper. A not fall within one of the categories
director, officer, employee, or agent set forth above. VoiceStream's
who is successful, on the merits or articles provide that VoiceStream
otherwise, in defense of any proceeding shall indemnify its directors and
subject to the DGCL's indemnification officers to the fullest extent not
provisions must be indemnified by the prohibited by law, including
indemnification
</TABLE>
247
<PAGE> 255
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
corporation for reasonable expenses for payments in settlement of actions
incurred therein, including attorneys' brought against the director or
fees. VoiceStream Holdings' certificate officer in the name of the
of incorporation provided that corporation, commonly referred to as
VoiceStream Holdings will indemnify its a derivative action. Such limitation
directors and officers to the fullest of liability, described above, also
extent not prohibited by law. may not limit a director's liability
for violation of, or otherwise
In addition, VoiceStream Holdings has relieve VoiceStream or its directors
entered into agreements indemnifying from the necessity of complying with,
its officers and directors and certain federal or state securities laws, or
other persons consistent with Delaware affect the availability of non-
law. monetary remedies such as injunctive
relief or rescission.
</TABLE>
248
<PAGE> 256
OMNIPOINT AND AERIAL STOCKHOLDERS
Upon consummation of the Aerial reorganization, the stockholders of Aerial
will become stockholders of VoiceStream Holdings and upon consummation of the
Omnipoint reorganization, the stockholders of Omnipoint will become stockholders
of VoiceStream Holdings. Since Aerial, Omnipoint and VoiceStream Holdings are
each Delaware corporations, the rights of Aerial and Omnipoint stockholders will
continue to be defined and governed by the DGCL. However, there are certain
differences between the certificates of incorporation and bylaws of Aerial,
Omnipoint and VoiceStream Holdings. The major differences are outlined below.
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
AUTHORIZED SHARES.... The authorized capital stock of The authorized capital stock of The authorized capital stock of
VoiceStream Holdings consists Omnipoint consists of Aerial consists of 100,000,000
of 400,000,000 shares of common 200,000,000 shares of common Common Shares, $1.00 par value;
stock, par value $0.001 per stock, par value $0.01 per 60,000,000 Series A Common
share; and 5,000,000 shares of share, 10,000,000 shares of Shares, $1.00 par value;
preferred stock, par value preferred stock, par value 60,000,000 Series B Common
$0.001 per share. $0.01 per share, of which Shares, $1.00 par value; and
325,000 have been designated 10,000,000 shares of Preferred
shares of Omnipoint's 7% Stock, $1.00 par value,
Cumulative Convertible issuable in series.
Preferred Stock, and 12,500
have been designated shares of
Omnipoint's Series A Non-
Voting Convertible Preferred
Stock.
INCREASE IN
AUTHORIZED SHARES.... An amendment to the VoiceStream An amendment to the Omnipoint The Aerial restated certificate
Holdings restated certificate amended and restated of incorporation provides that
of incorporation increasing or certificate of incorporation an increase or decrease in the
decreasing the capital stock increasing or decreasing the number of Aerial Common Shares
must be approved by a majority capital stock must be approved and Aerial Series B Common
of the outstanding common by a majority of the Shares may be approved by the
stock. outstanding common stock. holders of a majority of the
Aerial Series A Common Shares.
VOTING FOR
DIRECTORS............ VoiceStream Holdings common The holders of Omnipoint common Aerial Common Shares vote in
stock shall have one vote per stock are entitled to one vote the election of 25% of the
share on all matters submitted per share held at all meetings directors of Aerial, rounded up
to a vote of stockholders of of stockholders. to the nearest whole number, or
VoiceStream Holdings. three directors based on an
Aerial board of directors
consisting of twelve directors.
In such vote, each Aerial
Common Share is entitled to one
vote per share.
The Aerial Series A Common
Shares vote in the
</TABLE>
249
<PAGE> 257
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
election of 75% of the
directors, rounded down to the
nearest whole number, or nine
directors based on an Aerial
board of directors of twelve
directors. In such vote, each
Aerial Series A Common Share is
entitled to fifteen votes per
share.
The Aerial Series B Common
Shares, none of which are
issued, have no vote in the
election of directors or
otherwise except as required by
law.
VOTING ON MATTERS
OTHER THAN THE
ELECTION OF
DIRECTORS............ VoiceStream Holdings common The holders of Omnipoint common Aerial Common Shares have one
stock shall have one vote per stock are entitled to one vote vote per share on all matters
share on all matters submitted per share held at all meetings submitted to a vote of
to a vote of stockholders of of stockholders. stockholders of Aerial.
VoiceStream Holdings.
The Aerial Series A Common
Shares have fifteen votes on
all matters submitted to a vote
of stockholders of Aerial.
The Aerial Series B Common
Shares, if and when issued,
would have no vote except as
required by law.
CLASS VOTES ON
AMENDMENTS TO
CHARTER.............. VoiceStream Holdings common The holders of Omnipoint common Holders of Aerial Common
stock shall have one vote per stock are entitled to one vote Shares, Aerial Series A Common
share on all matters submitted per share held at all meetings Shares and any issued Aerial
to a vote of the stockholders of stockholders. Series B Common Shares are
of VoiceStream Holdings. entitled to vote as a class on
Holders of not less than a proposed amendment to the
two-thirds of the "Total Voting Aerial restated certificate of
Power," as defined in the incorporation if the amendment
VoiceStream Holdings restated would increase or decrease the
certificate of incorporation, par value or alter the powers,
must approve an amendment if preferences or special rights
the amendment provides that: of such class so as to affect
them adversely.
- stockholders shall have
preemptive rights to
</TABLE>
250
<PAGE> 258
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
acquire additional shares;
- stockholders shall have
cumulative voting rights;
- VoiceStream Holdings cannot
redeem shares when the
holding of such shares may
result in the loss of any
license or franchise from a
governmental agency to
conduct any portion of
VoiceStream Holdings'
business; or
- less than two-thirds vote is
enough to approve any
amendment listed in bullets
one through three.
CLASS VOTES ON
MERGERS.............. VoiceStream Holdings common The holders of Omnipoint common A merger or consolidation of
stock shall have one vote per stock are entitled to one vote Aerial must be approved by the
share on all matters submitted per share held at all meetings holders of a majority of the
to a vote of the stockholders of stockholders. voting power of the outstanding
of VoiceStream Holdings. Aerial Common Shares and Aerial
Series A Common Shares, voting
together as one group. The
Aerial Series B Common Shares,
if and when issued, would not
have any vote with respect to a
merger except as required by
law.
DIVIDEND RIGHTS...... The VoiceStream Holdings board The Omnipoint board may declare Except for stock dividends and
may declare and pay dividends and pay dividends from funds dividends of subsidiary capital
upon the outstanding shares of lawfully available therefor, stock, holders of Aerial Common
the corporation from time to subject to any preferential Shares and Aerial Series B
time and to such extent as it rights of any then outstanding Common Shares are entitled to
deems advisable, in accordance shares of preferred stock. share equally, on a per share
with the DGCL. basis, in all dividends.
STOCK DIVIDENDS...... The VoiceStream Holdings board The Omnipoint amended and A stock dividend may be paid
may declare and pay dividends restated certificate of only as follows:
upon the outstanding shares of incorporation does not include
the corporation from time to provisions relating to stock - Aerial Common Shares may be
time and to such extent as it dividends. paid to the holders of Aerial
deems advisable, in Common Shares and
proportionately to
</TABLE>
251
<PAGE> 259
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
accordance with the DGCL. holders of Aerial Series A
Common Shares and Aerial
Series B Common Shares;
- Aerial Common Shares may be
paid to the holders of Aerial
Common Shares at the same
time that Aerial Series A
Common Shares are paid
proportionately to the
holders of Aerial Series A
Common Shares and Aerial
Series B Common Shares are
paid proportionately to
holders of Aerial Series B
Common Shares;
- Aerial Series A Common Shares
may be paid to holders of
Aerial Series A Common Shares
and proportionately to
holders of Aerial Common
Shares and Aerial Series B
Common Shares; or
- Aerial Series B Common Shares
may be paid to holders of
Aerial Series B Common Shares
and proportionately to
holders of Aerial Common
Shares and Aerial Series A
Common Shares.
DIVIDENDS OF
SUBSIDIARY STOCK..... The VoiceStream Holdings The Omnipoint amended and Aerial may distribute to
restated certificate of restated certificate of holders of Aerial Common Shares
incorporation does not include incorporation does not include and Aerial Series A Common
provisions relating to provisions relating to Shares, and Aerial Series B
dividends of subsidiary stock. dividends of subsidiary stock. Common Shares, if any are
outstanding, shares of
subsidiary capital stock
</TABLE>
252
<PAGE> 260
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
corresponding to Aerial Common
Shares, Aerial Series A Common
Shares and Aerial Series B
Common Shares, respectively,
with rights, preferences and
limitations which, in the
judgment of the Aerial board of
directors, are similar in all
material respects to the
relative rights, preferences
and limitations of the shares
of common stock of Aerial.
Thus, although it has no
present intention to do so,
Aerial could recapitalize any
of its subsidiaries and then
spin off the subsidiary to
Aerial stockholders, with the
holders of Aerial Series A
Common Shares receiving the
subsidiary's series A common
shares, the holders of Aerial
Common Shares receiving the
subsidiary's common shares and
the holders of Aerial Series B
Common Shares receiving the
subsidiary's series B common
shares.
LIQUIDATION.......... In the event of any In the event of the liquidation In the event of the liquidation
liquidation, dissolution or or dissolution of Omnipoint, of Aerial, holders of Aerial
winding-up of VoiceStream holders of common stock are Common Shares, Aerial Series A
Holdings, holders of common entitled to receive all assets Common Shares and Aerial Series
stock are entitled to a per available for distribution to B Common Shares, if and when
share distribution of any stockholders, subject to any issued, would share pari passu
assets remaining after payment preferential rights of any then any assets of Aerial remaining
or provision for liabilities outstanding shares of preferred for distribution to holders of
and any preferred stock stock. Aerial common stock.
liquidation preferences.
REDEMPTION OF SHARES
TO PROTECT
LICENSES............. The VoiceStream Holdings The Omnipoint amended and The Aerial restated certificate
restated certificate of restated certificate of of incorporation permits shares
incorporation provides that incorporation does not include of Aerial capital stock,
outstanding shares of capital provisions relating to the including Aerial Common Shares,
stock of the corporation shall redemption of shares to protect Aerial Series A Common Shares,
be subject to redemption by the licenses. and Aerial Series B
</TABLE>
253
<PAGE> 261
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
corporation, by action of the Common Shares, to be redeemed
board of directors, if, in the by Aerial, (a) at fair market
judgment of the board of value or (b) at such holder's
directors, such action should purchase price if purchased
be taken, pursuant to any within a year of such
applicable provision of law, to redemption, to the extent
the extent necessary to prevent necessary to prevent the loss
the loss or secure the or secure the reinstatement of,
reinstatement of any license or or to prevent the denial of
franchise from any governmental applications for or the renewal
agency held by the corporation of any license or franchise
or any of its subsidiaries to from any governmental agency.
conduct any portion of the
business of the corporation or
any of its subsidiaries.
PREEMPTIVE RIGHTS.... VoiceStream Holdings common Omnipoint common stock has no The Aerial Common Shares and
stock has no preemptive rights preemptive rights enabling a the Aerial Series B Common
enabling a holder to subscribe holder to subscribe for or Shares have no preemptive
for or receive shares of any receive shares of any class of rights enabling a holder to
class of stock of VoiceStream stock of Omnipoint or any other subscribe for or receive shares
Holdings or any other securities convertible into of any class of stock of Aerial
securities convertible into shares of any class of stock of or any other securities
shares of any class of stock of Omnipoint under the Omnipoint convertible into shares of any
VoiceStream Holdings under the amended and restated class of stock of Aerial under
VoiceStream Holdings restated certificate of incorporation. the Aerial restated certificate
certificate of incorporation. of incorporation. Under the
Aerial restated certificate of
incorporation, the holders of
Aerial Series A Common Shares
have preemptive rights to
purchase any additional Aerial
Series A Common Shares or
securities convertible into or
exchangeable for, or carrying a
right to subscribe to or
acquire, Aerial Series A Common
Shares issued or sold by
Aerial, including treasury
shares, other than Aerial
Series A Common Shares sold
otherwise than for cash.
REMOVAL OF
DIRECTORS............ Any director or the entire The Omnipoint amended and Directors of Aerial may be
board may be removed, with or restated certificate of removed by stockholders
without cause, by the holders incorporation does not include entitled to vote in the
of a majority of the shares provisions relating to the election of such directors only
then entitled to removal of directors. for cause.
</TABLE>
254
<PAGE> 262
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
vote at an election of
directors.
MEETINGS OF
STOCKHOLDERS......... A special meeting of A special meeting of A special meeting of
stockholders may be called at stockholders may be called at stockholders may be called by
any time by the president, the any time by the president or the president, a majority of
board, or stockholders entitled the board. the board or holders of at
to cast at least one-fifth of least a majority of the votes
the votes that all stockholders of the stock issued and
are entitled to cast at the outstanding and entitled to
particular meeting. vote.
STOCKHOLDER ACTION BY
WRITTEN CONSENT...... Any action required to be, or Any action required or Stockholder action may be taken
that may be, taken at any permitted to be taken by without a meeting or vote if a
annual or special meeting of stockholders of Omnipoint may written consent is signed by
stockholders, may be taken be taken by unanimous written the holders of outstanding
without a meeting, without consent of the stockholders. shares having not less than the
prior notice and without a minimum number of votes that
vote, if a unanimous consent in would be necessary to authorize
writing, setting forth the such action at a meeting at
action so taken, shall be which all shares entitled to
signed by the holders of a vote thereon were present and
majority of the outstanding voted.
stock.
SECTION 203 OF
DGCL................. VoiceStream Holdings is subject Omnipoint is subject to Section The Aerial restated certificate
to section 203 of the DGCL. 203 of the DGCL. of incorporation expressly
provides that Aerial elects not
to be governed by section 203
of the DGCL.
</TABLE>
255
<PAGE> 263
OPINIONS FROM LEGAL COUNSEL
The validity of the VoiceStream Holdings common stock to be issued to
VoiceStream and Omnipoint stockholders pursuant to the reorganization will be
passed upon by Preston Gates & Ellis LLP. It is a condition to the completion of
the Omnipoint reorganization that VoiceStream and Omnipoint receive opinions
from Jones, Day, Reavis & Pogue and Piper & Marbury LLP, respectively, with
respect to the tax treatment of the Omnipoint reorganization. See "The Omnipoint
Reorganization Agreement -- Conditions to the Omnipoint Reorganization" and "The
Omnipoint Reorganization -- Material Federal Income Tax Consequences of the
Omnipoint Reorganization."
It is a condition to the completion of the Aerial reorganization that
VoiceStream and Aerial receive opinions from Jones, Day, Reavis & Pogue and
Sidley & Austin, respectively, with respect to the tax treatment of the Aerial
reorganization. See "The Aerial Reorganization Agreement -- Conditions to the
Reorganization" and "The Aerial Reorganization -- Material Income Tax
Consequences of the Aerial Reorganization."
EXPERTS
The consolidated financial statements of VoiceStream and its subsidiaries
for the year ended December 31, 1998, included in VoiceStream's Form 10/A, which
is incorporated herein by reference, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon their authority as experts in
giving said reports.
The consolidated financial statements of Omnipoint and its subsidiaries as
of December 31, 1998 and 1997 and for each of the three years in the period
ended December 31, 1998, incorporated by reference in this joint proxy
statement - prospectus, have been so incorporated herein in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Aerial and its subsidiaries as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998, included in Aerial's Form 10-K, which are incorporated herein
by reference, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon their authority as experts in giving said
reports.
256
<PAGE> 264
WHERE YOU CAN FIND MORE INFORMATION
VoiceStream, Omnipoint and Aerial file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any reports, statements or other information we file at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. VoiceStream's, Omnipoint's and Aerial's SEC filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at "http://www.sec.gov."
We have filed a registration statement on Form S-4 to register with the SEC
the VoiceStream Holdings common stock to be issued to VoiceStream, Omnipoint and
Aerial stockholders in the reorganizations. This joint proxy
statement-prospectus is a part of that registration statement and constitutes a
prospectus of VoiceStream Holdings in addition to being a proxy statement of
VoiceStream, Omnipoint and Aerial for the special meetings. As allowed by SEC
rules, this joint proxy statement-prospectus does not contain all the
information you can find in the registration statement or the exhibits to the
registration statement.
The SEC allows us to "incorporate by reference" information into this joint
proxy statement-prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
joint proxy statement-prospectus, except for any information superseded by
information in, or incorporated by reference in, this joint proxy
statement-prospectus. This joint proxy statement-prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC. These documents contain important information about VoiceStream, Omnipoint
and Aerial and their finances.
<TABLE>
<CAPTION>
VOICESTREAM SEC FILINGS (FILE NO. 0-25441) DATE FILED
------------------------------------------ ------------------
<S> <C>
Form 10/A................................................... April 13, 1999
Form 10-Q for the Quarter Ended June 30, 1999............... August 9, 1999
Form 8-K.................................................... May 10, 1999
Form 8-K.................................................... May 27, 1999
Form 8-K.................................................... June 24, 1999
Form 8-K.................................................... July 7, 1999
Form 8-K.................................................... , 1999
</TABLE>
<TABLE>
<CAPTION>
OMNIPOINT SEC FILINGS (FILE NO. 0-27442) DATE FILED
---------------------------------------- ------------------
<S> <C>
Form 10-K for the Year Ended December 31, 1998.............. April 6, 1999
1999 Proxy Statement........................................ April 27, 1999
Form 10-Q for the Quarter Ended June 30, 1999............... August 16, 1999
Form 10-Q for the Quarter Ended March 31, 1999.............. May 17, 1999
Form 8-K.................................................... July 2, 1999
</TABLE>
<TABLE>
<CAPTION>
AERIAL SEC FILINGS (FILE NO. 0-28262) DATE FILED
------------------------------------- ------------------
<S> <C>
Form 10-K for the year Ended December 31, 1998.............. March 31, 1999
1999 Proxy Statement........................................ April 19, 1999
Form 10-Q for the Quarter Ended June 30, 1999............... August 13, 1999
Form 10-Q for the Quarter Ended March 31, 1999.............. May 14, 1999
Form 8-K.................................................... September 28, 1999
</TABLE>
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We are also incorporating by reference additional documents that
VoiceStream, Omnipoint or Aerial file with the SEC between the date of this
joint proxy statement-prospectus and the date of the meetings.
Documents incorporated by reference by each company are available from them
without charge, excluding all exhibits unless the company has specifically
incorporated by reference an exhibit into this joint proxy statement-prospectus.
Stockholders may obtain documents incorporated by reference in this joint proxy
statement-prospectus by requesting them in writing or by telephone from the
appropriate party at the following address:
VoiceStream Wireless
Corporation
Attn: Investor Relations
3650 131st Avenue SE
Bellevue, Washington 98006
Omnipoint Corporation
Attn: Investor Relations
Three Bethesda Metro Center, Suite 400
Bethesda, Maryland 20814
Aerial Communications, Inc.
Attn: Investor Relations
8410 W. Bryn Mawr Avenue
Suite 1100
Chicago, Illinois 60631
You should rely only on the information contained or incorporated by
reference in this joint proxy statement-prospectus to vote on the Omnipoint
reorganization or Aerial reorganization, as applicable. We have not authorized
anyone to provide you with information that is different from what is contained
in this joint proxy statement-prospectus. Please note that VoiceStream has
supplied all information contained or incorporated by reference in this joint
proxy statement-prospectus relating to VoiceStream, Omnipoint has supplied all
such information relating to Omnipoint, and Aerial has supplied all such
information relating to Aerial.
This joint proxy statement-prospectus is dated November , 1999. You
should not assume that the information contained in the joint proxy
statement-prospectus is accurate as of any date other than such date, and
neither the mailing of this joint proxy statement-prospectus to stockholders nor
the issuance of VoiceStream Holdings common stock in the reorganizations shall
create any implication to the contrary.
258
<PAGE> 266
GLOSSARY*
"Adjusted Fully Diluted Shares" means the aggregate number of issued and
issuable shares of Aerial common stock and includes any stock appreciation
rights, phantom stock rights or other contractual rights the value of which is
determined in whole or in part by the value of shares of capital stock of Aerial
or any of its subsidiaries. Adjusted Fully Diluted Shares does not include any
shares issued or to be issued to TDS and Sonera pursuant to the debt replacement
agreement or shares that are or may be issued pursuant to Aerial performance
stock options.
"Aerial" means Aerial Communications, Inc.
"Aerial Cash Election" has the meaning set forth on page 4 of this joint proxy
statement-prospectus.
"Aerial Common Shares" means Aerial's common shares, par value $1.00 per share.
"Aerial Series A Common Shares" means Aerial's Series A common shares, par value
$1.00 per share.
"Aerial Stock Election" has the meaning set forth on this page 4 of this joint
proxy statement-prospectus.
"Aerial reorganization" means the combination of VoiceStream and Aerial pursuant
to the Aerial reorganization agreement.
"Aerial reorganization agreement" means the Agreement and Plan of
Reorganization, dated as of September 17, 1999, by and among Aerial,
VoiceStream, VoiceStream Holdings and certain other parties thereto.
"Allen & Co." means Allen & Co., Inc., a financial advisor to and investor in
Omnipoint.
"Appraisal Notice" has the meaning set forth on page 186 of this joint proxy
statement-prospectus.
"AT&T Wireless" means AT&T Wireless Services, Inc.
"Block" means one of six blocks into which the FCC has divided 120 MHz of radio
spectrum, each of which is allocated to serve either MTAs or BTAs.
"Bridge Street" means Bridge Street Fund 1992, L.P.
"BTA" means Basic Trading Area, a term used by the FCC to define licensed market
areas based on the Rand McNally 1992 Commercial Atlas and Marketing Guide, 123rd
Edition, at 38-39.
"CDMA" means Code Division Multiple Access, a wireless communications standard.
"cell site" has the meaning set forth on page 190 of this joint proxy
statement-prospectus.
"CGSA" means Cellular Geographic Service Area.
"Chancery Court" means the State of Delaware Court of Chancery.
"Chase Securities" means Chase Securities, Inc., financial advisor to the
Hutchison Entities.
"CIRI Transactions" means the transactions contemplated by the purchase
agreements between Omnipoint and CIVS II and CIVS III, as summarily described on
pages 63 and 64 of this joint proxy statement-prospectus.
"CIVS" means Cook Inlet/VoiceStream PCS LLC, a Delaware limited liability
company.
"CIVS II" means Cook Inlet/VoiceStream GSM II PCS, LLC, a Delaware limited
liability company.
"CIVS III" means Cook Inlet/VoiceStream GSM III PCS, LLC, a Delaware limited
liability company.
"Claritas" means Claritas, Inc.
"Clearnet" means Clearnet Communications.
"Closing Date Market Price" means the average closing price of one share of
VoiceStream common stock (calculated on a weighted average based upon the volume
of shares traded on each day) during the period of the 15 most-recent trading
days ending on the business day prior to the effective date of the
reorganization.
"CMRS" means Commercial Mobile Radio Service.
"Code" means Internal Revenue Code of 1986, as amended.
"Communications Act" means the Communications Act of 1934, as amended and the
rules, regulations and policies promulgated by the FCC thereunder.
"Cook Inlet" means Cook Inlet Region, Inc.
"Cook Inlet PCS" has the meaning set forth on page 202 of this joint proxy
statement-prospectus.
"Covered POPs" has the meaning set forth on page 47 of this joint proxy
statement-prospectus.
"CTIA" means Cellular Telecommunications Industry Association.
"Designated Entities" has the meaning set forth on page 23 of this joint proxy
statement-prospectus.
"DGCL" means the Delaware General Corporation Law.
"Donaldson, Lufkin & Jenrette" means Donaldson, Lufkin & Jenrette Securities
Corporation, financial advisor to Aerial.
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<PAGE> 267
"EBITDA" means operating income (loss) before depreciation and amortization and
non-cash stock compensation expense. Management believes EBITDA provides
meaningful additional information on a company's operating results and on its
ability to service its long-term debt and other fixed obligations and to fund
its continuing growth. EBITDA is considered by many financial analysts to be a
meaningful indicator of an entity's ability to meet its future financial
obligations, and growth in EBITDA is considered to be an indicator of future
profitability, especially in a capital-intensive industry such as wireless
telecommunications. EBITDA should not be construed as an alternative to
operating income (loss) as determined in accordance with GAAP as an alternate to
cash flows from operating activities (as determined in accordance with GAAP), or
as a measure of liquidity. Because EBITDA is not calculated in the same manner
by all companies, a particular company's presentation may not be comparable to
other similarly titled measures of other companies.
"Entity One" has the meaning set forth on page 95 of this joint proxy
statement-prospectus.
"Entity Two" has the meaning set forth on page 100 of this joint proxy
statement-prospectus.
"ESMR" means Enhanced Specialized Mobile Radio.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FCC" means the Federal Communications Commission.
"GAAP" means United States generally accepted accounting principles.
"General Cellular" means General Cellular Corporation.
"Goldman Sachs" means Goldman, Sachs & Co., financial advisor to VoiceStream.
"Goldman Sachs Entities" means, collectively, the GS Group, GS Capital, Stone
Street and Bridge Street.
"GS Capital" means GS Capital Partners, L.P.
"GS Group" means The Goldman Sachs Group, L.P.
"GSM" means Global System for Mobile Communications, a wireless communications
system standard.
"GTE Mobilnet" means GTE Mobilnet, Inc.
"Hellman & Friedman" means Hellman & Friedman, a private investment firm.
"Hellman Entities" means collectively, Hellman Trust, HFCP, HFOP, and HFIP.
"Hellman Trust" means The Hellman Family Revocable Trust dated December 17,
1984.
"HFCP" means Hellman & Friedman Capital Partners II, L.P.
"HFIP" means H&F International Partners, L.P.
"HFOP" means H&F Orchard Partners, L.P.
"Hutchison" means Hutchison Whampoa Limited., a diversified Hong Kong-based
corporation that includes interests in telecommunications businesses.
"Hutchison Entities" means Hutchison Telecommunications, Hutchison PCS (USA) and
Hutchison Holdings (USA).
"Hutchison Holdings (USA)" means Hutchison Telecommunications Holdings (USA)
Limited.
"Hutchison Investments" means a series of investments whereby Hutchison PCS
(USA) will invest a total of $957 million in VoiceStream Holdings, comprised of
$150 million of securities purchased from Omnipoint prior to the closing of the
reorganization and $807 million in cash for the purchase of a combination of
shares of VoiceStream Holdings common stock at $29 per share, and shares of
VoiceStream Holdings Junior Preferred at $100,000 per share (convertible into
VoiceStream Holdings common stock at $29 per share), which will be used in part
to pay the cash portion of the Omnipoint merger.
"Hutchison PCS (USA)" means Hutchison Telecommunications PCS (USA) Limited.
"Hutchison Telecommunications" means Hutchison Telecommunications Limited.
"Interim Investment" means a $300 million joint investment in Omnipoint by
VoiceStream and Hutchison PCS(USA) pursuant to the Securities Purchase Agreement
dated June 23, 1999. Hutchison PCS(USA)'s $150 million portion of this
investment will be rolled into the Hutchison Investments on the effective date
of the reorganization.
"Iowa Wireless" has the meaning set forth on page 208 of this joint proxy
statement-prospectus.
"IRS" means Internal Revenue Service.
"LECs" means local exchange carriers.
"Lehman Brothers" means Lehman Brothers Inc., a financial advisor to Omnipoint.
"LIN Broadcasting" means LIN Broadcasting Corp.
"Management Incentive Plan" means the VoiceStream Holdings 1999 Management
Incentive Stock Option Plan.
"Maximum Cash Amount" has the meaning set forth on page 31 of this joint proxy
statement-prospectus.
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"Maximum Share Issuance Number" has the meaning set forth on page 31 of this
joint proxy statement-prospectus.
"McCaw Cellular" means McCaw Cellular Communications, Inc.
"MDCP" means Madison Dearborn Capital Partners, L.P.
"Microcell" means Microcell Telecommunications, Inc.
"MTA" means Major Trading Area, a term used by the FCC to define licensed market
areas based on the Rand McNally 1992 Commercial Atlas and Marketing Guide, 123rd
Edition, at 38-39.
"Nasdaq" means the Nasdaq National Market.
"Nextel" means Nextel Communications, Inc. and/or its affiliate, Nextel
Partners, Inc.
"NPI" means Noverr Publishing, Inc.
"Omnipoint Cash Election" has the meaning set forth on page 3 of this joint
proxy statement-prospectus.
"Omnipoint merger" means the merger of Omnipoint with a subsidiary of
VoiceStream Holdings pursuant to the Omnipoint reorganization agreement.
"Omnipoint reorganization" means the combination of VoiceStream and Omnipoint
pursuant to the Omnipoint reorganization agreement.
"Omnipoint reorganization agreement" means the Agreement and Plan of
Reorganization, dated June 23, 1999, among VoiceStream, Omnipoint and
VoiceStream Holdings.
"Omnipoint Series A Preferred" means Omnipoint's Series A preferred stock, $0.01
par value per share.
"Omnipoint 7% Convertible Preferred" means Omnipoint 7% convertible preferred
stock, no par value.
"Omnipoint Standard Election" has the meaning set forth on page 3 of this joint
proxy statement-prospectus.
"Omnipoint Stock Election" has the meaning set forth on page 3 of this joint
proxy statement-prospectus.
"Other Transactions" has the meaning set forth on page 73 of this joint proxy
statement-prospectus.
"PBX" means Private Business Exchange.
"PCS" means Personal Communications Service.
"Pioneer Preference" license means a license granted by the FCC pursuant to its
pioneer's preference program, which extended preferential licensing treatment to
parties that developed new spectrum-using communications technologies, and
resulted in the grant of the A Block licenses for New York, Los Angeles and
Washington DC MTAs outside of the auction process.
"PN Cellular" means PN Cellular, Inc.
"POPs" has the meaning set forth on page 47 of the joint proxy
statement-prospectus.
"Powertel" means Powertel, Inc.
"prohibited plan" has the meaning set forth on page 27 of this joint proxy
statement-prospectus.
"Providence" means Providence Media Partners L.P.
"Purchase Plan" means the VoiceStream Holdings 1999 Employee Stock Purchase
Plan.
"Qualcomm" means Qualcomm Incorporated.
"Restricted Stock Plan" means the VoiceStream Holdings 1999 Executive Restricted
Stock Plan.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"SMR" means Specialized Mobile Radio.
"Sonera" means Sonera, Ltd., a Finnish telecommunications company and
stockholder of Aerial.
"Sonera-Aerial Investment" means the investment by Sonera of $230 million in
cash in Aerial and a subsidiary of Aerial on November 1, 1999, at an equivalent
of $22 per share of Aerial common stock.
"Sonera Investments" means the Sonera-Aerial Investment and the
Sonera-VoiceStream Investment, collectively.
"Sonera-VoiceStream Investment" means the investment by Sonera of $500 million
in cash in VoiceStream Holdings, to occur upon the closing of the Omnipoint
reorganization, at an equivalent of $57 per share of VoiceStream Holdings common
stock.
"Southwestern Bell" means Southwestern Bell Wireless.
"Spin-off" means the transaction in which Western Wireless distributed its
VoiceStream stock to its stockholders.
"Sprint PCS" means Sprint Corp. (PCS Group).
"Stanton Entities" means collectively, John Stanton, Theresa Gillespie, PN
Cellular, Stanton Communications Corporation, and The Stanton Family Trust.
"Stanton Family Trust" means a trust established by John Stanton and Theresa
Gillespie for the benefit of their children.
"Stone Street" means Stone Street Fund 1992.
"Tax Sharing Agreement" has the meaning set forth on page 73 of this joint proxy
statement-prospectus.
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"TDMA" means Time Division Multiple Access, a wireless communications standard.
"TDS" means Telephone and Data Systems, Inc., the parent of Aerial.
"TDS Debt Replacement" means the replacement of certain debt owed to TDS by a
subsidiary of Aerial with equity of Aerial, as described on page 161 of this
joint proxy statement-prospectus.
"Telecommunications Act" means the Telecommunications Act of 1996.
"US West" means US West Wireless LLC.
"Vodafone AirTouch" means Vodafone AirTouch Cellular Communications, Inc.
"VoiceStream Holdings Junior Preferred" means VoiceStream Holdings 2.5%
cumulative dividend convertible preferred stock, no par value.
"WALLC" has the meaning set forth on page 209 of this joint proxy
statement-prospectus.
"Wasserstein Perella" means Wasserstein Perella & Co., Inc., financial advisor
to the Aerial special committee.
"WBCA" means the Washington Business Corporation Act.
"Western Wireless" means Western Wireless Corporation, former parent of
VoiceStream.
"WTO Agreement" means World Trade Organization Basic Telecom Agreement.
* Certain defined terms used in the sections of this joint proxy
statement-prospectus relating to the fairness opinions of Goldman Sachs,
Lehman Brothers, Donaldson, Lufkin & Jenrette, and Wasserstein Perella and not
defined in this Glossary, have the meanings given to such terms in those
sections.
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ANNEX A
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF
JUNE 23, 1999
BY AND AMONG
VOICESTREAM WIRELESS CORPORATION,
VOICESTREAM WIRELESS HOLDING CORPORATION
AND
OMNIPOINT CORPORATION
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 -- DEFINITIONS.................................... A-1
Section 1.1 Definitions................................... A-1
ARTICLE 2 -- FORMATION OF HOLDING COMPANY AND
SUBSIDIARIES.............................................. A-9
Section 2.1 Organization of Holding Company.............. A-9
Section 2.2 Directors and Officers of Holding Company.... A-9
Section 2.3 Organization of Merger Subsidiaries.......... A-9
Section 2.4 Actions of Directors and Officers............ A-10
Section 2.5 Actions of Holding Company................... A-10
ARTICLE 2A -- THE MERGERS; CLOSING.......................... A-10
Section 2.1A The Mergers................................. A-10
Section 2.2A Directors................................... A-11
Section 2.3A Certificate of Incorporation and Bylaws..... A-11
Section 2.4A Officers.................................... A-11
ARTICLE 3 -- EFFECT OF THE MERGERS ON SECURITIES OF
VOICESTREAM, OMNIPOINT AND THE MERGER SUBSIDIARIES........ A-11
Section 3.1 Conversion of Merger Subsidiaries Stock...... A-11
Section 3.2 Cancellation of Holding Company Capital
Stock.................................................. A-12
Section 3.3 Conversion of Common Stock................... A-12
Section 3.4 Surrender and Payment........................ A-14
Section 3.5 Dissenting Shares............................ A-16
Section 3.6 Options, Warrants and Preferred Stock........ A-16
Section 3.7 Fractional Shares............................ A-18
Section 3.8 Withholding Rights........................... A-18
Section 3.9 Lost Certificates............................ A-18
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES OF OMNIPOINT.... A-18
Section 4.1 Corporate Existence and Power................ A-18
Section 4.2 Corporate Authorization...................... A-19
Section 4.3 Governmental Authorization................... A-19
Section 4.4 FCC Matters.................................. A-19
Section 4.5 Non-contravention............................ A-20
Section 4.6 Capitalization............................... A-20
Section 4.7 Subsidiaries; Investments.................... A-21
Section 4.8 SEC Filings.................................. A-22
Section 4.9 Financial Statements......................... A-23
Section 4.10 Absence of Certain Changes.................. A-23
Section 4.11 No Undisclosed Material Liabilities......... A-23
Section 4.12 Compliance with Laws and Court Orders....... A-23
Section 4.13 Litigation.................................. A-23
Section 4.14 Finders' Fees............................... A-23
Section 4.15 Opinion of Financial Advisor................ A-24
Section 4.16 Taxes....................................... A-24
Section 4.17 Tax Opinions................................ A-24
Section 4.18 Employee Benefit Plans and Labor Matters.... A-25
Section 4.19 Environmental Matters....................... A-26
Section 4.20 Intellectual Property....................... A-26
Section 4.21 Contracts................................... A-27
Section 4.22 Significant Omnipoint Employees............. A-27
Section 4.23 Employment Matters.......................... A-28
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Section 4.24 Labor....................................... A-28
Section 4.25 Vote Required............................... A-28
Section 4.26 Antitakeover Statutes and Charter
Provisions............................................. A-28
Section 4.27 Insurance................................... A-28
Section 4.28 Bank Accounts............................... A-28
Section 4.29 Transactions with Affiliates................ A-29
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF VOICESTREAM
AND HOLDING COMPANY....................................... A-29
Section 5.1 Corporate Existence and Power................ A-29
Section 5.2 Corporate Authorization...................... A-29
Section 5.3 Governmental Authorization................... A-30
Section 5.4 FCC Matters.................................. A-30
Section 5.5 Non-contravention............................ A-31
Section 5.6 Capitalization............................... A-31
Section 5.7 Subsidiaries; Investments.................... A-32
Section 5.8 SEC Filings.................................. A-33
Section 5.9 Financial Statements......................... A-33
Section 5.10 Absence of Certain Changes.................. A-33
Section 5.11 No Undisclosed Material Liabilities......... A-33
Section 5.12 Compliance with Laws and Court Orders....... A-34
Section 5.13 Litigation.................................. A-34
Section 5.14 Finders' Fees............................... A-34
Section 5.15 Opinion of Financial Advisor................ A-34
Section 5.16 Taxes....................................... A-34
Section 5.17 Tax Opinions................................ A-35
Section 5.18 Employee Benefit Plans and Labor Matters.... A-35
Section 5.19 Environmental Matters....................... A-36
Section 5.20 Intellectual Property....................... A-37
Section 5.21 Contracts................................... A-37
Section 5.22 VoiceStream Employees....................... A-37
Section 5.23 Employment Matters.......................... A-38
Section 5.24 Labor....................................... A-38
Section 5.25 ............................................ A-38
Section 5.26 Vote Required............................... A-39
Section 5.27 Insurance................................... A-39
Section 5.28 Bank Accounts............................... A-39
Section 5.29 Transactions with Affiliates................ A-39
Section 5.30 Not an Interested Stockholder............... A-39
Section 5.31 Representations with Respect to Holding
Company................................................ A-39
ARTICLE 6 -- COVENANTS OF OMNIPOINT......................... A-40
Section 6.1 Omnipoint Interim Operations................. A-40
Section 6.2 No Solicitation.............................. A-42
Section 6.3 Access to Information........................ A-43
Section 6.4 ............................................. A-43
ARTICLE 7 -- COVENANTS OF VOICESTREAM AND HOLDING COMPANY... A-44
Section 7.1 VoiceStream Interim Operations............... A-44
Section 7.2 Director and Officer Liability............... A-44
Section 7.3 Listing of Stock............................. A-45
Section 7.4 Holding Company Board of Directors........... A-45
Section 7.5 Employee Matters............................. A-45
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Section 7.6 Access to Information........................ A-46
Section 7.7 Covenants with Respect to Holding Company.... A-46
Section 7.8 Registration Rights.......................... A-47
ARTICLE 8 -- COVENANTS OF VOICESTREAM AND OMNIPOINT......... A-47
Section 8.1 Best Efforts................................. A-47
Section 8.2 Registration Statement and Proxy Statement... A-49
Section 8.3 Public Announcements......................... A-50
Section 8.4 Further Assurances........................... A-50
Section 8.5 Notices of Certain Events.................... A-50
Section 8.6 Tax-free Treatment........................... A-50
Section 8.7 Affiliates................................... A-51
Section 8.8 Stockholders' Meeting........................ A-51
Section 8.9 Conduct of Business by Holding Company and
the Merger Subsidiaries Pending the Mergers............ A-51
ARTICLE 9 -- CONDITIONS TO THE MERGER....................... A-52
Section 9.1 Conditions to the Obligations of Each
Party.................................................. A-52
Section 9.2 Conditions to the Obligations of
VoiceStream............................................ A-53
Section 9.3 Conditions to the Obligations of Omnipoint... A-53
ARTICLE 10 -- TERMINATION................................... A-54
Section 10.1 Termination................................. A-54
Section 10.2 Effect of Termination....................... A-56
Section 10.3 Fees and Expenses........................... A-56
ARTICLE 11 -- MISCELLANEOUS................................. A-57
Section 11.1 Notices..................................... A-57
Section 11.2 Reliance on Representations................. A-57
Section 11.3 Survival of Representations and
Warranties............................................. A-57
Section 11.4 Amendments; No Waivers...................... A-58
Section 11.5 Successors and Assigns...................... A-58
Section 11.6 Governing Law............................... A-58
Section 11.7 Jurisdiction................................ A-58
Section 11.8 Waiver of Jury Trial........................ A-58
Section 11.9 Counterparts; Effectiveness................. A-58
Section 11.10 Entire Agreement; No Third Party
Beneficiaries.......................................... A-58
Section 11.11 Captions................................... A-59
Section 11.12 Severability............................... A-59
Section 11.13 Specific Performance....................... A-59
Section 11.14 Schedules.................................. A-59
</TABLE>
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EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
Form of Purchase Agreement between Omnipoint and the Cook
Exhibit A-1 Entity
Form of Purchase Agreement between Omnipoint and the Cook
Exhibit A-2 Entity
Exhibit B Form of Omnipoint Rule 145 Affiliate Agreement
Exhibit C Form of Officer's Certificate of VoiceStream
Exhibit D Form of Officer's Certificate of Holding Company
Exhibit E Form of Opinion Letter of Regulatory Counsel to VoiceStream
Exhibit F-1 Form of Officer's Certificate of Omnipoint
Exhibit F-2 Form of Officer's Certificate of VoiceStream
Exhibit F-3 Form of Holding Company Officer's Certificate
Exhibit F-4 Form of 5% Shareholders Certificate
Exhibit F-5 Form of 5% Partnership-Shareholders Certificate
Exhibit G Form of Opinion Letter of Regulatory Counsel to Omnipoint
</TABLE>
Omnipoint Disclosure Schedule
VoiceStream Disclosure Schedule
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<PAGE> 275
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of June
23, 1999, by and among VoiceStream Wireless Corporation, a Washington
corporation ("VoiceStream"), VoiceStream Wireless Holding Corporation, a
Delaware corporation ("Holding Company"), and Omnipoint Corporation, a Delaware
corporation ("Omnipoint").
RECITALS
A. The Boards of Directors of VoiceStream and Omnipoint have approved, and
deem it advisable and in the best interests of their respective companies and
stockholders to consummate the reorganization (the "Reorganization") provided
for herein, pursuant to which (i) Holding Company will acquire all of the common
stock of each of VoiceStream and Omnipoint through mergers of Subsidiaries of
Holding Company with and into each of VoiceStream and Omnipoint and (ii)
Hutchison shall contribute $807,000,000 and Hutchison's Omnipoint Stock to
Holding Company in exchange for shares of common stock and shares of preferred
stock of Holding Company.
B. For federal income tax purposes, it is intended that (i) the VoiceStream
Merger qualify as a reorganization described in Section 368(a) of the United
States Internal Revenue Code of 1986, as amended (the "Code"), and/or as an
exchange described in Section 351(a) of the Code and (ii) the Omnipoint Merger,
taken together with the VoiceStream Merger and the Hutchison Transaction,
qualify as an exchange described in Section 351 of the Code.
C. VoiceStream Holding Company and Omnipoint desire to make certain
representations, warranties, covenants and agreements in connection with the
Transactions.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions.
(a) The following terms, as used herein, have the following meanings:
"Acquisition Proposal" means any offer or proposal for, or any
indication of interest in (i) a merger, consolidation, share exchange,
business combination, reorganization, recapitalization, liquidation,
dissolution or other similar transaction involving any member of the
Omnipoint Group, (ii) the acquisition, directly or indirectly, in a single
transaction or series of related transactions, (A) an equity interest
representing greater than 15% of the voting securities of any member of the
Omnipoint Group or (B) assets, securities or ownership interests
representing an amount equal to or greater than 15% of the consolidated
assets or earning power of the Omnipoint Group, other than the Transactions
or (iii) the consummation of any other transaction or the entering into of
any other agreement or arrangement with respect to any other transactions,
the effect of which would have the same result as the occurrence of (i) or
(ii).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with such Person provided that, for purposes of this definition, "control"
(including, with correlative meanings, the terms "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 and policies of such Person, whether through
the ownership of voting securities or by contract or otherwise.
A-1
<PAGE> 276
"All Cash Amount" means the sum of (i) the Closing Date Market Price
multiplied by .825 and (ii) $8.00.
"All Stock Number" means the sum of (i) $8.00 divided by the Closing
Date Market Price and (ii) .825.
"Allen" means Allen & Company Inc.
"Benefit Arrangement" means, with respect to any Person, any
employment, severance or similar contract or arrangement, whether formal or
informal, proposed or final, funded or unfunded, whether or not written,
providing for compensation, bonus, profit-sharing, stock option, or other
stock-related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance or other benefits) that (i) is not an
Employee Plan, (ii) is entered into, maintained, administered or
contributed to, as the case may be, by such Person or any of its Affiliates
(other than, in the case of VoiceStream, Western and its Subsidiaries) and
(iii) covers any employee or former employee of such Person or any of its
Subsidiaries employed in the United States. "Omnipoint Benefit
Arrangements" means the Benefit Arrangements of any member of the Omnipoint
Group. "VoiceStream Benefit Arrangements" means the Benefit Arrangements of
any member of the VoiceStream Group.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City or Seattle, Washington are
authorized or required by law to close.
"CIRI Agreements" means the Purchase Agreements, dated June 23, 1999
between Omnipoint and the Cook Entities, attached hereto as Exhibits A-1
and A-2.
"CIRI Transaction" means the transactions contemplated by the CIRI
Agreements.
"Closing Date Market Price" means with respect to one share of
VoiceStream Common Stock, the average Closing Price (calculated on a
weighted average based upon the volume of shares traded on each day) for
such share during the period of the 15 most recent trading days ending on
the Business Day prior to the Effective Time.
"Closing Price" means, on any day in which shares are traded on
NASDAQ, the last reported price for which one share of VoiceStream Common
Stock traded on NASDAQ.
"Communications Act" means the Communications Act of 1934 and the
Telecommunications Act of 1996 (together with the rules, regulations and
published decisions of the FCC).
"Confidentiality Agreement" means the confidentiality letter
agreement, dated October 14, 1998, between Western and Omnipoint.
"Cook Entities" means Cook Inlet/VS GSM II PCS, LLC, a Delaware
limited liability company, and Cook Inlet/VS GSM III PCS, LLC, a Delaware
limited liability company.
"Default Event" means (i) the occurrence of a change in the U.S.
financial, political or economic conditions the result of which would, in
the reasonable judgment of VoiceStream, materially and adversely affect the
ability of VoiceStream and Omnipoint to restructure or refinance any
Indebtedness of any member of the Omnipoint Group on terms which would, at
or after the Effective Time, not have a material adverse effect on the
business, financial conditions, prospects, assets or results of operations
of Holding Company, VoiceStream and Omnipoint and their respective
Subsidiaries, taken as a whole, and (ii) (A) any default by any member of
the Omnipoint Group in the observance or performance of any agreement or
condition relating to its
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respective Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or the occurrence of any other
event or the existence of any condition, the effect of which is to cause or
permit the holder or holders of such Indebtedness (or trustee or agent on
behalf of such holder or holders) to cause, with or without the passage of
time or the giving of notice, such Indebtedness to become due or payable
prior to its stated maturity or (B) the occurrence of any event or the
existence of any condition, the effect of which is to cause or permit the
holder or holders of such Indebtedness (or trustee or agent on behalf of
such holder or holders) to require, with or without the passage of time or
the giving of notice, any member of the Omnipoint Group to redeem or
repurchase such Indebtedness prior to its stated maturity; provided,
however, that no Default Event shall exist unless the aggregate amount of
Indebtedness in respect of which either (A) or (B) shall have occurred is
equal to at least $200,000,000.
"Delaware Law" means the Delaware General Corporation Law.
"Employee Plan" means, with respect to any Person, any "employee
benefit plan", as defined in Section 3(3) of ERISA, that (i) is subject to
any provision of ERISA, (ii) is maintained, administered or contributed to
by such Person or any of its ERISA Affiliates (other than, in the case of
VoiceStream, Western and Western's Subsidiaries) and (iii) covers any
employee or former employee of such Person (other than, in the case of
VoiceStream, Western and Western's Subsidiaries). "Omnipoint Employee Plan"
means an Employee Plan of any member of the Omnipoint Group and
"VoiceStream Employee Plan" means an Employee Plan of any member of the
VoiceStream Group.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation, and Liability Act, the Resource Conservation and Recovery
Act, the Emergency Planning and Community Right to Know Act, the Clean
Water Act, the Safe Drinking Water Act, the Clean Air Act, any so-called
"Superfund" or "Superlien" law, or any other federal, state or local
statute, law, ordinance, code, rule, regulation, Order, decree or other
requirement of any Governmental Body regulating, relating to or imposing
liability or standards of conduct concerning, health, safety and any
Hazardous Substance.
"Environmental Permits" means, with respect to any Person, all
permits, licenses, franchises, certificates, approvals and other similar
authorizations of any Governmental Body relating to or required by
Environmental Laws and affecting, or relating in any way to, the business
of such Person or any of its Subsidiaries as currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414
of the Code.
"FAA" means the Federal Aviation Administration and any successor
agency or body.
"FCC" means the Federal Communications Commission and any successor
agency or body.
"FCC Consent" means an order of the FCC, or by the staff of the FCC
acting pursuant to delegated authority, granting its consent to the
applications referred to in Section 8.1(b) of this Agreement required to
permit the consummation of the Transactions.
"FCC Consent Date" means the date on which Public Notice is given of
the FCC Consent pursuant to the rules and regulations of the FCC.
"Final Order" means an action or decision that has been granted by the
FCC as to which (i) no request for a stay or similar request is pending, no
stay is in effect, the action or decision has not been vacated, reversed,
set aside, annulled or suspended and any deadline for filing such request
that may be designated by statute or regulation has passed, (ii) no
petition for rehearing
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or reconsideration or application for review is pending and the time for
the filing of any such petition or application has passed, (iii) the FCC
does not have the action or decision under reconsideration on its own
motion and the time within which it may effect such reconsideration has
passed and (iv) no appeal is pending, including other administrative or
judicial review, or in effect and any deadline for filing any such appeal
that may be designated by statute or rule has passed.
"Goldman" means Goldman, Sachs & Co.
"Governmental Body" means any domestic or foreign national, state,
multi-state or municipal or other local government, any subdivision,
agency, commission or authority thereof, any court, or any
quasi-governmental or private body exercising any regulatory or taxing
authority thereunder.
"Governmental Consents" means all authorizations, consents, approvals,
exceptions or other actions by Governmental Bodies required to consummate
the Transactions.
"Group" means "group," as such term is defined in Rule 13d-3 of the
1934 Act.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"Hazardous Substance" means any hazardous substance, hazardous or
toxic waste, hazardous material, pollutant or contaminant, as those or
similar terms are used in the Environmental Laws, including, without
limitation, asbestos and asbestos-related products, chlorofluorocarbons,
oils or petroleum-derived compounds, polychlorinated biphenyls, pesticides
and radon.
"Hutchison" means Hutchison Telecommunications PCS (USA) Limited, a
British Virgin Islands corporation.
"Hutchison Agreement" means the Subscription Agreement, dated June 23,
1999, between Holding Company, Hutchison and Hutchison Telecommunications
Limited, a Hong Kong corporation.
"Hutchison's Omnipoint Stock" means the Omnipoint Non-Voting
Convertible Preferred or the Omnipoint Common Stock into which it is
convertible which is held by Hutchison.
"Hutchison Transaction" means the transactions contemplated by the
Hutchison Agreement.
"Indebtedness" of any Person at any date means (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under financing leases, (d) all obligations of such Person in
respect of acceptances issued or created for the account of such Person and
with respect to unpaid reimbursement obligations related to letters of
credit issued for the account of such Person and (e) all liabilities
secured by any Lien on any property owned by such Person even though such
Person has not assumed or otherwise become liable for the payment thereof.
"Investment Interest" means a direct or indirect ownership of (i)
capital stock, bonds, debentures, partnership, membership interests or
other ownership interests or other securities of any Person; (ii) any
deposit with or advance, loan or other extension of credit (including the
purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise to resell such property to such other
Person) to any other Person; (iii) any revenue or profit interests pursuant
to any agreement or license or (iv) any agreement, commitment,
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right, understanding or arrangement with respect to any of the items
referred to in (i), (ii) or (iii) of this definition.
"IRS" means the Internal Revenue Service.
"Jones Day" means Jones, Day, Reavis & Pogue.
"knowledge" means, with respect to any fact, the conscious awareness
of such fact by an executive officer (as defined under the 1933 Act) of the
relevant Person.
"Lehman" means Lehman Brothers Inc.
"Lien" as to any Person, means any mortgage, lien, pledge, adverse
claim, charge, security interest or other encumbrance (including, without
limitation rights of first refusal, proxy rights and other similar rights)
in or on, or any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or other
title retention agreement or capital lease with respect to, any property or
asset owned or held by such Person, or the signing or filing of a financing
statement which names such Person as debtor, or the signing of any security
agreement authorizing any other party as the secured party thereunder to
file any financing statement other than those filed for informational
purposes.
"Multiemployer Plan" means each Employee Plan, including for this
purpose any "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) of Western and its Subsidiaries, that is a multiemployer plan, as
defined in Section 3(37) of ERISA.
"NASDAQ" means The NASDAQ National Market.
"1933 Act" means the Securities Act of 1933.
"1934 Act" means the Securities Exchange Act of 1934.
"Omnipoint Balance Sheet" means the Consolidated Balance Sheet of
Omnipoint and its consolidated subsidiaries as of December 31, 1998 and the
footnotes thereto set forth in the Omnipoint 10-K.
"Omnipoint Balance Sheet Date" means December 31, 1998.
"Omnipoint Common Stock" means Common Stock, par value $0.01 per
share, of Omnipoint.
"Omnipoint Disclosure Schedule" means the disclosure schedule of
Omnipoint attached hereto.
"Omnipoint Employee" means an employee of any member of the Omnipoint
Group.
"Omnipoint Group" means Omnipoint and the Omnipoint Subsidiaries.
"Omnipoint Investment" means an entity in which any member of the
Omnipoint Group has an Investment Interest.
"Omnipoint Material Adverse Effect" means a material adverse effect on
the business, financial condition, prospects, assets or results of
operations of the Omnipoint Group taken as a whole, excluding any such
effect resulting from or arising in connection with (i) this Agreement, the
Transactions or the announcement thereof, (ii) changes or conditions
generally affecting the industries in which the Omnipoint Group operates or
(iii) changes in general economic, regulatory or political conditions. For
the purposes of Section 9.1(f), item (i) of the previous sentence shall not
be excluded from the definition of Omnipoint Material Adverse Effect.
"Omnipoint Non-Voting Convertible Preferred Stock" means Omnipoint's
Series A Non-Voting Convertible Preferred Stock, par value $0.01 per share.
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"Omnipoint Preferred Stock" means 7% Cumulative Convertible Preferred
Stock, par value $1,000 per share, of Omnipoint.
"Omnipoint Subsidiary" means a Subsidiary of Omnipoint.
"Omnipoint 10-K" means Omnipoint's annual report on Form 10-K for the
fiscal year ended December 31, 1998.
"Order" means and includes any order, writ, injunction, decree,
judgment, award, determination or written direction of any court,
arbitrator or Governmental Body.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means, with respect to any Person, any plan (other than
a Multiemployer Plan) that is subject to Title IV of ERISA and is
maintained, administered or contributed to or required to be contributed to
by such Person or any of its ERISA Affiliates. "Omnipoint Pension Plan"
means a Pension Plan of Omnipoint or any of its ERISA Affiliates and
"VoiceStream Pension Plan" means a Pension Plan of VoiceStream or any of
its ERISA Affiliates other than Employee Plan.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Piper Marbury" means Piper & Marbury L.L.P.
"SEC" means the Securities and Exchange Commission and any successor
agency or body.
"Significant Employees" means any employee of a Person who (i) is an
officer of such Person, (ii) owns any options to purchase capital stock of
such Person which accelerate as a result of the Merger, (iii) has a written
employment contract with such Person which calls for annual compensation in
excess of $125,000 or (iv) is compensated by such Person at an annual rate
greater than $125,000.
"Significant Omnipoint Employees" means Significant Employees of any
member of the Omnipoint Group.
"Significant VoiceStream Employees" means Significant Employees of any
member of the VoiceStream Group.
"Subsequent Transaction" means any transaction whereby (i) any member
of the VoiceStream Group or any VoiceStream Investment would acquire (by
merger, consolidation, acquisition of stock or assets or otherwise) any
corporation, limited liability company, partnership, other business
organization or assets or division thereof, which is in the business of
providing wireless communication services, (ii) any member of the
VoiceStream Group or any VoiceStream Investment would acquire an Investment
Interest in any of the foregoing, (iii) any member of the VoiceStream Group
or VoiceStream Investment would issue any equity interest or incur any
Indebtedness whether in connection with any item described in (i) or (ii)
or otherwise, (iv) any member of the VoiceStream Group or any VoiceStream
Investment enters into or engages in a strategic alliance or other
commercial relationship or (v) any member of the VoiceStream Group or any
VoiceStream Investment is acting in the ordinary course consistent with
past practice; provided, however, in connection with a Subsequent
Transaction described in items (i), (ii), (iii) or (iv) of this definition,
VoiceStream must receive an opinion from a nationally recognized investment
bank, acting as financial advisor to VoiceStream, to the effect that, from
a financial point of view, such Subsequent Transaction is fair to the
holders of VoiceStream Common Stock or, if applicable, VoiceStream.
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"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are at any time directly or indirectly owned by such
Person.
"Transactions" means the transactions contemplated by this Agreement.
"VoiceStream Balance Sheet" means the Consolidated Balance Sheet of
VoiceStream and its consolidated subsidiaries as of December 31, 1998 and
the footnotes thereto, as set forth in the VoiceStream 10-K.
"VoiceStream Balance Sheet Date" means December 31, 1998.
"VoiceStream Common Stock" means the Common Stock, no par value per
share, of VoiceStream.
"VoiceStream Disclosure Schedule" means the disclosure schedule of
VoiceStream attached hereto.
"VoiceStream Employee" means an employee of VoiceStream or a
VoiceStream Subsidiary.
"VoiceStream Group" means VoiceStream and the VoiceStream
Subsidiaries.
"VoiceStream Investment" means an entity in which VoiceStream has an
Investment Interest.
"VoiceStream Material Adverse Effect" means a material adverse effect
on the business, financial condition, prospects, assets or results of
operations of the VoiceStream Group taken as a whole, excluding any such
effect resulting from or arising in connection with (i) this Agreement, the
Transactions or the announcement thereof, (ii) changes or conditions
generally affecting the industries in which the VoiceStream Group operates
or (iii) changes in general economic, regulatory or political conditions.
For the purposes of Section 9.1(f), item (i) of the previous sentence shall
not be excluded from the definition of VoiceStream Material Adverse Effect.
"VoiceStream Subsidiary" means a Subsidiary of VoiceStream.
"VoiceStream 10-K" means VoiceStream's annual report on Form 10-K for
the fiscal year ended December 31, 1998.
"Washington Law" means the Washington Business Corporation Act.
"Western" means Western Wireless Corporation, a Washington
corporation.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<S> <C>
Affiliate Registration Statement............................ 7.8
Affiliate Shares............................................ 7.8
Benefits Maintenance Period................................. 7.5(a)(ii)
Cash Election............................................... 3.3(c)(ii)
Cash Election Consideration................................. 3.3(c)(ii)
Cash Election Proration Factor.............................. 3.3(h)
Certificate of Merger....................................... 2.1A(d)
Certificates................................................ 3.4(a)
Closing..................................................... 2.1A(c)
</TABLE>
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<TABLE>
<S> <C>
Closing Date................................................ 2.1A(c)
Code........................................................ Preamble
Dissenting Shares........................................... 3.5
Effective Time.............................................. 2.1A(d)
Election Deadline........................................... 3.4(a)
Election Form............................................... 3.4(a)
End Date.................................................... 10.1(b)(i)
Environmental Reports....................................... 4.19(b)
Exchange Agent.............................................. 3.4(a)
Exchange Fund............................................... 3.4(a)
FCC Applications............................................ 8.1(b)
Form S-4.................................................... 8.2
GAAP........................................................ 4.9
Holding Company............................................. Preamble
Holding Company Common Stock................................ 2.1
Holding Company Share Issuance Number....................... 3.3(f)
Indemnified Losses.......................................... 7.2(a)
Indemnified Person.......................................... 7.2(a)
Merger Agreements........................................... 2.1A
Merger Consideration........................................ 3.3(c)(iii)
Merger Sub A................................................ 2.3(i)
Merger Sub B................................................ 2.3(ii)
Merger Subsidiaries......................................... 2.3(ii)
Mergers..................................................... 2.1A(b)
New Director(s)............................................. 7.4
New Omnipoint Convertible Securities........................ 3.6
New Omnipoint Options....................................... 3.6(a)
New Omnipoint Warrants...................................... 3.6
New VoiceStream Convertible Securities...................... 3.6(b)
New VoiceStream Options..................................... 3.6(b)
New VoiceStream Warrants.................................... 3.6(b)
1999 Omnipoint SEC Documents................................ 4.8(b)
1999 VoiceStream SEC Documents.............................. 5.8(b)
Omnipoint................................................... Preamble
Omnipoint FCC Licenses...................................... 4.4(a)
Omnipoint Holders........................................... 3.4(b)
Omnipoint Intellectual Property............................. 4.20
Omnipoint Merger............................................ 2.1A(b)
Omnipoint Merger Agreement.................................. 2.1A
Omnipoint Options........................................... 4.6(a)
Omnipoint Pension Plan...................................... 1.1(a)
Omnipoint Rule 145 Affiliate................................ 8.7
Omnipoint SEC Documents..................................... 4.8(b)
Omnipoint Stockholders' Approval............................ 4.25
Omnipoint Stockholders' Meeting............................. 8.8(a)
Omnipoint Warrants.......................................... 4.6(a)
Proxy Statement/Prospectus.................................. 8.2
Reorganization.............................................. Preamble
Spinoff..................................................... 9.2(c)
</TABLE>
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<TABLE>
<S> <C>
Standard Election........................................... 3.3(c)(i)
Standard Election Consideration............................. 3.3(c)(iii)
Standard Election Exchange Rate............................. 3.3(c)(iii)
Stock Election.............................................. 3.3(c)(i)
Stock Election Consideration................................ 3.3(c)(i)
Stock Election Exchange Rate................................ 3.3(c)(i)
Stock Election Proration Factor............................. 3.3(g)
Successor Plan.............................................. 7.5(b)
Tax Returns................................................. 4.16
Taxes....................................................... 4.16
Termination Fee............................................. 10.3(b)
Transferred Employees....................................... 7.5(a)(ii)
VoiceStream................................................. Preamble
VoiceStream FCC Licenses.................................... 5.4(a)
VoiceStream Intellectual Property........................... 5.20
VoiceStream Merger.......................................... 2.1A(a)
VoiceStream Merger Agreement................................ 2.1A
VoiceStream Pension Plan.................................... 1.1(a)
VoiceStream SEC Documents................................... 5.8(b)
VoiceStream Stockholders' Approval.......................... 5.26
VoiceStream Stockholders' Meeting........................... 8.8(a)
</TABLE>
(c) Unless the context otherwise requires, the terms defined in this
Article 1 or elsewhere in this Agreement shall have the meanings herein
specified for all purposes of this Agreement, applicable to both the singular
and plural forms of any of the terms defined herein. When a reference is made in
this Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." The use of any gender herein shall be deemed
to include the neuter, masculine and feminine genders wherever necessary or
appropriate.
ARTICLE 2
FORMATION OF HOLDING COMPANY AND SUBSIDIARIES
SECTION 2.1 Organization of Holding Company. Prior to the execution of this
Agreement, VoiceStream has organized Holding Company under Delaware Law. The
authorized capital stock of Holding Company shall consist of 400,000,000 shares
of common stock, par value $0.001 per share (the "Holding Company Common
Stock"), of which one share shall be issued to VoiceStream at a price of $2.00,
and 5,000,000 shares of preferred stock, par value $0.001 per share.
SECTION 2.2 Directors and Officers of Holding Company. The directors and
officers of Holding Company were and shall be designated by VoiceStream. Each
such officer and director shall remain in office until his or her successors are
elected.
SECTION 2.3 Organization of Merger Subsidiaries. As promptly as practicable
(but in any event no more than 30 days) following the execution of this
Agreement, VoiceStream shall cause the following companies to be organized for
the sole purpose of effectuating the VoiceStream Merger and the Omnipoint Merger
contemplated herein:
(i) VoiceStream Subsidiary I, a corporation organized under the laws
of the State of Washington ("Merger Sub A"). The certificate of
incorporation and bylaws of Merger Sub A
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shall be in such forms as shall be determined by VoiceStream as soon as
practicable following the execution of this Agreement. The authorized
capital stock of Merger Sub A shall initially consist of 100 shares of
common stock, no par value per share, one share of which shall be issued to
Holding Company at a price of $1.00 per share.
(ii) VoiceStream Subsidiary II, a corporation organized under the laws
of the State of Delaware ("Merger Sub B" and, together with Merger Sub A,
the "Merger Subsidiaries"). The certificate of incorporation and bylaws of
Merger Sub B shall be in such forms as shall be determined by VoiceStream
as soon as practicable following the execution of this Agreement. The
authorized capital stock of Merger Sub B shall initially consist of 100
shares of common stock, par value $.01 per share, one share of which shall
be issued to Holding Company at a price of $1.00 per share.
SECTION 2.4 Actions of Directors and Officers. As promptly as practicable
(but not later than 30 days) following the execution of this Agreement,
VoiceStream shall cause (i) Holding Company to elect the directors of the Merger
Subsidiaries, (ii) the directors of Merger Sub A and Merger Sub B to elect their
respective officers, (iii) the directors of Holding Company to ratify and
approve this Agreement and to approve the forms of the Merger Agreements, (iv)
the Merger Agreements to be executed on behalf of the parties thereto, and (v)
the directors and officers of the Merger Subsidiaries to take such steps as may
be necessary or appropriate to complete the organization of the Merger
Subsidiaries and to approve the Merger Agreements.
SECTION 2.5 Actions of Holding Company. As promptly as practicable (but in
no event later than 15 days) following the execution of this Agreement, Holding
Company shall cause the Merger Subsidiaries to adopt the Merger Agreements.
ARTICLE 2A
THE MERGERS; CLOSING
SECTION 2.1A The Mergers. Pursuant to the Merger Agreements, in forms to be
mutually agreed upon by VoiceStream and Omnipoint (sometimes hereinafter
referred to individually as the "VoiceStream Merger Agreement" and the
"Omnipoint Merger Agreement", respectively, and collectively as the "Merger
Agreements"), upon the terms and subject to the conditions set forth in this
Agreement and in the Merger Agreements:
(a) Merger Sub A shall be merged with and into VoiceStream (the
"VoiceStream Merger") in accordance with the applicable provisions of
Washington Law. VoiceStream shall be the surviving corporation in the
VoiceStream Merger and shall continue its corporate existence under
Washington Law. As a result of the VoiceStream Merger, VoiceStream shall
become a wholly owned Subsidiary of Holding Company. The effects and
consequences of the VoiceStream Merger shall be as set forth in the
VoiceStream Merger Agreement.
(b) Merger Sub B will be merged with and into Omnipoint (the
"Omnipoint Merger"), in accordance with the applicable provisions of
Delaware Law. Omnipoint shall be the surviving corporation in the Omnipoint
Merger and shall continue its corporate existence under Delaware Law. As a
result of the Omnipoint Merger, Holding Company shall own, directly or
indirectly, all of the outstanding shares of Omnipoint Common Stock. The
effects and consequences of the Omnipoint Merger shall be as set forth in
the Omnipoint Merger Agreement. The term "Mergers" shall mean the
VoiceStream Merger and the Omnipoint Merger.
(c) Subject to the terms and conditions of this Agreement, the closing
of the Transactions (the "Closing") shall take place (a) at the offices of
Friedman Kaplan & Seiler LLP, 875 Third Avenue, New York, NY, at 11:00
a.m., local time, on the fifth Business Day following the day
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on which the last to be fulfilled or waived of the conditions set forth in
Article 9 (excluding conditions that, by their terms cannot be satisfied
until the Closing Date, but subject to the fulfillment or waiver of such
conditions) shall be fulfilled or waived in accordance herewith or (b) at
such other time, date or place as VoiceStream and Omnipoint may agree. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
(d) As soon as practicable following the Closing, the parties shall
(i) file a certificate of merger with respect to each of the Mergers (the
"Certificate of Merger") in such forms as are required by and executed in
accordance with applicable Delaware Law (in the case of the Omnipoint
Merger) and Washington Law (in the case of the VoiceStream Merger) and (ii)
make all other filings or recordings required under applicable Delaware Law
or Washington Law. The Mergers shall become effective at such time and date
(the "Effective Time") which is the later of (i) the date and time of the
filing of the Certificate of Merger with respect to the VoiceStream Merger
(or such other date and time as may be specified in such certificate as may
be permitted by Washington Law) and (ii) the date and time of the filing of
the Certificate of Merger with respect to the Omnipoint Merger (or such
other date and time as may be specified in such certificate as may be
permitted by Delaware Law).
(e) The consummation of the Omnipoint Merger shall be conditioned on
the simultaneous consummation of the VoiceStream Merger, and the
consummation of VoiceStream Merger shall be conditioned on the simultaneous
consummation of the Omnipoint Merger.
SECTION 2.2A Directors. The directors of VoiceStream and Merger Sub B,
immediately prior to the Effective Time shall be the directors of the surviving
corporation of the VoiceStream Merger and the Omnipoint Merger, respectively, as
of the Effective Time and until their successors are duly appointed or elected
in accordance with applicable Delaware Law (in the case of the Omnipoint Merger)
and Washington Law (in the case of VoiceStream Merger).
SECTION 2.3A Certificate of Incorporation and Bylaws. The certificate of
incorporation and bylaws of VoiceStream and Omnipoint immediately prior to the
Effective Time shall be the certificate of incorporation and bylaws of the
surviving corporation of the VoiceStream Merger and the Omnipoint Merger,
respectively, as of the Effective Time; provided, VoiceStream may change the
name of VoiceStream.
SECTION 2.4A Officers. The officers of VoiceStream and Omnipoint
immediately prior to the Effective Time shall be the officers of the surviving
corporations of the VoiceStream Merger and the Omnipoint Merger, respectively,
as of the Effective Time and until their successors are duly appointed or
elected in accordance with applicable Delaware Law (in the case of the Omnipoint
Merger) and Washington Law (in the case of VoiceStream Merger).
ARTICLE 3
EFFECT OF THE MERGERS ON SECURITIES OF VOICESTREAM,
OMNIPOINT AND THE MERGER SUBSIDIARIES
SECTION 3.1 Conversion of Merger Subsidiaries Stock. At the Effective Time,
by virtue of the VoiceStream Merger and without any action on the part of any of
the parties, each share of the common stock of Merger Sub A outstanding
immediately prior to the Effective Time shall be converted into and shall become
one share of common stock of the surviving corporation of the VoiceStream
Merger. At the Effective Time, by virtue of the Omnipoint Merger and without any
action on the part of any of the parties, each share of the common stock of
Merger Sub B outstanding immediately prior to the Effective Time shall be
converted into and shall become one share of common stock of the surviving
corporation of the Omnipoint Merger.
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SECTION 3.2 Cancellation of Holding Company Capital Stock. At the Effective
Time, the one share of the capital stock of Holding Company issued to
VoiceStream and outstanding immediately prior to the Effective Time shall be
canceled and cease to exist.
SECTION 3.3 Conversion of Common Stock.
(a) (i) Subject to the provisions of Sections 3.3 and 3.5, at the
Effective Time, each share of VoiceStream Common Stock that is issued and
outstanding immediately prior to the Effective Time shall be converted into
one share of Holding Company Common Stock. Upon such conversion, all such
shares of VoiceStream Common Stock shall be canceled and cease to exist,
and each certificate theretofore representing any such shares shall,
without any action on the part of the holder thereof, be deemed to
represent an equivalent number of shares of Holding Company Common Stock.
(ii) Subject to the provisions of Sections 3.3 and 3.5, at the
Effective Time, each share of Omnipoint Common Stock that is issued and
outstanding immediately prior to the Effective Time shall be converted
into the right to receive the Merger Consideration and cash for
fractional shares of Holding Company Common Stock. Upon such conversion,
all such shares of Omnipoint Common Stock shall be canceled and cease to
exist, and each certificate theretofore representing any such shares
shall, without any action on the part of the holder thereof, be deemed
to represent the right to receive the Merger Consideration.
(b) At the Effective Time, each share of VoiceStream Common Stock,
Omnipoint Common Stock or Holding Company Common Stock which is held in the
treasury of VoiceStream, Omnipoint or their respective Subsidiaries
(provided, however, any Omnipoint Common Stock held by VoiceStream or
Holding Company shall not be canceled pursuant to this Section 3.3(b))
immediately prior to the Effective Time shall, by virtue of the Mergers,
cease to be outstanding and shall be canceled and retired without payment
of any consideration therefor.
(c) Subject to the provisions of Sections 3.3(g) and (h) and of
Sections 3.5 and 3.7, each share of Omnipoint Common Stock that is issued
and outstanding immediately prior to the Effective Time (excluding any
Dissenting Shares or any share of Omnipoint Common Stock canceled pursuant
to Section 3.3(b) or held by Holding Company or VoiceStream) shall be
converted, at the election of the holder thereof in accordance with the
procedures set forth herein, into one of the following:
(i) for each such share of Omnipoint Common Stock with respect to
which an election to receive only Holding Company Common Stock has been
effectively made and not revoked or lost pursuant to Section 3.3(e) (a
"Stock Election"), the right to receive the All Stock Number of shares
(the "Stock Election Exchange Rate") of Holding Company Common Stock
(the "Stock Election Consideration");
(ii) for each such share of Omnipoint Common Stock with respect to
which an election to receive only cash has been effectively made and not
revoked or lost pursuant to Section 3.3(e) (a "Cash Election"), the
right to receive the All Cash Amount in cash, without interest (the
"Cash Election Consideration"); and
(iii) for each such share of Omnipoint Common Stock other than
shares as to which a Stock Election or a Cash Election has been made,
the right to receive (A) .825 shares (the "Standard Election Exchange
Rate") of Holding Company Common Stock and (B) $8.00 in cash, ((A) and
(B) being collectively referred to as the "Standard Election
Consideration" and, together with the Stock Election Consideration and
the Cash Election Consideration, the "Merger Consideration").
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(d) If between the date of this Agreement and the Effective Time the
outstanding shares of VoiceStream Common Stock shall have been changed into
a different number of shares, by reason of any stock dividend, subdivision,
split or combination of shares, the Cash Election Consideration, the Stock
Election Consideration and the Standard Election Consideration, will be
correspondingly adjusted to reflect such stock dividend, subdivision, split
or combination of shares.
(e) Each person who, at the Effective Time, is a record holder of
shares of Omnipoint Common Stock (other than holders of shares of Omnipoint
Common Stock to be canceled as set forth in Section 3.3(b)), shall have the
right to submit an Election Form specifying the number of shares of
Omnipoint Common Stock that such person desires to have converted into the
right to receive Holding Company Common Stock pursuant to the Stock
Election, the number of shares of Omnipoint Common Stock that such person
desires to have converted into the right to receive cash pursuant to the
Cash Election, or the number of shares of Omnipoint Common Stock that such
person desires to have converted into the right to receive the Standard
Election Consideration, pursuant to the Standard Election. Any such record
holder (including without limitation any such record holder of Dissenting
Shares) who fails properly to submit an Election Form on or prior to the
Election Deadline in accordance with the procedures set forth in Section
3.4(a) shall be deemed to have made a Standard Election. Each person who,
at the Effective Time, is a record holder of Omnipoint Preferred Stock,
shall be deemed to have made a Standard Election.
(f) The aggregate number of shares of Holding Company Common Stock to
be issued to holders of Omnipoint Common Stock in connection with the
Omnipoint Merger or to become subject to issuance upon the conversion of
the Omnipoint Preferred Stock shall equal the product of (x) .825 and (y)
the sum of (i) the total number of shares of Omnipoint Common Stock issued
and outstanding immediately prior to the Effective Time, other than shares
to be canceled pursuant to Section 3.3(b) and shares held by Holding
Company or VoiceStream and (ii) the total number of shares of Omnipoint
Common Stock issuable upon conversion of Omnipoint Preferred Stock
outstanding immediately prior to the Effective Time (the product of (x) and
(y) being referred to as the "Holding Company Share Issuance Number"). If
between the date of this Agreement and the Effective Time the outstanding
shares of VoiceStream Common Stock shall have been changed into a different
number of shares, by reason of any stock dividend, subdivision, split or
combination of shares, the Holding Company Share Issuance Number will be
correspondingly adjusted to reflect such stock dividend, subdivision, split
or combination of shares.
(g) In the event that the number of shares of Holding Company Common
Stock to be issued to holders of Omnipoint Common Stock in connection with
Omnipoint Merger or to become subject to issuance upon conversion of
Omnipoint Preferred Stock would exceed the Holding Company Share Issuance
Number based on the elections of the holders of Omnipoint Common Stock
(together with the conversion adjustments applicable to the Omnipoint
Preferred Stock), (i) all shares of Omnipoint Common Stock subject to a
Cash Election or a Standard Election will, as elected, be converted into
the right to receive the Cash Election Consideration or the Standard
Election Consideration, as the case may be, and (ii) each share of
Omnipoint Common Stock subject to a Stock Election will be converted into
the right to receive (A) a number of shares of Holding Company Common Stock
equal to the Stock Election Exchange Rate times the Stock Election
Proration Factor and (B) an amount of cash equal to (1) the All Cash Amount
multiplied by (2) one minus the Stock Election Proration Factor. The "Stock
Election Proration Factor" means a fraction (x) the numerator of which is
the Holding Company Share Issuance Number minus the aggregate number of
shares of Holding Company Common Stock to be issued in the Omnipoint Merger
pursuant to the Standard Elections or to
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become subject to issuance upon conversion of Omnipoint Preferred Stock
pursuant to elections corresponding to the Standard Elections deemed to
have been made by holders of Omnipoint Preferred Stock, and (y) the
denominator of which is the number of shares of Holding Company Common
Stock that, but for this paragraph (g), would have been issued to holders
of Omnipoint Common Stock in Transactions pursuant to the Stock Elections.
(h) In the event that the number of shares of Holding Company Common
Stock to be issued to holders of Omnipoint Common Stock in connection with
the Omnipoint Merger or to become subject to issuance upon conversion of
Omnipoint Preferred Stock would be less than the Holding Company Share
Issuance Number based on the elections of the holders of Omnipoint Common
Stock (together with the conversion adjustments applicable to the Omnipoint
Preferred Stock), (i) all shares of Omnipoint Common Stock subject to a
Stock Election or a Standard Election will, as elected, be converted into
the right to receive the Stock Election Consideration or the Standard
Election Consideration, as the case may be, and (ii) each share of
Omnipoint Common Stock subject to a Cash Election will be converted into
the right to receive (A) a number of shares of Holding Company Common Stock
equal to the Cash Election Proration Factor and (B) an amount of cash equal
to (1) the All Cash Amount multiplied by (2) (x) one minus (y) the Cash
Election Proration Factor divided by the Stock Election Exchange Rate. The
"Cash Election Proration Factor" means a fraction (x) the numerator of
which is the Holding Company Share Issuance Number minus the aggregate
number of shares of Holding Company Common Stock to be issued in the Merger
pursuant to the Stock Elections and the Standard Elections or to become
subject to issuance upon conversion of Omnipoint Preferred Stock pursuant
to elections corresponding to the Standard Elections deemed to have been
made by holders of Omnipoint Preferred Stock, and (y) the denominator of
which is the number of shares of Omnipoint Common Stock subject to the Cash
Elections.
SECTION 3.4 Surrender and Payment.
(a) Prior to the Effective Time, Holding Company shall appoint an
agent to be designated by VoiceStream (the "Exchange Agent") for the
purpose of exchanging certificates representing shares of Omnipoint Common
Stock (the "Certificates") for the Merger Consideration. At the Effective
Time, Holding Company will deposit (or cause to be deposited) with the
Exchange Agent the Merger Consideration to be paid in respect of the shares
(the "Exchange Fund"). Upon receipt, the Exchange Agent will invest the
cash portion of the Exchange Fund in United States government securities
maturing at the Election Deadline or such other investments as VoiceStream
and Omnipoint may mutually agree. Promptly after the Effective Time,
VoiceStream will send, or will cause the Exchange Agent to send, (A) to
each holder of shares of Omnipoint Common Stock, at the Effective Time, a
letter of transmittal and instructions (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only
upon proper delivery of the Certificates to the Exchange Agent) for use in
such exchange, and (B) to each holder of shares of Omnipoint Common Stock,
an election form (the "Election Form") providing for such holders to make
the Standard Election, the Cash Election or the Stock Election. Any
Standard Election (other than a deemed Standard Election), Cash Election or
Stock Election shall be validly made only if the Exchange Agent shall have
received by 5:00 p.m., New York City time, on a date (the "Election
Deadline") to be mutually agreed upon by VoiceStream and Omnipoint (which
date shall not be later than the twentieth Business Day after the Effective
Time), an Election Form properly completed and executed (with the signature
or signatures thereon guaranteed to the extent required by the Election
Form) by such holder accompanied by such holder's Certificates, or by an
appropriate guarantee of delivery of such Certificates from a member of any
registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the
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United States as set forth in such Election Form. Any holder of Omnipoint
Common Stock who has made an election by submitting an Election Form to the
Exchange Agent may at any time prior to the Election Deadline change such
holder's election by submitting a revised Election Form, properly completed
and signed that is received by the Exchange Agent prior to the Election
Deadline. Any holder of Omnipoint Common Stock may at any time prior to the
Election Deadline revoke his election and withdraw his Certificates
deposited with the Exchange Agent by written notice to the Exchange Agent
received by the close of business on the day prior to the Election
Deadline. VoiceStream shall have the right to make rules (which will be
described in the Election Form), not inconsistent with the terms of this
Agreement, governing the validity of Election Forms and the manner and
extent to which Standard Elections, Cash Election or Stock Elections are to
be taken into account in making the determinations prescribed by Sections
3.3(g) and 3.3(h).
(b) Upon surrender to the Exchange Agent of its Certificate, together
with a properly completed letter of transmittal, each holder of shares of
Omnipoint Common Stock (the "Omnipoint Holders") will be entitled to
receive promptly after the Election Deadline the Merger Consideration
(elected or deemed elected by it, subject to Sections 3.3(g) and (h)) in
respect of the shares of Omnipoint Common Stock represented by its
Certificate. Until so surrendered, each such Certificate shall represent
after the Effective Time, for all purposes, only the right to receive the
Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name the Certificate so surrendered
is registered, it shall be a condition to such payment that such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result of such
payment to a Person other than the registered holder of such Certificate,
or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(d) After the Effective Time, there shall be no further registration
of transfers of shares of Omnipoint Common Stock. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall
be canceled and exchanged for the Stock Election Consideration provided
for, and in accordance with the procedures set forth, in this Article 3.
(e) Any portion of the Exchange Fund made available to the Exchange
Agent pursuant to Section 3.4(a) that remains unclaimed by the Omnipoint
Holders, one year after the Effective Time shall be returned to Holding
Company, upon demand, and any such holder who has not exchanged its shares
for the Merger Consideration in accordance with this Section 3.4 prior to
that time shall thereafter look only to Holding Company for payment of such
consideration, any dividends and distributions in respect of such shares,
in each case without any interest thereon. Notwithstanding the foregoing,
Holding Company shall not be liable to any Omnipoint Holder for any amounts
paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by the Omnipoint
Holders five years after the Effective Time (or such earlier date,
immediately prior to such time when the amounts would otherwise escheat to
or become property of any Governmental Body) shall become, to the extent
permitted by applicable law, the property of Holding Company free and clear
of any claims or interest of any Person previously entitled thereto.
(f) No dividends or other distributions with respect to any Holding
Company Common Stock and no cash payment in lieu of fractional shares as
provided in Section 3.7, shall be paid to the holder of any unsurrendered
Certificates until such Certificates are surrendered as provided in Section
3.4(b). Following such surrender, there shall be paid, without interest, to
the Person in whose name such Holding Company Common Stock has been
registered, (i) at the
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time of such surrender, (A) in the case of Certificates, the amount of any
cash payable in lieu of fractional shares to which such Person is entitled
pursuant to Section 3.7, and (B) the amount of all dividends or other
distributions with a record date after the Effective Time previously paid
or payable on the date of such surrender, with respect to such Holding
Company Common Stock, and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective
Time but prior to surrender, and with a payment date subsequent to
surrender, payable with respect to such Holding Company Common Stock.
(g) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.4(a) to pay for shares for which
appraisal rights have been perfected shall be returned to Holding Company
upon demand.
SECTION 3.5 Dissenting Shares. Notwithstanding Section 3.3, Omnipoint
Common Stock or VoiceStream Common Stock outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the
Transactions and has demanded appraisal for such shares in accordance with
Delaware Law (in the case of Omnipoint) or Washington Law (in the case of
VoiceStream) ("Dissenting Shares") shall not be converted into a right to
receive shares of Holding Company Common Stock (in the case of VoiceStream
Common Stock) or the Merger Consideration (in the case of Omnipoint Common
Stock) unless such holder fails to perfect, withdraws or otherwise loses its
right to appraisal. If, after the Effective Time, such holder fails to perfect,
withdraws or loses its right to appraisal, such shares shall be treated as if
they had been converted as of the Effective Time into a right to receive (i) in
the case of Omnipoint, the Standard Election Consideration and (ii) in the case
of VoiceStream, Holding Company Common Stock. Omnipoint shall give VoiceStream
prompt notice of any demands received by Omnipoint for appraisal of shares, and
VoiceStream shall have the right to participate in all negotiations and
proceedings with respect to such demands. Except with the prior written consent
of VoiceStream, Omnipoint shall not make any payment with respect to, or settle
or offer to settle, any such demands.
SECTION 3.6 Options, Warrants and Preferred Stock. (a) At the Effective
Time, each option or warrant granted by Omnipoint to purchase shares of
Omnipoint Common Stock which is outstanding and unexercised immediately prior to
the Effective Time shall be assumed by Holding Company and converted into an
option ("New Omnipoint Options") or warrant ("New Omnipoint Warrants" and,
together with New Omnipoint Options, "New Omnipoint Convertible Securities") to
purchase shares of Holding Company Common Stock in such amount and at such
exercise price as provided below and otherwise having the same terms and
conditions as are in effect immediately prior to the Effective Time (except to
the extent that such terms, conditions and restrictions may be altered in
accordance with their terms as a result of the Transactions):
(i) the number of shares of Holding Company Common Stock to be subject
to each New Omnipoint Convertible Security shall be equal to the product of
(x) the number of shares of Omnipoint Common Stock subject to the original
option or warrant and (y) the sum of (1) $8.00 divided by the Closing Price
on the last day in which shares are traded on NASDAQ immediately preceding
the Closing Date and (2) .825;
(ii) the exercise price per share of Holding Company Common Stock
under each New Omnipoint Convertible Security shall be equal to (x) the
exercise price per share of Omnipoint Common Stock under the original
option or warrant divided by (y) the sum of (1) $8.00 divided by the
Closing Price on the last day in which shares are traded on NASDAQ
immediately preceding the Closing Date and (2) .825; and
(iii) upon each exercise of New Omnipoint Convertible Securities by a
holder thereof, the aggregate number of shares of Holding Company Common
Stock subject to a New Option shall be rounded down, if necessary, to the
nearest whole share and the aggregate exercise price shall
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be rounded up, if necessary, to the nearest cent. The adjustments provided
herein with respect to any options which are "incentive stock options" (as
defined in Section 422 of the Code) shall be effected in a manner
consistent with Section 424(a) of the Code.
(a) At the Effective Time, each option or warrant granted by
VoiceStream to purchase shares of VoiceStream Common Stock which is
outstanding and unexercised immediately prior to the Effective Time shall
be assumed by Holding Company and converted into an option ("New
VoiceStream Options") or warrant ("New VoiceStream Warrants" and, together
with New VoiceStream Options, "New VoiceStream Convertible Securities") as
follows: (i) the number of shares of Holding Company Common Stock to be
subject to the New VoiceStream Convertible Securities shall be equal to the
the number of shares of VoiceStream Common Stock subject to the original
option or warrant and (ii) the exercise price per share of VoiceStream
Common Stock under the New VoiceStream Convertible Securities shall be
equal to the exercise price per share of VoiceStream Common Stock under the
original option or warrant. The adjustments provided herein with respect to
any options which are "incentive stock options" (as defined in Section 422
of the Code) shall be effected in a manner consistent with Section 424(a)
of the Code.
(b) The parties shall take such actions as are necessary for the
assumption of the Omnipoint and VoiceStream options and warrants pursuant
to this Section 3.6 and any obligations to issue Omnipoint Common Stock or
VoiceStream Common Stock under the existing terms of any other plans,
agreements or arrangements of Omnipoint or VoiceStream covering any current
or former employee or director of any member of the Omnipoint Group or any
member of the VoiceStream Group including the reservation, issuance and
listing of Holding Company Common Stock as is necessary to effectuate the
transactions contemplated by this Section 3.6. Similarly, the parties shall
take all actions required to be taken by it to effectuate such assumption.
The parties shall cause Holding Company to prepare and file with the SEC a
registration statement on Form S-8 (or any other appropriate form) or a
post-effective amendment to a registration statement previously filed under
the 1933 Act, with respect to the shares of Holding Company Common Stock
subject to New Omnipoint Options and New VoiceStream Options and, where
applicable, shall use its reasonable best efforts to have such registration
statement declared effective as soon as practicable following the Effective
Time and to maintain the effectiveness of such registration statement
covering such New Omnipoint Options and New VoiceStream Options (and to
maintain the current status of the prospectus contained therein) for so
long as such New Omnipoint Options and New VoiceStream Options remain
outstanding. With respect to those individuals, if any, who, subsequent to
the Effective Time, will be subject to the reporting requirements under
Section 16(a) of the 1934 Act, where applicable, the parties shall cause
Holding Company to use all reasonable efforts to administer any New
Omnipoint Options and New VoiceStream Options issued pursuant to this
Section 3.6 in a manner that complies with Rule 16b-3 promulgated under the
1934 Act to the extent that the Omnipoint or VoiceStream stock options and
warrants in respect of which such New Omnipoint Options and New VoiceStream
Options have been issued and complied with such rule prior to the
Transactions.
(c) Omnipoint Preferred Stock.
From and after the Effective Time, each share of Omnipoint Preferred
Stock, which shall be outstanding as of the Effective Time, shall remain
outstanding and, subject to the terms of the Certificate of Designation of
the Omnipoint Preferred Stock, dated May 1, 1998, shall have the same
privileges, rights and preferences as the Omnipoint Preferred Stock
immediately prior to the Effective Time and, for purposes of Section 4.5(b)
of the Certificate of Designation
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thereof, all holders of Omnipoint Common Stock will be deemed to have
received pursuant to the Omnipoint Merger the Standard Election
Consideration.
(d) Omnipoint Non-Voting Convertible Preferred Stock.
From and after the Effective Time, each share of the Omnipoint
Non-Voting Convertible Preferred Stock (or shares of Common Stock into
which they were converted) which shall be outstanding as of the Effective
Time, shall remain outstanding and, subject to the terms of the Certificate
of Designation of the Omnipoint Non-Voting Convertible Preferred Stock,
dated June 23, 1999, shall have the same privileges, rights and preferences
as the Omnipoint Non-Voting Convertible Preferred Stock.
SECTION 3.7 Fractional Shares. No fractional shares of Holding Company
Common Stock shall be issued in the Mergers. All fractional shares of Holding
Company Common Stock that a holder of shares of Omnipoint Common Stock would
otherwise be entitled to receive as a result of the Mergers shall be aggregated
and if a fractional share results from such aggregation, such holder shall be
entitled to receive, in lieu thereof, an amount in cash without interest
determined by multiplying the Closing Date Market Price by the fraction of a
share of Holding Company Common Stock to which such holder would otherwise have
been entitled.
SECTION 3.8 Withholding Rights. Holding Company shall be entitled to deduct
and withhold from the consideration otherwise payable to any Person pursuant to
this Article 3 such amounts as it is required to deduct and withhold with
respect to the making of such payment under any provision of federal, state,
local or foreign tax law. If Holding Company so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
Omnipoint Holder, as the case may be, in respect of which Holding Company made
such deduction and withholding.
SECTION 3.9 Lost Certificates. If any Certificate is lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and executing an indemnity
reasonably satisfactory to VoiceStream (and, if required by VoiceStream in the
case of a Certificate representing more than 1,000 shares, the posting by such
Person of a bond, in such reasonable amount as VoiceStream may direct, as
indemnity) indemnifying VoiceStream against any claim that may be made against
VoiceStream with respect to the Certificate, the Exchange Agent will issue, in
exchange for such lost, stolen or destroyed Certificate, (i) the Merger
Consideration to be paid in respect of the shares represented by such
Certificate. In addition, such Person will be entitled to receive any amounts
payable pursuant to Section 3.4(f).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OMNIPOINT
Except as set forth in the Omnipoint Disclosure Schedule or as disclosed in
the Omnipoint SEC Documents filed prior to the date hereof, Omnipoint represents
and warrants to VoiceStream as follows:
SECTION 4.1 Corporate Existence and Power. Omnipoint is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and authority
required to carry on its business as now conducted and to own, operate and lease
its property. Omnipoint is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified, individually or in the aggregate, has not had and would not be
reasonably expected to have a Omnipoint Material Adverse Effect. Omnipoint has
heretofore delivered or made available to VoiceStream true and complete copies
of the certificate of incorporation and bylaws of Omnipoint as currently in
effect.
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SECTION 4.2 Corporate Authorization.
(a) The execution, delivery and performance by Omnipoint of this
Agreement and the consummation by Omnipoint of the Transactions are within
Omnipoint's corporate powers and, except for the required approval of
Omnipoint's stockholders of this Agreement and the Transactions, have been
duly authorized by all necessary corporate action on the part of Omnipoint.
This Agreement has been duly and validly executed and delivered by
Omnipoint and, assuming the due and valid authorization, execution and
delivery of this Agreement by VoiceStream and receipt of all required
approvals by Omnipoint's stockholders in connection with the consummation
of the Transactions, constitutes a valid and binding agreement of
Omnipoint, enforceable against it in accordance with its terms except as
may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by equitable
principles of general applicability.
(b) At a meeting duly called and held, Omnipoint's Board of Directors
has: (i) determined that this Agreement and the Transactions are advisable
and fair to and in the best interests of Omnipoint's stockholders; (ii)
approved and adopted this Agreement and the Transactions; and (iii)
resolved (subject to Section 8.8(b)) to recommend approval and adoption of
this Agreement by its stockholders. No other corporate proceedings on the
part of Omnipoint are necessary to authorize or approve this Agreement or
to consummate the Transactions (other than, with respect to the
Transactions, the approval and adoption of the Transactions and this
Agreement by holders of the shares of Omnipoint Common Stock to the extent
required by Omnipoint's certificate of incorporation and by applicable
Delaware Law).
SECTION 4.3 Governmental Authorization.
(a) The execution, delivery and performance by Omnipoint of this
Agreement and the consummation by Omnipoint of the Transactions require no
action by or in respect of, or filing with, any Governmental Body, other
than: (i) the filing of a certificate of merger in accordance with Delaware
Law; (ii) compliance with any applicable requirements of the HSR Act; (iii)
compliance with any applicable requirements of the 1934 Act; (iv)
compliance with any applicable requirements of the Communications Act; (v)
compliance with FAA regulations; (vi) compliance with any applicable
requirements of state and local public utility commissions or similar
entities; and (vii) any actions or filing, the absence of which would not
in the aggregate prevent or delay consummation of the Transactions in any
material respect, or otherwise prevent Omnipoint from performing its
obligations under this Agreement in any material respect or would not in
the aggregate have a Omnipoint Material Adverse Effect.
(b) Omnipoint and the Omnipoint Subsidiaries have not made any
material misstatements of fact, or omitted to disclose any fact, to any
Government Body or in any report, document or certificate filed therewith,
which misstatements or omissions, individually or in the aggregate, could
subject any material licenses or authorizations to revocation or failure to
renew.
SECTION 4.4 FCC Matters.
(a) Each member of the Omnipoint Group and each Omnipoint Investment
holds, and is qualified and eligible to hold, all material licenses,
permits and other authorizations issued or to be issued by the FCC
(including "Winning Bids in Auction 22 Not yet Licenced by FCC," as
referred to in the Omnipoint Disclosure Schedule) to such entity for the
operation of their respective businesses, all of which are set forth in the
Omnipoint Disclosure Schedule (the "Omnipoint FCC Licenses").
(b) The Omnipoint FCC Licenses are valid and in full force and effect
and none of Omnipoint, any of the Omnipoint Subsidiaries or any Omnipoint
Investment is or has been
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delinquent in payment on or in default under any installment obligation
owed to the United States Treasury in connection with the Omnipoint FCC
Licenses.
(c) All material reports and applications required by the
Communications Act or required to be filed with the FCC by any member of
the Omnipoint Group or any Omnipoint Investment have been filed and are
accurate and complete in all material respects.
(d) Each member of the Omnipoint Group and each Omnipoint Investment
is, and has been, in compliance in all material respects with, and the
wireless communications systems operated pursuant to the Omnipoint FCC
Licenses have been operated in compliance in all material respects with,
the Communications Act.
(e) There is not pending as of the date hereof any application,
petition, objection, pleading or proceeding with the FCC or any public
service commission or similar body having jurisdiction or authority over
the communications operations of any member of the Omnipoint Group or any
Omnipoint Investment which questions the validity of or contests any
Omnipoint FCC License or which presents a substantial risk that, if
accepted or granted, or concluded adversely, could result in (as
applicable) the revocation, cancellation, suspension, dismissal, denial or
any materially adverse modification of any Omnipoint FCC License or
imposition of any substantial fine or forfeiture against any member of the
Omnipoint Group or any Omnipoint Investment except as set forth on the
Omnipoint Disclosure Statement.
(f) No facts are known to any member of the Omnipoint Group which if
known by a Governmental Body of competent jurisdiction would present a
substantial risk that any Omnipoint FCC License could be revoked, canceled,
suspended or materially adversely modified or that any substantial fine or
forfeiture could be imposed against any member of the Omnipoint Group or
any Omnipoint Investment.
SECTION 4.5 Non-contravention. The execution, delivery and performance by
Omnipoint of this Agreement and the consummation by Omnipoint of the
Transactions do not and will not (i) contravene, conflict with, or result in any
violation or breach of any provision of the certificate of incorporation,
bylaws, stockholders agreement or other governing instrument of any member of
the Omnipoint Group or any Omnipoint Investment; (ii) assuming compliance with
the matters referred to in Section 4.3, contravene, conflict with or result in a
violation or breach of any provision of any applicable law, statute, ordinance,
rule, regulation, judgment, injunction, order, or decree; (iii) require any
consent or other action by any Person under, constitute a default (or an event
that, with or without notice or lapse of time or both, would constitute a
default) under, or cause or permit the termination, cancellation, acceleration,
triggering or other change of any right or obligation or the loss of any benefit
to which any member of the Omnipoint Group or any Omnipoint Investment is
entitled under (A) any provision of any agreement or other instrument binding
upon any member of the Omnipoint Group or any Omnipoint Investment or (B) any
license, franchise, permit, certificate, approval or other similar authorization
held by, or affecting, or relating in any way to, the assets or business of, any
member of the Omnipoint Group or any Omnipoint Investment; or (iv) result in the
creation or imposition of any Lien on any asset of any member of the Omnipoint
Group or any Omnipoint Investment, other than such exceptions in the case of
clauses (ii), (iii) and (iv) as would not be, individually or in the aggregate,
reasonably expected (A) to have a Omnipoint Material Adverse Effect, (B)
materially impair or delay the ability of Omnipoint to consummate the
Transactions or (C) to have a VoiceStream Material Adverse Effect.
SECTION 4.6 Capitalization.
(a) The authorized capital stock of Omnipoint consists of 200,000,000
shares of Omnipoint Common Stock and 10,000,000 shares of Omnipoint
Preferred Stock. As of the close of business on June 18, 1999, there were
outstanding (i) 53,235,393 shares of Omnipoint Common Stock
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(inclusive of all shares of restricted stock granted under any compensatory
plans or arrangements), (ii) Omnipoint stock options to purchase an
aggregate of 7,663,664 shares of Omnipoint Common Stock ("Omnipoint
Options"), (iii) no phantom shares or stock units issued under any stock
option, compensation or deferred compensation plan or arrangement, (iv)
Omnipoint warrants to purchase an aggregate of 2,446,437 shares of
Omnipoint Common Stock ("Omnipoint Warrants"), (v) 325,000 shares of
Omnipoint Preferred Stock and (vi) $199,294,435 principal amount of
Indebtedness, which is redeemable at the option of Omnipoint by issuing
shares of Omnipoint Common Stock at a price equal to 90% of the fair market
value of such Omnipoint Common Stock, in accordance with the terms of such
Indebtedness. All outstanding shares of capital stock of Omnipoint have
been, and all shares that may be issued pursuant to any compensatory plan
or arrangement will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. The Omnipoint Disclosure Schedule sets
forth for each category of Omnipoint Options and Omnipoint Warrants the
vesting schedule, the exercise price and the number of shares of Omnipoint
Common Stock into which such Omnipoint Options or Omnipoint Warrants are
exercisable.
(b) Except as set forth in Section 4.6(a) or on the Omnipoint
Disclosure Schedule, there are no outstanding subscriptions, options,
warrants, rights or convertible or exchangeable securities issued by
Omnipoint or any Omnipoint Subsidiary or other agreements or commitments to
which any member of the Omnipoint Group or any Omnipoint Investment is a
party of any character relating to the issued or unissued capital stock or
other securities of Omnipoint, including any agreement or commitment
obligating any member of the Omnipoint Group or any Omnipoint Investment to
issue, deliver or sell, or cause to be issued, delivered or sold, shares of
capital stock or other securities of Omnipoint, to grant, extend or enter
into any subscription, option, warrant, right or convertible or
exchangeable security or other similar agreement or commitment with respect
to Omnipoint or obligating Omnipoint to make any payments pursuant to any
stock based or stock related plan or award. There are no preemptive rights,
rights of first refusal, rights of first offer or any similar rights
granted with respect to the securities or any assets of any members of the
Omnipoint Group.
SECTION 4.7 Subsidiaries; Investments.
(a) Each Omnipoint Subsidiary and each Omnipoint Investment is a
corporation or other legal entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and has
all corporate, partnership or other similar powers required to carry on its
business as now conducted, other than such exceptions as, individually or
in the aggregate, have not had and would not be reasonably expected to have
a Omnipoint Material Adverse Effect. Each Omnipoint Subsidiary and each
Omnipoint Investment is duly qualified to do business as a foreign
corporation or other foreign legal entity and is in good standing in each
jurisdiction where such qualification is necessary, with such exceptions,
individually or in the aggregate, as have not had and would not be
reasonably expected to have a Omnipoint Material Adverse Effect. The
Omnipoint Disclosure Schedule sets forth a list of all Omnipoint
Subsidiaries and all Omnipoint Investments and their respective
jurisdictions of organization and identifies Omnipoint's (direct or
indirect) percentage ownership interest therein.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each Omnipoint Subsidiary and each
Omnipoint Investment, is owned by Omnipoint or a Omnipoint Subsidiary,
directly or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting securities
or ownership interests).
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(c) There are no outstanding subscriptions, options, warrants, rights
or convertible or exchangeable securities issued by any member of the
Omnipoint Group or any Omnipoint Investment or other agreements or
commitments of any character relating to the issued or unissued capital
stock or other securities or partnership interests or membership interests
of any Omnipoint Subsidiary or any Omnipoint Investment, including, without
limitation, any agreement or commitment obligating any member of the
Omnipoint Group or any Omnipoint Investment to issue, deliver or sell, or
cause to be issued, delivered or sold, shares of capital stock, other
securities, partnership interests or membership interests of any Omnipoint
Subsidiary or any Omnipoint Investment or obligating any member of the
Omnipoint Group or any Omnipoint Investment to grant, extend or enter into
any subscription, option, warrant, right or convertible or exchangeable
security or other similar agreement or commitment with respect to any
Omnipoint Subsidiary or any Omnipoint Investment, or obligating any
Omnipoint Subsidiary or any Omnipoint Investment to make any payments
pursuant to any stock based or stock related plan or award. No member of
the Omnipoint Group is subject to any obligation or requirement to provide
funds for or to make any investment (in the form of a loan, capital
contribution or otherwise) to or in any Person (other than obligations to
individuals who are employees, which obligations (i) are set forth in
Section 4.22 of the Omnipoint Disclosure Schedule or (ii) are for de
minimis amounts and are made in the ordinary course of business consistent
with past practices), including, without limitation, any Omnipoint
Investment.
(d) Omnipoint has previously delivered or made available to
VoiceStream true and complete copies of the organizational documents or
comparable governing instruments (including all amendments to each of the
foregoing), of each Omnipoint Subsidiary and each Omnipoint Investment as
in effect on the date hereof.
SECTION 4.8 SEC Filings.
(a) Omnipoint has filed all required reports, schedules, forms,
statements and other documents required to be filed by it with the SEC
since January 1, 1997.
(b) Omnipoint has delivered or made available to VoiceStream: (i) the
Omnipoint 10-K; (ii) its proxy or information statements relating to
meetings of, or actions taken without a meeting by, the stockholders of
Omnipoint held since December 31, 1998; and (iii) all of its other reports,
statements, schedules, forms, exhibits and registration statements and all
other documents required to be filed with the SEC since December 31, 1998
(the "1999 Omnipoint SEC Documents") (the documents referred to in Sections
4.8(a) and (b), collectively, the "Omnipoint SEC Documents"). The Omnipoint
Disclosure Schedule sets forth a list of all the 1999 Omnipoint SEC
Documents.
(c) As of its filing date, each Omnipoint SEC Document complied as to
form in all material respects with the applicable requirements of the 1933
Act and the 1934 Act, as the case may be.
(d) As of its filing date, each Omnipoint SEC Document filed pursuant
to the 1934 Act did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made,
not misleading.
(e) Each Omnipoint SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as
of the date such registration statement or amendment became effective, did
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 not misleading.
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SECTION 4.9 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Omnipoint
included in the Omnipoint SEC Documents fairly present, in all material
respects, in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of Omnipoint and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
SECTION 4.10 Absence of Certain Changes. Since the Omnipoint Balance Sheet
Date, the business of each member of the Omnipoint Group and each Omnipoint
Investment has been conducted in the ordinary course consistent with past
practices and there has not been any event, occurrence or development which,
individually or in the aggregate, has had or would be reasonably expected to
have a Omnipoint Material Adverse Effect.
SECTION 4.11 No Undisclosed Material Liabilities. There are no liabilities
or obligations of any member of the Omnipoint Group or any Omnipoint Investment
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or set
of circumstances that would be reasonably expected to result in such a liability
or obligation, other than for Taxes, if any, arising out of, or attributable to
the Transactions (including the CIRI Transaction and the transactions described
in Recital A hereof):
(a) liabilities or obligations disclosed and provided for in the
Omnipoint Balance Sheet or in the notes thereto or in Omnipoint SEC
Documents filed prior to the date hereof or in the Omnipoint 10-K; and
(b) liabilities or obligations that, individually or in the aggregate
have not had and would not be reasonably expected to have a Omnipoint
Material Adverse Effect.
SECTION 4.12 Compliance with Laws and Court Orders. Each member of the
Omnipoint Group and each Omnipoint Investment holds all licenses, franchises,
certificates, consents, permits, qualifications and authorizations from all
Governmental Bodies necessary for the lawful conduct of their business, except
where the failure to hold any of the foregoing, individually or in the
aggregate, has not had and would not be reasonably expected to have a Omnipoint
Material Adverse Effect. Each member of the Omnipoint Group and each Omnipoint
Investment is and has been in compliance with, and to the knowledge of
Omnipoint, is not under investigation with respect to and has not been
threatened to be charged with or given notice of any violation of, any such
license, franchise, certificate, consent, permit, qualification or
authorization, applicable law, statute, ordinance, rule, regulation, judgment,
injunction, order or decree, except for failures to comply or violations that,
individually or in the aggregate, have not had and would not be reasonably
expected to have a Omnipoint Material Adverse Effect.
SECTION 4.13 Litigation. There is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or, to the knowledge of
Omnipoint, threatened against or affecting, any member of the Omnipoint Group,
any Omnipoint Investment or any of their respective properties before any court
or arbitrator or before or by any other Governmental Body, that, individually or
in the aggregate, would be reasonably expected to have a Omnipoint Material
Adverse Effect.
SECTION 4.14 Finders' Fees. Except for fees payable to Allen and Lehman
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of Omnipoint or any Omnipoint
Subsidiary who might be entitled to any fee or commission from VoiceStream, any
of the VoiceStream Subsidiaries, Omnipoint or any of the Omnipoint Subsidiaries
in connection with the Transactions. Copies of the engagement agreements with
Allen and Lehman have been provided to VoiceStream; except as set forth on such
engagement agreements, no other fees are payable to Allen and Lehman.
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SECTION 4.15 Opinion of Financial Advisor. Omnipoint has received an
opinion of Lehman, financial advisor to Omnipoint, to the effect that, as of
June 23, 1999, from a financial point of view, the Merger Consideration is fair
to the holders of Omnipoint Common Stock.
SECTION 4.16 Taxes. (a) Except as set forth in the Omnipoint Disclosure
Schedules and except as would not have a Omnipoint Material Adverse Effect, (i)
all Omnipoint Tax Returns required to be filed with any taxing authority by, or
with respect to, Omnipoint and the Omnipoint Subsidiaries have been filed in
accordance with all applicable laws or an appropriate extension of time to file
such Omnipoint Tax Returns has been obtained; (ii) Omnipoint and the Omnipoint
Subsidiaries have timely paid all Taxes shown as due and payable on the
Omnipoint Tax Returns that have been so filed, and, as of the time of filing,
the Omnipoint Tax Returns correctly reflected the facts regarding the income,
business, assets, operations, activities and the status of Omnipoint and the
Omnipoint Subsidiaries (other than Taxes which are being contested in good faith
by appropriate proceeding and for which adequate reserves are reflected on the
Omnipoint Balance Sheet); (iii) Omnipoint and the Omnipoint Subsidiaries have
made provision for all Taxes payable by Omnipoint and the Omnipoint Subsidiaries
for which no Omnipoint Tax Return has yet been filed; (iv) the charges, accruals
and reserves for Taxes with respect to Omnipoint and the Omnipoint Subsidiaries
reflected on the Omnipoint Balance Sheet are adequate under GAAP to cover the
Tax liabilities accruing through the date thereof; (v) there is no action, suit,
proceeding, audit or claim now pending or, to the knowledge of Omnipoint,
proposed against or with respect to Omnipoint or any Omnipoint Subsidiary in
respect of any Tax where an adverse determination is reasonably likely; (vi)
Omnipoint is not, and never has been the subject of a federal income tax
examination; and (vii) there are no Liens or encumbrances for Taxes on any of
the assets of Omnipoint or any Omnipoint Subsidiary except Liens for current
Taxes not yet due. For purposes of this Agreement, "Taxes" shall mean any and
all taxes, charges, fees, levies or other assessments, including, without
limitation, all net income, gross income, gross receipts, excise, stamp, real or
personal property, ad valorem, withholding, social security (or similar),
unemployment, occupation, use, service, service use, license, net worth,
payroll, franchise, severance, transfer, recording, employment, premium,
windfall profits, environmental (including taxes under Section 59A of the Code),
customs duties, capital stock, profits, disability, sales, registration, value
added, alternative or add-on minimum, estimated or other taxes, assessments or
charges imposed by any federal, state, local or foreign governmental body and
any interest, penalties, or additions to tax attributable thereto; provided,
however, that Taxes shall not include Taxes, if any, arising out of or
attributable to the Transactions (including the CIRI Transaction and the
transactions described in Recital A hereof). For purposes of this Agreement,
"Tax Returns" shall mean any return, report, form or similar statement required
to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
(b) To the knowledge of Omnipoint, there is no plan or intention on the
part of any Omnipoint shareholder to sell, exchange, transfer or otherwise
dispose of any stock of Holding Company received in the Transactions, except
that such Omnipoint shareholders as are partnerships for U.S. federal income tax
purposes may distribute such Holding Company stock to one or more of their
partners (other than to a partner which would, immediately after such
distribution, own 5 percent or more of Holding Company's stock, taking into
account such partner's pro rata share of any Holding Company stock held by the
partnership).
SECTION 4.17 Tax Opinions. There are no facts or circumstances relating to
Omnipoint that would, to Omnipoint's knowledge, prevent Piper Marbury from
delivering the opinion referred to in Section 9.3(b) as of the date hereof.
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SECTION 4.18 Employee Benefit Plans and Labor Matters.
(a) The Omnipoint Disclosure Schedule contains a true and complete
list, as of the date hereof, of all Omnipoint Employee Plans and all
Omnipoint Benefit Arrangements. Copies of each Omnipoint Employee Plan and
each Omnipoint Benefit Arrangement (and, if applicable, related trust
agreements) and all amendments thereto and written interpretations thereof
have been made available to VoiceStream as of the date hereof or will have
been made available to VoiceStream within thirty days after the date
hereof, together with the three most recent annual reports (Form 5500
including, if applicable, Schedule B thereto) and the most recent actuarial
valuation report prepared in connection with any Omnipoint Employee Plan.
(b) No "accumulated funding deficiency," as defined in Section 412 of
the Code, has been incurred with respect to any Omnipoint Employee Plan
subject to such Section 412, whether or not waived. No "reportable event"
within the meaning of Section 4043 of ERISA for which the reporting
requirements have not been waived, and no event described in Section 4062
or 4063 of ERISA has occurred in connection with any Omnipoint Employee
Plan. Neither Omnipoint nor to Omnipoint's knowledge any ERISA Affiliate of
Omnipoint has (i) engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Sections 4069 or
4212(c) of ERISA or (ii) incurred, or reasonably expects to incur prior to
the Effective Time (A) any liability under Title IV of ERISA arising in
connection with the termination of, or a complete or partial withdrawal
from, any plan covered or previously covered by Title IV of ERISA or (B)
any liability under Section 4971 of the Code that in either case could
become a liability of Omnipoint, any Omnipoint Subsidiary, VoiceStream or
any of their ERISA Affiliates after the Effective Time. If a "complete
withdrawal" by Omnipoint and all of its ERISA Affiliates were to occur as
of the Effective Time with respect to all Multiemployer Plans, neither
Omnipoint nor any Omnipoint Subsidiary would incur any withdrawal liability
under Title IV of ERISA.
(c) As of December 31, 1998, the fair market value of the assets of
each Omnipoint Pension Plan (excluding for these purposes any accrued but
unpaid contributions) exceeded the present value of all benefits accrued
under such Omnipoint Pension Plan calculated pursuant to FAS No. 87,
"Employers' Accounting for Pensions."
(d) Each Omnipoint Employee Plan that is intended to be qualified
under Section 401(a) of the Code is the subject of a favorable
qualification determination letter issued by the IRS and to Omnipoint's
knowledge each such Omnipoint Employee Plan is so qualified.
(e) There is no contract, plan or arrangement (written or otherwise)
covering any employee or former employee of Omnipoint or any Omnipoint
Subsidiary that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Sections 162(m) or 280G of the Code.
(f) As of December 31, 1998, there were no amounts accumulated for
post-retirement benefit obligations under Omnipoint Employee Plans and
Omnipoint Benefit Arrangements as determined in accordance with Statement
of Financial Accounting Standards No. 106.
(g) Each Omnipoint Employee Plan and each Omnipoint Benefit
Arrangement has been maintained in material compliance with its terms and
with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations (including any special provisions relating to
registration or qualification where such Plan was intended so to be so
registered or qualified) and has been maintained in good standing with
applicable regulatory authorities.
(h) No employee or former employee of Omnipoint or any Omnipoint
Subsidiary will become entitled to any bonus, retirement, severance, job
security or similar benefit or
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enhancement of such benefit (including acceleration of vesting or exercise
of an incentive award) as a result of the Transactions (either alone or
together with any other event).
(i) Neither Omnipoint nor any of the Omnipoint Subsidiaries is, or has
been, a party to any collective bargaining agreement or union contract.
Neither Omnipoint nor any of the Omnipoint Subsidiaries is involved in or
threatened with any labor dispute, work stoppage, labor strike, slowdown or
grievance. To the knowledge of Omnipoint, there is no organizing effort or
representation question at issue with respect to any employee of Omnipoint
or any of the Omnipoint Subsidiaries.
SECTION 4.19 Environmental Matters.
(a) Except as have not had and would not be reasonably expected to
have, individually or in the aggregate, a Omnipoint Material Adverse
Effect:
(A) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review (or any basis therefor) is pending or,
to the knowledge of Omnipoint, is threatened by any Governmental Body or
other Person relating to or arising out of any Environmental Law;
(B) each member of the Omnipoint Group and each Omnipoint
Investment is and has been in compliance with all Environmental Laws and
all Environmental Permits; and
(C) there are no liabilities of or relating to any member of the
Omnipoint Group or any Omnipoint Investment of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or
otherwise arising under or relating to any Environmental Law and there
are no facts, conditions, situations or set of circumstances that could
reasonably be expected to result in or be the basis for any such
liability.
(b) There have been no environmental assessments, investigations,
studies, audits, tests, reviews or other analyses conducted (collectively,
"Environmental Reports") of which Omnipoint has knowledge in relation to
the current or prior business of any member of the Omnipoint Group or any
Omnipoint Investment or any property or facility now or previously owned or
leased by any member of the Omnipoint Group or any Omnipoint Investment
that reveal matters that, individually or in the aggregate, have had or
would reasonably be expected to have a Omnipoint Material Adverse Effect.
(c) For purposes of this Section 4.19, the terms Omnipoint and
Omnipoint Subsidiary shall include any entity that is, in whole or in part,
a predecessor of any member of the Omnipoint Group or any Omnipoint
Investment.
SECTION 4.20 Intellectual Property. With such exceptions as, individually
or in the aggregate, have not had and would not be reasonably expected to have a
Omnipoint Material Adverse Effect, each member of the Omnipoint Group and each
Omnipoint Investment own or have a valid license to use each trademark, service
mark, trade name, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property right
(collectively, the "Omnipoint Intellectual Property") necessary to carry on its
business substantially as currently conducted. No member of the Omnipoint Group
or any Omnipoint Investment has received any notice of infringement of or
conflict with, and to Omnipoint's knowledge, there are no infringements of or
conflicts with, the rights of any Person with respect to the use of any
Omnipoint Intellectual Property that, in either such case, individually or in
the aggregate, have had or would be reasonably expected to have, a Omnipoint
Material Adverse Effect.
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SECTION 4.21 Contracts. No member of the Omnipoint Group or any Omnipoint
Investment is a party to or bound by (i) any "material contract" (as such term
is defined in Item 601(b)(10) of Regulation S-K of the SEC) or any agreement,
contract or commitment that would be such a "material contract" but for the
exception for contracts entered into in the ordinary course of business, (ii)
any non-competition agreement or any other agreement or obligation which
materially limits or will materially limit any member of the Omnipoint Group or
any Investment Interest from engaging in the business of providing wireless
communications services or from developing wireless communications technology
anywhere in the world or (iii) any management agreement, technical services
agreement or other agreement whereby any member of the Omnipoint Group or any
Investment Interest is provided or is required to provide management or
technical services to any other Person . With such exceptions as, individually
or in the aggregate, have not had, and would not be reasonably expected to have,
a Omnipoint Material Adverse Effect, (x) each of the contracts, agreements and
commitments of the Omnipoint Group and the Omnipoint Investments is valid and in
full force and effect and (y) neither any member of the Omnipoint Group nor any
Omnipoint Investment has violated any provision of, or committed or failed to
perform any act which, with or without notice, lapse of time, or both, would
constitute a default under the provisions of any such contract, agreement or
commitment. To the knowledge of Omnipoint, no counterparty to any such contract,
agreement or commitment has violated any provision of, or committed or failed to
perform any act which, with or without notice, lapse of time, or both would
constitute a default or other breach under the provisions of, such contract,
agreement or commitment, except for defaults or breaches which, individually or
in the aggregate, have not had, or would not reasonably be expected to have, a
Omnipoint Material Adverse Effect. Neither any member of the Omnipoint Group nor
any Omnipoint Investment is a party to, or otherwise a guarantor of or liable
with respect to, any interest rate, currency or other swap or derivative
transaction, other than any such transactions which are not material to the
business of the Omnipoint Group. Omnipoint has provided or made available to
VoiceStream a copy of each agreement described in item (i), (ii) or (iii) above.
SECTION 4.22 Significant Omnipoint Employees. The Omnipoint Disclosure
Schedule contains a list setting forth the name and current annual salary and
other compensation payable to each Significant Omnipoint Employee, and the
profit sharing, bonus or other form of additional compensation paid or payable
by Omnipoint to or for the benefit of each such person for the current fiscal
year. Except as set forth on the Omnipoint Disclosure Schedule or under the
employment, consulting or other agreements listed thereon, there are no oral or
written contracts, agreements or arrangements obligating Omnipoint to increase
the compensation or benefits presently being paid or hereafter payable to any
Significant Omnipoint Employees. The Omnipoint Disclosure Schedule annexed
hereto sets forth summaries of all oral employment or consulting or similar
arrangements regarding any Significant Omnipoint Employee which are not
terminable without liability on thirty (30) days' or less prior notice and lists
all written employment and consulting agreements with respect to any Significant
Omnipoint Employee, true and complete copies of which have been provided to
VoiceStream. Except for severance obligations to Significant Omnipoint Employees
set forth on the Omnipoint Disclosure Schedule, there is not due or owing and
there will not be due and owing at the Effective Time to any Significant
Omnipoint Employees, any sick pay, severance pay (whether arising out of the
termination of an Significant Omnipoint Employee prior to, on, or subsequent to
the Effective Time), compensable time or pay, including salary, commission and
bonuses, personal time or pay or vacation time or vacation pay attributable to
service rendered on or prior to the Effective Time. Except as disclosed in the
Omnipoint Disclosure Schedule and other than claims made in the ordinary course
of business consistent with past practice in an aggregate amount not to exceed
$100,000, neither Omnipoint nor the Omnipoint Subsidiaries have, any liability
arising out of claims made or suits brought (including workers' compensation
claims and claims or suits for contribution to, or indemnification of, third
parties, occupational health and safety, environmental, consumer protection or
equal employment matters) for injury, sickness, disease, discrimination, death
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or termination of employment of any Significant Omnipoint Employee, or other
employment matter to the extent attributable to an event occurring or a state of
facts existing on or prior to the Effective Time.
SECTION 4.23 Employment Matters. Omnipoint and each Omnipoint Subsidiary
(A) is in compliance with all applicable Federal and state laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Omnipoint
Employees, except where the failure to be in compliance would not, singly or in
the aggregate, have a material adverse effect on Omnipoint, any Omnipoint
Subsidiary or their financial condition or business; (B) has withheld all
amounts required by law or by agreement to be withheld from the wages, salaries
and other payments to Omnipoint Employees; (C) is not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of the
foregoing, except as would reasonably be expected to not have a Omnipoint
Material Adverse Effect; and (D) (other than routine payments to be made in the
normal course of business and consistent with past practice) is not liable for
any payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, Social Security
or other benefits for Omnipoint Employees.
SECTION 4.24 Labor. No work stoppage or labor strike with respect to
Omnipoint Employees is pending or, to the best knowledge of Omnipoint, is
threatened. Except as set forth on the Omnipoint Disclosure Schedules, there is
no involvement nor, to the best knowledge of Omnipoint, is there threatened, any
labor dispute, grievance or litigation relating to labor, safety or
discrimination matters involving any Omnipoint Employee including charges of
unfair labor practices or discrimination complaints, which, if adversely
determined, would reasonably be expected to have, individually or in the
aggregate, a material adverse effect on its financial condition or business.
There has been no engagement in any unfair labor practices within the meaning of
the National Labor Relations Act which would reasonably be expected to have,
individually or in the aggregate, a Omnipoint Material Adverse Effect.
SECTION 4.25 Vote Required. The only vote of the holders of any class or
series of capital stock of Omnipoint necessary to approve this Agreement and the
Transactions is the affirmative vote of the holders of a majority of the
outstanding shares of Omnipoint Common Stock (the "Omnipoint Stockholders'
Approval").
SECTION 4.26 Antitakeover Statutes and Charter Provisions. Omnipoint has
taken all action necessary to exempt the Omnipoint Merger and this Agreement and
the Transactions from the restrictions of Section 203 of Delaware Law, and,
accordingly, neither such Section nor any other antitakeover or similar statute
or regulation applies or purports to apply to any such transactions. No other
"control share acquisition," "fair price," "moratorium" or other antitakeover
laws or regulations enacted under U.S. state or federal laws apply to this
Agreement or any of the Transactions.
SECTION 4.27 Insurance. The Omnipoint Disclosure Schedules set forth a list
and brief description of all policies of fire, liability and other forms of
insurance and material fidelity bonds held by the Omnipoint Group. The Omnipoint
Group's assets, business, equipment, property and operations are adequately
insured against loss or damage and all other hazards or risks of the character
usually insured against by companies in the same or similar business and such
insurance shall be continued in full force and effect through 11:59 p.m. on the
Effective Time. Each such policy and fidelity bond is in full force and effect,
all premiums due and payable under such policies and fidelity bonds have been
and on the Effective Time will be paid in full, and there are no disputed claims
arising under such policies or fidelity bonds.
SECTION 4.28 Bank Accounts. The Disclosure Schedule sets forth a complete
list of all bank accounts, savings deposits, money-market accounts, certificates
of deposit, safety deposit boxes, and
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similar investment accounts with banks or other financial institutions
maintained by or on behalf of the Omnipoint or any Omnipoint Subsidiary showing
the depository bank or institution address, appropriate bank contact personnel,
account number and names of signatories.
SECTION 4.29 Transactions with Affiliates. No Affiliate of the Omnipoint
Group or Omnipoint Investment nor any stockholder, officer, director, partner,
member, consultant or employee of any thereof, is at the date hereof a party to
any transaction with any member of the Omnipoint Group or Omnipoint Investment,
including any contract or arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property (including
intellectual property) to or from, or otherwise requiring payments to or from
any member of the Omnipoint Group or any Omnipoint Investment, or any Affiliate
thereof.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF VOICESTREAM AND HOLDING COMPANY
Except as set forth in the VoiceStream Disclosure Schedule or as disclosed
in the VoiceStream SEC Documents filed prior to the date hereof, each of
VoiceStream and Holding Company, represent and warrant to Omnipoint as follows:
SECTION 5.1 Corporate Existence and Power. Each of VoiceStream and Holding
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and authority required to carry on its business as now
conducted and to own, operate and lease its property. Each of VoiceStream and
Holding Company is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified, individually or
in the aggregate, has not had and would not be reasonably expected to have a
VoiceStream Material Adverse Effect. VoiceStream has heretofore delivered or
made available to Omnipoint true and complete copies of the certificate of
incorporation and bylaws of VoiceStream as currently in effect.
SECTION 5.2 Corporate Authorization.
(a) The execution, delivery and performance by each of VoiceStream and
Holding Company of this Agreement and the consummation by VoiceStream and
Holding Company of the Transactions are within VoiceStream's and Holding
Company's respective corporate powers and, except for the required approval
of VoiceStream's stockholders of this Agreement and the Transactions, have
been duly authorized by all necessary corporate action on the part of
VoiceStream and Holding Company. This Agreement has been duly and validly
executed and delivered by VoiceStream and Holding Company and, assuming the
due and valid authorization, execution and delivery of this Agreement by
Omnipoint and receipt of all required approvals by VoiceStream's
stockholders in connection with the consummation of the Transactions,
constitutes a valid and binding agreement of VoiceStream and Holding
Company, enforceable against it in accordance with its terms except as may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by equitable
principles of general applicability.
(b) At a meeting duly called and held, VoiceStream's Board of
Directors has: (i) determined that this Agreement and the Transactions are
advisable and fair to and in the best interests of VoiceStream's
stockholders; (ii) approved and adopted this Agreement and the
Transactions; and (iii) resolved (subject to Section 8.8(b)) to recommend
approval and adoption of this Agreement by its stockholders. No other
corporate proceedings on the part of VoiceStream are necessary to authorize
or approve this Agreement or to consummate the Transactions (other than,
with respect to the Transactions, the approval and adoption of the
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Transactions and this Agreement by holders of shares of VoiceStream to the
extent required by VoiceStream's certificate of incorporation and by
applicable Delaware Law and Washington Law.
SECTION 5.3 Governmental Authorization.
(a) The execution, delivery and performance by VoiceStream of this
Agreement and the consummation by VoiceStream of the Transactions require
no action by or in respect of, or filing with, any Governmental Body, other
than: (i) the filing of a certificate of merger in accordance with Delaware
Law; (ii) compliance with any applicable requirements of the HSR Act; (iii)
compliance with any applicable requirements of the 1934 Act; (iv)
compliance with any applicable requirements of the Communications Act; (v)
compliance with FAA regulations; (vi) compliance with any applicable
requirements of state and local public utility commissions or similar
entities; and (vii) any actions or filing, the absence of which would not
in the aggregate prevent or delay consummation of the Transactions in any
material respect, or otherwise prevent VoiceStream from performing its
obligations under this Agreement in any material respect or would not in
the aggregate have a VoiceStream Material Adverse Effect.
(b) VoiceStream and the VoiceStream Subsidiaries have not made any
material misstatements of fact, or omitted to disclose any fact, to any
Governmental Body, which misstatements or omissions, individually or in the
aggregate, could subject any material licenses or authorizations to
revocation or failure to renew.
SECTION 5.4 FCC Matters.
(a) Each member of the VoiceStream Group and each VoiceStream
Investment holds, and is qualified and eligible to hold, all material
licenses, permits and other authorizations issued by the FCC to such entity
for the operation of their respective businesses, all of which are set
forth in the VoiceStream Disclosure Schedule (the "VoiceStream FCC
Licenses").
(b) The VoiceStream FCC Licenses are valid and in full force and
effect and none of VoiceStream, any of the VoiceStream Subsidiaries or any
VoiceStream Investment is or has been delinquent in payment on or in
default under any installment obligation owed to the United States Treasury
in connection with the VoiceStream FCC Licenses.
(c) All material reports and applications required by the
Communications Act or required to be filed with the FCC by any member of
the VoiceStream Group or any VoiceStream Investment have been filed and are
accurate and complete in all material respects.
(d) Each member of the VoiceStream Group and each VoiceStream
Investment is, and has been, in compliance in all material respects with,
and the wireless communication systems operated pursuant to the VoiceStream
FCC Licenses have been operated in compliance in all material respects
with, the Communications Act.
(e) There is not pending as of the date hereof any application,
petition, objection, pleading or proceeding with the FCC or any public
service commission or similar body having jurisdiction or authority over
the communications operations of any member of the VoiceStream Group or any
VoiceStream Investment which questions the validity of or contests any
VoiceStream FCC License or which presents a substantial risk that, if
accepted or granted, or concluded adversely, could result in the
revocation, cancellation, suspension or any materially adverse modification
of any VoiceStream FCC License or imposition of any substantial fine or
forfeiture against any member of the VoiceStream Group or any VoiceStream
Investment except as set forth in the VoiceStream Disclosure Statement.
(f) No facts are known to any Member of the VoiceStream Group which if
known by a Governmental Body of competent jurisdiction would present a
substantial risk that any VoiceStream FCC License could be revoked,
canceled, suspended or materially adversely
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modified or that any substantial fine or forfeiture could be imposed
against any member of the VoiceStream Group or any VoiceStream Investment.
SECTION 5.5 Non-contravention. The execution, delivery and performance by
VoiceStream of this Agreement and the consummation by VoiceStream of the
Transactions do not and will not (i) contravene, conflict with, or result in any
violation or breach of any provision of the certificate of incorporation,
bylaws, stockholders agreement or other governing instrument of any member of
the VoiceStream Group or any VoiceStream Investment; (ii) assuming compliance
with the matters referred to in Section 5.3, contravene, conflict with or result
in a violation or breach of any provision of any applicable law, statute,
ordinance, rule, regulation, judgment, injunction, order, or decree; (iii)
require any consent or other action by any Person under, constitute a default
(or an event that, with or without notice or lapse of time or both, would
constitute a default) under, or cause or permit the termination, cancellation,
acceleration, triggering or other change of any right or obligation or the loss
of any benefit to which any member of the VoiceStream Group or any VoiceStream
Investment is entitled under (A) any provision of any agreement or other
instrument binding upon any member of the VoiceStream Group or any VoiceStream
Investment or (B) any license, franchise, permit, certificate, approval or other
similar authorization held by, or affecting, or relating in any way to, the
assets or business of, any member of the VoiceStream Group or any VoiceStream
Investment; or (iv) result in the creation or imposition of any Lien on any
asset of any member of the VoiceStream Group or any VoiceStream Investment,
other than such exceptions in the case of clauses (ii), (iii) and (iv) as would
not be, individually or in the aggregate, reasonably expected to have a
VoiceStream Material Adverse Effect or materially impair or delay the ability of
VoiceStream to consummate the Transactions.
SECTION 5.6 Capitalization.
(a) The authorized capital stock of VoiceStream consists of
300,000,000 shares of VoiceStream Common Stock and 50,000,000 shares of
Preferred Stock. As of the close of business on May 31, 1999, there were
outstanding (i) 95,549,998 shares of VoiceStream Common Stock (inclusive of
all shares of restricted stock granted under any compensatory plans or
arrangements), (ii) VoiceStream stock options to purchase an aggregate of
4,067,090 shares of VoiceStream Common Stock (of which options to purchase
an aggregate of 2,417,170 shares of VoiceStream Common Stock were
exercisable), (iii) no phantom shares or stock units issued under any stock
option, compensation or deferred compensation plan or arrangement with
respect to VoiceStream Common Stock, (iv) no VoiceStream warrants to
VoiceStream Common Stock and (v) no shares of VoiceStream Preferred Stock.
All outstanding shares of capital stock of VoiceStream have been, and all
shares that may be issued pursuant to any compensatory plan or arrangement
will be, when issued in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
(b) Except as set forth in Section 5.6(a) or on the VoiceStream
Disclosure Schedules, there are no outstanding subscriptions, options,
warrants, rights or convertible or exchangeable securities issued by
VoiceStream or any VoiceStream Subsidiary or other agreements or
commitments to which any member of the VoiceStream Group or any VoiceStream
Investment is a party of any character relating to the issued or unissued
capital stock or other securities of VoiceStream or any VoiceStream
Subsidiary, including any agreement or commitment obligating any member of
the VoiceStream Group or any VoiceStream Investment to issue, deliver or
sell, or cause to be issued, delivered or sold, shares of capital stock or
other securities of VoiceStream or any VoiceStream Subsidiary, to grant,
extend or enter into any subscription, option, warrant, right or
convertible or exchangeable security or other similar agreement or
commitment with respect to VoiceStream or any VoiceStream Subsidiary to
make any payments pursuant to any stock based or stock related plan or
award. There are no preemptive rights, rights of first refusal,
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rights of first offer or any similar rights granted with respect to the
securities or any assets of any member of the VoiceStream Group.
SECTION 5.7 Subsidiaries; Investments.
(a) Each VoiceStream Subsidiary and each VoiceStream Investment is a
corporation or other legal entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and has
all corporate, partnership or other similar powers required to carry on its
business as now conducted, other than such exceptions as, individually or
in the aggregate, have not had and would not be reasonably expected to have
a VoiceStream Material Adverse Effect. Each VoiceStream Subsidiary and each
VoiceStream Investment is duly qualified to do business as a foreign
corporation or other foreign legal entity and is in good standing in each
jurisdiction where such qualification is necessary, with such exceptions,
individually or in the aggregate, as have not had and would not be
reasonably expected to have a VoiceStream Material Adverse Effect. The
VoiceStream Disclosure Schedule sets forth a list of all VoiceStream
Subsidiaries and all VoiceStream Investments and their respective
jurisdictions of organization and identifies VoiceStream's (direct or
indirect) percentage ownership interest therein.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each VoiceStream Subsidiary and each
VoiceStream Investment, is owned by VoiceStream or a VoiceStream
Subsidiary, directly or indirectly, free and clear of any Lien and free of
any other limitation or restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests).
(c) There are no outstanding subscriptions, options, warrants, rights
or convertible or exchangeable securities issued by any member of the
VoiceStream Group or a VoiceStream Investment or other agreements or
commitments of any character relating to the issued or unissued capital
stock or other securities or partnership interests or membership interests
of any VoiceStream Subsidiary or any VoiceStream Investment, including any
agreement or commitment obligating any member of the VoiceStream Group or
any VoiceStream Investment to issue, deliver or sell, or cause to be
issued, delivered or sold, shares of capital stock, other securities,
partnership interests or membership interests of any VoiceStream Subsidiary
or any VoiceStream Investment or obligating any member of the VoiceStream
Group or any VoiceStream Investment to grant, extend or enter into any
subscription, option, warrant, right or convertible or exchangeable
security or other similar agreement or commitment with respect to any
VoiceStream Subsidiary or any VoiceStream Investment, or obligating any
member of the VoiceStream Group or any VoiceStream Investment to make any
payments pursuant to any stock based or stock related plan or award. No
member of the VoiceStream Group is subject to any obligation or requirement
to provide funds for or to make any investment (in the form of a loan,
capital contribution or otherwise) to or in any Person, (other than
obligations to individuals who are employees, which obligations (i) are set
forth in Section 5.22 of the VoiceStream Disclosure Schedule or (ii) are
for de minimis amounts and are made in the ordinary course of business
consistent with past practices), including, without limitation, any
VoiceStream Investment.
(d) VoiceStream has previously delivered or made available to
Omnipoint true and complete copies of the organizational documents or
comparable governing instruments (including all amendments to each of the
foregoing), of each VoiceStream Subsidiary and each VoiceStream Investment
as in effect on the date hereof.
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SECTION 5.8 SEC Filings.
(a) VoiceStream has filed all required reports, schedules, forms,
statements and other documents required to be filed by it with the SEC
since January 1, 1997.
(b) VoiceStream has delivered or made available to Omnipoint: (i) the
VoiceStream 10-K; (ii) its proxy or information statements relating to
meetings of, or actions taken without a meeting by, the stockholders of
VoiceStream held since December 31, 1998; and (iii) all of its other
reports, statements, schedules, forms, exhibits and registration statements
and all other documents required to be filed with the SEC since December
31, 1998 (the "1999 VoiceStream SEC Documents") (the documents referred to
in Sections 5.8(a) and (b), collectively, the "VoiceStream SEC Documents").
The VoiceStream Disclosure Schedule sets forth a list of all the 1999
VoiceStream SEC Documents.
(c) As of its filing date, each VoiceStream SEC Document complied as
to form in all material respects with the applicable requirements of the
1933 Act and the 1934 Act, as the case may be.
(d) As of its filing date, each VoiceStream SEC Document filed
pursuant to the 1934 Act did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
(e) Each VoiceStream SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as
of the date such registration statement or amendment became effective, did
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 not misleading.
SECTION 5.9 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of
VoiceStream included in the VoiceStream SEC Documents fairly present, in all
material respects, in conformity with GAAP applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of VoiceStream and its consolidated Subsidiaries as of the dates thereof and
their consolidated results of operations and cash flows for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
SECTION 5.10 Absence of Certain Changes. Since the VoiceStream Balance
Sheet Date, the business of each member of the VoiceStream Group and each
VoiceStream Investment has been conducted in the ordinary course consistent with
past practices and there has not been any event, occurrence or development
which, individually or in the aggregate, has had or would be reasonably expected
to have a VoiceStream Material Adverse Effect.
SECTION 5.11 No Undisclosed Material Liabilities. There are no liabilities
or obligations of any member of the VoiceStream Group or any VoiceStream
Investment of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances that would be reasonably expected to result in
such a liability or obligation, other than for taxes, if any, arising out of, or
attributable to the Transactions (including the CIRI Transaction and the
transactions described in Recital A hereof), or:
(a) liabilities or obligations disclosed and provided for in the
VoiceStream Balance Sheet or in the notes thereto or in VoiceStream SEC
Documents filed prior to the date hereof or in the VoiceStream 10-K; and
(b) liabilities or obligations that, individually or in the aggregate
have not had and would not be reasonably expected to have a VoiceStream
Material Adverse Effect.
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SECTION 5.12 Compliance with Laws and Court Orders. Each member of the
VoiceStream Group and each VoiceStream Investment holds all licenses,
franchises, certificates, consents, permits, qualifications and authorizations
from all Governmental Bodies necessary for the lawful conduct of their business,
except where the failure to hold any of the foregoing, individually or in the
aggregate, has not had and would not be reasonably expected to have a
VoiceStream Material Adverse Effect. Each member of the VoiceStream Group and
each VoiceStream Investment is and has been in compliance with, and to the
knowledge of VoiceStream, is not under investigation with respect to and has not
been threatened to be charged with or given notice of any violation of, any such
license, franchise, certificate, consent, permit, qualification or
authorization, applicable law, statute, ordinance, rule, regulation, judgment,
injunction, order or decree, except for failures to comply or violations that,
individually or in the aggregate, have not had and would not be reasonably
expected to have a VoiceStream Material Adverse Effect.
SECTION 5.13 Litigation. There is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or, to the knowledge of
VoiceStream, threatened against or affecting, any member of the VoiceStream
Group or any VoiceStream Investment or any of their respective properties before
any court or arbitrator or before or by any other Governmental Body, that,
individually or in the aggregate, would be reasonably expected to have a
VoiceStream Material Adverse Effect.
SECTION 5.14 Finders' Fees. Except for fees payable to Goldman, there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of VoiceStream or any VoiceStream
Subsidiary who might be entitled to any fee or commission from Omnipoint, any of
the Omnipoint Subsidiaries, VoiceStream or any of the VoiceStream Subsidiaries
in connection with the Transactions. A copy of the engagement agreement with
Goldman has been provided to Omnipoint; except as set forth on such engagement
agreement, no other fees are payable to Goldman.
SECTION 5.15 Opinion of Financial Advisor. VoiceStream has received an
opinion of Goldman, financial advisor to VoiceStream, to the effect that, as of
June 23, 1999, from a financial point of view, the Merger Consideration is fair
to the holders of VoiceStream Common Stock.
SECTION 5.16 Taxes. (a) Except as set forth in the VoiceStream Disclosure
Schedules and except as would not have a VoiceStream Material Adverse Effect,
(i) all VoiceStream Tax Returns required to be filed with any taxing authority
by, or with respect to, VoiceStream and the VoiceStream Subsidiaries have been
filed in accordance with all applicable laws or an appropriate extension of time
to file such VoiceStream Tax Return has been obtained; (ii) VoiceStream and the
VoiceStream Subsidiaries have timely paid all Taxes shown as due and payable on
the VoiceStream Tax Returns that have been so filed, and, as of the time of
filing, the VoiceStream Tax Returns correctly reflected the facts regarding the
income, business, assets, operations, activities and the status of VoiceStream
and the VoiceStream Subsidiaries (other than Taxes which are being contested in
good faith by appropriate proceeding and for which adequate reserves are
reflected on the VoiceStream Balance Sheet); (iii) VoiceStream and the
VoiceStream Subsidiaries have made provision for all Taxes payable by
VoiceStream and the VoiceStream Subsidiaries for which no VoiceStream Tax Return
has yet been filed; (iv) the charges, accruals and reserves for Taxes with
respect to VoiceStream and the VoiceStream Subsidiaries reflected on the
VoiceStream Balance Sheet are adequate under GAAP to cover the Tax liabilities
accruing through the date thereof; (v) there is no action, suit, proceeding,
audit or claim now pending or to the knowledge of VoiceStream, threatened
against or with respect to VoiceStream or any VoiceStream Subsidiary in respect
of any Tax where an adverse determination is reasonably likely; (vi) the federal
income Tax Returns of VoiceStream and the VoiceStream Subsidiaries have been
examined and settled with the IRS (or the applicable statutes of limitation for
the assessment of federal income Taxes for such
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periods have expired) for all years through 1997; and (vii) there are no Liens
or encumbrances for Taxes on any of the assets of VoiceStream or any VoiceStream
Subsidiary except liens for current Taxes not yet due.
(b) To the knowledge of VoiceStream, there is no plan or intention on the
part of any VoiceStream shareholder to sell, exchange, transfer or otherwise
dispose of any stock of Holding Company received in the Transactions, except
that VoiceStream shareholders that are partnerships for U.S. federal income tax
purposes may distribute such Holding Company stock to one or more of their
partners (other than to a partner which would, immediately after such
distribution, own 5 percent or more of Holding Company's stock, taking into
account such partner's pro rata share of any Holding Company stock held by the
partnership).
(c) The maximum number of shares of Holding Company Common Stock which may
be issued pursuant to conversion rights held by the Cook Entities (after
consummation of the Transactions), including conversion rights under the CIRI
Agreements, is 9,000,000.
SECTION 5.17 Tax Opinions. There are no facts or circumstances relating to
VoiceStream that would, to VoiceStream's knowledge, prevent Jones Day from
delivering the opinions referred to in Sections 9.2(b) and 9.2(c) as of the date
hereof.
SECTION 5.18 Employee Benefit Plans and Labor Matters.
(a) The VoiceStream Disclosure Schedule contains a true and complete
list, as of the date hereof, of all VoiceStream Employee Plans and all
VoiceStream Benefit Arrangements. Copies of each VoiceStream Employee Plan
and each VoiceStream Benefit Arrangement (and, if applicable, related trust
agreements) and all amendments thereto and written interpretations thereof
have been made available to Omnipoint as of the date hereof or will have
been made available to Omnipoint within thirty days after the date hereof,
together with the three most recent annual reports (Form 5500 including, if
applicable, Schedule B thereto) and the most recent actuarial valuation
report prepared in connection with any VoiceStream Employee Plan.
(b) No "accumulated funding deficiency," as defined in Section 412 of
the Code, has been incurred with respect to any VoiceStream Employee Plan
subject to such Section 412, whether or not waived. No "reportable event"
within the meaning of Section 4043 of ERISA for which the reporting
requirements have not been waived, and no event described in Section 4062
or 4063 of ERISA has occurred in connection with any VoiceStream Employee
Plan. Neither VoiceStream nor to VoiceStream's knowledge any ERISA
Affiliate of VoiceStream has (i) engaged in, or is a successor or parent
corporation to an entity that has engaged in, a transaction described in
Sections 4069 or 4212(c) of ERISA or (ii) incurred, or reasonably expects
to incur prior to the Effective Time (A) any liability under Title IV of
ERISA arising in connection with the termination of, or a complete or
partial withdrawal from, any plan covered or previously covered by Title IV
of ERISA or (B) any liability under Section 4971 of the Code that in either
case could become a liability of VoiceStream, any VoiceStream Subsidiary,
Omnipoint or any of their ERISA Affiliates after the Effective Time. If a
"complete withdrawal" by VoiceStream and all of its ERISA Affiliates were
to occur as of the Effective Time with respect to all Multiemployer Plans,
neither of VoiceStream, nor any VoiceStream Subsidiary would incur any
withdrawal liability under Title IV of ERISA.
(c) As of December 31, 1998, the fair market value of the assets of
each VoiceStream Pension Plan (excluding for these purposes any accrued but
unpaid contributions) exceeded the present value of all benefits accrued
under such VoiceStream Pension Plan calculated pursuant to FAS No. 87,
"Employers' Accounting for Pensions."
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(d) Each VoiceStream Employee Plan that is intended to be qualified
under Section 401(a) of the Code is the subject of a favorable
qualification determination letter issued by the IRS and to VoiceStream's
knowledge each such VoiceStream Employee Plan is so qualified.
(e) There is no contract, plan or arrangement (written or otherwise)
covering any employee or former employee of VoiceStream or any VoiceStream
Subsidiary that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Sections 162(m) or 280G of the Code.
(f) As of December 31, 1998, there are no accumulated post-retirement
benefit obligations under any of the VoiceStream Employee Plans and
VoiceStream Benefit Arrangements as determined in accordance with Statement
of Financial Accounting Standards No. 106.
(g) Each VoiceStream Employee Plan and each VoiceStream Benefit
Arrangement has been maintained in material compliance with its terms and
with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations (including any special provisions relating to
registration or qualification where such Plan was intended so to be so
registered or qualified) and has been maintained in good standing with
applicable regulatory authorities.
(h) No employee or former employee of VoiceStream or any VoiceStream
Subsidiary will become entitled to any bonus, retirement, severance, job
security or similar benefit or enhancement of such benefit (including
acceleration of vesting or exercise of an incentive award) as a result of
the Transactions (either alone or together with any other event).
(i) Neither VoiceStream nor any of the VoiceStream Subsidiaries is, or
has been, a party to any collective bargaining agreement or union contract.
Neither VoiceStream nor any of the VoiceStream Subsidiaries is involved in
or threatened with any labor dispute, work stoppage, labor strike, slowdown
or grievance. To the knowledge of VoiceStream, there is no organizing
effort or representation question at issue with respect to any employee of
VoiceStream or any of the VoiceStream Subsidiaries.
SECTION 5.19 Environmental Matters.
(a) Except as have not had and would not be reasonably expected to
have, individually or in the aggregate, a VoiceStream Material Adverse
Effect:
(A) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review (or any basis therefor) is pending or,
to the knowledge of VoiceStream, is threatened by any Governmental Body
or other Person relating to or arising out of any Environmental Law;
(B) each member of the VoiceStream Group and each VoiceStream
Investment is and has been in compliance with all Environmental Laws and
all Environmental Permits; and
(C) there are no liabilities of or relating to any member of the
VoiceStream Group or any VoiceStream Investment of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or
otherwise arising under or relating to any Environmental Law and there
are no facts, conditions, situations or set of circumstances that could
reasonably be expected to result in or be the basis for any such
liability.
(b) There have been no Environmental Reports of which VoiceStream has
knowledge in relation to the current or prior business of any member of the
VoiceStream Group or any VoiceStream Investment or any property or facility
now or previously owned or leased by any member of the VoiceStream Group or
any VoiceStream Investment that reveal matters that,
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individually or in the aggregate, have had or would reasonably be expected
to have a VoiceStream Material Adverse Effect; and
(c) For purposes of this Section 5.19, the terms VoiceStream and
VoiceStream Subsidiary shall include any entity that is, in whole or in
part, a predecessor of any member of the VoiceStream Group or any
VoiceStream Investment.
SECTION 5.20 Intellectual Property. With such exceptions as, individually
or in the aggregate, have not had and would not be reasonably expected to have a
VoiceStream Material Adverse Effect, each member of the VoiceStream Group and
each VoiceStream Investment owns or has a valid license to use each trademark,
service mark, trade name, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property right
(collectively, the "VoiceStream Intellectual Property") necessary to carry on
its business substantially as currently conducted. No member of the VoiceStream
Group or any VoiceStream Investment has received any notice of infringement of
or conflict with, and to VoiceStream's knowledge, there are no infringements of
or conflicts with, the rights of any Person with respect to the use of any
VoiceStream Intellectual Property that, in either such case, individually or in
the aggregate, have had or would be reasonably expected to have, a VoiceStream
Material Adverse Effect.
SECTION 5.21 Contracts. No member of the VoiceStream Group nor any
VoiceStream Investment is a party to or bound by (i) any "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) or any
agreement, contract or commitment that would be such a "material contract" but
for the exception for contracts entered into in the ordinary course of business,
(ii) any non-competition agreement or any other agreement or obligation which
materially limits or will materially limit any member of the VoiceStream Group
or any VoiceStream Investment Interest from engaging in the business of
providing wireless communications services or from developing wireless
communications technology anywhere in the world or (iii) any management
agreement, technical services agreement or other agreement whereby any member of
the VoiceStream Group or any of its Investment Interest is provided or is
required to provide management or technical services to any other Person. With
such exceptions as, individually or in the aggregate, have not had, and would
not be reasonably expected to have, a VoiceStream Material Adverse Effect, (x)
each of the contracts, agreements and commitments of the VoiceStream Group and
the VoiceStream Investments is valid and in full force and effect and (y)
neither any member of the VoiceStream Group nor any VoiceStream Investments has
violated any provision of, or committed or failed to perform any act which, with
or without notice, lapse of time, or both, would constitute a default under the
provisions of any such contract, agreement or commitment. To the knowledge of
VoiceStream, no counterparty to any such contract, agreement or commitment has
violated any provision of, or committed or failed to perform any act which, with
or without notice, lapse of time, or both would constitute a default or other
breach under the provisions of, such contract, agreement or commitment, except
for defaults or breaches which, individually or in the aggregate, have not had,
or would not reasonably be expected to have, a VoiceStream Material Adverse
Effect. Neither any member of the VoiceStream nor any VoiceStream Investment is
a party to, or otherwise a guarantor of or liable with respect to, any interest
rate, currency or other swap or derivative transaction, other than any such
transactions which are not material to the business of the VoiceStream Group.
VoiceStream has provided or made available to Omnipoint a copy of each agreement
described in item (i), (ii) or (iii) above.
SECTION 5.22 VoiceStream Employees. The VoiceStream Disclosure Schedule
contains a list setting forth the name and current annual salary and other
compensation payable to each Significant VoiceStream Employee, and the profit
sharing, bonus or other form of additional compensation paid or payable by
VoiceStream to or for the benefit of each such person for the current fiscal
year.
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Except as set forth on the VoiceStream Disclosure Schedule or under the
employment, consulting or other agreements listed thereon, there are no oral or
written contracts, agreements or arrangements obligating VoiceStream to increase
the compensation or benefits presently being paid or hereafter payable to any
Significant VoiceStream Employees. The VoiceStream Disclosure Schedule annexed
hereto sets forth summaries of all oral employment or consulting or similar
arrangements regarding any Significant VoiceStream Employee which are not
terminable without liability on thirty (30) days' or less prior notice and lists
all written employment and consulting agreements with respect to any Significant
VoiceStream Employee, true and complete copies of which have been provided to
Omnipoint. Except for severance obligations to Significant VoiceStream Employees
set forth on the VoiceStream Disclosure Schedule, there is not due or owing and
there will not be due and owing at the Effective Time to any Significant
VoiceStream Employees, any sick pay, severance pay (whether arising out of the
termination of any Significant VoiceStream Employee prior to, on, or subsequent
to the Effective Time), compensable time or pay, including salary, commission
and bonuses, personal time or pay or vacation time or vacation pay attributable
to service rendered on or prior to the Effective Time. Except as disclosed in
the VoiceStream Disclosure Schedule, there is not now, and there will not be as
of the Effective Time, any liability arising out of claims made or suits brought
(including workers' compensation claims and claims or suits for contribution to,
or indemnification of, third parties, occupational health and safety,
environmental, consumer protection or equal employment matters) for injury,
sickness, disease, discrimination, death or termination of employment of any
Significant VoiceStream Employee, or other employment matter to the extent
attributable to an event occurring or a state of facts existing on or prior to
the Effective Time.
SECTION 5.23 Employment Matters. VoiceStream and each VoiceStream
Subsidiary (A) are in compliance with all applicable Federal and state laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
VoiceStream Employees, except where the failure to be in compliance would not,
singly or in the aggregate, a material adverse effect on VoiceStream, any
VoiceStream Subsidiary or their financial condition or business; (B) have
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to VoiceStream Employees; (C) is not liable
for any arrears of wages or any taxes or any penalty for failure to comply with
any of the foregoing, except as would not have a VoiceStream Material Adverse
Effect; and (D) (other than routine payments to be made in the normal course of
business and consistent with past practice) are not liable for any payment to
any trust or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, Social Security or other benefits
for VoiceStream Employees.
SECTION 5.24 Labor. No work stoppage or labor strike with respect to
VoiceStream Employees is pending or, to the best knowledge of VoiceStream, is
threatened. Except as set forth on the VoiceStream Disclosure Schedules, there
is no involvement nor, to the best knowledge of VoiceStream, is there
threatened, any labor dispute, grievance or litigation relating to labor, safety
or discrimination matters involving any VoiceStream Employee including charges
of unfair labor practices or discrimination complaints, which, if adversely
determined, would reasonably be expected to have individually or in the
aggregate, a material adverse effect on its financial condition or business.
There has been no engagement in any unfair labor practices within the meaning of
the National Labor Relations Act which would, individually or in the aggregate,
a VoiceStream Material Adverse Effect.
SECTION 5.25 There is not presently nor has there been in the past any
collective bargaining agreement or union contract with respect to VoiceStream
Employees and no collective bargaining agreement with respect to VoiceStream
Employees is at the date hereof being negotiated.
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SECTION 5.26 Vote Required. The only vote of the holders of any class or
series of capital stock of VoiceStream necessary to approve this Agreement and
the Transactions is the affirmative vote of the holders of a majority of the
outstanding shares of VoiceStream Common Stock (the "VoiceStream Stockholders'
Approval").
SECTION 5.27 Insurance. The VoiceStream Disclosure Schedules set forth a
list and brief description of all policies of fire, liability and other forms of
insurance and material fidelity bonds held by the VoiceStream Group. The
VoiceStream Group's assets, business, equipment, property and operations are
adequately insured against loss or damage and all other hazards or risks of the
character usually insured against by companies in the same or similar business
and such insurance shall be continued in full force and effect through 11:59
p.m. on the Effective Time. Each such policy and fidelity bond is in full force
and effect, all premiums due and payable under such policies and fidelity bonds
have been and on the Effective Time will be paid in full, and there are no
disputed claims arising under such policies or fidelity bonds.
SECTION 5.28 Bank Accounts. The Disclosure Schedule sets forth a complete
list of all bank accounts, savings deposits, money-market accounts, certificates
of deposit, safety deposit boxes, and similar investment accounts with banks or
other financial institutions maintained by or on behalf of the VoiceStream or
any VoiceStream Subsidiary showing the depository bank or institution address,
appropriate bank contact personnel, account number and names of signatories.
SECTION 5.29 Transactions with Affiliates. No Affiliate of the VoiceStream
Group or VoiceStream Investment nor any stockholder, officer, director, partner,
member, consultant or employee of any thereof, is at the date hereof a party to
any transaction with any member of the VoiceStream Group, or VoiceStream
Investment including any contract or arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property (including
intellectual property) to or from, or otherwise requiring payments to or from
any member of the VoiceStream Group, VoiceStream Investment, or any Affiliate
thereof.
SECTION 5.30 Not an Interested Stockholder. As of the date of this
Agreement, neither VoiceStream nor any of its Affiliates is an "Interested
Stockholder" as such term is defined in Section 203 of the Delaware Law.
SECTION 5.31 Representations with Respect to Holding Company.
(a) There is currently no indebtedness between Omnipoint common
shareholders and Holding Company, and none will be created as a result of
the Transactions, other than Holding Company's obligation to pay cash to
Omnipoint shareholders pursuant to Section 3.3. of the Agreement.
(b) Immediately following the Transactions, Omnipoint shareholders and
VoiceStream shareholders will collectively own at least 80 percent of the
total combined voting power of all classes of Holding Company's stock
entitled to vote and at least 80 percent of the total number of shares of
all other classes of Holding Company's stock.
(c) Each Omnipoint shareholder and VoiceStream shareholder will
receive stock (and, in the case of Omnipoint shareholders, cash) of Holding
Company with an aggregate value approximately equal to the fair market
value of their stock transferred to Holding Company.
(d) Holding Company is not, nor will it be, an investment company
within the meaning of Section 351(e) of the Code immediately after the
Transactions.
(e) Holding Company, Omnipoint and VoiceStream will each remain in
existence following the Transactions. Holding Company will retain the
Omnipoint Shares and VoiceStream Shares, and there is no plan or intention
on the part of Holding Company to liquidate Omnipoint or VoiceStream or
otherwise dispose of such shares.
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(f) To the knowledge of Holding Company there is no plan or intention
on the part of any Omnipoint shareholder or VoiceStream Shareholders to
sell, exchange, transfer or otherwise dispose of any stock of Holding
Company received in the Transactions, except that such Omnipoint
shareholders and VoiceStream shareholders as are partnerships for U.S.
federal income tax purposes may distribute such Holding Company stock to
one or more of their partners (other than to a partner which would,
immediately after such distribution, own 5 percent or more of Holding
Company's stock, taking into account such partner's pro rata share of any
Holding Company stock held by the partnership).
ARTICLE 6
COVENANTS OF OMNIPOINT
Omnipoint agrees that:
SECTION 6.1 Omnipoint Interim Operations. Except as set forth in the
Omnipoint Disclosure Schedule or as otherwise expressly contemplated hereby,
without the prior written consent of VoiceStream, Omnipoint shall, and shall
cause each member of the Omnipoint Group to, conduct its business in all
material respects in the ordinary course consistent with past practice and use
all reasonable efforts to: (i) preserve intact its present business
organization; (ii) keep available the services of its key officers and key
employees; (iii) maintain in effect all material foreign, federal, state and
local licenses, approvals and authorizations, including, without limitation, the
Omnipoint FCC Licenses, all material licenses and permits that are required for
Omnipoint or any Omnipoint Subsidiary to carry on its business and (iv) preserve
existing relationships with its material partners, lenders, suppliers and others
having material business relationships with it so that the business of the
Omnipoint Group shall not be adversely affected in any material respect as of
the Effective Time. Further, and without limiting the generality of the
foregoing, except as set forth in Section 6.1 of the Omnipoint Disclosure
Schedule, from the date hereof until the Effective Time, without the prior
written consent of VoiceStream, Omnipoint shall not, nor shall it permit any
member of the Omnipoint Group or Omnipoint Investment to:
(a) amend its certificate of incorporation or bylaws or other
applicable governing instrument;
(b) amend any term of any of its outstanding securities;
(c) split, combine, subdivide or reclassify any shares of its capital
stock or other equity interests or declare, set aside or pay any dividend
or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem, repurchase
or otherwise acquire or offer to redeem, repurchase, or otherwise acquire
any of its securities or any securities of any member of the Omnipoint
Group or Omnipoint Investment except for dividends paid by any Omnipoint
Subsidiary that is, directly or indirectly, wholly owned by Omnipoint;
(d) adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other material reorganization (other than a merger or consolidation between
wholly owned Omnipoint Subsidiaries);
(e) issue, deliver or sell, or authorize the issuance, delivery or
sale of, any shares of its capital stock of any class or other equity
interests or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such capital stock or other
equity interests, other than (i) the issuance of shares of Omnipoint Common
Stock upon the exercise of currently outstanding stock options or warrants
in accordance with their present terms, (ii) issuances pursuant to the
conversion of convertible securities outstanding on the date hereof in
accordance with their present terms and (iii) the granting of options to
acquire shares of
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Omnipoint Common Stock in accordance with Section 6.1 of the Omnipoint
Disclosure Schedule; (f) incur any capital expenditures except as set forth
in the Omnipoint Disclosure Schedule;
(g) acquire (by merger, consolidation, acquisition of stock or assets
or otherwise) any corporation, limited liability company, partnership,
other business organization or division thereof, licenses or other assets
except for (i) capital expenditures, which shall be governed by clause (f),
(ii) pursuant to agreements in effect as of the date hereof and listed on
the Omnipoint Disclosure Schedule, or (iii) tangible assets used in the
ordinary course of business of Omnipoint and the Omnipoint Subsidiaries in
a manner that is consistent with past practice;
(h) other than pursuant to agreements in effect as of the date hereof
and listed on the Omnipoint Disclosure Schedule, sell, lease, license,
encumber or otherwise transfer any assets (including any licenses or
Investment Interest) having a fair market value exceeding $5,000,000 in any
one transaction or series of related transactions or $10,000,000 in the
aggregate;
(i) incur, assume or guarantee any Indebtedness other than pursuant to
agreements in effect on the date hereof and listed on the Omnipoint
Disclosure Schedule;
(j) create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired,
other than Liens incurred in the ordinary course of business to secure
indebtedness or other obligations permitted by this Agreement;
(k) create, incur, assume or suffer to exist any obligation whereby
Omnipoint or any Omnipoint Subsidiary guarantees any Indebtedness, leases,
dividends or other obligations of any third party;
(l) make any loan, advance or capital contributions to or investment
in any Person, or acquire any Investment Interest, other than loans,
advances or capital contributions to or investments in its wholly owned
Subsidiaries;
(m) except for capital expenditures, which shall be governed by clause
(f), engage in or enter into any transaction or commitment, enter into any
contract or agreement, or relinquish or amend in any material respect any
contract or other right, in any case, material to the Omnipoint Group,
taken as a whole, other than transactions and commitments in the ordinary
course of business consistent with past practices and those contemplated by
this Agreement;
(n) enter into any agreement or arrangement that materially limits or
otherwise materially restricts Omnipoint, any Omnipoint Subsidiary or any
of their respective Affiliates or any successor thereto or that could,
after the Effective Time, limit or restrict VoiceStream, any VoiceStream
Subsidiary, the Surviving Corporation or any of their Affiliates, from
engaging in the business of providing wireless communications services or
developing wireless communications technology anywhere in the world or
otherwise from engaging in any other business;
(o) except as required pursuant to any written agreements listed on
the Omnipoint Disclosure Schedule and existing on the date hereof or as
otherwise mandated by law as of the date hereof (i) enter into any
commitment to provide any severance or termination pay to (or amend any
existing arrangement with) any director, officer or employee of Omnipoint
or any Omnipoint Subsidiary that calls for payments in excess of $200,000
in the aggregate for all such directors, officers, or (ii) increase the
benefits payable under any existing severance or termination pay policy or
employment agreement (other than as may be increased by function of the
existing terms of any such policy or agreement), (iii) enter into any
employment, deferred compensation or other similar agreement (or amend any
such existing agreement) with any director, officer or employee of
Omnipoint or any Omnipoint Subsidiary that calls for annual payments in
excess of $125,000, (iv) establish, adopt or amend (except as required by
applicable
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law) any collective bargaining, bonus, profit-sharing, thrift, pension,
retirement, deferred compensation, compensation, stock option, restricted
stock or other benefit plan or arrangement covering any director, officer
or employee of Omnipoint or any Omnipoint Subsidiary, except that Omnipoint
and the Omnipoint Subsidiaries may amend any such existing agreement or
plan or adopt a successor plan or arrangement to the extent mandated by
applicable law or to the extent that such amendment would not result in a
more than de minimis increase in the costs or liabilities under such
agreement or plan, (v) increase the compensation, bonus or other benefits
payable to any director, officer or employee of Omnipoint or any Omnipoint
Subsidiary or (vi) amend the terms of any outstanding option or right to
purchase shares of Omnipoint Common Stock;
(p) change (i) its methods of accounting or accounting practices in
any material respect, except as required by concurrent changes in U.S. GAAP
or by Law or (ii) its fiscal year;
(q) make, or amend in any respect the terms of any Investment
Interest, which cannot be terminated within 30 days of the Effective Time
without any penalty;
(r) settle, or propose to settle, any material litigation,
investigation, arbitration, proceeding or other claim;
(s) make any material tax election or enter into any settlement or
compromise of any material tax liability;
(t) take any action, other than as expressly permitted by this
Agreement, that would make any representation or warranty of Omnipoint
hereunder inaccurate in any material respect at the Effective Time; or
(u) agree or commit to do any of the foregoing;
provided that the limitations set forth above shall not apply to any transaction
exclusively between (i) Omnipoint and any Omnipoint Subsidiary that is wholly
owned by Omnipoint or between any such wholly owned Omnipoint Subsidiaries and
(ii) any member or members of the Omnipoint Group and any member or members of
the VoiceStream Group.
SECTION 6.2 No Solicitation.
(a) From the date hereof until the termination hereof, Omnipoint will
not, and will cause the Omnipoint Subsidiaries, Omnipoint Affiliates, and
the officers, directors, employees, investment bankers, attorneys,
accountants, consultants or other agents or advisors of Omnipoint, the
Omnipoint Subsidiaries and the Omnipoint Affiliates not to, directly or
indirectly: (i) take any action to solicit, initiate, facilitate or
encourage the submission of any Acquisition Proposal; (ii) other than in
the ordinary course of business and not related to an Acquisition Proposal,
engage in any discussions or negotiations with, or disclose any non-public
information relating to Omnipoint or any Omnipoint Subsidiary or afford
access to the properties, books or records of Omnipoint or any Omnipoint
Subsidiary to, any Person who is known by Omnipoint to be considering
making, or has made, an Acquisition Proposal; (iii) (A) approve any
transaction under Section 203 of the Delaware Law or (B) approve of any
Person's becoming an "interested stockholder" under Section 203 of Delaware
Law or (iv) enter into any agreement with respect to an Acquisition
Proposal. Nothing contained in this Agreement shall prevent the Board of
Directors of Omnipoint from complying with Rule 14e-2 and Rule 14d-9 under
the 1934 Act with regard to an Acquisition Proposal; provided that the
Board of Directors of Omnipoint shall not recommend that the stockholders
of Omnipoint tender their shares in connection with a tender offer except
to the extent the Board of Directors of Omnipoint by a majority vote
determines in its good faith judgment that such a recommendation is
required to comply with
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the fiduciary duties of the Board of Directors of Omnipoint to shareholders
under applicable Delaware Law, after receiving the advice of outside legal
counsel.
(b) Omnipoint will notify VoiceStream promptly (but in no event later
than 24 hours) after receipt by Omnipoint (or any of its advisors) of any
Acquisition Proposal, or of any request (other than in the ordinary course
of business and not related to an Acquisition Proposal) for non-public
information relating to Omnipoint or any of the Omnipoint Subsidiaries or
for access to the properties, books or records of Omnipoint or any
Omnipoint Subsidiary by any Person who is known to be considering making,
or has made, an Acquisition Proposal. Omnipoint shall provide such notice
orally and in writing and shall identify the Person making, and the terms
and conditions of, any such Acquisition Proposal, indication or request.
Omnipoint shall keep VoiceStream fully informed, on a prompt basis (but in
any event no later than 24 hours), of the status and details of any such
Acquisition Proposal, indication or request. Omnipoint shall, and shall
cause the Omnipoint Subsidiaries and the directors, employees and other
agents of Omnipoint and the Omnipoint Subsidiaries to, cease immediately
and cause to be terminated all activities, discussions or negotiations, if
any, with any Persons conducted prior to the date hereof with respect to
any Acquisition Proposal.
SECTION 6.3 Access to Information. Omnipoint shall (i) give to VoiceStream
and VoiceStream's counsel, financial advisors, auditors and other authorized
representatives unlimited access during normal business hours to the offices,
properties, books and records of Omnipoint and the Omnipoint Subsidiaries, (ii)
at VoiceStream's request, furnish to VoiceStream and VoiceStream's counsel,
financial advisors, auditors and other authorized representatives all financial
and operating data (including without limitation, all subscriber information
(including a breakdown of all additions and disconnections) and all information
concerning all capital expenditures) and other information to which the
Omnipoint Board of Directors or the senior executives of Omnipoint are provided
or have access to (all of the foregoing to be furnished to VoiceStream
simultaneously with the same being furnished to any member of Omnipoint's Board
of Directors or the senior executives of Omnipoint), and (iii) instruct its
employees, counsel, financial advisors, auditors and other authorized
representatives to cooperate with the other party in VoiceStream's
investigation. Any investigation pursuant to this Section 6.3 shall be conducted
in such manner as not to interfere unreasonably with the conduct of the business
of Omnipoint and the Omnipoint Subsidiaries. The foregoing information shall be
held in confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement.
SECTION 6.4 Omnipoint shall use its reasonable best efforts to take, or
cause to be taken, all actions and do, or cause to be done, all things
necessary, proper or advisable under applicable law and regulations to
consummate the closing under the CIRI Agreements pursuant to the terms thereof.
Prior to the Effective Time, upon the satisfaction or waiver by VoiceStream or
Omnipoint, as applicable of all the conditions for the consummation of the
Transactions, Omnipoint shall in accordance with the CIRI Agreements sell,
assign, transfer, convey and deliver to each Purchaser (as defined in each of
the CIRI Agreements) the FCC Licenses and Schedule I, Schedule II and Schedule
III Assets and Assumed Liabilities (as defined in each of the CIRI Agreements).
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ARTICLE 7
COVENANTS OF VOICESTREAM AND HOLDING COMPANY
VoiceStream and Holding Company agree that:
SECTION 7.1 VoiceStream Interim Operations. Except as set forth in the
VoiceStream Disclosure Schedule or as otherwise expressly contemplated hereby,
without the prior consent of Omnipoint, from the date hereof until the Effective
Time, VoiceStream shall not, nor shall it permit any members of the VoiceStream
Group or any VoiceStream Investment to:
(a) amend its certificate of incorporation, bylaws or other applicable
governing instrument;
(b) amend any material terms of the shares of VoiceStream Common
Stock;
(c) split, combine, subdivide or reclassify any shares of VoiceStream
Common Stock or declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of VoiceStream Common Stock, except for (i) regular
quarterly cash dividends, (ii) regular dividends on any future series of
preferred stock pursuant to the terms of such securities, or (iii)
dividends paid by any VoiceStream Subsidiary to VoiceStream or any
VoiceStream Subsidiary that is, directly or indirectly, wholly owned by
VoiceStream;
(d) take any action that would or would reasonably be expected to
prevent, impair or materially delay the ability of Omnipoint or VoiceStream
to consummate the transactions contemplated by this Agreement;
(e) change (i) its methods of accounting or accounting practices in
any material respect except as required by concurrent changes in U.S. GAAP
or by law or (ii) its fiscal year;
(f) enter into or acquire any new line of business that (i) is
material to the VoiceStream Group taken as a whole and (ii) is not
strategically related to the current business or operations of the
VoiceStream Group; or
(g) agree or commit to do any of the foregoing.
SECTION 7.2 Director and Officer Liability.
(a) Holding Company shall indemnify and hold harmless and advance
expenses to the present and former officers and directors of each member of
the Omnipoint Group and the present and former officers and directors of
each member of the VoiceStream Group, and each person who prior to the
Effective Time becomes an officer or director of any member of the
Omnipoint Group or any member of the VoiceStream Group (each an
"Indemnified Person"), in respect of acts or omissions by them in their
capacities as such occurring at or prior to the Effective Time (including,
without limitation, for acts or omissions occurring in connection with this
Agreement and the consummation of the Transactions) to the same extent
provided under Omnipoint's certificate of incorporation and bylaws in
effect on the date hereof (with respect to the officers and directors of
the Omnipoint Group) or VoiceStream's certificate of incorporation and
bylaws in effect on the date hereof (with respect to the officers and
directors of the VoiceStream Group) (collectively, the "Indemnified
Losses"); provided that such indemnification shall be subject to any
limitation imposed from time to time under applicable law. Without limiting
the generality of the foregoing, the Indemnified Losses shall include
reasonable costs of prosecuting a claim under this Section 7.2(a). Holding
Company shall periodically advance or reimburse each Indemnified Person for
all reasonable fees and expenses of counsel constituting Indemnified Losses
as such fees and expenses are incurred; provided that such Indemnified
Person shall agree to promptly repay to Holding Company the amount of any
such reimbursement if it shall be judicially determined by judgment or
order not subject to further
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appeal or discretionary review that such Indemnified Person is not entitled
to be indemnified by Holding Company in connection with such matter.
(b) For six years after the Effective Time, Holding Company shall
provide officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time (including, without
limitation, for acts or omissions occurring in connection with this
Agreement and the consummation of the Transactions) covering each such
Indemnified Person currently covered by Omnipoint's officers' and
directors' liability insurance policy (with respect to officers and
directors of the Omnipoint Group) or by VoiceStream's officers' and
directors' liability insurance policy (with respect to officers and
directors of the VoiceStream Group) on terms with respect to coverage and
amount (including with respect to the payment of attorney's fees) no less
favorable than those of such policy in effect on the date hereof (which
policies have been made available by Omnipoint to VoiceStream and by
VoiceStream to Omnipoint); provided that if the aggregate annual premiums
for such insurance during such period shall exceed 200% of the per annum
rate of premium paid by Omnipoint (with respect to the liability insurance
policies of the officers and directors of Omnipoint) or VoiceStream (with
respect to the liability insurance policies of the officers and directors
of VoiceStream) as of the date hereof for such insurance, then Holding
Company shall provide a policy with the best coverage as shall then be
available at 200% of such rate.
(c) The rights of each Indemnified Person and its heirs and legal
representatives under this Section 7.2 shall be in addition to any rights
such Person may have under the certificate of incorporation or bylaws of
any member of the Omnipoint Group (with respect to the Omnipoint officers
and directors) or the VoiceStream Group (with respect to the VoiceStream
officers and directors), or under Delaware Law or any other applicable
laws. These rights shall survive consummation of the Transactions and are
intended to benefit, and shall be enforceable by, each Indemnified Person.
SECTION 7.3 Listing of Stock. Holding Company shall use its reasonable best
efforts to cause (i) the shares of Holding Company Common Stock to be issued in
connection with the Transactions (and the shares of Holding Company Common Stock
underlying the securities to be issued pursuant to Section 3.6) to be approved
for listing on NASDAQ, subject to official notice of issuance, and (ii) the
securities of Omnipoint to be de-listed from NASDAQ following the Transactions.
SECTION 7.4 Holding Company Board of Directors. Immediately prior to the
Effective Time, the Board of Directors of Holding Company will take all
necessary action to expand the size of its Board of Directors of Holding Company
to 14 members and to appoint to the Holding Company Board, as of the Effective
Time, 4 current members of the Omnipoint Board selected by Omnipoint who agrees
to serve in that capacity (the "New Directors"). From the Effective Time until
and including the second annual meeting of the stockholders of Holding Company
taking place after the Effective Time, the Board of Directors of Holding Company
will nominate the New Directors for reelection to the Holding Company Board of
Directors at each subsequent annual or special meeting of the stockholders of
Holding Company at which the New Directors' term expires. The provisions of this
Section 7.4 shall survive the consummation of the Transactions and are intended
to benefit, and shall be enforceable by, the New Directors.
SECTION 7.5 Employee Matters.
(a) Holding Company shall, or shall cause its Subsidiaries to:
(i) honor the terms of all Omnipoint Employee Plans and Omnipoint
Benefit Arrangements as in effect on the date hereof (or as amended with
the prior consent of VoiceStream) and to pay the benefits required under
such terms of such plans and arrangements, in each case subject to
Section 7.5(c); and
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(ii) until December 31, 2001 (the "Benefits Maintenance Period"),
with respect to employees of Omnipoint or any of Omnipoint Subsidiaries
at the Effective Time ("Transferred Employees"), provide a level of
employee benefits and aggregate compensation which is substantially
comparable in the aggregate to the level of employee benefits and
aggregate compensation provided by Omnipoint and Omnipoint Subsidiaries
as of the Effective Time (other than the benefits provided under any
severance or termination benefit plans and arrangements of Omnipoint or
any Omnipoint Subsidiary).
(b) If Transferred Employees are included in any VoiceStream Benefit
Arrangement or VoiceStream Employee Plan, including without limitation, any
plan or arrangement providing vacation benefits, the Transferred Employees
shall receive credit for service prior to the Effective Time with Omnipoint
and the Omnipoint Subsidiaries and their predecessors to the same extent
such service was counted under similar Omnipoint Employee Plans and
Omnipoint Benefit Arrangements for purposes of determining eligibility to
participate, vesting and the level of benefits provided. If Transferred
Employees or their dependents are included in any medical, dental or health
plan other than the plan or plans they participated in at the Effective
Time (a "Successor Plan"), any such Successor Plan shall (i) waive all
limitations as to pre-existing conditions, exclusions and waiting periods,
except to the extent such limitations, exclusions or waiting periods were
applicable to such employees or dependents under any corresponding
Omnipoint Employee Plan at the Effective Time, and (ii) provide each such
employee or dependent with credit for any copayments and deductibles paid
prior to the date of inclusion in the Successor Plan in satisfying any
applicable deductible or out-of-pocket requirements under such Successor
Plan.
(c) Notwithstanding any of the above, nothing contained herein shall
be construed as requiring VoiceStream or any VoiceStream Subsidiary to
continue any specific Employee Plan or Benefit Arrangement or to continue
the employment of any specific person, provided, however, that any changes
that VoiceStream or any VoiceStream Subsidiary may make to any such
Employee Plan or Benefit Arrangement are permitted by the terms of the
applicable Employee Plan or Benefit Arrangement under any applicable Law.
SECTION 7.6 Access to Information. VoiceStream, between the date hereof and
the earlier of the effective time of the termination of this Agreement, between
the date hereof and the earlier of the Effective Time or the Termination of this
Agreement, shall (i) give to Omnipoint and Omnipoint's counsel, financial
advisors, auditors and other authorized representatives reasonable access during
normal business hours to the offices, properties, books and records of
VoiceStream and the VoiceStream Subsidiaries, (ii) furnish to Omnipoint and
Omnipoint's counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as
Omnipoint may reasonably request and (iii) instruct its employees, counsel,
financial advisors, auditors and other authorized representatives to cooperate
with Omnipoint's investigation. Any investigation pursuant to this Section 7.6
shall be conducted in such manner as not to interfere unreasonably with the
conduct of the business of VoiceStream.
SECTION 7.7 Covenants with Respect to Holding Company.
(a) Holding Company will not issue any stock as compensation for
services in connection with the Transactions or take any other action which
may cause such Transactions not to qualify as an exchange under Section 351
of the Code.
(b) Holding Company will retain the VoiceStream and Omnipoint shares
following the Transactions and Holding Company will not liquidate Omnipoint
or VoiceStream or otherwise dispose of such shares unless it obtains an
opinion of counsel to the effect that such liquidation
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or disposition will not cause the Transactions to fail to qualify as an
exchange under Section 351 of the Code.
(c) Holding Company will not take any action, or cause VoiceStream or
Omnipoint to take any action, which may cause the Transactions not to
qualify as an exchange under Section 351 of the Code.
SECTION 7.8 Registration Rights. Not later than 15 days after the Closing
Date, Holding Company shall prepare and file with the SEC a registration
statement (the "Affiliate Registration Statement") on Form S-1, S-3, if the
Holding Company is eligible to use such form, or any other filing form which
Holding Company shall deem appropriate, with respect to the sale of the shares
of Holding Company Common Stock to be held by any "affiliate" (as such term is
defined under Rule 145 of the 1933 Act) (and their limited partners) of either
Omnipoint or VoiceStream immediately following the Effective Time (the
"Affiliate Shares"). Holding Company shall take all reasonable steps necessary
to ensure that the Affiliate Registration Statement does not, as of its
effective date, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. Holding Company shall use its best efforts to
have the Affiliate Registration Statement declared effective as soon as
practicable after the Closing Date and shall keep the Affiliate Registration
Statement effective subject to appropriate "blackout" periods and other
exceptions and limitations as the Board of Directors of Holding Company
determines in good faith to be customary and appropriate until the earlier of
(i) one year after its effective date, (ii) all Affiliate Shares have been sold
thereunder, or (iii) all Affiliate Shares may be sold without registration under
the 1933 Act.
ARTICLE 8
COVENANTS OF VOICESTREAM AND OMNIPOINT
Each of the parties hereto agree that:
SECTION 8.1 Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each of the
parties will use its reasonable best efforts to promptly (i) take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the Transactions as soon as practicable, including preparing and
filing as promptly as practicable all documentation to effect all necessary
filings, notices, petitions, statements, registrations, submissions of
information, applications and other documents, and (ii) obtain and maintain
all approvals, consents, registrations, permits, authorizations and other
confirmations required to be obtained from any third party (including
consents of the FAA and other Governmental Bodies) that are necessary,
proper or advisable to consummate the Transactions. In connection with the
foregoing, Omnipoint will cooperate with and assist VoiceStream, and, with
respect to matters that are within Omnipoint's power or control, will use
its best efforts to promptly (i) take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate the Transactions as
soon as practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information,
applications and other documents, (ii) obtain and maintain all approvals,
consents, registrations, permits, authorizations and other confirmations
required to be obtained from any third party that are necessary, proper or
advisable to consummate the Transactions; provided, however, no member of
the VoiceStream Group or any VoiceStream Subsidiary shall be required to
divest or hold separate or otherwise take or commit to take any action that
limits its freedom of action with respect to (or Holding Company's ability
to retain)
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any member of the Omnipoint Group or any Omnipoint Investment or any
material portion of the assets of the VoiceStream Group or any of the
VoiceStream Group's business, product lines, or assets of the Omnipoint
Group, (iii) consummate the CIRI Transactions, and (iv) consummate the
Hutchison Transaction. At VoiceStream's request, Omnipoint will commit to
and implement any divestiture, hold separate or similar transaction or
action with respect to any asset or business of the Omnipoint Group or any
Omnipoint Investment, which commitment and implementation may, at
Omnipoint's option, be conditioned upon 4nd effective as of the Effective
Time. Subject to applicable laws relating to the exchange of information,
VoiceStream and Omnipoint shall have the right to review in advance, and to
the extent practicable to consult with each other on, all the information
relating to any member of the Omnipoint Group or any Omnipoint Investment
or any member of the VoiceStream Group or VoiceStream Investment, as
applicable, that appears in any filing made with, or written materials
submitted to, any third party and/or any Governmental Bodies in connection
with the Transactions.
(b) As promptly as practicable after the execution and delivery of
this Agreement, VoiceStream and Omnipoint shall prepare all appropriate
applications for FCC approval, and such other documents as may be required,
with respect to the transfer of control of Omnipoint and VoiceStream to
Holding Company (collectively, the "FCC Applications"). Not later than the
tenth business day following execution and delivery of this Agreement,
Omnipoint and VoiceStream will exchange with each other their respective
completed portions of the FCC Applications. Not later than the fifteenth
Business Day following the execution and delivery of this Agreement,
Omnipoint and VoiceStream shall file, or cause to be filed, the FCC
Applications. If the Effective Time shall not have occurred for any reason
within any applicable initial consummation period, and neither Omnipoint
nor VoiceStream shall have terminated this Agreement pursuant to Section
10.1, VoiceStream and Omnipoint shall jointly request one or more
extensions of the consummation period of such grant. No party hereto shall
knowingly take, or fail to take, any action if the intent or reasonably
anticipated consequence of such action or failure to act is, or would be,
to cause the FCC not to grant approval of the FCC Applications or delay
either such approval or the consummation of the transfer of control of
Omnipoint. VoiceStream and Omnipoint shall each pay one-half ( 1/2) of any
FCC fees, if applicable, in connection with the filing or granting of
approval of the FCC Applications. Each of VoiceStream and Omnipoint shall
bear its own expenses in connection with the preparation and prosecution of
the FCC Applications. VoiceStream and Omnipoint shall each use all
reasonable efforts to prosecute the FCC Applications in good faith and with
due diligence before the FCC and in connection therewith shall take such
action or actions as may be necessary or reasonably required in connection
with the FCC Applications, including furnishing to the FCC any documents,
materials or other information requested by the FCC in order to obtain such
FCC approval as expeditiously as practicable.
(c) Promptly after the date hereof, VoiceStream and Omnipoint (as may
be required pursuant to the HSR Act) will complete all documents required
to be filed with the Federal Trade Commission and the Department of Justice
in order to comply with the HSR Act and, not later than 10 Business Days
after the date hereof, together with the Persons who are required to join
in such filings, shall file the same with the appropriate Governmental
Bodies. VoiceStream and Omnipoint shall each pay one-half ( 1/2) of any
fees that may be payable in connection with the filing pursuant to the HSR
Act. VoiceStream, and Omnipoint shall promptly furnish all materials
thereafter required by any of the Governmental Bodies having jurisdiction
over such filings, and shall take all reasonable actions and shall file and
use all reasonable efforts to have declared effective or approved all
documents and notifications with any such Governmental Bodies, as may be
required under the HSR Act or other federal antitrust laws for the
consummation of the Transactions and any other transactions contemplated
hereby.
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(d) In addition to the filings required by the HSR Act and the
Communications Act, the Parties shall (i) as promptly as possible and in
any event within 15 days after the date hereof file with any other
applicable Governmental Bodies (including, but not limited to the FAA) the
applications and related documents required to be filed by such
Governmental Bodies (and prosecute diligently any such applications,
including providing such information as such Governmental Bodies may
reasonably request) in order to consummate the Transactions, (ii) cooperate
with each other as may reasonably be requested in connection with the
foregoing, and (iii) otherwise use their best efforts to obtain promptly
the requested consent and approval of the applications by any applicable
Governmental Bodies. VoiceStream and Omnipoint shall each pay one half
(1/2) of all filing or other Governmental Body filing or grant fees in
connection with the applications requesting its consent to the consummation
of the Transactions.
SECTION 8.2 Registration Statement and Proxy Statement. VoiceStream and
Omnipoint shall cooperate and promptly prepare and file with the SEC as soon as
practicable a Registration Statement on Form S-4 (the "Form S-4") under the 1933
Act, with respect to the Holding Company Common Stock issuable in the Mergers, a
portion of which Registration Statement shall also serve as the joint proxy
statement with respect to the meetings of stockholders of Omnipoint and of
VoiceStream in connection with the Transactions (the "Proxy
Statement/Prospectus"). The respective parties shall cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the 1933 Act, the 1934 Act and the
rules and regulations thereunder. VoiceStream shall use all reasonable efforts,
and Omnipoint shall cooperate with VoiceStream, to have the Form S-4 declared
effective by the SEC as promptly as practicable and to keep the Form S-4
effective as long as is necessary to consummate the Transactions. VoiceStream
shall, as promptly as practicable, provide copies of any written comments
received from the SEC with respect to the Form S-4 to Omnipoint and advise
Omnipoint of any verbal comments with respect to the Form S-4 received from the
SEC. VoiceStream shall use its best efforts to obtain, prior to the effective
date of the Form S-4, all necessary state securities laws or "Blue Sky" permits
or approvals required to carry out the Transactions and shall pay all expenses
incident thereto. VoiceStream agrees that the Proxy Statement/Prospectus and
each amendment or supplement thereto at the time of mailing thereof and at the
time of the respective meetings of stockholders of Omnipoint and VoiceStream,
or, in the case of the Form S-4 and each amendment or supplement thereto, at the
time it is filed or becomes effective, shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing
shall not apply to the extent that any such untrue statement of a material fact
or omission to state a material fact was made by VoiceStream in reliance upon
and in conformity with written information concerning Omnipoint furnished to
VoiceStream by Omnipoint specifically for use in the Proxy Statement/Prospectus.
Omnipoint agrees that the written information concerning Omnipoint provided by
it for inclusion in the Proxy Statement/Prospectus and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
respective meetings of stockholders of Omnipoint and VoiceStream, or, in the
case of written information concerning Omnipoint provided by Omnipoint for
inclusion in the Form S-4 or any amendment or supplement thereto, at the time it
is filed or becomes effective, shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. No amendment or supplement to the Proxy
Statement/Prospectus shall be made by VoiceStream or Omnipoint without the
approval of the other party. VoiceStream shall advise Omnipoint, promptly after
it receives notice thereof, of the time when the Form S-4 has become effective
or any supplement or amendment has been filed, the issuance of any stop order,
the suspension of the qualification of VoiceStream Common Stock issuable in
connection with the Transactions for offering or sale in any jurisdiction, or
any request by the SEC for amendment of the Proxy Statement/
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Prospectus or the Form S-4 or comments thereon and responses thereto or requests
by the SEC for additional information.
SECTION 8.3 Public Announcements. So long as this Agreement is in effect,
Omnipoint and VoiceStream will consult with each other before issuing any press
release or making any public statement with respect to the Transactions and
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make any
such public statement without the prior consent of the other party, which
consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, any such press release or public statement as may be required by
applicable law or any listing agreement with any national securities exchange or
NASDAQ may be issued without such consent, if the party making such release or
statement has used its reasonable efforts to consult with the other party.
SECTION 8.4 Further Assurances. At and after the Effective Time, the
officers and directors of Holding Company will be authorized to execute and
deliver, in the name and on behalf of Omnipoint or VoiceStream, any deeds, bills
of sale, assignments or assurances and to take and do, in the name and on behalf
of Omnipoint or VoiceStream, any other actions and things to vest, perfect or
confirm of record in Holding Company any and all right, title and interest in,
to and under any of the rights, properties or assets of Omnipoint or VoiceStream
acquired or to be acquired by Holding Company as a result of, or in connection
with, the Transactions.
SECTION 8.5 Notices of Certain Events. Each of Omnipoint and VoiceStream
shall promptly notify the other of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Transactions;
(b) any notice or other communication from any Governmental Body in
connection with the Transactions;
(c) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be reasonably expected to cause any
representation or warranty made by it and contained herein to be untrue or
inaccurate in any material respect at any time during the period commencing
on the date hereof and ending at the Effective Time; provided, however,
that the delivery of any notice pursuant to this Section 8.5 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice;
(d) any failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
8.5 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice;
(e) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against such party which, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 4.13, in the case of Omnipoint, or
Section 5.13, in the case of VoiceStream, or which relate to the
consummation of the Transactions; and
(f) any event, condition or state of facts which could have a Material
Adverse Effect on such party.
SECTION 8.6 Tax-free Treatment. Prior to the Effective Time, each party
shall use its best efforts to cause (i) the VoiceStream Merger to qualify as a
reorganization described in Section 368(a) of the Code and/or as an exchange
described in Section 351 of the Code and (ii) the Omnipoint Merger, taken
together with the VoiceStream Merger and the Hutchison Transaction, to qualify
as an exchange described in Section 351 of the Code, to obtain the opinions of
counsel
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referred to in Sections 9.2(b), 9.2(c) and 9.3(b), including the execution of
the letters of representation referred to therein, and will not take any action
reasonably likely to cause the Mergers not to so qualify.
SECTION 8.7 Affiliates. Within 30 days following the date of this
Agreement, Omnipoint shall deliver to VoiceStream a letter identifying all known
Persons who may be deemed "affiliates" of Omnipoint under Rule 145 of the 1933
Act (a "Omnipoint Rule 145 Affiliate"). Omnipoint shall use its best efforts to
obtain a written agreement from each Omnipoint Rule 145 Affiliate as soon as
practicable and, in any event, at least 30 days prior to the Effective Time,
substantially in the form of Exhibit B hereto. Holding Company shall be entitled
to place legends as specified in such Omnipoint Rule 145 Affiliate letters on
the certificates evidencing any Holding Company Common Stock to be received by
such Affiliates pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Holding
Company Common Stock, consistent with the terms of such Affiliate letters.
SECTION 8.8 Stockholders' Meeting.
(a) Each of Omnipoint and VoiceStream shall cause a meeting of its
respective stockholders (the "Omnipoint Stockholders' Meeting" and the
"VoiceStream Stockholders' Meeting" respectively) to be duly called and
held as soon as reasonably practicable for the purpose of voting on the
approval and adoption of (i) in the case of VoiceStream, this Agreement,
the VoiceStream Merger Agreement and the VoiceStream Merger and (ii) in the
case of Omnipoint, this Agreement, the Omnipoint Merger Agreement and the
Omnipoint Merger. In connection with each party's respective meeting, each
party will, (i) subject to Section 8.8(b), use its reasonable best efforts
to obtain such approvals from its respective stockholders and (ii)
otherwise comply with all legal requirements applicable to such meeting.
(b) Except as provided below, the Board of Directors of each party
shall unanimously recommend approval and adoption of this Agreement and the
Transactions by its respective stockholders and VoiceStream and Omnipoint
shall each take all lawful action to solicit such approval, including
timely mailing of the Proxy Statement/Prospectus. Omnipoint shall be
permitted to withdraw, or modify in a manner adverse to VoiceStream, its
recommendation to its stockholders, but only if (i) the Board of Directors
of Omnipoint determines in good faith by majority vote, on the basis of the
advice of Omnipoint's outside counsel that it must take such action in
order for the Board of Directors to comply with its fiduciary duties under
applicable Delaware Law, (ii) Omnipoint shall have delivered to VoiceStream
three business days' prior written notice advising Voicestream that it
intends to take such action and Omnipoint's Board of Directors has
considered any proposed changes to this Agreement (if any) proposed by
VoiceStream and (iii) Omnipoint has fully and completely complied with
Sections 6.2 and 8.5. Unless this Agreement is previously terminated in
accordance with Article 10, each party shall submit this Agreement to its
stockholders at the meeting required to be called and held pursuant to
Section 8.8(a), even if such party's Board of Directors determines at any
time after the date hereof that it is no longer advisable or recommends
that its stockholders reject it.
SECTION 8.9 Conduct of Business by Holding Company and the Merger
Subsidiaries Pending the Mergers. Prior to the Effective Time, the parties shall
cause Holding Company and the Merger Subsidiaries to (a) perform their
respective obligations under this Agreement and the Merger Agreements in
accordance with the terms hereof and thereof and take all other actions
necessary or appropriate for the consummation of the Transactions, (b) not incur
directly or indirectly any liabilities or obligations except those incurred in
connection with the consummation of this Agreement, the Merger Agreements and
the Transactions (c) not engage directly or indirectly in any business or
activities of any type or kind whatsoever and not enter into any agreements or
arrangements with any person or entity, or be subject to or be bound by any
obligation or undertaking
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which is not contemplated by this Agreement or the Merger Agreements and (d) not
create, grant or suffer to exist any Lien upon their respective properties or
assets which would attach to any properties or assets of VoiceStream or
Omnipoint after the Effective Time.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1 Conditions to the Obligations of Each Party. The obligations of
Omnipoint, Holding Company and VoiceStream to consummate the Transactions are
subject to the satisfaction of the following conditions:
(a) the Omnipoint Stockholders' Approval shall have been obtained;
(b) any applicable waiting period under the HSR Act relating to the
Transactions shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the
Transactions;
(d) the shares of Holding Company Common Stock to be issued in the
Transactions shall have been approved for listing on the NASDAQ, subject to
official notice of issuance;
(e) all Governmental Consents shall have been obtained and be in
effect, and be subject to no limitations, conditions, restrictions or
obligations, except for such consents the failure to obtain would not, and
such limitations, conditions, restrictions or obligation as would not,
individually or in the aggregate, be reasonably expected to have a
Omnipoint Material Adverse Effect or VoiceStream Material Adverse Effect;
(f) no court, arbitrator or Governmental Body shall have issued any
order, and there shall not be any statute, rule or regulation restraining
or prohibiting the effective operation of the business of VoiceStream and
the VoiceStream Subsidiaries or Omnipoint and the Omnipoint Subsidiaries
after the Effective Time that would be reasonably expected to have a
VoiceStream Material Adverse Effect or Omnipoint Material Averse Effect
(after giving effect to the Transactions);
(g) the CIRI Transactions shall have been consummated prior to the
Effective Time;
(h) the VoiceStream Stockholders' Approval shall have been obtained;
(i) the Form S-4 shall have become effective and shall be effective at
the Effective Time, and no stop order suspending effectiveness of the Form
S-4 shall have been issued, no action, suit, proceeding or investigation by
the SEC to suspend the effectiveness thereof shall have been initiated and
be continuing, or, to the knowledge of VoiceStream or Omnipoint,
threatened, and all necessary approvals under state securities laws
relating to the issuance or trading of Holding Company Common Stock to be
issued to Omnipoint stockholders in connection with the Transactions shall
have been received;
(j) the Hutchison Transaction shall be consummated on, or prior to,
the Effective Time; and
(k) the FCC Consent shall have become a Final Order and shall not
contain any conditions with respect to Omnipoint or VoiceStream, which
conditions would have a VoiceStream Material Adverse Effect or Omnipoint
Material Adverse Effect.
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SECTION 9.2 Conditions to the Obligations of VoiceStream. The obligations
of VoiceStream to consummate the Transactions are subject to the satisfaction of
the following further conditions:
(a) (i) Omnipoint shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of Omnipoint
contained in this Agreement and in any certificate or other writing
delivered by Omnipoint pursuant hereto, disregarding all qualifications and
exceptions contained therein relating to materiality or a Omnipoint
Material Adverse Effect or any similar standard or qualification, shall be
true and correct at and as of the Effective Time, as if made at and as of
such time (other than representations or warranties that address matters
only as of a certain date which shall be true and correct as of such date),
with only such exceptions as, individually or in the aggregate, have not
had and would not be reasonably expected to have a Omnipoint Material
Adverse Effect, and (iii) VoiceStream shall have received a certificate
signed by an executive officer of Omnipoint to the foregoing effect;
(b) VoiceStream shall have received an opinion of Jones Day, in form
and substance reasonably satisfactory to VoiceStream on the basis of
certain facts, representations and assumptions set forth in the opinion,
dated the Closing Date, to the effect that (i) the VoiceStream Merger will
be treated for federal income tax purposes as a reorganization described in
Section 368(a) of the Code, and (ii) each of VoiceStream, Holding Company
and, in the case of a reorganization described in Section 368(a)(2)(E) of
the Code, Merger Sub A, will be a party to the reorganization within the
meaning of Section 368(b) of the Code; or to the effect that the
VoiceStream Merger will be treated as a transfer of property by the
VoiceStream stockholders, other than holders of Dissenting Shares, to
Holding Company described in Section 351(a) of the Code. In rendering such
opinion, such counsel shall be entitled to rely upon certain documentation
including representations of officers of VoiceStream and Holding Company in
substantially the same form as Exhibits C and D;
(c) VoiceStream shall have received an opinion of Jones Day, in form
and substance reasonably satisfactory to VoiceStream on the basis of
certain facts, representations and assumptions set forth in the opinion,
dated the Closing Date, to the effect that the Transactions should not
cause the spinoff of VoiceStream on May 3, 1999 (the "Spinoff") to fail to
be a transaction described in Section 355(a) of the Code with respect to
the shareholders of Western. In rendering such opinion, such counsel shall
be entitled to rely upon certain documentation, including representations
of officers of VoiceStream;
(d) no Default Event shall occur, or shall reasonably be expected to
occur, as a result of the consummation of the Transactions;
(e) VoiceStream shall have received an opinion of regulatory counsel
of Omnipoint, dated the Effective Time, containing the items listed on
Exhibit E;
(f) VoiceStream shall have received an opinion of corporate counsel to
Omnipoint in form and substance reasonably acceptable to VoiceStream;
(g) no more than 10% of the shares of Omnipoint Common Stock
outstanding immediately prior to the Effective Time shall be Dissenting
Shares; and
(h) no more than 10% of the shares of VoiceStream Common Stock
outstanding immediately prior to the Effective Time shall be Dissenting
Shares.
SECTION 9.3 Conditions to the Obligations of Omnipoint. The obligations of
Omnipoint to consummate the Transactions are subject to the satisfaction of the
following further conditions:
(a) VoiceStream shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time;
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(b) Omnipoint shall have received the opinion of Piper Marbury, based
upon reasonable requested representation letters and dated the Closing
Date, to the effect that (i) the Omnipoint Merger will be treated as a
transfer of property to Holding Company by the holders of Omnipoint Common
Stock described in Section 351(a) or Section 351(b) of the Code and (ii) no
gain or loss will be recognized for federal income tax purposes by
Omnipoint in connection with the Transactions. In rendering such opinion,
such counsel shall be entitled to rely upon certain documentation including
representations of officers of Omnipoint, VoiceStream and Holding Company
and of 5% or greater shareholders of Omnipoint and VoiceStream, in
substantially the same form as Exhibits F-1 through F-5.
(c) the representations and warranties of VoiceStream contained in
this Agreement and in any certificate or other writing delivered by
VoiceStream pursuant hereto, disregarding all qualifications and exceptions
contained therein relating to materiality or VoiceStream Material Adverse
Effect or any similar standard or qualification shall be true at and as of
the Effective Time as if made at and as of such time (other than
representations and warranties that address matters only as of a certain
date, which shall be true as of such date), with only such exceptions as,
individually or in the aggregate, have not had and would not be reasonably
expected to have a VoiceStream Material Adverse Effect;
(d) Omnipoint shall have received an opinion of regulatory counsel to
VoiceStream, dated the Effective Time, containing the items listed on
Exhibit G;
(e) Omnipoint shall have received a certificate signed by an executive
officer of VoiceStream certifying as to the matters set forth in (a) and
(c);
(f) Omnipoint shall have received an opinion of corporate counsel to
VoiceStream in form and substance reasonably acceptable to Omnipoint; and
(g) VoiceStream shall not have agreed to any modification of the
exchange rights agreement with the Cook Entities which would increase the
number of shares of Holding Company Common Stock issuable to the Cook
Entities upon exercise of their exchange rights which they received in the
CIRI Transactions.
Notwithstanding anything contained to the contrary in Section 9.3(c) or
anywhere else in this Agreement, VoiceStream may enter into any Subsequent
Transaction, and neither any changes of any representation or warranty of
VoiceStream contained in this Agreement as a result of any Subsequent
Transaction, nor any amendments or exceptions to the VoiceStream Disclosure
Schedule resulting from or related to any Subsequent Transaction, shall result
in a failure of the conditions set forth in Section 9.3(c); provided, in each
case, that any such Subsequent Transaction would not, or would reasonably not be
expected to prevent, impair or materially delay the ability of Omnipoint or
VoiceStream to consummate the Transactions.
ARTICLE 10
TERMINATION
SECTION 10.1 Termination. This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of Omnipoint
or of VoiceStream):
(a) by mutual written agreement of Omnipoint and VoiceStream;
(b) by either Omnipoint or VoiceStream, if:
(i) the Transactions have not been consummated on or before March
31, 2000 (the "End Date"); provided that if (A)(x) the Effective Time
has not occurred by March 31,
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2000 by reason of the non-satisfaction of any of the conditions set
forth in Sections 9.1(a), 9.1(b), 9.1(c), 9.1(d), 9.1(e), 9.1(f),
9.1(g), 9.1(i), 9.1(j) and 9.1(k) and (y) all other conditions in
Article 9 have theretofore been satisfied or waived or are then capable
of being promptly satisfied then, either party may, upon written notice
to the other party given on or before March 31, 2000, extend the End
Date to June 30, 2000; provided further that the right to terminate this
Agreement pursuant to this Section 10.1(b)(i) shall not be available to
any party whose breach of any provision of this Agreement results in the
failure of the Transactions to be consummated by the End Date; or
(ii) (A) there shall be any law or regulation that makes
consummation of the Transactions illegal or otherwise prohibited or (B)
any judgment, injunction, order or decree of any court or other
Governmental Body having competent jurisdiction enjoining Omnipoint and
VoiceStream from consummating the Transactions is entered and such
judgment, injunction, order or decree shall have become final and
non-appealable;
(c) by VoiceStream, if:
(i) the Board of Directors of Omnipoint shall have failed to
recommend or withdrawn, or modified in a manner adverse to VoiceStream,
its approval or recommendation of this Agreement and the Transactions,
or shall have failed to call the Omnipoint Stockholders' Meeting in
accordance with Section 8.8(a) (or the Board of Directors of Omnipoint
resolves to do any of the foregoing);
(ii) Omnipoint shall have willfully and materially breached any of
its obligations under Sections 8.8(b) or 6.2; or
(iii) Omnipoint Stockholders' Approval shall not have been obtained
at the Omnipoint Stockholders' Meeting (or any adjournment or
postponement thereof);
(iv) a breach of any representation, warranty, covenant or
agreement on the part of Omnipoint set forth in this Agreement shall
have occurred that would cause the condition set forth in Section 9.2(a)
not to be satisfied, and such condition shall be incapable of being
satisfied by the End Date; or
(d) by Omnipoint, if:
(i) the Board of Directors of VoiceStream shall have failed to
recommend or withdrawn, or modified in a manner adverse to VoiceStream,
its approval or recommendation of this Agreement and the Transactions,
or shall have failed to call the VoiceStream Stockholders' Meeting in
accordance with Section 8.8(a) (or the Board of Directors of VoiceStream
resolves to do any of the foregoing);
(ii) VoiceStream shall have willfully and materially breached any
of its obligations under Sections 8.8(b);
(iii) VoiceStream Stockholders' Approval shall not have been
obtained at the VoiceStream Stockholders' Meeting (or any adjournment or
postponement thereof); or
(iv) a breach of any representation, warranty, covenant or
agreement on the part of VoiceStream set forth in this Agreement shall
have occurred that would cause the condition set forth in Section 9.3(a)
and (c) not to be satisfied, and such condition shall be incapable of
being satisfied by the End Date.
The party desiring to terminate this Agreement pursuant to this
Section 10.1 (other than pursuant to Section 10.1(a)) shall give notice of
such termination to the other party.
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SECTION 10.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 10.1, this Agreement shall become void and of no effect
without liability, except as set forth in Section 10.3, of any party (or any
stockholder, director, officer, employee, agent, consultant or representative of
such party) to the other parties hereto, except that the agreements contained in
this Section 10.2 and in the Confidentiality Agreement shall survive the
termination hereof and (b) no such termination shall relieve any party of any
liability or damages resulting from any breach by such party of this Agreement.
SECTION 10.3 Fees and Expenses.
(a) Except as otherwise provided in this Section 10.3 or Section
8.1(c), all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense whether or not
the Transactions are consummated; provided that Omnipoint and VoiceStream
shall share equally all fees and expenses, other than attorneys' and
accounting fees and expenses, incurred in relation to the printing and
filing of the Proxy Statement/Prospectus and except as set forth on Section
8.1(c).
(b) If this Agreement is terminated pursuant to Section 10.1(c)(i) or
Section 10.1(c)(ii), Omnipoint shall pay to VoiceStream a termination fee
of $70,000,000 in cash (the "Termination Fee").
(c) If (A) this Agreement is terminated pursuant to Section
10.1(c)(iii), (B) after the date hereof and prior to the Omnipoint
Stockholders' Meeting, an Acquisition Proposal is made or continued or
renewed by any Person and not withdrawn prior to such meeting and (C)
within one year of the Omnipoint Stockholders' Meeting, either (1)
Omnipoint or any Omnipoint Subsidiary enters into an agreement with such
Person with respect to an Acquisition Proposal which provides for (x)
transfer or issuance of securities representing more than 50% of the equity
or voting interests in Omnipoint, (y) a merger, consolidation,
recapitalization or another transaction resulting in the issuance of cash
or securities of such Person (other than a reincorporation or a holding
company merger that results in the Omnipoint stockholders owning all of the
equity interests in the surviving corporation) to Omnipoint stockholders in
exchange for more than 50% of the equity or voting interests in Omnipoint,
or (z) transfer of assets, securities or ownership interests representing
more than 50% of the consolidated assets or earning power of the Omnipoint
Group, or (2) any Person or Group commences a tender offer that results in
the acquisition by the Person making the tender offer of a majority of the
Omnipoint Common Stock, then Omnipoint shall pay to VoiceStream the
Termination Fee.
(d) Any payment of the Termination Fee pursuant to this Section 10.3
shall be made within one Business Day after termination of this Agreement
except that any payment of the Termination Fee pursuant to Section 10.3(c)
shall be paid within one Business Day after it becomes payable. Any payment
of the Termination Fee shall be made by wire transfer of immediately
available funds. If one party fails to pay to the other promptly any fee or
expense due hereunder (including the Termination Fee), the defaulting party
shall pay the costs and expenses (including legal fees and expenses) in
connection with any action, including the prosecution of any lawsuit or
other legal action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate of The Bank
of New York in New York City from the date such fee was required to be paid
to the date it is paid.
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ARTICLE 11
MISCELLANEOUS
SECTION 11.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,
if to VoiceStream or Holding Company, to:
3650 131 Avenue SE
Bellevue, Washington 98006
Attention: Alan R. Bender, Esq.
Fax: (425) 586-8080
with a copy to:
Friedman Kaplan & Seiler LLP
875 Third Avenue
New York, New York 10022
Attention: Barry A. Adelman, Esq.
Fax: (212) 355-6401
if to Omnipoint, to:
Omnipoint Corporation
Three Bethesda Metro Center
Suite 400
Bethesda, Maryland 20814
Attention: Doug G. Smith
Fax: (301) 951-3591
with copies to:
Piper & Marbury L.L.P.
1200 Nineteenth Street, N.W.
Washington, D.C. 20036
Attention: Edwin M. Martin, Jr., Esq.
Fax: (202) 233-2085
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. on a Business Day,
in the place of receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding Business Day
in the place of receipt.
SECTION 11.2 Reliance on Representations. Notwithstanding any
investigation, knowledge or review made at any time by or on behalf of any party
hereto, the parties acknowledge and agree that all representations and
warranties contained in this Agreement, or in the Exhibits or in any of the
documents, certification or agreements delivered in connection therewith are
being relied upon as a material inducement to enter into this Agreement and the
Transactions.
SECTION 11.3 Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or,
except as provided under Section 10.2 of this Agreement, the termination of this
Agreement.
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SECTION 11.4 Amendments; No Waivers.
(a) Subject to applicable law, any provision of this Agreement may be
amended or waived prior to the Effective Time if, but only if, such
amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by
each party against whom the waiver is to be effective; provided that, after
the adoption of this Agreement by the stockholders of Omnipoint, no such
amendment or waiver shall be made or given that requires the approval of
the stockholders of Omnipoint unless the required approval is obtained.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 11.5 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto.
SECTION 11.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of law rules of such state.
SECTION 11.7 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the Transactions shall be brought in any federal court
located in the State of Delaware or any Delaware state court, and each of the
parties hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 11.1 shall be deemed effective service of
process on such party.
SECTION 11.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS.
SECTION 11.9 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. No provision of
this Agreement is intended to confer any rights, benefits, remedies, obligations
or liabilities hereunder upon any Person other than the parties hereto and their
respective successors and assigns.
SECTION 11.10 Entire Agreement; No Third Party Beneficiaries. This
Agreement, together with the Confidentiality Agreement, constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement. Except as
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set forth in Sections 7.2 and 7.4 above, this Agreement is not intended to
confer upon any Person other than the parties hereto any rights or remedies.
SECTION 11.11 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
SECTION 11.12 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the Transactions is not affected in
any manner materially adverse to any party. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner so that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 11.13 Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
SECTION 11.14 Schedules. Each of Omnipoint and VoiceStream has set forth
information in its respective Disclosure Schedule in a section thereof that
corresponds to the section of this Agreement to which it relates. A matter set
forth in one section of the Disclosure Schedules must be set forth in any other
relevant section of the Disclosure Schedule irrespective of its relevance to the
latter section of the Disclosure Schedule or section of the Agreement being
apparent on the face of the information disclosed in the Disclosure Schedule.
The fact that any item of information is disclosed in a Disclosure Schedule to
this Agreement shall not be construed to mean that such information is required
to be disclosed by this Agreement. Such information and the dollar thresholds
set forth herein shall not be used as a basis for interpreting the terms
"material" or "Material Adverse Effect" or other similar terms in this Agreement
except as otherwise expressly set forth in such Disclosure Schedules.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
VOICESTREAM WIRELESS CORPORATION
By: /s/ JOHN W. STANTON
------------------------------------
Name: John W. Stanton
Title: Chairman
OMNIPOINT CORPORATION
By: /s/ DOUGLAS G. SMITH
------------------------------------
Name: Douglas G. Smith
Title: Chairman, President & CEO
VOICESTREAM WIRELESS HOLDING
CORPORATION
By: /s/ DONALD GUTHRIE
------------------------------------
Name: Donald Guthrie
Title: Vice Chairman
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ANNEX B
[OPINION OF GOLDMAN, SACHS & CO. (OMNIPOINT REORGANIZATION)]
PERSONAL AND CONFIDENTIAL
June 23, 1999
Board of Directors
VoiceStream Wireless Corporation
3650 131st Avenue SE
Suite 400
Bellevue, WA 98006
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to VoiceStream Wireless Corporation ("VoiceStream") of the Merger
Consideration (as defined below) to be paid by VoiceStream under the Agreement
and Plan of Reorganization (the "Agreement"), dated as of June 23, 1999, among
VoiceStream, VoiceStream Wireless Holding Corporation (the "Holding Company")
and Omnipoint Corporation ("Omnipoint"), which provides for the merger of
VoiceStream Subsidiary I, a to be formed wholly-owned subsidiary of Holding
Company, with and into VoiceStream and the merger of VoiceStream Subsidiary II,
a to be formed wholly-owned subsidiary of Holding Company, with and into
Omnipoint in which, as more fully set forth in the Agreement, (x) each
outstanding share of common stock, par value $0.01 per share ("Omnipoint Common
Stock"), of Omnipoint will be converted into the right to receive, at the
election of the holder of such share and subject to certain procedures and
limitations contained in the Agreement, (i) cash in an amount equal to the sum
of (A) the average closing price (calculated on a weighted average based upon
the volume of shares traded on each day) (the "Closing Date Market Price") for
each share of VoiceStream common stock, no par value (the "VoiceStream Common
Stock"), during the period of the fifteen most recent trading days ending on the
business day prior to the Effective Time (as defined in the Agreement)
multiplied by 0.825 and (B) $8.00, (ii) a number of shares of Holding Company
common stock, par value $0.001 per share ("Holding Company Common Stock"), equal
to the sum of (A) 0.825 and (B) $8.00 divided by the Closing Date Market Price
or (iii) (A) 0.825 of a share of Holding Company Common Stock and (B) $8.00 (the
"Merger Consideration") and (y) each outstanding share of VoiceStream Common
Stock will be converted into the right to receive one share of Holding Company
Common Stock.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with VoiceStream, having provided certain investment banking services
to VoiceStream and its former parent, Western Wireless Corporation ("Western"),
from time to time, including having acted as lead manager in the initial public
offering of 11 million shares of common stock, no par value (the "Western Common
Stock"), of Western in May 1996; having acted as lead manager in the public
offering of $200 million aggregate principal amount of 10.5% senior subordinated
notes due June 2006, of Western in May 1996; having acted as lead manager in the
private offering of $200 million aggregate principal amount of 10.5% senior
subordinated notes due February 2007, of Western in
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October 1996; and having acted as lead manager in the public offering of 12.1
million shares of Western Common Stock in April 1998; having acted as Western's
financial advisor in connection with the sale of 19.9% of the outstanding shares
of VoiceStream Common Stock to Hutchison Telecommunications PCS (USA) Limited
("Hutchison") in February 1998; and having acted as VoiceStream's financial
advisor in connection with, and having participated in certain of the
negotiations leading to, the Agreement. Investment funds affiliated with
Goldman, Sachs & Co. have a principal investment in VoiceStream in the amount of
9,730,208 shares of VoiceStream Common Stock and have the right to designate a
nominee for election to VoiceStream's Board of Directors. Terrence O'Toole, a
Managing Director of Goldman, Sachs & Co., is a director of VoiceStream. In
addition, Goldman Sachs Credit Partners, L.P., an affiliate of Goldman, Sachs &
Co., has offered to be Lead Arranger and Syndication Agent of a $3 billion
credit facility (the "Facility") in connection with the Merger, and has offered
a commitment to fully underwrite the Facility. In addition, we have provided
certain investment banking services to Omnipoint from time to time, including
having acted as co-manager in the public offering of 6 million shares of
Omnipoint Common Stock in June 1996; having acted as co-manager in the private
offering of $250 million aggregate principal amount of 11.625% senior notes due
August 2006 in August 1996; and having acted as co-manager in the private
offering of $200 million aggregate principal amount of 11.625% senior notes due
August 2006 in November 1996. Goldman, Sachs & Co. provides a full range of
financial advisory and securities services and, in the course of its normal
trading activities, may from time to time effect transactions and hold
securities, including derivative securities, of VoiceStream and Omnipoint for
its own account and for the accounts of customers. As of June 17, 1999, Goldman,
Sachs & Co. had a long position of $46.4 million of Omnipoint funded bank loans;
a net long position of $7.1 million of Omnipoint unfunded bank loans; a net
short position of 214,627 shares of Omnipoint Common Stock; a short position of
40,000 call options on Omnipoint Common Stock at an exercise price of $15.00; a
long position of 100,000 put options on Omnipoint Common Stock at an exercise
price of $5.00; a long position of $16.5 million face value of Omnipoint
convertible preferred stock; and a net short position of $2.0 million aggregate
principal amount of Omnipoint 11.625% senior notes due August 2006. As of the
same date and in addition to the principal investment referred to above,
Goldman, Sachs & Co. had a long position of $8.5 million of VoiceStream bank
loans.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Securities Purchase Agreement dated June 23, 1999 among
Omnipoint, VoiceStream and Hutchison; the Stock Subscription Agreement dated
June 23, 1999 among Hutchison, Hutchison Telecommunications Limited and Holding
Company; Registration Statement on Form 10 of VoiceStream dated April 13, 1999;
Annual Reports to Stockholders and Annual Reports on Form 10-K of Western for
the three years ended December 31, 1998; Annual Reports to Stockholders and
Annual Reports on Form 10-K of Omnipoint for the three years ended December 31,
1998; certain interim reports to stockholders and Quarterly Reports on Form 10-Q
of VoiceStream, Western and Omnipoint; certain other communications from
VoiceStream, Western and Omnipoint to their respective stockholders; certain
internal financial analyses and forecasts for VoiceStream prepared by the
management of VoiceStream, certain financial analyses and forecasts for
Omnipoint prepared by the management of VoiceStream, and certain internal
financial analyses and forecasts for Omnipoint prepared by the management of
Omnipoint (collectively, the "Forecasts"). We also have held discussions with
members of senior management of VoiceStream and Omnipoint regarding the
strategic rationale for, and the potential benefits of, the transactions
contemplated by the Agreement and the past and current business operations,
financial condition and future prospects of their respective companies. In
addition, we have reviewed the reported price and trading activity for the
VoiceStream Common Stock and Omnipoint Common Stock, compared certain financial
and stock market information for VoiceStream and Omnipoint with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the
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U.S. wireless communications industry specifically and in other industries
generally and performed such other studies and analyses as we considered
appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In this regard, we have
assumed with your consent that the Forecasts have been reasonably prepared on a
basis reflecting the best currently available estimates and judgments of
VoiceStream and Omnipoint, as the case may be. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of VoiceStream
or Omnipoint or any of their subsidiaries and we have not been furnished with
any such evaluation or appraisal. We have also taken into account the Company's
view as to the possible tax consequences of the transactions contemplated by the
Agreement as described to us by the Company. We have assumed that all material
governmental, regulatory or other consents and approvals necessary for the
consummation of the transaction contemplated by the Agreement will be obtained
without any adverse effect on VoiceStream or Omnipoint or on the contemplated
benefits of the transactions contemplated by the Agreement. Our advisory
services and the opinion expressed herein are provided for the information and
assistance of the Board of Directors of VoiceStream in connection with its
consideration of the transactions contemplated by the Agreement and such opinion
does not constitute a recommendation as to how any holder of shares of
VoiceStream Common Stock should vote with respect to such transactions.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the Merger
Consideration to be paid by VoiceStream pursuant to the Agreement is fair from a
financial point of view to VoiceStream.
Very truly yours,
(GOLDMAN, SACHS & CO.)
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[OPINION OF LEHMAN BROTHERS (OMNIPOINT REORGANIZATION)]
ANNEX C
June 23, 1999
Board of Directors
Omnipoint Corporation
3 Bethesda Metro Center
Suite 400
Bethesda, MD 20814
Members of the Board:
We understand that Omnipoint Corporation ("Omnipoint"), VoiceStream
Wireless Corporation ("VoiceStream"), VoiceStream Acquisition Corp. ("VAC"), a
newly-formed Washington company, and a wholly-owned subsidiary of Newco,
Omnipoint Acquisition Corp. ("OAC"), a Delaware corporation and a wholly-owned
subsidiary of Newco, and VoiceStream Holding Company ("Newco", and together with
Omnipoint, VoiceStream, VAC and OAC, the "Companies") intend to enter into an
Agreement and Plan of Merger to be dated June 23, 1999 (the "Merger Agreement")
pursuant to which, among other things, (i) VAC will merge with VoiceStream with
VoiceStream surviving as a subsidiary of Newco, and (ii) OAC will merge with
Omnipoint with Omnipoint surviving as a subsidiary of Newco (together, the
"Merger"). Upon effectiveness of the Merger, each outstanding share of common
stock of Omnipoint will be exchanged into, at the election of each stockholder
of Omnipoint: (i) 0.825 shares of common stock of Newco ("Newco Common Stock")
and $8.00 in cash; or (ii) cash equal to 0.825 multiplied by the VoiceStream
Price (as defined below) plus $8.00 (subject to proration); or (iii) a number of
shares of Newco Common Stock equal to 0.825, plus $8.00 divided by the
VoiceStream Price (subject to proration) (the "Proposed Transaction").
"VoiceStream Price" means the daily volume-weighted price per share of
VoiceStream Common Stock averaged over the 15-trading-day period ending on the
fifth business day prior to the effective date of the Merger. We further
understand that (i) each share of convertible preferred stock of Omnipoint, when
converted by the holders thereof, will be exchangeable into shares of Newco
Common Stock and cash on an as-converted basis and (ii) each option or warrant
convertible into common stock of Omnipoint will be assumed by Newco and
converted to an option or warrant convertible into Newco Common Stock at an
exchange ratio of 0.825, plus $8.00 divided by the VoiceStream Price.
Concurrent with the Merger, Omnipoint will contribute certain assets to a
newly-formed joint venture, 51% owned by Cook Inlet Region, Inc. ("Cook Inlet"),
a corporation with current interests in two other joint ventures with
VoiceStream, and 49% owned by Omnipoint. In consideration for the licenses
transferred by Omnipoint to Cook Inlet, Cook Inlet will contribute approximately
$75 million to the partnership to acquire its 51% stake therein (the "Cook Inlet
Contribution"). In addition, upon the execution of the Merger Agreement,
VoiceStream and Hutchison Whampoa ("Hutchison"), a Hong Kong-based property and
telecom company with a 24% ownership stake in VoiceStream, have each agreed to
invest approximately $102.5 million in Omnipoint in the form of a convertible
preferred security (the "Initial Interim Investment"). VoiceStream and Hutchison
also have agreed to jointly invest an additional $95 million in Omnipoint on
October 1, 1999 on the same terms and conditions and in the same proportion as
the initial $205 million investment (the "Subsequent Interim Investment" and,
together with the Initial Interim Investment, the "Interim Investment").
Hutchison also has agreed to invest an additional $807 million in Newco upon the
effectiveness of the Merger (the "Hutchison Investment"). The Hutchison
Investment will be a combination of 6.1 million shares of Newco Common Stock at
$29 per share and $426.1 million in a 40-year junior convertible security with a
dividend rate of 2.2%, payable in kind, and with a conversion price of $29.
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The amount invested in each security will be dependent on the amount of the
convertible security required to keep Hutchison's equity interest in Newco at no
more than 19.9% of the fully diluted number of shares of Newco Common Stock. The
terms and conditions of the Proposed Transaction are set forth in more detail in
the Merger Agreement.
We have been requested by the Board of Directors of Omnipoint to render our
opinion with respect to the fairness, from a financial point of view, to
Omnipoint's stockholders of the consideration to be offered to such stockholders
in the Proposed Transaction. We have not been requested to opine as to, and our
opinion does not in any manner address, Omnipoint's underlying business decision
to proceed with or effect the Proposed Transaction nor the fairness (i) to
Omnipoint of the terms of the Interim Investment or (ii) to Newco of the terms
of the Cook Inlet Contribution or the Hutchison Investment.
In arriving at our opinion, we reviewed and analyzed:(1) the Merger
Agreement and the specific terms of the Proposed Transaction, (2) publicly
available information concerning Omnipoint and VoiceStream that we believe to be
relevant to our analysis, including Form 10-Ks for the fiscal year ended
December 31, 1998 and 10-Qs for the quarter ended March 31, 1999, (3) financial
and operating information with respect to the businesses, operations and
prospects of Omnipoint and VoiceStream furnished to us by Omnipoint and
Voicestream, respectively, (4) a trading history of Omnipoint's common stock
from June 17, 1998 to the present and a comparison of that trading history with
those of other companies that we deemed relevant, (5) a trading history of the
VoiceStream's common stock from May 3, 1999 (the date VoiceStream's common stock
first began to trade independently from Western Wireless Corporation, a
predecessor company) to the present and a comparison of that trading history
with those of other companies that we deemed relevant, (5) a comparison of the
historical financial and operating results and present financial condition of
Omnipoint with those of other companies that we deemed relevant, (6) a
comparison of the historical financial and operating results and present
financial condition of VoiceStream with those of other companies that we deemed
relevant, (7) a comparison of the financial terms of the Proposed Transaction
with the financial terms of certain other recent transactions that we deemed
relevant, (8) third party research analysts' estimates, valuation analyses,
target prices and investment considerations for Omnipoint and VoiceStream, (9)
the terms of the Cook Inlet Contribution, (10) the terms of the Hutchison
Investment, (11) Omnipoint's current cash flow forecast and limited cash
position, its ability to meet its liquidity requirements in the future and the
potential alternatives available to Omnipoint to fund such requirements, (12)
the results of Lehman Brothers' efforts to secure a strategic equity investor
for Omnipoint and Omnipoint's negotiations with selected potential equity
investors, and (13) the terms of the Interim Investment and a comparison of such
terms with the terms of investments by other potential sources of equity
available to Omnipoint. In addition, we have had discussions with the respective
managements of Omnipoint and VoiceStream concerning their businesses,
operations, assets, financial condition and prospects and have undertaken such
other studies, analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of Omnipoint that they are
not aware of any facts or circumstances that would make such information
inaccurate or misleading. With respect to the financial projections of
Omnipoint, upon advice of Omnipoint we have assumed that such projections have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of Omnipoint as to the future
financial performance of Omnipoint. With respect to the financial projections of
VoiceStream, upon advice of VoiceStream we have assumed that such projections
have been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of VoiceStream as to the future
financial performance of VoiceStream and that VoiceStream will
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perform substantially in accordance with such projections. In arriving at our
opinion, we have not conducted a physical inspection of the properties and
facilities of Omnipoint and have not made or obtained any evaluations or
appraisals of the assets or liabilities of Omnipoint. Upon advice of Omnipoint
and its legal and accounting advisors, we have assumed that the exchange of
shares Common Stock of Omnipoint pursuant to the Merger will be pursuant to
Section 351 of the Internal Revenue Code of 1986, as amended, and therefore will
be tax free to the stockholders of Omnipoint who receive only Newco Common Stock
in exchange for their shares of common stock of Omnipoint. Our opinion
necessarily is based upon market, economic and other conditions as they exist
on, and can be evaluated as of, the date of this letter.
In addition, we express no opinion as to the prices at which shares of
Newco Common Stock actually will trade following consummation of the Merger and
this opinion should not be viewed as providing any assurance that the market
value of the Newco Common Stock to be held by shareholders of Omnipoint after
the Merger will be in excess of the market value of the shares of Omnipoint
owned by such shareholders at any time prior to announcement or consummation of
the Proposed Transaction.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
offered to the stockholders of Omnipoint in the Proposed Transaction is fair to
such stockholders.
We have acted as financial advisor to Omnipoint in connection with the
Proposed Transaction and will receive a fee for our services which is contingent
upon the consummation of the Proposed Transaction. In addition, Omnipoint has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. In the ordinary course of our business, we actively
trade in the debt and equity securities of Omnipoint for our own account and for
the accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities.
This opinion is for the use and benefit of the Board of Directors of
Omnipoint and is rendered to the Board of Directors in connection with its
consideration of the Proposed Transaction. This opinion is not intended to be
and does not constitute a recommendation to any stockholder of Omnipoint as to
how such stockholders should vote with respect to the Proposed Transaction or,
with respect to the consideration to be offered to the stockholders of Omnipoint
in the Proposed Transaction, which of the cash and stock alternatives such
stockholders should elect.
Very truly yours,
LEHMAN BROTHERS
By: /s/ PERRY HOFFMEISTER
------------------------------------
Managing Director
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ANNEX D
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF SEPTEMBER 17, 1999
AMONG
VOICESTREAM WIRELESS CORPORATION
VOICESTREAM WIRELESS HOLDING CORPORATION
VOICESTREAM SUBSIDIARY III CORPORATION
AERIAL COMMUNICATIONS, INC.
AND
TELEPHONE AND DATA SYSTEMS, INC.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Article I -- The Reorganization............................................. D-2
Section
1.0 The Reorganization.......................................... D-2
Section
1.1 The Merger.................................................. D-3
Section
1.2 Closing..................................................... D-3
Section
1.3 Effective Time.............................................. D-3
Section
1.4 Effects of the Merger....................................... D-4
Section
1.5 Restated Certificate of Incorporation and By-laws; Officers D-4
and Directors...............................................
Article II -- Effect of the Merger on the Stock of the Constituent
Corporations; Surrender of
Certificates.............................................................. D-4
Section
2.1 Effect on Stock............................................. D-4
Section
2.2 Surrender of Certificates................................... D-6
Article III -- Representations and Warranties of the Company................ D-9
Section
3.1 Organization................................................ D-9
Section
3.2 Subsidiaries................................................ D-9
Section
3.3 Capital Structure........................................... D-9
Section
3.4 Authority................................................... D-10
Section
3.5 Consents and Approvals; No Violations....................... D-10
Section
3.6 SEC Documents and Other Reports............................. D-11
Section
3.7 Absence of Material Adverse Change.......................... D-11
Section
3.8 Information Supplied........................................ D-12
Section
3.9 Permits; Compliance with Laws............................... D-12
Section
3.10 Tax Matters................................................. D-13
Section
3.11 Liabilities................................................. D-14
Section
3.12 Benefit Plans; Employees and Employment Practices........... D-14
Section
3.13 Litigation.................................................. D-16
Section
3.14 Environmental Matters....................................... D-16
Section
3.15 Section 203 of DGCL......................................... D-17
Section
3.16 Intellectual Property....................................... D-17
Section
3.17 Opinion of Financial Advisor................................ D-18
Section
3.18 Brokers..................................................... D-18
Section
3.19 Tax Status.................................................. D-18
Section
3.20 Contracts................................................... D-18
Section
3.21 Vote Required............................................... D-19
Section
3.22 Transactions with Affiliates................................ D-19
Article IV -- Representations and Warranties of Parent and Sub.............. D-19
Section
4.1 Organization................................................ D-19
Section
4.2 Ownership of Merger Subs.................................... D-19
Section
4.3 Capital Structure........................................... D-19
Section
4.4 Authority................................................... D-20
Section
4.5 Consents and Approvals; No Violations....................... D-20
Section
4.6 SEC Documents and Other Reports............................. D-21
Section
4.7 Absence of Material Adverse Change.......................... D-21
Section
4.8 Information Supplied........................................ D-22
Section
4.9 Permits; Compliance with Laws............................... D-22
Section
4.10 Tax Matters................................................. D-23
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Section 4.11 Liabilities................................................. D-23
Section 4.12 Litigation.................................................. D-24
Section 4.13 State Takeover Statutes..................................... D-24
Section 4.14 Brokers..................................................... D-24
Section 4.15 Tax Status.................................................. D-24
Section 4.16 Interim Operations of Sub................................... D-24
Section 4.17 Vote Required............................................... D-24
Section 4.18 Transactions with Affiliates................................ D-24
Section 4.19 Opinion of Goldman, Sachs & Co.............................. D-24
Article V -- Covenants Relating to Conduct of Business....................... D-25
Section 5.1 Conduct of Business by the Company Pending the
Reorganization.............................................. D-25
Section 5.2 Conduct of Business by Parent Pending the Reorganization.... D-26
Section 5.3 No Solicitation............................................. D-27
Section 5.4 Third Party Standstill Agreements........................... D-28
Section 5.5 Disclosure of Certain Matters; Delivery of Certain
Filings..................................................... D-28
Section 5.6 Tax Status.................................................. D-28
Article VI -- Additional Agreements.......................................... D-28
Section 6.1 Employee Benefits........................................... D-28
Section 6.2 Options; Restricted Stock Awards............................ D-30
Section 6.3 Company Stockholders Meeting................................ D-30
Section 6.4 Preparation of the Registration Statement and Joint Proxy D-31
Statement...................................................
Section 6.5 Comfort Letters............................................. D-32
Section 6.6 Access to Information....................................... D-32
Section 6.7 Compliance with the Securities Act.......................... D-32
Section 6.8 Stock Exchange Listings..................................... D-33
Section 6.9 Fees and Expenses........................................... D-33
Section 6.10 Public Announcements........................................ D-33
Section 6.11 Real Estate Transfer Tax.................................... D-33
Section 6.12 State Takeover Laws......................................... D-33
Section 6.13 Indemnification; Directors and Officers Insurance........... D-34
Section 6.14 Best Efforts................................................ D-35
Section 6.15 Certain Litigation.......................................... D-36
Section 6.16 Transition Services Agreement............................... D-36
Section 6.17 Registration Rights Agreement............................... D-36
Section 6.18 Investor Claim.............................................. D-37
Section 6.19 Intercompany Service Agreements............................. D-37
Section 6.20 Revolving Credit Agreement.................................. D-37
Section 6.21 Series A and B Notes........................................ D-37
Section 6.22 Nokia Credit Agreement...................................... D-38
Section 6.23 Intercompany Accounts....................................... D-38
Section 6.24 Tax Allocation Agreement and Tax Settlement Agreement....... D-38
Section 6.25 Parent Stockholder Voting Agreement......................... D-38
Section 6.26 Agreements Regarding Taxes.................................. D-38
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Article VII -- Conditions Precedent......................................... D-41
Section 7.1 Conditions to Each Party's Obligation to Effect the D-41
Reorganization..............................................
Section 7.2 Conditions to Obligation of the Company to Effect the D-42
Reorganization..............................................
Section 7.3 Conditions to Obligations of Parent and Merger Sub C to
Effect the Reorganization................................... D-44
Article VIII -- Termination and Amendment.................................. D-46
Section 8.1 Termination................................................. D-46
Section 8.2 Effect of Termination....................................... D-47
Section 8.3 Amendment................................................... D-47
Section 8.4 Extension; Waiver........................................... D-47
Article IX -- General Provisions........................................... D-47
Section 9.1 Non-Survival of Representations and Warranties and
Agreements................................................. D-47
Section 9.2 Notices.................................................... D-47
Section 9.3 Interpretation; Definitions................................ D-48
Section 9.4 Counterparts............................................... D-57
Section 9.5 Entire Agreement; No Third-Party Beneficiaries............. D-57
Section 9.6 Governing Law.............................................. D-58
Section 9.7 Assignment................................................. D-58
Section 9.8 Severability............................................... D-58
Section 9.9 Enforcement of this Agreement.............................. D-58
Section 9.10 Obligations of Subsidiaries................................ D-58
Section 9.11 Reliance on Representations................................ D-58
ANNEX A -- RESTATED CERTIFICATE OF INCORPORATION
ANNEX B -- COMPANY'S RESTATED BYLAWS
ANNEX C -- TRANSITION SERVICES AGREEMENT
ANNEX D -- STOCKHOLDER AGREEMENT
ANNEX E -- INDEMNITY AGREEMENT
ANNEX F -- DEBT/EQUITY REPLACEMENT AGREEMENT
ANNEX G -- PARENT STOCKHOLDER AGREEMENT
ANNEX H -- INVESTOR AGREEMENT
ANNEX I -- FORM OF PARENT FCC COUNSEL OPINION
ANNEX J -- FORM OF PRESTON GATES & ELLIS LLP OPINION
ANNEX K -- FORM OF COMPANY FCC COUNSEL OPINION
ANNEX L -- FORM OF SIDLEY & AUSTIN OPINION
ANNEX M -- TAX CERTIFICATES
ANNEX N -- TAX CERTIFICATES
ANNEX O -- STOCKHOLDER TAX CERTIFICATE
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 17, 1999 (this
"Agreement") among VoiceStream Wireless Corporation, a Washington corporation
("VoiceStream"), VoiceStream Wireless Holding Corporation, a Delaware
corporation ("Holding"), (VoiceStream and Holding are collectively referred to
herein as "Parent" as explained below) VoiceStream Subsidiary III Corporation, a
Delaware corporation ("Merger Sub C"), which shall be a wholly owned direct
subsidiary of Holding as of the Effective Time, Aerial Communications, Inc., a
Delaware corporation (the "Company") (Merger Sub C and the Company being
hereinafter collectively referred to as the "Constituent Corporations"), and
Telephone and Data Systems, Inc., a Delaware corporation ("Series A
Stockholder"). Except as otherwise set forth herein, capitalized (and certain
other) terms used herein shall have the meanings set forth in Section 9.3.
WITNESSETH:
WHEREAS, VoiceStream, Holding and Omnipoint Corporation, a Delaware
corporation ("Omnipoint"), have entered into an Agreement and Plan of
Reorganization dated as of June 23, 1999 (the "Omnipoint Agreement") providing
for, among other things, the merger of a subsidiary of Holding ("Merger Sub A")
into VoiceStream (the "VoiceStream Merger"), and the merger of another
subsidiary of Holding ("Merger Sub B") into Omnipoint (the "Omnipoint
Merger")(the VoiceStream Merger, the Omnipoint Merger and the other transactions
contemplated by the Omnipoint Agreement are herein referred to as the "Omnipoint
Reorganization");
WHEREAS, the reorganization provided herein (the "Reorganization") shall
include the merger (the "Merger") of Merger Sub C with and into the Company and,
if applicable, the other transactions described below;
WHEREAS, if the Omnipoint Reorganization is consummated prior to the
consummation of the transactions contemplated by this Agreement, and the other
conditions to the Reorganization specified in Article VII are satisfied or
waived, in the Reorganization, Holding shall be Parent and shall acquire all of
the common stock of the Company through the Merger, in which case the Merger
will occur as part of and concurrently with or promptly after the Omnipoint
Reorganization;
WHEREAS, if the transactions contemplated by the Omnipoint Agreement are
terminated or not consummated by the Omnipoint End Date (as defined herein), and
the other conditions to the Reorganization specified in Article VII are
satisfied or waived by the Omnipoint End Date, in the Reorganization, Holding
shall be Parent and shall concurrently acquire (i) all of the common stock of
the Company through the Merger and (ii) all of the common stock of VoiceStream
through the VoiceStream Merger;
WHEREAS, the respective Boards of Directors of VoiceStream, Holding, Merger
Sub C and the Company have approved and declared advisable the Reorganization,
upon the terms and subject to the conditions herein set forth whereby each
issued and outstanding Series A Common Share, $1.00 par value, of the Company
("Company Series A Common Shares") and each issued and outstanding Common Share,
$1.00 par value of the Company ("Company Common Shares" and together with the
Company Series A Common Shares, "Company Common Stock"), other than shares of
Company Common Stock owned directly or indirectly by Parent or the Company, will
be converted into shares of Common Stock, $0.001 par value, of Parent ("Parent
Common Stock") or, to the extent provided herein, cash;
WHEREAS, the respective Boards of Directors of VoiceStream, Holding and the
Company have determined that the Reorganization is in furtherance of and
consistent with their respective long-term business strategies and is fair to
and in the best interests of their respective stockholders;
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<PAGE> 346
WHEREAS, for federal income tax purposes, it is intended that the
Reorganization shall qualify as a reorganization within the meaning of Section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code"), and/or as an exchange described in Section 351(a) of the Code;
WHEREAS, VoiceStream, Holding, Merger Sub C and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Reorganization and also to prescribe various conditions to the
Reorganization.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
VoiceStream, Holding, Merger Sub C and the Company hereby agree as follows:
ARTICLE I
THE REORGANIZATION
SECTION 1.0 The Reorganization. (a) Holding has caused Merger Sub A, Merger
Sub B and Merger Sub C to be organized for the purposes of effectuating the
Omnipoint Merger, the VoiceStream Merger, and the Merger. Merger Sub A, Merger
Sub B and Merger Sub C are collectively referred to as "Merger Subs".
(b) If the Omnipoint Reorganization is consummated by the Omnipoint End
Date, the Merger shall occur as specified herein as part of and concurrently
with or promptly after the Omnipoint Reorganization.
(c) If the transactions contemplated by the Omnipoint Agreement are
terminated or not consummated by the Omnipoint End Date and the other conditions
to the Reorganization specified in Article VII are satisfied or waived by the
Omnipoint End Date, Holding shall concurrently acquire (i) all of the common
stock of the Company through the Merger as specified herein, and (ii) all of the
common stock of VoiceStream through the VoiceStream Merger as specified in this
Section 1.0(c). In such event, pursuant to Articles of Merger and a Plan of
Merger, in a form to be mutually agreed upon by VoiceStream and the Company
(sometimes hereinafter referred to collectively as the "Merger Document" or
"Merger Documents"), upon the terms and subject to the conditions set forth in
this Agreement and in the Merger Documents:
(i) In the VoiceStream Merger, Merger Sub A shall be merged with and
into VoiceStream in accordance with the applicable provisions of Washington
law. VoiceStream shall be the surviving corporation in the VoiceStream
Merger and shall continue its corporate existence under Washington law. As
a result of the VoiceStream Merger, VoiceStream shall become a wholly owned
Subsidiary of Holding. The effects and consequences of the VoiceStream
Merger shall be as set forth in the VoiceStream Merger Documents.
(ii) The parties shall (i) file Merger Documents as are required by
and executed in accordance with Washington law and (ii) make all other
filings or recordings required under applicable Washington law.
(iii) In the case of this Section 1.0(c), the Effective Time shall be
the later of (i) the date and time of the filing of the Merger Documents
with respect to the VoiceStream Merger (or such other date and time as may
be specified in such documents as may be permitted by Washington law) and
(ii) the date and time of the filing of the Certificate of Merger (as
defined below) with respect to the Merger (or such other date and time as
may be specified in such certificate as may be permitted by Delaware law).
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(iv) At the Effective Time, by virtue of the VoiceStream Merger and
without any action on the part of any of the parties, each share of the
common stock of Merger Sub A outstanding immediately prior to the Effective
Time shall be converted into and shall become one share of common stock of
the surviving corporation of the VoiceStream Merger.
(v) At the Effective Time, the one share of the capital stock of
Holding issued to VoiceStream and outstanding immediately prior to the
Effective Time shall be cancelled and cease to exist.
(vi) At the Effective Time, each share of VoiceStream Common Stock
that is issued and outstanding immediately prior to the Effective Time
shall be converted into one share of Holding Common Stock. Upon such
conversion, all such shares of VoiceStream Common Stock shall be cancelled
and cease to exist, and each certificate theretofore representing any such
shares shall, without any action on the part of the holder thereof, be
deemed to represent an equivalent number of shares of Holding Common Stock.
(vii) Notwithstanding the foregoing, VoiceStream Common Stock
outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Reorganization and has demanded appraisal
for such shares in accordance with Washington law ("Dissenting Shares")
shall not be converted into a right to receive shares of Holding Common
Stock unless such holder fails to perfect, withdraws or otherwise loses its
right to appraisal. If, after the Effective Time, such holder fails to
perfect, withdraws or loses its right to appraisal, such shares shall be
treated as if they had been converted as of the Effective Time into a right
to receive Holding Common Stock.
(d) All representations, warranties and covenants of Parent are hereby made
on a joint and several basis by VoiceStream and Holding.
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the DGCL, in the Reorganization, Merger Sub C
shall be merged with and into the Company at the Effective Time. Following the
Effective Time, the separate corporate existence of Merger Sub C shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Merger Sub C and the Company in accordance with the DGCL.
SECTION 1.2 Closing. Unless waived by Parent, the Company and Parent shall
use their reasonable commercial efforts to cause the closing of the transactions
contemplated by this Agreement (the "Closing") to take place concurrently with
the closing of the Omnipoint Reorganization or as soon as practicable
thereafter, subject to the satisfaction or waiver of the conditions set forth in
Article VII. If the Omnipoint Reorganization does not take place, the Closing
will take place at 10:00 a.m. on the fifth Business Day after satisfaction or
waiver of the conditions set forth in Article VII, at the offices of Sidley &
Austin, One First National Plaza, Chicago, Illinois 60603, or, at the request of
Parent, at the offices of Sidley & Austin, 873 Third Avenue, New York, New York
10022, unless another date, time or place is agreed to in writing by the parties
hereto. The date on which the Closing takes place is herein referred to as the
"Closing Date."
SECTION 1.3 Effective Time. The Merger shall become effective when a
Certificate of Merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the DGCL, is duly filed with the Secretary of State
of the State of Delaware, or at such other time as Merger Sub C and the Company
shall agree should be specified in the Certificate of Merger. Except as provided
in Section 1.0(c)(iii), the term "Effective Time" shall mean the later of the
date and time at which the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware or such later time established by
the Certificate of Merger. The filing of the Certificate of Merger shall be made
as soon as practicable after the satisfaction or waiver of the conditions set
forth herein.
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SECTION 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the DGCL.
SECTION 1.5 Restated Certificate of Incorporation and By-laws; Officers and
Directors. (a) The Restated Certificate of Incorporation of the Company, as in
effect immediately prior to the Effective Time, shall be amended as of the
Effective Time as set forth on Annex A hereto. As so amended, such Restated
Certificate of Incorporation shall be the Restated Certificate of Incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The Restated By-laws of the Company, as in effect immediately prior to
the Effective Time, shall be amended as of the Effective Time as set forth on
Annex B. As so amended, such Restated By-laws shall be the By-laws of the
Surviving Corporation until thereafter changed or amended as provided by the
Restated Certificate of Incorporation of the Surviving Corporation or by
applicable law.
(c) Subject to Section 2.2 of the Investment Agreement, the directors of
Merger Sub C immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, until the next annual meeting of stockholders (or the
earlier of their resignation or removal) and until their respective successors
are duly elected and qualified, as the case may be.
(d) Subject to the Management Side Letter, the officers of Merger Sub C
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation until the earlier of their resignation or removal and until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT CORPORATIONS;
SURRENDER OF CERTIFICATES
SECTION 2.1 Effect on Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of any of Sub, the Company or the
holders of any securities of the Constituent Corporations:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Merger Sub C shall be converted into and become one validly
issued, fully paid and nonassessable share of Common Stock, no par value,
of the Surviving Corporation.
(b) Treasury Stock and Parent Owned Stock. Each share of Company
Common Stock that is owned by the Company or by any Subsidiary of the
Company and each share of Company Common Stock that is owned by Parent,
Merger Sub C or any other Subsidiary of Parent shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall
be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Except as set forth in Item
2.1(c) of the Company Letter, as of the date hereof, no shares of Company
Common Stock or Stock Equivalents were issued, reserved for issuance or
outstanding. Each share of Company Common Stock issued and outstanding
(other than shares of Company Common Stock to be cancelled in accordance
with Section 2.1(b)) shall be converted into .455 (the "Conversion Number")
validly issued, fully paid and nonassessable shares of Parent Common Stock
(the "Per Share Stock Consideration"); provided, that each share of Company
Common Stock with respect to which an election to receive only cash has
been effectively made by a Public Holder and not revoked or lost pursuant
to Section 2.1(d) (a "Cash Election"), shall be converted into the right to
receive $18.00 in cash, without interest (the "Per Share Cash
Consideration"). Notwithstanding the foregoing, in the event that (i) the
Omnipoint Agreement is terminated or the transactions contemplated by the
Omnipoint Agreement are not consummated by the Omnipoint
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End Date and (ii) the Closing Date Market Price is less than $39.56, the
Conversion Number shall be the amount determined by dividing $18.00 by the
Closing Date Market Price, but shall not be greater than .50 or less than
.455. In the event Investor exercises its right under Section 10.6 of the
Investment Agreement ("Tag-Along Right"), the Operating Company Shares
owned by Investor (as described in the Company Letter) shall be converted
immediately prior to the Effective Time into such number of shares of
Company Common Stock equal to the product of (i) such number of Operating
Company Shares and (ii) the Exchange Rate, and the shares of Company Common
Stock obtained by Investor through such conversion shall be converted into
shares of Parent Common Stock pursuant to the Merger. In the event Investor
does not exercise its Tag-Along Right, subject to the authorization,
execution and delivery of the Indemnity Agreement, Parent hereby agrees to
accept and be bound by all of the rights of Investor and its Affiliates
under the Investment Agreement and the Joint Venture Agreement. As of the
Effective Time, all such shares of Company Common Stock shall be converted
in accordance with this paragraph, and when so converted, shall no longer
be outstanding and shall automatically be retired and shall cease to exist,
and each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except
the right to receive (i) certificates representing the shares of Parent
Common Stock into which such shares of Company Common Stock have been
converted, (ii) any dividends and other distributions in accordance with
Section 2.2(d) and (iii) any cash, without interest, to be paid in lieu of
any fractional share of Parent Common Stock in accordance with Section
2.2(e).
(d) Cash Election by Public Holders. Each person who, at the Effective
Time, is a record holder of shares of Company Common Stock other than the
Series A Stockholder, Investor (with respect to Operating Company Shares
owned by Investor which are converted into Company Common Stock immediately
prior to the Merger pursuant to the Tag-Along Right) and holders of shares
of Company Common Stock to be cancelled as set forth in Section 2.1(b)
(such eligible holders hereinafter being referred to as the "Public
Holders"), shall have the right to submit an election form (the "Cash
Election Form") specifying the number of shares of Company Common Stock
that such person desires to have converted into the right to receive the
Per Share Cash Consideration pursuant to the Cash Election. Any eligible
record holder who fails properly to submit a Cash Election Form on or prior
to the Election Deadline in accordance with the procedures set forth in
this Section 2.1(d) shall be entitled to receive the Per Share Stock
Consideration for each share of Company Common Stock registered in the name
of such holder. Any Cash Election shall be validly made only if the
Exchange Agent shall have received a Cash Election Form by 5:00 p.m., New
York City time on the twentieth Business Day (the "Election Deadline")
after the date on which the Letter of Transmittal and Cash Election Form
are sent to the Public Holders pursuant to Section 2.2(b). For a Cash
Election made by a Public Holder to be valid, a Cash Election Form properly
completed and executed (with the signature or signatures thereon guaranteed
to the extent required by the Cash Election Form) must be delivered by such
holder accompanied by such holder's Certificates, or by an appropriate
guarantee of delivery of such Certificates from a member of any registered
national securities exchange or of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United States as
set forth in such Cash Election Form. Any holder of Company Common Stock
who has made an election by submitting an Election Form to the Exchange
Agent may at any time prior to the Election Deadline change such holder's
election by submitting a revised Cash Election Form and/or a Letter of
Transmittal, properly completed and signed, that is received by the
Exchange Agent prior to the Election Deadline. Any holder of Company Common
Stock may at any time prior to the Election Deadline revoke such holder's
election by written notice to the Exchange Agent received by the close of
business on the day prior to the Election Deadline, in which event such
holder shall be entitled to receive only the Per Share Stock Consideration
with respect to each share of Company Common Stock registered
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in the name of such holder immediately prior to the Effective Time. Parent
shall have the right to make reasonable rules (which will be described in
the Cash Election Form), not inconsistent with the terms of this Agreement,
governing the validity of Cash Election Forms and the procedures for making
Cash Elections.
(e) Adjustment of Conversion Number. Except in connection with the
Omnipoint Agreement, in the event of any reclassification, stock split or
stock dividend with respect to Parent Common Stock, any change or
conversion of Parent Common Stock into other securities or any other
dividend or distribution with respect to Parent Common Stock (other than
normal quarterly cash dividends as the same may be modified from time to
time in the ordinary course), or if a record date with respect to any of
the foregoing should occur, prior to the Effective Time, appropriate and
proportionate adjustments, if any, shall be made to the Conversion Number
and the Per Share Cash Election Consideration, and thereafter all
references in this Agreement to the Conversion Number and the Per Share
Cash Election Consideration shall be deemed to be to the Conversion Number
and the Per Share Cash Election Consideration, respectively, as so
adjusted.
Notwithstanding the foregoing, in the event of any amendment of the
Omnipoint Agreement that would result in a reclassification, stock split, or
stock dividend with respect to Parent Common Stock, any change or conversion of
Parent Common Shares into other securities or any other dividend or distribution
with respect to Parent Common Stock, appropriate and proportionate adjustments,
if any, shall be made to the Conversion Number and the Per Share Cash Election
Consideration, and thereafter all references in this Agreement shall be deemed
to be the Conversion Number and the Per Share Cash Election Consideration,
respectively, as so adjusted.
In the event that the aggregate number of shares of Company Common Stock
and Stock Equivalents, not including shares issued or to be issued pursuant to
the Debt/Equity Replacement Agreement and to TDS and Investor or shares which
are or may be issued pursuant to Performance Options ("Adjusted Fully Diluted
Shares") exceeds 85,839,161 shares as of the Effective Time, the Conversion
Number shall be determined by dividing 39,056,818 by such number of Adjusted
Fully Diluted Shares as of the Effective Time. The number of shares of Company
Common Stock and Stock Equivalents for the purpose of such recalculation shall
be determined in a manner consistent with the methodologies used in preparing
Item 2.1(c) of the Company Letter including without limitation the shares of
Company Common Stock actually outstanding and shares of Company Common Stock
issuable (i) in exchange for the Operating Company Shares whether or not
Investor exercises its Tag-Along Rights as set forth in Section 10.6 of the
Investment Agreement, (ii) pursuant to Company Stock Options determined using
the treasury stock method, (iii) pursuant to the Restricted Stock Plan
regardless of whether payment for the Restricted Stock units is made in cash or
Company Common Stock, (iv) pursuant to the Tax-Deferred Savings Plan, (v)
pursuant to the Compensation Plan for Non-Employee Directors, and (vi) any other
Company Common Stock and Stock Equivalents outstanding as of the Effective Time;
provided, for the purpose of such recalculation the shares of Company Common
Stock issued or issuable pursuant to Performance Options and the shares issued
or issuable pursuant to the Debt/Equity Replacement Agreement and to TDS and
Investor shall be disregarded for purpose of the recalculation. The Conversion
Number shall be subject to further adjustment as provided in the third sentence
of Section 2.1(c) in the event that the Omnipoint Agreement is terminated or the
transactions contemplated by the Omnipoint Agreement are not consummated by the
Omnipoint End Date, provided that the Conversion Number determined pursuant to
this Section 2.1(e) shall be used in lieu of .455.
SECTION 2.2 Surrender of Certificates. (a) Exchange Agent. ChaseMellon
Shareholder Services LLC shall act as exchange agent in the Merger (the
"Exchange Agent"). As and when needed, but no later than twenty-five Business
Days after the Effective Time, Parent shall deposit with the
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Exchange Agent, in trust for the holders of certificates (the "Company
Certificates") which immediately prior to the Effective Time represented shares
of Company Common Stock converted in the Merger, (i) certificates (the "Parent
Certificates") representing the shares of Parent Common Stock issuable pursuant
to Section 2.1(c) with respect to shares of Company Common Stock which have been
converted into the right to receive Parent Common Stock (such shares of Parent
Common Stock, together with cash in lieu of fractional shares and any dividends
or distributions with respect thereto in accordance with Section 2.2(d) being
hereinafter referred to as the "Stock Consideration Fund"), and (ii) cash with
respect to shares of Company Common Stock with respect to which a Cash Election
has been properly made and not withdrawn or lost (the "Cash Consideration Fund")
(the Stock Consideration Fund and the Cash Consideration Fund are hereinafter
referred to as the "Exchange Fund").
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, but no later than five Business Days after the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail to each holder
of record of a Company Certificate, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to a Company
Certificate shall pass, only upon delivery of such Company Certificate to the
Exchange Agent and shall be in a form and have such other provisions as Parent
may reasonably specify), (ii) with respect to the Public Holders, the Cash
Election Form and (iii) instructions for use in effecting the surrender of
Company Certificates in exchange for the property described in the next
sentence. Upon surrender for cancellation to the Exchange Agent of all Company
Certificate(s) held by any holder of record of a Company Certificate, together
with such letter of transmittal duly executed, such holder shall be entitled to
receive in exchange therefor (x) the Per Share Cash Consideration if a Cash
Election is properly and timely made or (y) a Parent Certificate (which shall
not include any restrictive legends) representing the number of whole shares of
Parent Common Stock into which the shares of Company Common Stock represented by
the surrendered Company Certificate(s) shall have been converted at the
Effective Time pursuant to Section 2.1(c), cash in lieu of any fractional share
of Parent Common Stock in accordance with Section 2.2(e) and certain dividends
and other distributions in accordance with Section 2.2(d); and the Company
Certificate(s) so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of shares of Company Common Stock that is not registered
in the transfer records of the Company, cash or a Parent Certificate
representing shares of Parent Common Stock may be paid to or issued in a name
other than that in which the Company Certificate surrendered in exchange
therefor is registered, if such Company Certificate shall be properly endorsed
or otherwise be in proper form for transfer and the person requesting such
payment shall pay any transfer or other Taxes required by reason of the payment
to a person other than the registered holder of such Company Certificate or
establish to the satisfaction of the Surviving Corporation that such Tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 2.2, each Company Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive (i) the Per Share Cash
Consideration, subject to the delivery of a proper and timely Cash Election
Form, or (ii)(A) certificates representing the shares of Parent Common Stock
into which the shares of Company Common Stock represented by such Company
Certificate have been converted, (B) any dividends and other distributions in
accordance with Section 2.2(d) and (C) any cash, without interest, to be paid in
lieu of any fractional share of Parent Common Stock in accordance with Section
2.2(e). Parent or the Exchange Agent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as Parent or the Exchange
Agent is required to deduct and withhold with respect to the making of such
payment under the Code or under any provision of state, local or foreign Tax
law. To the extent that amounts are so withheld by Parent or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in respect
of which such deduction and withholding was made by Parent or the Exchange
Agent.
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(c) No Further Ownership Rights in Shares. All shares of Parent Common
Stock issued and cash paid upon the surrender of Company Certificates in
accordance with the terms of this Article II (including any cash paid pursuant
to Section 2.2(d) or Section 2.2(e)) shall be deemed to have been issued (and
paid) in full satisfaction of all rights pertaining to the shares of Company
Common Stock theretofore represented by such Company Certificates. At the
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Company Certificates are presented to the Surviving Corporation or the
Exchange Agent for any reason, they shall be cancelled and exchanged as provided
in this Article II.
(d) Dividends. No dividends or other distributions that are declared on or
after the Effective Time on Parent Common Stock, or are payable to the holders
of record thereof on or after the Effective Time, shall be paid to any person
entitled by reason of the Merger to receive Parent Certificates, and no cash
payment in lieu of any fractional share of Parent Common Stock shall be paid to
any such person pursuant to Section 2.2(e), until such person shall have
surrendered its Company Certificate(s) as provided in Section 2.2(b). Subject to
applicable law, there shall be paid to each person receiving a Parent
Certificate: (i) at the time of such surrender or as promptly as practicable
thereafter, the amount of any dividends or other distributions theretofore paid
with respect to the shares of Parent Common Stock represented by such Parent
Certificate and having a record date on or after the Effective Time and a
payment date prior to such surrender; and (ii) at the appropriate payment date
or as promptly as practicable thereafter, the amount of any dividends or other
distributions payable with respect to such shares of Parent Common Stock and
having a record date on or after the Effective Time but prior to such surrender
and a payment date on or subsequent to such surrender. In no event shall the
person entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions.
(e) No Fractional Shares. No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Company Certificates pursuant to this Article II; no dividend or other
distribution by Parent and no stock split shall relate to any such fractional
share; and no such fractional share shall entitle the record or beneficial owner
thereof to vote or to any other rights of a stockholder of Parent. In lieu of
any such fractional share, each holder of shares of Company Common Stock who
would otherwise have been entitled thereto upon the surrender of Company
Certificate(s) for exchange pursuant to this Article II (other than with respect
to shares of Company Common Stock for which an effective Cash Election has been
made) will be paid an amount in cash (without interest), rounded to the nearest
whole cent, determined by multiplying (i) the per share closing price on the
Nasdaq National Market System ("Nasdaq") of Parent Common Stock (as reported on
the Nasdaq) on the date on which the Effective Time shall occur (or, if Parent
Common Stock shall not trade on the Nasdaq on such date, the first day of
trading in Parent Common Stock on the Nasdaq thereafter) by (ii) the fractional
share to which such holder would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to holders of Company Common Stock for twelve months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Company Common Stock who have not theretofore complied with this Article II and
the instructions set forth in the letter of transmittal mailed to such holders
after the Effective Time shall thereafter look only to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) for payment of
cash pursuant to the Cash Election or shares of Parent Common Stock, any cash in
lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to such shares of Parent Common Stock to which they
are entitled.
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(g) No Liability. None of Parent, Sub, the Company or the Exchange Agent
shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub C as follows:
SECTION 3.1 Organization. The Company and each of its Subsidiaries
(collectively, the "Company Subsidiaries") is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has requisite corporate power and authority to carry on its
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority has not had
and would not reasonably be expected to have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Reorganization.
The Company and each of the Company Subsidiaries is duly qualified or licensed
to do business and in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not
reasonably be expected to have a Material Adverse Effect on the Company or
prevent or materially delay the consummation of the Reorganization. The Company
has delivered to Parent complete and correct copies of its Restated Certificate
of Incorporation and By-laws and has made available to Parent the Certificate of
Incorporation and By-laws (or similar organizational documents) of each of the
Company Subsidiaries.
SECTION 3.2 Subsidiaries. Item 3.2 of the Company Letter lists each Company
Subsidiary and any Investment Entities. All of the outstanding shares of capital
stock of each Company Subsidiary that is a corporation have been validly issued
and are fully paid and nonassessable. Except as set forth in Item 3.2 of the
Company Letter, all of the outstanding shares of capital stock of each
Subsidiary of the Company are owned by the Company, by Subsidiaries of the
Company or by the Company and Subsidiaries of the Company, free and clear of all
Liens. Except as set forth in Item 3.2 of the Company Letter, (i) the Company
and its Subsidiaries have no on-going obligations, agreements, commitments,
rights, understandings or arrangements with respect to any Investment Entities,
including funding obligations; and (ii) all Investment Interests are owned by
the Company or its Subsidiaries free and clear of all Liens. Except as set forth
in Item 3.2 of the Company Letter and except for the capital stock owned by the
Company in its Subsidiaries, neither the Company nor any of its Subsidiaries
owns, directly or indirectly, any capital stock or other ownership interest in
any corporation, partnership, joint venture, limited liability company or other
entity.
SECTION 3.3 Capital Structure. The authorized capital stock of the Company
consists of 60,000,000 Company Series A Common Shares, 100,000,000 Company
Common Shares, 60,000,000 Series B Common Shares, $1.00 par value (the "Company
Series B Common Shares") and 10,000,000 shares of Preferred Stock, $1.00 par
value (the "Company Preferred Stock"). At the close of business on September 16,
1999, (i) no shares of Company Preferred Stock and no Series B Common Shares
were outstanding, (ii) 40,000,000 Company Series A Common Shares and 31,930,588
Company Common Shares were issued and outstanding, (iii) no shares of Company
Common Stock were held by the Company in treasury, (iv) 40,000,000 Company
Common Shares were reserved for issuance upon conversion of the Company Series A
Common Shares, (v) 2,960,480 Company Common Shares were reserved for issuance
pursuant to outstanding stock options (the "Company Stock Options") to purchase
Company Common Shares under the Company's 1996 Long-Term Incentive Plan (the
"Company Long-Term Incentive Plan"), (vi) 456,000 Company Common
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Shares were reserved for issuance pursuant to the Company's Retention Restricted
Stock Unit Plan (the "Restricted Stock Plan"), (vii) 114,514 Company Common
Shares were reserved for issuance pursuant to the Tax Deferred Savings Plan,
(viii) 6,056 Company Common Shares were reserved for issuance pursuant to the
Company's Compensation Plan for Non-Employee Directors and (ix) as described in
Item 3.2 of the Company Letter, Company Common Shares were reserved for issuance
to the Investor in Aerial Operating Company, Inc. ("Operating Company"). Except
as set forth above and in Item 3.2 and 3.3 of the Company Letter, and except for
Company Common Shares which are reserved for issuance in exchange for shares of
Company Series A Common Shares in accordance with the Company's Restated
Certificate of Incorporation, as of the date hereof, no shares of Company Common
Stock or shares of capital stock of any Subsidiary of the Company were issued,
reserved for issuance or outstanding and there are no stock appreciation rights,
phantom stock rights or other contractual rights the value of which is
determined in whole or in part by the value of any capital stock ("Stock
Equivalents") of the Company or any Subsidiary of the Company. Each outstanding
share of Company Common Stock is, and each share of Company Common Stock which
may be issued pursuant to the Company Benefit Plans and the other agreements and
instruments listed above will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. There are no
outstanding bonds, debentures, notes or other indebtedness of the Company or any
Subsidiary of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
the Company's stockholders may vote. Except as set forth above or in Item 3.3 of
the Company Letter, as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind obligating the Company or any of the Company
Subsidiaries to issue, deliver or sell or create, or cause to be issued,
delivered or sold or created, additional shares of capital stock or other voting
securities or Stock Equivalents of the Company or of any of the Company
Subsidiaries or obligating the Company or any of the Company Subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking.
Except as set forth in Item 3.3 of the Company Letter, as of the date of
this Agreement, there are no outstanding contractual obligations of the Company
or any of the Company Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of the Company Subsidiaries.
SECTION 3.4 Authority. The Board of Directors of the Company, at a meeting
duly called and held, duly adopted resolutions approving this Agreement, the
Reorganization and the Stockholder Agreement, determining that the
Reorganization, including the Merger, is fair to, and in the best interests of,
the Company's stockholders and recommending that the Company's stockholders
adopt this Agreement. The Company has requisite corporate power and authority to
execute and deliver this Agreement and, subject to approval by the Company's
stockholders of the Reorganization, to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the Reorganization and of the other
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to approval by the
Company's stockholders of this Agreement and the Reorganization. This Agreement
has been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub)
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity.
SECTION 3.5 Consents and Approvals; No Violations. Except as set forth in
Item 3.5 of the Company Letter, except for filings, permits, authorizations,
consents and approvals as may be
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required under the Securities Act, the Exchange Act, the Communications Act, the
HSR Act, the DGCL, and under the rules, regulations and published decisions of
the FAA, the FCC and state public utility or service commissions or similar
agencies, and except as may be required in connection with the Transfer Taxes
described in Section 6.11, neither the execution, delivery or performance of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Restated Certificate of Incorporation or By-laws of the
Company or of the similar organizational documents of any of the Company
Subsidiaries, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
reasonably be expected to have a Material Adverse Effect on the Company or
prevent or materially delay the consummation of the Reorganization), (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, (iv) violate any order, writ, judgment, injunction, decree,
statute, rule or regulation applicable to the Company, any of the Company
Subsidiaries or any of their properties or assets, or (v) result in the creation
or imposition of any Lien on any asset of the Company or its Subsidiaries except
in the case of clauses (iii), (iv) or (v) for violations, breaches or defaults
that would not reasonably be expected to have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Reorganization.
SECTION 3.6 SEC Documents and Other Reports. The Company has filed with the
SEC all documents required to be filed by it since April 25, 1996 under the
Securities Act or the Exchange Act (the "Company SEC Documents"). As of their
respective filing dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, each as in effect on the date so filed, and at the time filed with
the SEC none of the Company SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the Company SEC Documents comply as of their respective dates in all
material respects with the then applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except in
the case of the unaudited statements, as permitted by Form 10-Q under the
Exchange Act) applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly present the
consolidated financial position of the Company and its consolidated Subsidiaries
as at the dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). The Company and its Subsidiaries have not made
any material misstatements of fact, or omitted to disclose any fact, to any
Government Entity or in any report, document or certificate filed therewith,
which misstatements or omissions, individually or in the aggregate, could
reasonably be expected to subject any material licenses or authorizations to
revocation or failure to renew, except to the extent that such revocation or
failure to renew would not have a Material Adverse Effect on the Company or the
transactions contemplated by this Agreement.
SECTION 3.7 Absence of Material Adverse Change. Except as disclosed in Item
3.7 of the Company Letter or in the documents filed by the Company with the SEC
and publicly available prior to the date of this Agreement (the "Company Filed
SEC Documents"), since December 31, 1998 the Company and its Subsidiaries have
conducted their respective businesses in all material respects only
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in the ordinary course, consistent with past practices, and there has not been
(i) any Material Adverse Change with respect to the Company, (ii) any
declaration, setting aside or payment of any dividend or other distribution with
respect to its capital stock or any redemption, purchase or other acquisition of
any of its capital stock, (iii) any split, combination or reclassification of
any of its capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
its capital stock, or (iv) any change in accounting methods, principles or
practices by the Company affecting its assets, liabilities or business, except
insofar as may have been required by a change in generally accepted accounting
principles.
SECTION 3.8 Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by reference
in (i) the Registration Statement or (ii) the proxy statement (together with any
amendments or supplements thereto, the "Joint Proxy Statement") relating to the
Stockholders Meetings, will, in the case of the Registration Statement, at the
time it becomes effective, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or in the case of the Joint
Proxy Statement, at the time of the mailing of the Joint Proxy Statement, the
time of the Stockholders Meetings and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders Meetings which has become false or
misleading. The Registration Statement will comply (with respect to the Company)
as to form in all material respects with the requirements of the Securities Act,
and the Joint Proxy Statement will comply (with respect to the Company) as to
form in all material respects with the requirements of the Exchange Act.
SECTION 3.9 Permits; Compliance with Laws. (a) Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and, as of the date of
this Agreement, no suspension or cancellation of any of the Company Permits is
pending or, to the knowledge of the Company, threatened, except where the
suspension or cancellation of any of the Company Permits would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect on
the Company. The businesses of the Company and its Subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity, except for possible violations that would not reasonably be expected to
have a Material Adverse Effect on the Company or prevent, or result in a
material delay in, the consummation of the Reorganization.
(b)(i) The Company and each of its Subsidiaries holds, and is
qualified and eligible to hold, all material licenses, permits and other
authorizations issued or to be issued by the FCC to such entity for the
operation of their respective businesses, all of which are set forth in
Item 3.9(b)(i) of the Company Letter (the "Company FCC Licenses").
(ii) The Company FCC Licenses are valid and in full force and effect
and neither the Company nor any of its Subsidiaries is or has been
delinquent in payment on or in default under any installment obligation
owed to the United States Treasury in connection with the Company FCC
Licenses. As used herein, the term "full force and effect" means that (i)
the orders issuing the Company FCC Licenses have become effective, (ii) no
stay of effectiveness of such orders
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has been issued by the FCC, and (iii) the Company FCC Licenses have not
been invalidated by any subsequent published FCC action.
(iii) All material reports and applications required by the
Communications Act or required to be filed with the FCC by the Company or
any of its Subsidiaries have been filed and are accurate and complete in
all material respects.
(iv) The Company and its Subsidiaries are, and have been, in
compliance in all material respects with, and the wireless communications
systems operated pursuant to the Company FCC Licenses are and have been
operated in compliance in all material respects with, the Communications
Act.
(v) There is not pending as of the date hereof any application,
petition, objection, pleading or proceeding with the FCC or any public
service commission or similar body having jurisdiction or authority over
the communications operations of the Company or any of its Subsidiaries
which questions the validity of or contests any Company FCC License or
which presents a substantial risk that, if accepted or granted, or
concluded adversely, could result in (as applicable) the revocation,
cancellation, suspension, dismissal, denial or any materially adverse
modification of any Company FCC License or imposition of any substantial
fine or forfeiture against the Company or any of its Subsidiaries except as
set forth in Item 3.9(b)(v) of the Company Letter.
(vi) No facts are known to the Company or its Subsidiaries which if
known by a Governmental Entity of competent jurisdiction would present a
substantial risk that any Company FCC License could be revoked, cancelled,
suspended or materially adversely modified or that any substantial fine or
forfeiture could be imposed against the Company or any of its Subsidiaries.
SECTION 3.10 Tax Matters. Except as set forth in Item 3.10 of the Company
Letter or as would not have a Material Adverse Effect on the Company, (i) the
Company and each of its Subsidiaries have timely filed (after taking into
account any extensions to file) all Tax Returns required to be filed by them
either on a separate or combined or consolidated basis; (ii) all such Tax
Returns are complete and accurate and disclose all taxes required to be paid for
the periods covered thereby; (iii) the Company and its Subsidiaries have paid or
caused to be paid all taxes shown as due on such Tax Returns and all Taxes for
which no Tax Return was required to be filed, and the financial statements
contained in the most recent Company SEC Documents reflect an adequate reserve
for all Taxes payable by the Company and its Subsidiaries for all taxable
periods and portions thereof accrued through the date of such financial
statements; (iv) none of the Company or any Subsidiary has waived in writing any
statute of limitations in respect of Taxes; (v) the Tax Returns referred to in
clause (i) relating to income Taxes have been examined by the appropriate taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (vi) there is no action, suit,
investigation, audit, claim or assessment pending or proposed in writing with
respect to taxes of the Company or any of its Subsidiaries; (vii) there are no
liens for Taxes upon the assets of the Company or any Subsidiary except for
liens relating to current Taxes not yet due; (viii) all Taxes which the Company
or any Subsidiary is required by law to withhold or to collect for payment have
been duly withheld and collected, and have been paid or accrued on the books of
the Company or such Subsidiary; (ix) none of the Company or any Subsidiary has
been a member of any group of corporations filing Tax Returns on a consolidated,
combined, unitary or similar basis other than each such group of which it is
currently a member; (x) no deduction of any amount that would otherwise be
deductible by the Company or any of its Subsidiaries with respect to taxable
periods ending on or before the Effective Time could be disallowed under Section
162(m) of the Code; (xi) neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of
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stock qualifying for tax-free treatment under Section 355 of the Code (a) in the
two years prior to the date of this Agreement or (b) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Reorganization; (xii) neither the Company nor any of its Subsidiaries is a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code; and (xiii) as a result of the Reorganization, neither the
Company nor Parent will be obligated to make a payment to an individual that
would be a "parachute payment" to a "disqualified individual" as those terms are
defined in Section 280G of the Code without regard to whether such payment is
reasonable compensation for personal services performed or to be performed in
the future.
SECTION 3.11 Liabilities. Except as set forth in the Company Filed SEC
Documents or Item 3.11 of the Company Letter, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company and
its Subsidiaries or in the notes thereto, other than liabilities and obligations
incurred in the ordinary course of business since December 31, 1998 and
liabilities which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 3.12 Benefit Plans; Employees and Employment Practices. (a) Except
as disclosed in the Company Filed SEC Documents or Item 3.12(a) of the Company
Letter, neither the Company nor any of its Subsidiaries has adopted or amended
in any material respect any Company ERISA Benefit Plan since the date of the
most recent audited financial statements included in the Company Filed SEC
Documents. Except as set forth in Item 3.12(a) of the Company Letter, the
Company does not have any commitment to create, adopt or contribute to any
additional plan covering any active, former or retired employees of the Company.
Except as disclosed in Item 3.12(a) of the Company Letter or in the Company
Filed SEC Documents, as of the date of this Agreement, there exist no material
employment, consulting, severance, bonus, incentive or termination agreements
between the Company or any of its Subsidiaries and any current or former
employee, officer or director of the Company or any of its Subsidiaries.
(b) Item 3.12(b) of the Company Letter contains a list of all ERISA Benefit
Plans sponsored by the Company or its ERISA Affiliates. None of the Company, any
of its Subsidiaries, any officer of the Company or any of its Subsidiaries or
any of the ERISA Benefit Plans has on or before the date of this Agreement
engaged in a "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) with respect to any ERISA Benefit Plan that could
reasonably be expected to subject the Company, any of its Subsidiaries or any
officer of the Company or any of its Subsidiaries to any material Tax on
prohibited transactions imposed by Section 4975 of the Code or to any material
liability under Section 502(i) or (l) of ERISA where the Tax or liability that
would be reasonably expected to occur would have a Material Adverse Effect on
the Company. Except as disclosed in Item 3.12(b) of the Company Letter, none of
the Company, its Subsidiaries or any ERISA Affiliate has at any time during the
five-year period preceding the date hereof contributed to any "multiemployer
plan" (as defined in Section 3(37) of ERISA).
(c) Except as disclosed in Item 3.12(c) of the Company Letter, and except
for such matters as could not be reasonably expected to have a Material Adverse
Effect on the Company, to the extent applicable, (i) each Company ERISA Benefit
Plan complies with the requirements of ERISA and the Code, (ii) each Company
ERISA Benefit Plan intended to be qualified under Section 401 (a) of the Code
has been determined by the Internal Revenue Service to be so qualified and
nothing has occurred since the date of that determination that could reasonably
be expected to adversely affect the qualified status of such plan and its
related trust is tax-exempt and has been so since its creation, and (iii) each
Company ERISA Benefit Plan has been maintained and administered in compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and
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regulations, including but not limited to ERISA and the Code, which are
applicable to such Company ERISA Benefit Plans.
(d) Except as disclosed in Item 3.12(d) of the Company Letter, all material
contributions, reserves or premium payments to the Company ERISA Benefit Plan,
accrued to the date hereof have been made or provided for.
(e) Except as disclosed in Item 3.12(e) of the Company Letter, and except
for any liability as could not be reasonably expected to have a Material Adverse
Effect on the Company, the Company has not incurred any liability under Subtitle
C or D of Title IV of ERISA with respect to any "single-employer plan" within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
Company, or any entity which is considered one employer with Company under
Section 4001 of ERISA.
(f) Except as disclosed in Item 3.12(f) of the Company Letter, the Company
has no obligation for retiree health and life benefits under any Company ERISA
Benefit Plan, except as required to avoid excise taxes under Section 4980(B) of
the Code and the terms of the Company ERISA Benefit Plans permit the Company to
amend or terminate such Company ERISA Benefit Plans without incurring liability
thereunder.
(g) Except as disclosed in Item 3.12 (g) of the Company Letter, the Company
has not engaged in, nor is it a successor or parent corporation to an entity
that has engaged in a transaction described in Section 4069 of ERISA.
(h) Except as disclosed in Item 3.12(h) of the Company Letter or the
Company Filed SEC Documents, neither the Company nor any of its ERISA Affiliates
has any current or projected liability in respect of post employment or post
retirement welfare benefits for retired or former employees of the Company.
(i) Except as disclosed in Item 3.12(i) of the Company Letter, no tax under
Section 4980B of the Code has been incurred in respect of any Company ERISA
Benefit Plan that is a group health plan, as defined in Section 5000(b)(1) of
the Code.
(j) Except as disclosed in Item 3.12(j) of the Company Letter, as of the
date of this Agreement there is no pending dispute, arbitration, claim, suit or
grievance involving a Company Benefit Plan (other than routine claims for
benefits payable under any such Company Benefit Plan) that would reasonably be
expected to have a Material Adverse Effect on the Company.
(k) Item 3.12(k) of the Company Letter contains a list setting forth the
name and current annual salary and other compensation payable to each
Significant Employee, and the profit sharing, bonus or other form of additional
compensation paid or payable by the Company or its Subsidiaries to or for the
benefit of each such person for the current fiscal year. Except as set forth in
Item 3.12(k) of the Company Letter, there are no oral or written contracts,
agreements or arrangements obligating the Company or any of its Subsidiaries to
increase the compensation or benefits presently being paid or hereafter payable
to any Significant Employees or any oral employment or consulting or similar
arrangements regarding any Significant Employee which are not terminable without
liability on thirty days' or less prior notice and lists all written employment
and consulting agreements with respect to any Significant Employee. The Company
has provided true and correct copies of all employment agreements listed on Item
3.12(k). Except for severance obligations to Significant Employees set forth in
Item 3.12(k) of the Company Letter, there is not due or owing and there will not
be due and owing at the Effective Time to any Significant Employees, any sick
pay, severance pay (whether arising out of the termination of a Significant
Employee prior to, on, or subsequent to the Effective Time), compensable time or
pay, including salary, commission and bonuses, personal time or pay or vacation
time or vacation pay attributable to service rendered on or
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prior to the Effective Time. Except as disclosed in Item 3.12(k) of the Company
Letter and other than claims made in the ordinary course of business consistent
with past practice in an aggregate amount not to exceed $500,000 neither the
Company nor any of its Subsidiaries have any liability arising out of claims
made or suits brought (including workers' compensation claims and claims or
suits for contribution to, or indemnification of, third parties, occupational
health and safety, environmental, consumer protection or equal employment
matters) for injury, sickness, disease, discrimination, death or termination of
employment of any Significant Employee, or other employment matter to the extent
attributable to an event occurring or a state of facts existing on or prior to
the Effective Time.
(l) The Company and each of its Subsidiaries (i) is in compliance with all
applicable Federal and state laws, rules and regulations respecting employment,
employment practices, terms and conditions of employment and wages and hours, in
each case, with respect to Company Employees, except where the failure to be in
compliance would not, singly or in the aggregate, have a Material Adverse Effect
on the Company or any of its Subsidiaries or their financial condition or
business; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Company Employees; (iii)
is not liable for any arrears of wages or any taxes or any penalty for failure
to comply with any of the foregoing, except as would reasonably be expected to
not have a Material Adverse Effect on the Company; and (iv) (other than routine
payments to be made in the normal course of business and consistent with past
practice) is not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, Social Security or other benefits for Company Employees.
(m) Except as disclosed in Item 3.12(m) of the Company Letter, as of the
date of this Agreement there are no material controversies, strikes, work
stoppages or disputes pending between the Company or any of its Subsidiaries and
any current or former employees, and no organizational effort by any labor union
or other collective bargaining unit currently is under way with respect to any
employee, which in any such case would reasonably be expected to have a Material
Adverse Effect on the Company. None of the Company or any of its Subsidiaries is
a party to a collective bargaining agreement. Except as set forth in Item
3.12(m) of the Company Letter, there is no, and there is not threatened, any
labor dispute, grievance or litigation relating to labor, safety or
discrimination matters involving any Company Employee including charges of
unfair labor practices or discrimination complaints, which, if adversely
determined, would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. There has been no
engagement in any unfair labor practices by the Company or its Subsidiaries
within the meaning of the National Labor Relations Act which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
SECTION 3.13 Litigation. Except with respect to the matters addressed in
Annex E hereto or as disclosed in Item 3.13 of the Company Letter or in the
Company Filed SEC Documents, as of the date of this Agreement, there is no suit,
action, proceeding or investigation pending or, to the Company's knowledge,
threatened, against the Company or any of its Subsidiaries that, individually or
in the aggregate, would reasonably be expected to have a Material Adverse Effect
on the Company or prevent or materially delay the consummation of the
Reorganization. Except as disclosed in Item 3.13 of the Company Letter or in the
Company Filed SEC Documents, neither the Company nor any of its Subsidiaries is
subject to any outstanding judgment, order, writ, injunction or decree that
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Reorganization.
SECTION 3.14 Environmental Matters. Except as set forth in the Company
Filed SEC Documents or in Item 3.14 of the Company Letter, neither the Company
nor any of its Subsidiaries
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has (i) not been in compliance with any Environmental Laws or Environmental
Permits, except for such non-compliance as, taken individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect on the Company or its Subsidiaries; (ii) stored, released or disposed of
any Hazardous Substances on, under or at any of the Company's or any of its
Subsidiaries' properties or any other properties, other than in a manner that
would not, in all such cases taken individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect on the Company, (iii) any
knowledge of the presence of any Hazardous Substances that have been released
into the environment on, under or at any of the Company's or any of its
Subsidiaries' properties other than that which would not reasonably be expected
to result in a Material Adverse Effect on the Company, or (iv) received any
written notice (A) of any violation of any applicable Environmental Law that has
not been resolved or settled with the relevant Governmental Entity and with
respect to which there are no continuing material obligations, (B) of the
institution or pendency of any suit, action, claim, proceeding or investigation
by any Governmental Entity or any third party in connection with any such
violation, (C) by any Governmental Entity requiring remediation of Hazardous
Substances at or arising from any of the Company's or any of its Subsidiaries'
properties or any other properties, (D) alleging noncompliance by the Company or
any of its Subsidiaries with the terms of any permit required under any
Environmental Law in any manner reasonably likely to require material
expenditures or to result in material liability that has not been resolved or
settled and with respect to which there are no continuing material obligations
or (E) demanding payment for response to or remediation of Hazardous Substances
at or arising from any of the Company's or any of its Subsidiaries' properties
or any other properties, except in each case for the notices set forth in Item
3.14 of the Company Letter and except in each case for notices that would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on the Company.
SECTION 3.15 Section 203 of DGCL. Under the Company's Restated Certificate
of Incorporation, Section 203 of the DGCL is inapplicable to the Reorganization,
this Agreement and the Stockholder Agreement and, accordingly, neither such
Section nor, to the knowledge of the Company, any other antitakeover or similar
statute or regulation applies to any such transactions. To the knowledge of the
Company, no other "control share acquisition," "fair price," "moratorium" or
other antitakeover laws or regulations enacted under U.S. federal or state laws
applicable to the Company apply to this Agreement or any of the transactions
related thereto.
SECTION 3.16 Intellectual Property. Item 3.16 of the Company Letter sets
forth a complete list of all Intellectual Property Rights. Except as set forth
in the Company Filed SEC Documents or in Item 3.16 of the Company Letter, the
Intellectual Property Rights consist solely of items and rights which are: (i)
owned by the Company or its Subsidiaries, (ii) in the public domain, or (iii)
rightfully used by Company or its Subsidiaries pursuant to a license, and, with
respect to Intellectual Property Rights owned by the Company or its
Subsidiaries, the Company or its Subsidiaries own the entire right, title and
interest in and to such Intellectual Property Rights free and clear of any
Liens. The Company and its Subsidiaries have all rights in the Intellectual
Property Rights necessary to carry out the current and anticipated future (up to
the Closing) activities of the Company and its Subsidiaries. The Intellectual
Property Rights do not infringe on any proprietary right of any Person. No
claims (x) challenging the validity, effectiveness, or ownership by the Company
or its Subsidiaries of any of the Intellectual Property Rights, or (y) to the
effect that the Intellectual Property Rights infringe or will infringe on any
intellectual property or other proprietary right of any person have been
asserted or, to the Company's knowledge, are threatened by any person nor to the
Company's knowledge are there any valid grounds for any bona fide claim of any
such kind. To the best of the Company's knowledge, there is no material
unauthorized use, infringement or misappropriation of any of the Intellectual
Property Rights by any third party, employee or former employee of the Company
or its Subsidiaries.
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SECTION 3.17 Opinion of Financial Advisor. The Company has received the
opinion of Donaldson Lufkin & Jenrette Securities Corporation ("Company
Financial Advisor"), dated the date hereof, to the effect that, as of the date
hereof, the consideration to be received in the Reorganization by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view, a copy of which opinion has been delivered to Parent.
SECTION 3.18 Brokers. Except for the Company Financial Advisor and
Wasserstein Perella & Company, Inc., the financial advisor to the Special
Committee of the Board of Directors of the Company, the fees and expenses of
each of which will be paid by the Company (and are reflected in agreements with
the Company, true and correct copies of which have been furnished to Parent), no
broker, investment banker, financial advisor or other person, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
SECTION 3.19 Tax Status. To the knowledge of the Company after due
investigation, neither the Company nor any of its Affiliates has taken any
action or failed to take any action which action or failure would jeopardize the
qualification of either the Merger or the VoiceStream Merger as a reorganization
within the meaning of Section 368(a) of the Code and/or as part of a transaction
described in Section 351(a) of the Code. To the knowledge of the Company after
due investigation, there are no facts or circumstances relating to the Company
or its Affiliates, including any covenants or undertakings of the Company
pursuant to this Agreement, that would prevent Sidley & Austin from delivering
the opinion referred to in Section 7.2(b) as of the date hereof.
SECTION 3.20 Contracts. Except as set forth in the Company Filed SEC
Documents or in Item 3.20 of the Company Letter, neither the Company nor any of
its Subsidiaries is a party to or bound by (i) any "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC) or any
agreement, contract or commitment the loss or termination of which would have a
Material Adverse Effect on the Company; (ii) any non-competition agreement or
any other agreement or obligation which materially limits or will materially
limit the Company or any of its Subsidiaries from engaging in the business of
providing wireless communications services or from developing wireless
communications technology anywhere in the world; or (iii) any management
agreement, technical services agreement or other agreement whereby the Company
or any of its Subsidiaries is provided or is required to provide management or
technical services to any other Person. With such exceptions as, individually or
in the aggregate, have not had, and would not be reasonably expected to have, a
Material Adverse Effect on the Company or its Subsidiaries, (x) each of the
contracts, agreements and commitments of the Company or its Subsidiaries is
valid and in full force and effect and (y) neither the Company nor any of its
Subsidiaries has violated any provision of, or committed or failed to perform
any act which, with or without notice, lapse of time, or both, would constitute
a default under the provisions of any such contract, agreement or commitment. To
the knowledge of the Company, no counterparty to any such contract, agreement or
commitment has violated any provision of, or committed or failed to perform any
act which, with or without notice, lapse of time, or both would constitute a
default or other breach under the provisions of, such contract, agreement or
commitment, except for defaults or breaches which, individually or in the
aggregate, have not had, or would not reasonably be expected to have, a Material
Adverse Effect on the Company or its Subsidiaries. Neither the Company nor any
of its Subsidiaries is a party to, or otherwise a guarantor of or liable with
respect to, any interest rate, currency or other swap or derivative transaction,
other than any such transactions which are not material to the business of the
Company or its Subsidiaries. The Company has provided or made available to
Parent a copy of each agreement described in item (i), (ii) and (iii) above.
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SECTION 3.21 Vote Required. The only vote of the holders of any class or
series of capital stock of the Company necessary to approve this Agreement and
the transactions contemplated hereby is the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock.
SECTION 3.22 Transactions with Affiliates. Except as described in Item 3.22
of the Company Letter or the Company Filed SEC Documents, no Affiliate of the
Company nor any stockholder, officer, director, partner, member, consultant or
employee of any thereof, is at the date hereof a party to any transaction with
the Company or any of its Subsidiaries, including any contract or arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property (including intellectual property) to or from, or otherwise
requiring payments to or from the Company or any of its Subsidiaries, or any
Affiliate thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Merger Sub C represent and warrant to the Company as follows:
SECTION 4.1 Organization. Parent, Sub, Merger Sub A, Merger Sub B and each
of Parent's Subsidiaries (collectively, the "Parent Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has requisite corporate or other
organizational power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority has not had and would not
reasonably be expected to have a Material Adverse Effect on Parent or prevent or
materially delay the consummation of the Reorganization. Each of Parent and
Merger Sub C is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not reasonably be expected to have a
Material Adverse Effect on Parent or prevent or materially delay the
consummation of the Reorganization.
SECTION 4.2 Ownership of Merger Subs. All of the outstanding shares of
capital stock of each Merger Sub have been validly issued and are fully paid and
nonassessable. All of the outstanding shares of capital stock of each Merger Sub
are owned by Holding.
SECTION 4.3 Capital Structure. The authorized capital stock of Holding
consists of 400,000,000 shares of common stock, par value $0.001 per share
("Holding Common Stock"), of which one share has been issued to VoiceStream at a
price of $2.00 as of the date hereof, and 5,000,000 shares of preferred stock,
par value $0.001 per share, none of which are outstanding as of the date hereof.
The authorized capital stock of VoiceStream consists of 300,000,000 shares of
VoiceStream common stock ("VoiceStream Common Stock") and 50,000,000 shares of
VoiceStream preferred stock ("VoiceStream Preferred Stock"). As of the close of
business on September 15, 1999, (i) there were outstanding 95,765,505 shares of
VoiceStream Common Stock (inclusive of all shares of restricted stock granted
under any compensatory plans or arrangements); (ii) 7,600,000 shares of
VoiceStream common Stock had been authorized pursuant to the VoiceStream stock
option plan (the "VoiceStream Option Plan"), of which 4,590,542 shares are
issued and outstanding; (iii) 1,000,000 shares of VoiceStream Common Stock had
been authorized pursuant to the VoiceStream employee stock purchase plan (the
"VoiceStream ESPP"), of which 158,092 shares have been issued; (iv) 200,000
shares of VoiceStream Common Stock had been authorized under the VoiceStream
executive restricted stock plan (the "VoiceStream ERSP"), of which no shares
have been issued; (v) no phantom shares or stock units had been issued under any
stock option, compensation or deferred compensation plan or arrangement with
respect to VoiceStream Common Stock; and (vi) there were outstanding no
VoiceStream warrants for VoiceStream Common Stock and no shares
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of VoiceStream Preferred Stock. Each outstanding share of VoiceStream Common
Stock is, and each share of VoiceStream Common Stock which may be issued
pursuant to the VoiceStream ESPP or VoiceStream ERSP will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. There are no
outstanding bonds, debentures, notes or other indebtedness of Parent or any
Subsidiary of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
Parent's stockholders may vote. Except for this Agreement, as set forth above or
in Item 4.3 of the Parent Letter, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind obligating Parent or any of the Parent
Subsidiaries to issue, deliver or sell or create, or cause to be issued,
delivered or sold or created, additional shares of capital stock or other voting
securities or Stock Equivalents of Parent or of any of the Parent Subsidiaries
or obligating Parent or any of the Parent Subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking.
As of the date of this Agreement, there are no outstanding contractual
obligations of Parent or any of the Parent Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Parent or any of the Parent
Subsidiaries.
SECTION 4.4 Authority. The Board of Directors of Parent, at a meeting duly
called and held, duly adopted resolutions approving this Agreement, the
Reorganization and the Stockholder Agreement, determining that the
Reorganization, including the Merger, and the issuance (the "Parent Share
Issuance") of shares of Parent Common Stock in accordance with the
Reorganization, is fair to, and in the best interests of, Parent's stockholders.
The Board of Directors of Merger Sub C has declared the Reorganization advisable
and approved this Agreement. Parent and Merger Sub C have the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and Merger Sub C and the consummation by
Parent and Merger Sub C of the Reorganization and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Merger Sub C subject, in the case of Parent, to the
approval of the Reorganization and the Parent Share Issuance by Parent's
stockholders. This Agreement has been duly executed and delivered by Parent and
Merger Sub C and (assuming the valid authorization, execution and delivery of
this Agreement by the Company) constitutes the valid and binding obligation of
each of Parent and Merger Sub C enforceable against each of them in accordance
with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to general
principles of equity. The Parent Share Issuance, the filing of a registration
statement on Form S-4 with the SEC by Parent under the Securities Act of 1933,
as amended, for the purpose of registering the shares of Parent Common Stock to
be issued in connection with the Reorganization (together with any amendments or
supplements thereto, whether prior to or after the effective date thereof, the
"Registration Statement") have been duly authorized by Parent's Board of
Directors.
SECTION 4.5 Consents and Approvals; No Violations. Except as set forth in
Item 4.5 of the Parent Letter, except for filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the Securities Act, the Exchange Act, the Communications Act,
the HSR Act, the DGCL, and under the rules, regulations and published decisions
of the FAA, the FCC and state public utility or service commissions or similar
agencies, and except as may be required in connection with the Transfer Taxes
described in Section 6.11, neither the execution, delivery or performance of
this Agreement by Parent and Merger Sub C nor the consummation by Parent and
Merger Sub C of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective certificate of
incorporation
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or By-laws of Parent and Sub, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity (except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings would not reasonably be expected to have a Material Adverse Effect
on Parent or prevent or materially delay the consummation of the
Reorganization), (iii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
lease, contract, agreement or other instrument or obligation to which Parent or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, (iv) violate any order, writ, judgment,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their properties or assets, or (v) result in the creation
or imposition of any Lien on any asset of the Company or its Subsidiaries except
in the case of clauses (iii), (iv) or (v) for violations, breaches or defaults
that would not reasonably be expected to have a Material Adverse Effect on
Parent or prevent or materially delay the consummation of the Reorganization.
SECTION 4.6 SEC Documents and Other Reports. Parent has filed with the SEC
all documents required to be filed by it since December 31, 1998 under the
Securities Act or the Exchange Act (the "Parent SEC Documents"). As of their
respective filing dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, each as in effect on the date so filed, and at the time filed with
the SEC none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Parent
included in the Parent SEC Documents comply as of their respective dates in all
material respects with the then applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except in
the case of the unaudited statements, as permitted by Form 10-Q under the
Exchange Act) applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly present the
consolidated financial position of Parent and its consolidated Subsidiaries as
at the dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Parent and its Subsidiaries have not made any
material misstatements of fact, or omitted to disclose any fact, to any
Government Entity or in any report, document or certificate filed therewith,
which misstatements or omissions, individually or in the aggregate, could
reasonably be expected to subject any material licenses or authorizations to
revocation or failure to renew, except to the extent that such revocation or
failure to renew would not have a Material Adverse Effect on Parent or the
transactions contemplated by this Agreement.
SECTION 4.7 Absence of Material Adverse Change. Except as disclosed in Item
4.7 of the Parent Letter or in the documents filed by Parent with the SEC and
publicly available prior to the date of this Agreement (the "Parent Filed SEC
Documents"), since December 31, 1998 Parent and its Subsidiaries have conducted
their respective businesses in all material respects only in the ordinary
course, consistent with past practices, and there has not been (i) any Material
Adverse Change with respect to Parent, (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to its capital stock
(other than regular quarterly cash dividends) or any redemption, purchase or
other acquisition of any of its capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, or (iv) any change in
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accounting methods, principles or practices by Parent affecting its assets,
liabilities or business, except insofar as may have been required by a change in
generally accepted accounting principles.
SECTION 4.8 Information Supplied. None of the information supplied or to be
supplied by Parent specifically for inclusion or incorporation by reference in
(i) the Registration Statement or (ii) the Joint Proxy Statement, will, in the
case of the Registration Statement, at the time it becomes effective, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or in the case of the Joint Proxy Statement, at the time
of the mailing of the Joint Proxy Statement, the time of the Stockholders
Meetings and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Stockholders Meetings which has become false or misleading. The Registration
Statement will comply (with respect to Parent) as to form in all material
respects with the requirements of the Securities Act and the Joint Proxy
Statement will comply (with respect to Parent) as to form in all material
respects with the requirements of the Exchange Act.
SECTION 4.9 Permits; Compliance with Laws. (a) Each of Parent and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, charters, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
Parent or any of its Subsidiaries to own, lease and operate its properties or to
carry on its business as it is now being conducted (the "Parent Permits"),
except where the failure to have any of the Parent Permits would not,
individually or in the aggregate, have a Material Adverse Effect on Parent, and,
as of the date of this Agreement, no suspension or cancellation of any of the
Parent Permits is pending or, to the knowledge of Parent, threatened, except
where the suspension or cancellation of any of the Parent Permits would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent. The businesses of Parent and its Subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations that would not reasonably be
expected to have a Material Adverse Effect on Parent or prevent or materially
delay the consummation of the Reorganization.
(b)(i) Parent and each of its Subsidiaries holds, and is qualified and
eligible to hold, all material licenses, permits and other authorizations
issued or to be issued by the FCC to such entity for the operation of their
respective businesses, all of which are set forth in Item 4.9(b)(i) of
Parent Letter (the "Parent FCC Licenses").
(ii) Parent FCC Licenses are valid and in full force and effect and
neither Parent nor any of its Subsidiaries is or has been delinquent in
payment on or in default under any installment obligation owed to the
United States Treasury in connection with Parent FCC Licenses. As used
herein, the term "full force and effect" means that (i) the orders issuing
the Parent FCC Licenses have become effective, (ii) no stay of
effectiveness of such orders has been issued by the FCC, and (iii) the
Parent FCC Licenses have not been invalidated by any subsequent published
FCC action.
(iii) All material reports and applications required by the
Communications Act or required to be filed with the FCC by Parent or any of
its Subsidiaries have been filed and are accurate and complete in all
material respects.
(iv) Parent and its Subsidiaries are, and have been, in compliance in
all material respects with, and the wireless communications systems
operated pursuant to Parent FCC Licenses are and have been operated in
compliance in all material respects with, the Communications Act.
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(v) There is not pending as of the date hereof any application,
petition, objection, pleading or proceeding with the FCC or any public
service commission or similar body having jurisdiction or authority over
the communications operations of Parent or any of its Subsidiaries which
questions the validity of or contests any Parent FCC License or which
presents a substantial risk that, if accepted or granted, or concluded
adversely, could result in (as applicable) the revocation, cancellation,
suspension, dismissal, denial or any materially adverse modification of any
Parent FCC License or imposition of any substantial fine or forfeiture
against Parent or any of its Subsidiaries except as set forth in Item
4.9(b)(v) of Parent Letter.
(vi) No facts are known to Parent or its Subsidiaries which if known
by a Governmental Entity of competent jurisdiction would present a
substantial risk that any Parent FCC License could be revoked, cancelled,
suspended or materially adversely modified or that any substantial fine or
forfeiture could be imposed against Parent or any of its Subsidiaries.
SECTION 4.10 Tax Matters. Except as set forth in Item 4.10 of the Parent
Letter or as would not have a Material Adverse Effect on Parent, (i) Parent and
each of its Subsidiaries have timely filed (after taking into account any
extensions to file) all Tax Returns required to be filed by them either on a
separate or combined or consolidated basis; (ii) all such Tax Returns are
complete and accurate and disclose all Taxes required to be paid for the periods
covered thereby; (iii) Parent and its Subsidiaries have paid or caused to be
paid all Taxes shown as due on such Tax Returns and all Taxes for which no Tax
Return was required to be filed, and the financial statements contained in the
most recent Parent SEC Documents reflect an adequate reserve for all Taxes
payable by Parent and its Subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements; (iv) none of
Parent or any Subsidiary has waived in writing any statute of limitations in
respect of Taxes; (v) the Tax Returns referred to in clause (i) relating to
income taxes have been examined by the appropriate taxing authority or the
period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired; (vi) there is no action, suit, investigation,
audit, claim or assessment pending or proposed in writing with respect to Taxes
of Parent or any of its Subsidiaries; (vii) there are no liens for Taxes upon
the assets of Parent or any Subsidiary except for liens relating to current
Taxes not yet due; (viii) all Taxes which Parent or any Subsidiary is required
by law to withhold or to collect for payment have been duly withheld and
collected, and have been paid or accrued on the books of Parent or such
Subsidiary; (ix) none of Parent or any Subsidiary has been a member of any group
of corporations filing Tax Returns on a consolidated, combined, unitary or
similar basis other than each such group of which it is currently a member; (x)
no deduction of any amount that would otherwise be deductible by Parent or any
of its Subsidiaries with respect to taxable periods ending on or before the
Effective Time could be disallowed under Section 162(m) of the Code; (xi)
neither Parent nor any of its Subsidiaries is a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code; and
(xii) as a result of the Reorganization, Parent will not be obligated to make a
payment to an individual that would be a "parachute payment" to a "disqualified
individual" as those terms are defined in Section 280G of the Code without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
SECTION 4.11 Liabilities. Except as set forth in the Parent Filed SEC
Documents, to the knowledge of Parent, neither Parent nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of Parent and its
Subsidiaries or in the notes thereto, other than liabilities and obligations
incurred in the ordinary course of business since December 31, 1998 and
liabilities which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent.
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SECTION 4.12 Litigation. Except as disclosed in Item 4.12 of the Parent
Letter or in the Parent Filed SEC Documents, as of the date of this Agreement,
there is no suit, action, proceeding or investigation pending or, to Parent's
knowledge, threatened, against Parent or any of its Subsidiaries that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Parent or prevent or materially delay the
consummation of the Reorganization. Except as disclosed in Item 4.12 of the
Parent Letter or in the Parent Filed SEC Documents, neither Parent nor any of
its Subsidiaries is subject to any outstanding judgment, order, writ, injunction
or decree that would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Parent or prevent or materially delay the
consummation of the Reorganization.
SECTION 4.13 State Takeover Statutes. To the knowledge of Parent, no state
antitakeover statute or similar statute or regulation applicable to Parent is
applicable to this Agreement or the transactions contemplated hereby. To the
knowledge of Parent, no other "control share acquisition," "fair price,"
"moratorium" or other antitakeover laws or regulations enacted under U.S.
federal or state laws applicable to Parent apply to this Agreement or any of the
transactions related thereto.
SECTION 4.14 Brokers. No broker, investment banker, financial advisor or
other person, other than Goldman, Sachs & Co., the fees and expenses of which
will be paid by Parent (and are reflected in an agreement between Goldman, Sachs
& Co. and Parent, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent.
SECTION 4.15 Tax Status. To the knowledge of Parent after due
investigation, neither Parent nor any of its Affiliates has taken any action or
failed to take any action which action or failure would jeopardize the
qualification of either the Merger or the VoiceStream Merger as a reorganization
within the meaning of Section 368(a) of the Code and/or as part of a transaction
described in Section 351(a) of the Code. To the knowledge of Parent after due
investigation, there are no facts or circumstances relating to Parent or its
Affiliates, including any covenants or undertakings of the Company pursuant to
this Agreement, that would prevent Jones, Day, Reavis & Pogue from delivering
the opinion referred to in Section 7.3(b) as of the date hereof.
SECTION 4.16 Interim Operations of Sub. Merger Sub C was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
SECTION 4.17 Vote Required. The only vote of the holders of any class or
series of capital stock of Parent necessary to approve this Agreement and the
transactions contemplated hereby is (i) with respect to the transactions
contemplated by Sections 1.0(b) or 1.0(c), the affirmative vote of the holders
of two-thirds of the outstanding shares of Parent Common Stock and (ii) with
respect to the Parent Share Issuance, the affirmative vote of the holders of a
majority of the outstanding shares of Parent Common Stock.
SECTION 4.18 Transactions with Affiliates. Except as described in Item 4.18
of Parent Letter or the Parent SEC Documents, no Affiliate of Parent nor any
stockholder, officer, director, partner, member, consultant or employee of any
thereof, is at the date hereof a party to any transaction with Parent or any of
its Subsidiaries, including any contract or arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property (including intellectual property) to or from, or otherwise requiring
payments to or from Parent or any of its Subsidiaries, or any Affiliate thereof.
SECTION 4.19 Opinion of Goldman, Sachs & Co. Parent has received the oral
opinion of Goldman, Sachs & Co. on the date hereof to the effect that, as of the
date hereof, the consideration to be paid by Parent in the Reorganization is
fair to the Parent's stockholders from a financial point of view.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business by the Company Pending the
Reorganization. During the period from the date of this Agreement until the
Effective Time, the Company shall, and shall cause each of its Subsidiaries to,
in all material respects, except as contemplated by this Agreement, carry on its
business in the ordinary course as currently conducted. Without limiting the
generality of the foregoing, and except as otherwise contemplated by this
Agreement (including the Annexes hereto) or as disclosed in the Company Letter,
during such period, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, or redeem or repurchase, any of its capital
stock or other equity interest, except for dividends by a Subsidiary of the
Company to its parent or (ii) split, combine or reclassify any of its
capital stock or other equity interest or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock or other equity interest, any other voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities,
other than the issuance of shares of Company Common Stock under the Company
Long-Term Incentive Plan, Company Restricted Stock Plan or Tax Deferred
Savings Plan in the ordinary course or pursuant to the Investment
Agreement;
(c) amend its Restated Certificate of Incorporation or By-laws or
other similar organizational documents;
(d) acquire, or agree to acquire, in a single transaction or in a
series of related transactions, any business or assets, other than (i)
transactions that are in the ordinary course of business, and which involve
individually or in the aggregate a purchase price not in excess of
$5,000,000 and (ii) capital expenditures described in paragraph (e) below;
(e) make or agree to make any new capital expenditure other than
expenditures contemplated by the Company's capital budget for fiscal 1999
and expenditures not in excess of the dollar amount included in the
Company's business plan for fiscal 2000;
(f) sell, lease, license, encumber or otherwise dispose of, or agree
to sell, lease, license, encumber or otherwise dispose of, any of its
assets, other than transactions that are in the ordinary course of business
and which involve assets having a current value not in excess of $5,000,000
individually or in the aggregate;
(g) increase the salary or wages payable or to become payable to its
directors, officers or employees, except for increases required under
employment agreements existing on the date hereof, and except for increases
for officers and employees in the ordinary course of business consistent
with past practices; or enter into any employment or severance agreement
with, or establish, adopt, enter into or amend, or make any grants or
awards under, any bonus, profit sharing, thrift, stock option, restricted
stock, pension, retirement, deferred compensation, employment, termination
or severance plan, agreement, policy or arrangement for the benefit of, any
director, officer or employee, except, in each case, in the ordinary course
of business consistent with past practices (including those with respect to
the timing and amount of, and persons entitled to, grants and awards), or
as may be required by the terms of any such plan, agreement, policy or
arrangement or to comply with applicable law;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, make any change in its method of
accounting or its fiscal year;
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(i) enter into, modify in any material respect, amend in any material
respect or terminate any material contract or agreement to which the
Company or any of its Subsidiaries is a party, or waive, release or assign
any material rights or claims, in each case, in any manner adverse to the
Company or any of its Subsidiaries;
(j) amend any term of any of its outstanding securities in any
material respect;
(k) adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other material reorganization;
(l) incur, assume or guarantee any material Indebtedness other than
pursuant to agreements in effect on the date hereof and listed in the
Company Letter;
(m) create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired,
other than Liens incurred in the ordinary course of business or to secure
Indebtedness or other obligations permitted by this Agreement;
(n) create, incur, assume or suffer to exist any obligation whereby
the Company or its Subsidiaries guarantees any Indebtedness, leases,
dividends or other obligations of any third party;
(o) make any loan, advance or capital contributions to or investment
in any Person, other than loans, advances or capital contributions to or
investments in its wholly owned Subsidiaries;
(p) enter into any agreement or arrangement that materially limits or
otherwise materially restricts the Company, any of its Subsidiaries or any
of their respective Affiliates or any successor thereto or that could,
after the Effective Time, limit or restrict Parent, any of its
Subsidiaries, the Surviving Corporation or any of their Affiliates, from
engaging in the business of providing wireless communications services or
developing wireless communications technology anywhere in the world or
otherwise from engaging in any other business;
(q) settle, or propose to settle, any material litigation,
investigation, arbitration, proceeding or other claim;
(r) make any material tax election or enter into any settlement or
compromise of any material tax liability;
(s) take any action, other than as expressly permitted by this
Agreement, that would make any representation or warranty of the Company
hereunder inaccurate in any material respect at the Effective Time; or
(t) enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.
SECTION 5.2 Conduct of Business by Parent Pending the
Reorganization. During the period from the date of this Agreement until the
Effective Time, except as contemplated by this Agreement or the Omnipoint
Agreement, Parent shall not, and shall not permit any of its Subsidiaries to,
without the prior written consent of the Company (which consent shall not be
unreasonably withheld or delayed):
(a) amend its articles or certificate of incorporation, bylaws or
other applicable governing instrument;
(b) amend any terms of the shares of Parent Common Stock in any
material respect;
(c) split, combine, subdivide or reclassify any shares of Parent
Common Stock or declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of Parent Common Stock, except for (i) regular
quarterly cash
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dividends, (ii) regular dividends on any future series of preferred stock
pursuant to the terms of such securities, or (iii) dividends paid by any
Parent Subsidiary to Parent or any Parent Subsidiary that is, directly or
indirectly, wholly owned by Parent;
(d) take any action that would or would reasonably be expected to
prevent, impair or materially delay the ability of
Parent to consummate the transactions contemplated by this Agreement;
(e) change (i) its methods of accounting or accounting practices in
any material respect except as required by concurrent changes in generally
accepted accounting principles or by law or (ii) its fiscal year;
(f) enter into or acquire any new line of business that (i) is
material to Parent and (ii) is not strategically related to the current
business or operations of Parent;
(g) agree or commit to do any of the foregoing;
provided, however, that nothing herein shall preclude or restrict Parent from
consummating the transactions contemplated by the Omnipoint Agreement.
SECTION 5.3 No Solicitation. (a) From the date hereof until the termination
hereof, the Company will not, and will cause its Affiliates, and the officers,
directors, employees, investment bankers, attorneys, accountants, consultants or
other agents or advisors of the Company and its Affiliates, not to, directly or
indirectly: (i) take any action to solicit, initiate, facilitate or encourage
the submission of any Acquisition Proposal; (ii) other than in the ordinary
course of business and not related to an Acquisition Proposal, engage in any
discussions or negotiations with, or disclose any non-public information
relating to the Company or any of its Subsidiaries or afford access to the
properties, books or records of the Company or any of its Subsidiaries to, any
Person who is known by the Company to be considering making, or has made, an
Acquisition Proposal; (iii) (A) approve any transaction under Section 203 of the
Delaware Law or (B) approve of any Person's becoming an "interested stockholder"
under Section 203 of Delaware Law or (iv) enter into any agreement with respect
to an Acquisition Proposal. Nothing contained in this Agreement shall prevent
the Board of Directors of the Company from complying with Rule 14e-2 and Rule
14d-9 under the 1934 Act with regard to an Acquisition Proposal; provided, that
the Board of Directors of the Company shall not recommend that the stockholders
of the Company tender their shares in connection with a tender offer except to
the extent the Board of Directors of the Company by a majority vote determines
in its good faith judgment that such a recommendation is required to comply with
the fiduciary duties of the Board of Directors of the Company to shareholders
under applicable Delaware Law, after receiving the advice of outside legal
counsel.
(b) The Company will notify Parent promptly (but in no event later than 24
hours) after receipt by the Company (or any of its advisors) of any Acquisition
Proposal, or of any request (other than in the ordinary course of business and
not related to an Acquisition Proposal) for non-public information relating to
the Company or any of its Subsidiaries or for access to the properties, books or
records of the Company or any of its Subsidiaries by any Person who is known to
be considering making, or has made, an Acquisition Proposal. The Company shall
provide such notice orally and in writing and shall identify the Person making,
and the terms and conditions of, any such Acquisition Proposal or request. The
Company shall keep Parent fully informed, on a prompt basis (but in any event no
later than 24 hours), of the status and details of any such Acquisition Proposal
or request. The Company shall, and shall cause its Subsidiaries and the
directors, employees and other agents of the Company and the Company
Subsidiaries to, cease immediately and cause to be terminated all activities,
discussions or negotiations, if any, with any Persons conducted prior to the
date hereof with respect to any Acquisition Proposal.
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SECTION 5.4 Third Party Standstill Agreements. Subject to the fiduciary
responsibilities of the Board of Directors of the Company, during the period
from the date of this Agreement through the Effective Time, the Company shall
enforce and shall not terminate, amend, modify or waive any standstill provision
of any confidentiality or standstill agreement between the Company and other
parties entered into prior to the date hereof in connection with the process
conducted by the Company to solicit acquisition proposals for the Company.
SECTION 5.5 Disclosure of Certain Matters; Delivery of Certain Filings. The
Company shall promptly advise Parent orally and in writing if there occurs, to
the knowledge of the Company, any change or event which results in the executive
officers of the Company having a good faith belief that such change or event has
resulted in or is reasonably likely to result in a Material Adverse Effect on
the Company or prevent or materially delay the consummation of the
Reorganization. Parent shall promptly advise the Company orally and in writing
if there occurs, to the knowledge of Parent, any change or event which results
in the executive officers of Parent having a good faith belief that such change
or event has resulted in or is reasonably likely to result in a Material Adverse
Effect on Parent. The Company shall provide to Parent, and Parent shall provide
to the Company, copies of all filings made by the Company or Parent, as the case
may be, with any Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
SECTION 5.6 Tax Status. During the period from the date of this Agreement
through the Effective Time, each of Parent, the Company and their respective
Affiliates shall use its reasonable best efforts (i) to cause each of the Merger
and the VoiceStream Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code and/or as part of a transaction described in Section
351(a) of the Code and (ii) to obtain the opinions of counsel referred to in
Section 7.2(b) and Section 7.3(b), including the execution of the tax
certificates referenced therein.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Employee Benefits. (a) Parent shall take all necessary action
so that each person who is an employee of the Company or any of its Subsidiaries
as of the Effective Time (including each such person who is on vacation,
temporary layoff, approved leave of absence, sick leave or short-or long-term
disability) (a "Retained Employee") shall remain an employee of the Company or
the Surviving Corporation or a Subsidiary of the Company or of the Surviving
Corporation, as the case may be, immediately following the Effective Time. If
any person who (a) is receiving, as of the Effective Time, long-term disability
benefits and (b) was employed by Aerial or any of its Subsidiaries immediately
before becoming eligible to receive long-term disability benefits ceases to be
totally and permanently disabled and is able to return to employment, Parent
shall take all necessary action so that, to the extent required by law, such
person becomes an employee of the Company or the Surviving Corporation or a
Subsidiary of the Company or of the Surviving Corporation, as the case may be.
Prior to the Effective Time, TDS and the Company shall enter into an Employee
Benefit Plans Separation Agreement whereby certain TDS employee benefit plans in
which the Company participates shall be spun-off to allow the Company to become
the sole sponsor. The terms of the Employee Benefit Plans Separation Agreement
shall provide, inter alia, for the termination (without the establishment of any
similar plan) of the Company's participation in the Telephone and Data Systems,
Inc. Wireless Companies' Pension Plan and Telephone and Data Systems, Inc.
Supplemental Executive Retirement Plan. Parent shall not be subject to any
liability with respect to the Telephone and Data Systems, Inc. Wireless
Companies' Pension Plan. Parent shall take all necessary action so that each
employee benefit plan maintained by the Company or any of its Subsidiaries
immediately before the Effective Time shall be continued immediately following
the Effective Time. Parent shall take all necessary action so that, throughout
the period beginning at the
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Effective Time and ending on September 30, 2000, the Company, the Surviving
Corporation and their Subsidiaries will provide for each Retained Employee and
former employee of the Company and its Subsidiaries, a level of employee
benefits and aggregate compensation that is substantially comparable in the
aggregate with that provided by the Company immediately prior to the Effective
Time. Parent shall take all necessary action so that each Retained Employee
shall after the Effective Time continue to be credited with the unused vacation
and sick leave credited to such employee through the Effective Time under the
applicable vacation and sick leave policies of the Company and its Subsidiaries,
and Parent shall permit or cause the Company, the Surviving Corporation and
their Subsidiaries to permit such employees to use such vacation and sick leave.
Parent shall take all necessary action so that, for all purposes under each
employee benefit plan maintained by Parent or any of its Subsidiaries in which
employees or former employees of the Company and its Subsidiaries become
eligible to participate upon or after the Effective Time, each such person shall
be given credit for all service with the Company and its Subsidiaries (or all
service credited by the Company or its Subsidiaries) to the same extent as if
rendered to Parent or any of its Subsidiaries. As of the Effective Time, the
Company will have no Company Benefit Plans except for those Company Benefit
Plans listed in Items 3.12(a) and 3.12(b) of the Company Letter. Item 6.1(a) of
the Company Letter contains a true and complete list of each director, officer
and employee of the Company and its Subsidiaries holding options under any
Company Benefit Plan, and the dollar or share amounts thereof.
(b) Except as otherwise provided in this Section or in Section 6.2, nothing
in this Agreement shall be interpreted as limiting the power of the Surviving
Corporation to amend or terminate any particular Company Benefit Plan or any
other particular employee benefit plan, program, agreement or policy or as
requiring the Surviving Corporation to offer to continue (other than as required
by its terms) any written employment contract or to continue the employment of
any specific person, provided, however, that no such termination or amendment
may take away benefits or any other payments already accrued as of the time of
such termination or amendment without the consent of such person, except as
allowed by law.
(c) As of the Effective Time and subject to the applicable time limitations
contained herein, Parent shall honor or cause to be honored by the Company, the
Surviving Corporation and their Subsidiaries all employment agreements, bonus
agreements, severance agreements and non-competition agreements with the persons
who are directors, officers and employees of the Company and its Subsidiaries.
(d) Without limitation of Parent's or the Company's obligations under any
existing employment agreement, bonus agreement, severance agreement or
non-competition agreement, Parent shall maintain, or shall cause the Company and
the Surviving Corporation to maintain, the Company's bonus programs through at
least September 30 of the calendar year in which the Reorganization is
consummated, with bonuses to be paid to each Retained Employee still employed at
such time participating thereunder at the greater of (A) such employee's target
level and (B) the bonus such employee would have earned under the applicable
Company bonus program if the transactions contemplated by this Agreement had not
occurred, in all events on a basis consistent with past practice, and in either
case prorated on the basis of the portion of the calendar year elapsed as of the
time of termination of the relevant bonus program.
(e) Parent shall, or shall cause the Company and the Surviving Corporation
to, (A) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Retained Employees and former employees of the Company and its
Subsidiaries under any welfare or fringe benefit plan in which such employees
and former employees may be eligible to participate after the Effective Time,
other than limitations or waiting periods that are in effect with respect to
such employees and that have not been satisfied
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under the corresponding welfare or fringe benefit plan maintained by the Company
for the Retained Employees and former employees prior to the Effective Time, and
(B) provide each Retained Employee and former employee with credit under any
welfare plans in which such employee or former employee becomes eligible to
participate after the Effective Time for any co-payments and deductibles paid by
such Retained Employee or former employee for the then current plan year under
the corresponding welfare plans maintained by the Company prior to the Effective
Time.
SECTION 6.2 Options; Restricted Stock Awards. (a) Prior to the Effective
Time, the Board of Directors of the Company (or the Stock Option Compensation
Committee of the Board of Directors) shall adopt such resolutions or shall take
such other actions as may be required, with respect to Company Stock Options and
Company Restricted Stock Units, to specifically approve the transactions
contemplated by this Section 6.2. The Company shall use reasonable efforts to
obtain any necessary consents of the holders of such Company Stock Options and
Company Restricted Stock Units to effect this Section 6.2.
(b) At the Effective Time, each Company Stock Option which is outstanding
immediately prior to the Effective Time pursuant to any Company Stock Plan shall
become and represent an option to purchase the number of shares of Parent Common
Stock (a "Substitute Option") determined by multiplying the number of Company
Common Shares subject to such Company Stock Option immediately prior to the
Effective Time by the Conversion Number, at an exercise price per share of
Parent Common Stock (increased to the nearest whole cent) equal to the exercise
price per Company Common Share subject to such Company Stock Option immediately
prior to the Effective Time divided by the Conversion Number. All other terms
and conditions applicable to the Company Stock Options, including vesting, shall
remain unchanged with respect to the Substitute Options. No fractional shares of
Parent Common Stock will be issued upon the exercise of Substitute Options. In
lieu of such issuance, the shares of Parent Common Stock issued pursuant to the
terms of this Agreement shall be rounded to the closest whole share of Parent
Common Stock. After the Effective Time, except as otherwise provided in this
Section 6.2, each Substitute Option shall be exercisable upon the same terms and
conditions as were applicable to the related Company Stock Option immediately
prior to the Effective Time, after giving effect to the resolutions and other
actions described in this Section 6.2. Not later than ten days following the
Effective Time, Parent shall file a registration statement on Form S-8 or
otherwise included in an existing registration statement with respect to the
shares of Parent Common Stock to be issued upon exercise of the Substitute
Options and shall use its best efforts to maintain the effectiveness of such
registration statement for so long as the Substitute Options shall remain
outstanding.
(c) Pursuant to the Company Restricted Stock Plan, as of the date of
approval by the stockholders of the Company of this Agreement, each Company
Restricted Stock Unit shall become fully vested and each holder of a Company
Restricted Stock Unit shall be entitled to receive from the Company a payment in
an amount equal to the Fair Market Value (as defined by the Restricted Stock
Unit Plan) of such Restricted Stock Unit determined on such vesting date. Such
payment shall be made in cash or Company Common Shares, as determined in the
sole discretion of the Chairman of the Company.
SECTION 6.3 Company Stockholders Meeting. (a) The Company shall call a
meeting of the holders of Company Common Stock (the "Company Stockholders
Meeting") to be held as promptly as practicable for the purpose of voting upon
the Reorganization. Except as provided below, the Board of Directors of each
party shall recommend approval and adoption of this Agreement and the
transactions contemplated hereby by its respective stockholders and Parent and
the Company shall each take all lawful action to solicit such approval,
including timely mailing of the Proxy Statement/ Prospectus. The Board of
Directors of the Company shall be permitted to withdraw, or modify in a manner
adverse to Parent, its recommendation to its stockholders, but only if (i) the
Board of
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Directors of the Company determines in good faith by majority vote of all
directors entitled to vote on the approval of this Agreement, on the basis of
the advice of the Company's outside counsel that it is required under Delaware
law to take such action in order for the Board of Directors to comply with its
fiduciary duties under applicable Delaware Law, (ii) the Company shall have
delivered to Parent three Business Days' prior written notice advising Parent
that it intends to take such action and the Company's Board of Directors has
considered any proposed changes to this Agreement (if any) proposed by Parent
and (iii) the Company has fully and completely complied with Section 5.3 and
this Section. Unless this Agreement is previously terminated in accordance with
Section 8.1, the Company shall submit this Agreement to its stockholders at the
meeting required to be called and held pursuant to this Section 6.3(a), even if
the Company's Board of Directors determines at any time after the date hereof
that it is no longer advisable or recommends that its stockholders reject it.
(b) Parent shall call a meeting of its stockholders (the "Parent
Stockholder Meeting" and, together with the Company Stockholder Meeting, the
"Stockholder Meetings"), to be held as promptly as practicable for the purpose
of voting upon the Reorganization and Parent Share Issuance. Unless waived by
the Company, Parent shall use its reasonable commercial efforts to cause the
Parent Stockholder Meeting to be coordinated with and held at the same time and
place as the vote of the Parent Stockholders, as defined below, with respect to
the Omnipoint Agreement. Parent shall, though its Board of Directors, recommend
to the holders of Parent Common Stock approval of the Reorganization and Parent
Share Issuance. Unless this Agreement is previously terminated in accordance
with Section 8.1, Parent shall submit the Reorganization and Parent Share
Issuance to its stockholders at the meeting required to be called and held
pursuant to this Section 6.3(a), even if Parent's Board of Directors determines
at any time after the date hereof that it is no longer advisable or recommends
that its stockholders reject it.
(c) The Company and Parent shall coordinate and cooperate with respect to
the timing of the Stockholder Meetings and shall use their reasonable commercial
efforts to hold such meetings on the same day. Parent shall use its reasonable
best efforts to cause the record date for the Parent Stockholder Meeting to be
set as of a date prior to the consummation of the transactions contemplated by
the Omnipoint Agreement.
SECTION 6.4 Preparation of the Registration Statement and Joint Proxy
Statement. The Company and Parent shall promptly prepare and file with the SEC
the Joint Proxy Statement and Parent shall prepare and file with the SEC the
Registration Statement, in which the Joint Proxy Statement will be included as a
prospectus. Unless waived by the Company, the Company and Parent shall use their
reasonable commercial efforts to cause the Joint Proxy Statement to be combined
with the proxy statement of Parent and Omnipoint relating to the Omnipoint
Agreement. Each of the Company and Parent shall use its reasonable efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. Parent shall also take any reasonable
action (other than qualifying to do business in any jurisdiction in which it is
now not so qualified) required to be taken under any applicable state securities
laws in connection with the issuance of Parent Common Stock in connection with
the Reorganization and upon any exercise of the Substitute Options. The Company
shall furnish all information concerning the Company and the holders of shares
of Company Common Stock as may be reasonably requested by Parent in connection
with any such action. Parent shall notify the Company promptly of the receipt of
any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Registration Statement or the Joint
Proxy Statement or for additional information and will supply the Company with
copies of all correspondence between Parent or any of its representatives, on
the one hand, and the SEC or its staff, on the other hand, with respect to the
Registration Statement, the Joint Proxy Statement or the Reorganization. If at
any time prior to the Company Stockholders Meeting there shall occur any event
that should be set forth in an amendment or supplement to the Registration
Statement or the Joint Proxy Statement, each of Parent and the
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Company shall promptly prepare and mail to the stockholders of the Company and
Parent such an amendment or supplement. Parent and the Company shall cooperate
in the preparation of the Registration Statement, the Joint Proxy Statement or
any amendment or supplement thereto.
SECTION 6.5 Comfort Letters. (a) The Company shall use reasonable efforts
to cause to be delivered to Parent "comfort" letters of Arthur Andersen LLP, the
Company's independent public accountants, dated the date on which the
Registration Statement shall become effective and as of the Effective Time, and
addressed to Parent and the Company, in form and substance reasonably
satisfactory to Parent and as is reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
(b) Parent shall use reasonable efforts to cause to be delivered to the
Company "comfort" letters of Arthur Andersen LLP, Parent's independent public
accountants, dated the date on which the Registration Statement shall become
effective and as of the Effective Time, and addressed to the Company and Parent,
in form and substance reasonably satisfactory to the Company and as is
reasonably customary in scope and substance for letters delivered by independent
public accountants in connection with transactions such as those contemplated by
this Agreement.
SECTION 6.6 Access to Information. Upon reasonable notice and subject to
restrictions contained in confidentiality agreements to which the Company is
subject and subject to the terms of the Reciprocal Non-Disclosure and
Confidentiality Agreement dated December 28, 1998, between Series A Stockholder
on behalf of itself and its Affiliates, including the Company, and Parent, as
the same may be amended, supplemented or modified (the "Confidentiality
Agreement"), (a) the Company shall, and shall cause each of its Subsidiaries to,
afford to Parent and to the officers, employees, accountants, counsel and other
representatives of Parent all reasonable access, during normal business hours
during the period prior to the Effective Time, to all their respective lenders,
agents and other representatives, properties, assets, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its subsidiaries to) furnish promptly to Parent all information
concerning its business, properties and personnel as Parent may reasonably
request, including a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of the federal or state securities laws or the federal Tax laws and
(b) Parent shall, and shall cause each of its Subsidiaries to, afford to the
Company and to the officers, employees, accountants, counsel and other
representatives of the Company all reasonable access, during normal business
hours during the period prior to the Effective Time, to all their respective
properties, books, contracts, commitments and records and, during such period,
Parent shall (and shall cause each of its Subsidiaries to) furnish promptly to
the Company all information concerning its business, properties and personnel as
the Company may reasonably request, including a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of the federal or state securities laws or
the federal Tax laws.
SECTION 6.7 Compliance with the Securities Act. (a) No later than thirty
days following the date of this Agreement, the Company shall cause to be
prepared and delivered to Parent a list identifying all persons who, at the time
of the Company Stockholders Meeting, may be deemed to be an "affiliate" of the
Company, as such term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Rule 145 Affiliates"). The Company shall use reasonable
efforts to cause each person who is identified as a Rule 145 Affiliate in such
list (except Series A Stockholder and Investor) to deliver to Parent on or prior
to the Effective Time a written agreement, in a form to be approved by the
parties hereto, that such Rule 145 Affiliate shall not sell, pledge, transfer or
otherwise dispose of any shares of Parent Common Stock issued to such Rule 145
Affiliate in connection with the Reorganization, except pursuant to an effective
registration statement or in
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compliance with such Rule 145 or another exemption from the registration
requirements of the Securities Act.
(b) Prior to the Effective Time, the Board of Directors of Parent (or the
committee of the Board of Directors of Parent composed solely of two or more
"Non-Employee Directors," as that term is defined in Rule 16b-3(b)(3)(i) under
the Exchange Act, administering the stock plans of Parent) shall adopt such
resolutions or shall take such other actions as are required to specifically
approve the acquisitions of Parent Common Stock and Substitute Options at the
Effective Time, as contemplated by Sections 2.1(c) and 6.2, by directors,
officers or employees of the Company who may become directors or officers of
Parent, such approvals to be given for the purpose of exempting such
acquisitions under Rule 16b-3 under the Exchange Act, it being acknowledged that
such approvals shall not adversely affect Parent's ability subsequently to
determine that any such person has not in fact become a director or officer of
Parent.
SECTION 6.8 Stock Exchange Listings. Parent shall use reasonable efforts to
be included on Nasdaq, upon notification of issuance, the shares of Parent
Common Stock to be issued in connection with the Reorganization and upon any
exercise of the Substitute Options.
SECTION 6.9 Fees and Expenses. (a) Except as provided below in this Section
6.9, all fees and expenses incurred in connection with the Reorganization, this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees or expenses, whether or not the Reorganization is
consummated.
(b) In the event that Parent terminates this Agreement pursuant to Section
8.1(c)(i) or Section 8.1(e), the Company shall pay, or cause to be paid, in same
day funds to Parent within five (5) Business Days of such termination,
$40,000,000 (the "Termination Fee").
SECTION 6.10 Public Announcements. Parent and the Company will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, fiduciary
duties or by obligations pursuant to any listing agreement with any national
securities exchange.
SECTION 6.11 Real Estate Transfer Tax. Parent and the Company agree that
either the Surviving Corporation or the Company (without any liability to any of
the Company's stockholders) will pay any state or local Tax which is
attributable to the transfer of the beneficial ownership of the Company's or its
Subsidiaries' real property, if any (collectively, the "Transfer Taxes"), and
any penalties or interest with respect to the Transfer Taxes, payable in
connection with the consummation of the Reorganization. The Company agrees to
cooperate with Parent in the filing of any returns with respect to the Transfer
Taxes, including supplying in a timely manner a complete list of all real
property interests held by the Company and its Subsidiaries and any information
with respect to such property that is reasonably necessary to complete such
returns. The portion of the consideration allocable to the real property of the
Company and its Subsidiaries shall be determined by Parent in its reasonable
discretion. To the extent permitted by law, the Company's stockholders shall be
deemed to have agreed to be bound by the allocation established pursuant to this
Section 6.11 in the preparation of any return with respect to the Transfer
Taxes.
SECTION 6.12 State Takeover Laws. If any "fair price" or "control share
acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, Parent and the Company and
their respective Boards of Directors shall use reasonable efforts to grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to minimize the effects of any such
statute or regulation on the transactions contemplated hereby.
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SECTION 6.13 Indemnification; Directors and Officers Insurance. (a) Parent
shall, or shall cause the Surviving Company to, continue to provide all rights
to indemnification or exculpation, existing in favor of a director, officer,
employee or agent (an "Indemnified Person") of the Company or any of its
Subsidiaries (including, without limitation, rights relating to advancement of
expenses and indemnification rights to which such persons are entitled because
they are serving as a director, officer, agent or employee of another entity at
the request of the Company or any of its Subsidiaries), as provided in the
Restated Certificate of Incorporation of the Company, the By-laws of the Company
or any indemnification agreement, in each case, as in effect on the date of this
Agreement, and relating to actions or events through the Effective Time, and
such rights to indemnification shall survive the Reorganization and shall
continue in full force and effect, without any amendment thereto; provided,
however, that neither Parent nor the Surviving Corporation shall be required to
indemnify any Indemnified Person in connection with any proceeding (or portion
thereof) to the extent involving any claim initiated by such Indemnified Person
unless the initiation of such proceeding (or portion thereof) was authorized by
the Board of Directors of the Company or unless such proceeding is brought by an
Indemnified Person to enforce rights under this Section 6.13; provided further
that any determination required to be made with respect to whether an
Indemnified Person's conduct complies with the standards set forth under the
DGCL, the Restated Certificate of Incorporation of the Company, the By-laws of
the Company or any such agreement, as the case may be, shall be made by
independent legal counsel selected by Parent and reasonably acceptable to such
Indemnified Person; and provided further that nothing in this Section 6.13 shall
impair any rights of any Indemnified Person. Without limiting the generality of
the preceding sentence, in the event that any Indemnified Person becomes
involved in any actual or threatened action, suit, claim, proceeding or
investigation after the Effective Time relating to actions prior to the
Effective Time, Parent shall, or shall cause the Surviving Corporation to,
promptly advance to such Indemnified Person his or her legal and other expenses
(including the cost of any investigation and preparation incurred in connection
therewith), subject to the providing by such Indemnified Person of an
undertaking to reimburse all amounts so advanced in the event of a
non-appealable determination of a court of competent jurisdiction that such
Indemnified Person is not entitled thereto.
(b) Subject to the prior written approval by Parent, which shall not be
unreasonably withheld, prior to the Effective Time, the Company shall have the
right to obtain and pay for in full a "tail" coverage directors' and officers'
liability insurance policy ("D&O Insurance") covering a period of not more than
six years after the Effective Time and providing coverage in amounts and on
terms consistent with the Company's existing D&O Insurance. In the event the
Company does not obtain such insurance, Parent shall cause the Surviving
Corporation to continue to provide D&O Insurance relating to actions or events
through the Effective Time (through Series A Stockholder or directly with an
insurance carrier), for a period of not more than six years after the Effective
Time; provided, that the Surviving Corporation may substitute therefor policies
of substantially similar coverage and amounts containing terms no less
advantageous to such former directors or officers; provided further that if the
existing D&O Insurance expires or is cancelled during such period, Parent or the
Surviving Corporation shall make reasonable commercial efforts to obtain
substantially similar D&O Insurance; and provided further that the Company shall
not be required to expend, in order to maintain or procure an annual D&O
Insurance policy, an amount in excess of 200% of the last annual premium paid
prior to the date hereof, but in such case shall purchase as much coverage as
possible for such amount.
(c) The provisions of this Section 6.13 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Person, his or her heirs and
his or her personal representatives and shall be binding upon the successors and
assigns of Parent, the Company and the Surviving Company.
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SECTION 6.14 Best Efforts. (a) Subject to the provisions hereof, each of
the Company, Parent and Merger Sub C agrees to use best efforts to consummate
and make effective, in the most expeditious manner practicable, the
Reorganization and the other transactions contemplated by this Agreement;
provided, however, that neither Parent nor any of its Subsidiaries shall be
required, nor, without the consent of Parent, shall the Company or its
Subsidiaries be permitted, to divest or hold separate or otherwise take or
commit to take any action that limits its freedom of action with respect to the
Company, Parent or any of their Subsidiaries or any material portion of the
assets of the Company, Parent or any of their Subsidiaries or any of the
business, product lines, or assets of the Company, Parent or any of their
Subsidiaries. Without limiting the foregoing, (i) each of the Company, Parent
and Merger Sub C agrees to use best efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements that may be
imposed on itself with respect to the Reorganization (which actions shall
include furnishing all information required under the HSR Act and all actions
required in connection with approvals of or filings with the FCC, state public
utility or service commissions or similar agencies and any other Governmental
Entity) and shall promptly cooperate with and furnish information to each other
in connection with any such requirements imposed upon any of them or any of
their Subsidiaries in connection with the Reorganization and (ii) each of the
Company, Parent and Merger Sub C shall, and shall cause its Subsidiaries to, use
best efforts to obtain (and shall cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, the FCC,
state public utility or service commissions or similar agencies and any other
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Sub, the Company or any of their Subsidiaries in
connection with the Reorganization or the taking of any action contemplated
thereby or by this Agreement. Notwithstanding anything to the contrary contained
in this Agreement, in connection with any filing or submission required or
action to be taken by Parent, the Company or any of its respective Subsidiaries
to consummate the Reorganization or the other transactions contemplated in this
Agreement, the Company shall not, without Parent's prior written consent, commit
to any divestiture of assets or businesses of the Company and its Subsidiaries
if such divested assets and/or businesses are material to the assets or
profitability of the Company and its Subsidiaries taken as a whole.
(b) As promptly as practicable after the execution and delivery of this
Agreement, Parent and the Company shall prepare all appropriate applications for
FCC approval, and such other documents as may be required, with respect to the
transfer of control of the Company and Parent to Holding Company (collectively,
the "FCC Applications"). Not later than the tenth Business Day following
execution and delivery of this Agreement, the Company and Parent will exchange
with each other their respective completed portions of the FCC Applications. Not
later than the fifteenth Business Day following the execution and delivery of
this Agreement, the Company and Parent shall file, or cause to be filed, the FCC
Applications. If the Effective Time shall not have occurred for any reason
within any applicable initial consummation period, and neither the Company nor
Parent shall have terminated this Agreement pursuant to Section 8.1, Parent and
the Company shall jointly request one or more extensions of the consummation
period of such grant. No party hereto shall knowingly take, or fail to take, any
action if the intent or reasonably anticipated consequence of such action or
failure to act is, or would be, to cause the FCC not to grant approval of the
FCC Applications or delay either such approval or the consummation of the
transfer of control of the Company. Parent and the Company shall each pay
one-half ( 1/2) of any FCC fees, if applicable, in connection with the filing or
granting of approval of the FCC Applications. Each of Parent and the Company
shall bear its own expenses in connection with the preparation and prosecution
of the FCC Applications. Parent and the Company shall each use all commercially
reasonable efforts to prosecute the FCC Applications in good faith and with due
diligence before the FCC and in connection therewith shall take such action or
actions as may be necessary or reasonably required in connection with the FCC
Applications,
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including furnishing to the FCC any documents, materials or other information
requested by the FCC in order to obtain such FCC approval as expeditiously as
practicable.
(c) Promptly after the date hereof, Parent and the Company (as may be
required pursuant to the HSR Act) will complete all documents required to be
filed with the Federal Trade Commission and the Department of Justice in order
to comply with the HSR Act and, not later than 20 Business Days after the date
hereof, together with the Persons who are required to join in such filings,
shall file the same with the appropriate Governmental Entities. Parent and the
Company shall each pay one-half ( 1/2) of any fees that may be payable in
connection with the filing pursuant to the HSR Act. Parent and the Company shall
promptly furnish all materials thereafter required by any of the Governmental
Entities having jurisdiction over such filings and shall take all reasonable
actions and shall file and use all reasonable efforts to have declared effective
or approved all documents and notifications with any such Governmental Entities,
as may be required under the HSR Act or other federal antitrust laws for the
consummation of the Transactions and any other transactions contemplated hereby.
(d) Each of the Company and Parent shall promptly notify the other of:
(i) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement;
(iii) the occurrence, or non-occurrence, of any event the occurrence
or non-occurrence of which would be reasonably be expected to cause any
representation or warranty made by it and contained herein to be untrue or
inaccurate in any material respect at any time during the period commencing
on the date hereof and ending at the Effective Time;
(iv) any failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
6.14(d) shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice;
(v) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against such party which, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.13, in the case of the Company, or
Section 4.12, in the case of Parent, or which relate to the consummation of
the Transactions; and
(vi) any event, condition or state of facts which could have a
Material Adverse Effect on such party.
SECTION 6.15 Certain Litigation. The Company agrees that it shall not
settle any litigation commenced after the date hereof against the Company or any
of its directors by any stockholder of the Company relating to the
Reorganization, this Agreement or the Stockholder Agreement without the prior
written consent of Parent, which consent shall not be unreasonably withheld or
delayed.
SECTION 6.16 Transition Services Agreement. Parent, Company and Series A
Stockholder shall enter into the Transition Services Agreement in the form
attached hereto as Annex C on or prior to the Effective Time.
SECTION 6.17 Registration Rights Agreement. Parent and Series A Stockholder
shall enter into the Registration Rights Agreement in the form attached hereto
as Exhibit A to the Stockholder Agreement on or prior to the Effective Time.
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SECTION 6.18 Investor Claim. Matters relating to the investment and claim
by the Investor are set forth on Annex E hereto.
SECTION 6.19 Intercompany Service Agreements. Each of the following
agreements ("Intercompany Service Agreements") and, except as provided in the
Transition Services Agreement or in this Agreement, all other agreements between
the Company and its Subsidiaries, on the one hand, and Series A Stockholder and
its Subsidiaries (other than the Company and its Subsidiaries) on the other
hand, shall be terminated as of the Effective Time and, as provided in Section
6.23, all amounts due from one party to another thereunder shall be settled in
cash on or prior to the Effective Time:
(i) Cash Management Agreement;
(ii) Insurance Cost Sharing Agreement;
(iii) Intercompany Agreement;
(iv) Exchange Agreement;
(v) Employee Benefit Plan Agreement; and
(vi) Company Registration Rights Agreement.
Following such termination, except as otherwise provided in this Agreement
or the Transition Services Agreement, the Company and Series A Stockholder shall
release each other with respect to any Loss relating to or arising from the
foregoing agreements and all amounts due thereunder on and after the Effective
Time.
SECTION 6.20 Revolving Credit Agreement. On the date of this Agreement, the
Company, Operating Company, Series A Stockholder and Parent shall enter into the
Debt/Equity Replacement Agreement attached hereto as Annex F.
SECTION 6.21 Series A and B Notes. Prior to the Effective Time, Parent
shall, with the assistance of the Company, acquire all of the Series A Notes and
Series B Notes. Any investment banking firm engaged in connection with such
acquisition shall be selected by the Series A Stockholder subject to the consent
of Parent (including such investment banking firm's fees and expenses), which
shall not be unreasonably withheld. Unless otherwise determined pursuant to the
preceding sentence, the parties hereto agree that Credit Suisse First Boston
Corporation ("CSFB") shall be engaged to assist Parent in acquiring the Series A
Notes and Series B Notes. Parent shall bear the fees and expenses of acquiring
the Series A Notes and Series B Notes (including the fees and reasonable
expenses of counsel and of CSFB or other investment banking firm selected
pursuant to this Section), and shall be responsible for and pay any make-whole
premium (the "Make-Whole Premium"), to the extent the amount of the Make-Whole
Premium is less than or equal to the difference (the "Parent Cost") between the
Redemption Present Value and accreted value of the Notes on the date such Notes
are acquired. The Redemption Present Value of the Notes shall be computed by
CSFB in accordance with standard market practice, and shall equal the present
value of the redemption price of such Notes corresponding to the earliest
Optional Redemption Date, as defined in the Series A Indenture and the Series B
Indenture (November 1, 2001 in the case of the Series A Notes and February 1,
2003 in the case of the Series B Notes), discounted from such date to the date
of acquisition, using a discount rate equal to a comparable Treasury rate with
respect to such Note plus 50 basis points. Series A Stockholder shall be
responsible for and shall pay the amount of any Make-Whole Premium in excess of
the Parent Cost. Following the acquisition of the Series A Notes and Series B
Notes, on or prior to the Effective Time, Series A Stockholder shall be released
and discharged in full from the Series A Guaranty and the Series B Guaranty and
such guarantees shall be terminated.
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SECTION 6.22 Nokia Credit Agreement. At the Effective Time, Parent shall
cause all obligations, including accrued interest, under the Nokia Credit
Agreement to be repaid in full and the Nokia Credit Agreement and the Nokia
Guaranty shall be terminated, or Parent shall obtain an amendment to the Nokia
Credit Agreement (including the substitution of Parent as guarantor thereunder
and the release and discharge in full of the Series A Stockholder's obligations
under the Nokia Guaranty), to permit the Reorganization to occur without
resulting in a default under the Nokia Credit Agreement. Parent shall bear the
expense of refinancing all borrowings under the Nokia Credit Agreement.
Following such action, on or prior to the Effective Time, Series A Stockholder
shall be released and discharged in full from the Nokia Guaranty.
SECTION 6.23 Intercompany Accounts. All intercompany accounts payable,
receivables, loans, including accrued interest and any penalties, accrued but
unpaid guarantee fees and other intercompany accounts ("Intercompany
Accounts")between the Company and its Subsidiaries, on the one hand, and Series
A Stockholder and its Subsidiaries (other than the Company and its
Subsidiaries), on the other hand, including amounts due from one party to
another under the Intercompany Service Agreements, shall be settled and paid in
cash on or prior to the Effective Time. To the extent necessary Parent shall
advance funds to the Company on or prior to the Effective Time to permit the
Company to settle all Intercompany Accounts with Series A Stockholder. The
parties acknowledge and agree that the preparation of financial statements and
accounts will necessarily require the parties to estimate the amounts of certain
Intercompany Accounts and, accordingly, except as otherwise provided in the
Transition Services Agreement, the parties agree that they will cooperate after
the Effective Time to true-up such estimates considering actual experience or
information learned after the Effective Time. The parties hereto agree to
true-up and settle such estimates in cash within 30 days after notice from the
other party specifying in reasonable detail the final amount of any such
Intercompany Account. Following such settlement, the Company and Series A
Stockholder shall release each other with respect to any Loss relating to or
arising from any such intercompany accounts on and after the Effective Time.
SECTION 6.24 Tax Allocation Agreement and Tax Settlement Agreement. The Tax
Allocation Agreement shall terminate as of the Effective Time and none of the
parties thereto shall have any liability to any other party thereunder following
the Effective Time. The Tax Settlement Agreement shall remain in full force and
effect in accordance with its terms following the Effective Time, and the
Company shall withdraw its contention, made in a letter dated June 8, 1999 from
the Company to the Series A Stockholder, that an error in the application of the
federal income tax law was made in the tax settlement model referred to in
Section 2 of the Tax Settlement Agreement.
SECTION 6.25 Parent Stockholder Voting Agreement. Hellman & Friedman
Investors, L.P., H & F Orchard Partners, L.P., H & F International Partners,
L.P., John W. Stanton, Theresa E. Gillespie, PNCellular, Inc., Stanton Family
Trust, Stanton Communications Corporation, GS Capital Partners, L.P., The
Goldman Sachs Group, Inc., Bridge Street Fund 1992, L.P., Stone Street Fund
1992, L.P., Providence Media Partners, L.P., Hutchinson Telecommunications
Holdings (USA) Limited and Hutchinson Telecommunications PCS (USA) Limited
("Parent Stockholders"), who hold 46% of the fully diluted voting power of the
Parent Company Stock on the date hereof, shall enter into the Parent Stockholder
Voting Agreement with the Company in the form attached hereto as Annex G
pursuant to which such stockholders of Parent shall agree to vote for the
Reorganization and Parent Share Issuance.
SECTION 6.26 Agreements Regarding Taxes.
(a) Series A Stockholder Liability for Taxes. The Series A Stockholder
shall be liable for and shall indemnify Parent and the Company and its
Subsidiaries for all Taxes (including any obligation to contribute to the
payment of a Tax determined on a consolidated, combined or unitary basis
with respect to a group of corporations that includes or included the
Company or
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any of its Subsidiaries and Taxes resulting from the Company and its
Subsidiaries ceasing to be a member of the Series A Stockholder's Group),
(i) imposed on the Series A Stockholder's Group or any member thereof
(other than the Company and its Subsidiaries) for any taxable year, (ii)
imposed on the Company or any of its Subsidiaries or for which the Company
or any of its Subsidiaries may otherwise be liable for any taxable year or
period that ends on or before the date on which the Effective Time occurs
(the "Effective Date"), and with respect to any taxable year or period
beginning before and ending after the Effective Date, the portion of such
taxable year ending on and including the Effective Date, or (iii) imposed
on Parent or the Company or any of its Subsidiaries as a result of the
receipt of any payment made to it pursuant to the provisions of this
Section 6.26. Except as set forth in Section 6.26(d), the Series A
Stockholder shall be entitled to any refund of Taxes of the Company and its
Subsidiaries received for such periods.
(b) Parent Liability for Taxes. Parent shall be liable for and
indemnify the Series A Stockholder for (i) the Taxes of the Company and any
of its Subsidiaries for any taxable year or period that begins after the
Effective Date and, with respect to any taxable year or period beginning
before and ending after the Effective Date, the portion of such taxable
year beginning after the Effective Date and (ii) Taxes imposed on the
Series A Stockholder as a result of any payment made to it pursuant to the
provisions of this Section 6.26. Parent shall be entitled to any refund of
Taxes of the Company and any of its Subsidiaries received for such periods.
(c) Taxes for Short Taxable Year. For purposes of paragraphs (a) and
(b), whenever it is necessary to determine the liability for Taxes of the
Company or any of its Subsidiaries for a portion of a taxable year or
period that begins before and ends after the Effective Date, the
determination of the Taxes of such entity for the portion of the year or
period ending on, and the portion of the year or period beginning after,
the Effective Date shall be determined by assuming that the entity had a
taxable year or period which ended at the close of the Effective Date,
except that exemptions, allowances or deductions that are calculated on an
annual basis, such as the deduction for depreciation, shall be apportioned
on a time basis.
(d) Refunds from Carrybacks. If the Series A Stockholder becomes
entitled to a refund or credit of Taxes for any period for which it is
liable under Section 6.26(a) to indemnify Parent and such Taxes are
attributable solely to the carryback of losses, credits or similar items
from a taxable year or period that begins after the Effective Date and
attributable to the Company or any of its Subsidiaries, the Series A
Stockholder shall promptly pay to Parent the amount of such refund or
credit together with any interest thereon. In the event that any refund or
credit of Taxes for which a payment has been made is subsequently reduced
or disallowed, Parent shall indemnify and hold harmless the Series A
Stockholder for any Tax liability, including interest and penalties,
assessed against the Series A Stockholder by reason of the reduction or
disallowance.
(e) Tax Returns. The Series A Stockholder shall file or cause to be
filed when due all Tax Returns with respect to Taxes that are required to
be filed by or with respect to the Company and any of its Subsidiaries for
taxable years or periods ending on or before the Effective Date and shall
pay any Taxes due in respect of such Tax Returns, and Parent shall file or
cause to be filed when due all Tax Returns with respect to Taxes that are
required to be filed by or with respect to the Company and any of its
Subsidiaries for taxable years or periods ending after the Effective Date
and shall remit any Taxes due in respect of such Tax Returns. The Series A
Stockholder shall pay Parent the Taxes for which the Series A Stockholder
is liable pursuant to Section 6.26(a) but which are payable with Tax
Returns to be filed by Parent pursuant to the previous sentence within 10
days prior to the due date for the filing of such Tax Returns.
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(f) Contest Provisions. Parent shall promptly notify the Series A
Stockholder in writing upon receipt by Parent, any of its Affiliates or the
Company or any of its Subsidiaries of notice of any pending or threatened
federal, state, local or foreign income or franchise tax audit or
assessment which may materially affect the Taxes of the Company or any of
its Subsidiaries for which the Series A Stockholder would be required to
indemnify Parent pursuant to Section 6.26(a), provided that failure to
comply with this provision shall not affect Parent's right to
indemnification hereunder. The Series A Stockholder shall have the sole
right to represent the Company and its Subsidiaries' interests in any tax
audit or administrative or court proceeding relating to taxable periods
ending on or before the Effective Date, and to employ counsel of its choice
at its expense. Notwithstanding the foregoing, the Series A Stockholder
shall not be entitled to settle, either administratively or after the
commencement of litigation, any claim for Taxes which would adversely
affect the liability for Taxes of Parent or the Company or any of the
Company's Subsidiaries for any period after the Effective Date to any
extent (including the imposition of income tax deficiencies, the reduction
of asset basis or cost adjustments, the lengthening of any amortization or
depreciation periods, the denial of amortization or depreciation
deductions, or the reduction of loss or credit carryforwards) without the
prior written consent of Parent. Such consent shall not be unreasonably
withheld, and shall not be necessary to the extent that the Series A
Stockholder has indemnified Parent against the effects of any such
settlement.
(g) Assistance and Cooperation. After the Closing Date, each of the
Series A Stockholder and Parent shall:
(i) assist (and cause their respective Affiliates to assist) the
other party in preparing any Tax Returns or reports which such other
party is responsible for preparing and filing in accordance with this
Section 6.26;
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of the Company or any
of its Subsidiaries;
(iii) make available to the other party and to any taxing authority
as reasonably requested all information, records, and documents relating
to Taxes of the Company and its Subsidiaries;
(iv) provide timely notice to the other in writing of any pending
or threatened tax audits or assessments of the Company or any of its
Subsidiaries for taxable periods for which the other party may have a
liability under this Section 6.26; and
(v) furnish the other party with copies of all correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any such taxable period.
(h) Payment. Any indemnity payment required to be made pursuant to
this Section 6.26 shall be paid within 15 days after the indemnified party
makes written demand upon the indemnifying party, but in no case earlier
than five Business Days prior to the date on which the relevant Taxes are
required to be paid to the relevant taxing authority (including estimated
Tax payments).
(i) Adjustment to Purchase Price. Parent and the Series A Stockholder
agree to report any indemnification payment made by the Series A
Stockholder under this Section 6.26 as an adjustment to purchase price,
contribution to capital, or other non-taxable amount to the extent that
there is substantial authority for such reporting position under applicable
law, it being understood that if such reporting position is disallowed in
any administrative or court proceeding,
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the Series A Stockholder shall indemnify Parent under Section 6.26(a) for
the effects of such disallowance.
(j) Survival of Obligations. The obligations of the parties set forth
in this Section 6.26 shall be unconditional and absolute and shall remain
in effect without limitation as to time.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Reorganization. The respective obligations of each party hereto to effect the
Reorganization shall be subject to the fulfillment at or prior to the Effective
Time of the following conditions:
(a) Stockholder Approval. The Reorganization shall have been duly
approved by the requisite vote of the stockholders of the Company in
accordance with applicable law and the Restated Certificate of
Incorporation and By-laws of the Company and the Parent Share Issuance
shall have been duly approved by the requisite vote of the stockholders of
Parent in accordance with applicable law and the Certificate of
Incorporation and Bylaws of Parent.
(b) No Injunction or Restraint. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity preventing the consummation of
the Reorganization or which could reasonably be expected to have a Material
Adverse Effect on the Company shall be in effect; provided, however, that
each of the parties shall have used their commercially reasonable efforts
to prevent the entry of any such temporary restraining order, injunction or
other order, including, without limitation, taking such action as is
required to comply with Section 6.14, and to appeal as promptly as possible
any injunction or other order that may be entered.
(c) Stock Exchange Listings. The shares of Parent Common Stock
issuable in accordance with the Reorganization and pursuant to Section 6.2
shall have been authorized for listing on the Nasdaq, subject to official
notice of issuance.
(d) HSR. Any waiting period (and any extension thereof) under the HSR
Act applicable to the Reorganization shall have expired or been terminated.
(e) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall
have been initiated or, to the knowledge of Parent or the Company,
threatened by the SEC. All necessary state securities authorizations
(including state takeover approvals) shall have been received unless the
failure to receive any such authorization would not have a Material Adverse
Effect on the Company or Parent or the transactions contemplated by this
Agreement.
(f) Governmental Approvals. All necessary consents or authorizations
from Governmental Entities which may be required in connection with the
transactions contemplated hereby, including but not limited to the FCC and
state public utility or service commissions or similar agencies, shall have
been received and, in the case of the FCC, shall have become Final Orders,
unless the failure to receive any such consent or authorization would not
have a Material Adverse Effect on the Company or Parent or the transactions
contemplated by this Agreement, and such consents or authorizations shall
not contain any conditions which would reasonably be expected to have a
Material Adverse Effect on the Company or Parent or the transactions
contemplated by this Agreement.
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(g) Investor Agreement. Parent and the Series A Stockholder shall have
executed and delivered the Investor Agreement attached hereto as Exhibit H.
(h) Omnipoint Agreement. The transactions contemplated by the
Omnipoint Agreement shall have been consummated or terminated, provided
that this condition shall be deemed to have been satisfied on the Omnipoint
End Date if the transactions contemplated by the Omnipoint Agreement shall
have not been consummated or terminated by such date.
(i) Public Announcement. In the event the Omnipoint Agreement shall
have been terminated or the condition specified in Section 7.1(h) shall
have been deemed to be satisfied pursuant to the proviso thereof, twenty
business days shall have elapsed following public announcement of such
event.
SECTION 7.2 Conditions to Obligation of the Company to Effect the
Reorganization. The obligation of the Company to effect the Reorganization shall
be subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Performance of Obligations; Representations and Warranties. Each
of Parent and Merger Sub C shall have performed each of its agreements
contained in this Agreement required to be performed at or prior to the
Effective Time, and each of the representations and warranties of Parent
and Merger Sub C contained in this Agreement (disregarding all
qualifications and exceptions contained therein relating to materiality or
a Material Adverse Effect or any similar standard or qualification) shall
be true and correct at and as of the Effective Time as if made at and as of
the Effective Time in each case except as contemplated or permitted by this
Agreement and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company or
Parent or the transactions contemplated by this Agreement; and the Company
shall have received a certificate signed on behalf of Parent by its Chief
Executive Officer and its Chief Financial Officer to such effect.
(b) Tax Opinion. The Company shall have received an opinion of Sidley
& Austin, in form and substance reasonably satisfactory to the Company,
dated the Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective Time, for
federal income tax purposes:
(i) The Merger will constitute either (A) a "reorganization" within
the meaning of Section 368(a) of the Code, to which the Company, Merger
Sub C and Parent will each be a party, within the meaning of Section
368(b) of the Code or (B) part of a transaction described in Section
351(a) of the Code;
(ii) No gain or loss will be recognized by Parent, Merger Sub C or
the Company as a result of the Merger;
(iii) A stockholder of the Company that does not elect to receive
any cash pursuant to the Merger will recognize no gain or loss solely as
a result of the conversion of shares of Company Common Stock into shares
of Parent Common Stock pursuant to the Merger, except with respect to
cash, if any, received in lieu of fractional shares of Parent Common
Stock;
(iv) A stockholder of the Company that elects to receive cash
pursuant to the Merger will recognize any gain (but not loss) realized
as a result of the Merger in an amount equal to the lesser of (A) the
difference between (x) the fair market value of Parent Common Stock
received pursuant to the Merger plus cash received pursuant to the
Merger and (y) the basis of such stockholder's Company Common Stock
surrendered in the Merger or (B) the amount of cash received pursuant to
the election to receive cash;
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(v) The aggregate tax basis of the shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to the
Merger (including fractional shares of Parent Common Stock for which
cash is received) will be the same as the aggregate tax basis of such
shares of Company Common Stock, (A) decreased by the amount of cash
received in exchange for shares of Company Common Stock pursuant to an
election to receive cash and (B) increased by the amount of gain
recognized (determined under clause (iv) above);
(vi) The holding period for shares of Parent Common Stock received
in exchange for shares of Company Common Stock pursuant to the Merger
will include the period that such shares of Company Common Stock were
held by the stockholder, provided such shares of Company Common Stock
were held as capital assets by such stockholder at the Effective Time;
and
(vii) A stockholder of the Company who receives cash in lieu of a
fractional share of Parent Common stock will recognize gain or loss
equal to the difference, if any, between such stockholder's basis in
such fractional share (as described in clause (v) above) and the amount
of cash received.
In rendering such opinion, Sidley & Austin may receive and rely upon
representations from others, including representations from the Company and
Holding contained in certificates substantially in the form of the Company
Tax Certificate and the Tax Matters Certificate attached hereto as Annex M
and Annex M-2, representations from Holding contained in a certificate
substantially in the form of the Parent Tax Certificate attached hereto as
Annex N, and representations in a certificate substantially in the form of
the Tax Matters Certificate attached hereto as Annex O from certain persons
who own, as of the Effective Time, five percent (5%) or more of the total
number of shares of the Company or of VoiceStream (or, in such counsel's
discretion, of Omnipoint).
(c) Consents Under Agreements. Parent shall have obtained the consent
or approval of each person whose consent or approval shall be required in
connection with the transactions contemplated hereby under any indenture,
mortgage, evidence of indebtedness, lease or other agreement or instrument
to which Parent or one of its Subsidiaries is a party, except where the
failure to obtain the same would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect on Parent or the
Company or upon the transactions contemplated by this Agreement.
(d) Intercompany Services Agreements. The Intercompany Services
Agreements shall have been terminated.
(e) Debt/Equity Replacement Agreement. The transactions contemplated
by the Debt/ Equity Replacement Agreement shall have been consummated.
(f) Series A and B Notes. The Series A Notes and Series B Notes shall
have been acquired by Parent and/or Parent shall have obtained consents
from the requisite number of holders of Series A Notes and Series B Notes
to the amendment of the Series A Indenture and Series B Indenture
(including the substitution of Parent as guarantor thereunder and the
elimination of Section 3.8 in such indentures), and Parent shall have taken
such other action as may be necessary to permit the Reorganization to occur
without resulting in a default under the Series A Indenture or the Series B
Indenture, to cause the Series A Stockholder to be released and discharged
in full from the Series A Guarantee and the Series B Guarantee and to
terminate such guarantees on or prior to the Effective Time.
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(g) Nokia Credit Agreement. Parent shall have caused all obligations
under the Nokia Credit Agreement to be repaid in full and the Nokia Credit
Agreement and Nokia Guaranty shall have been terminated; or Parent shall
have obtained an amendment to the Nokia Credit Agreement (including the
substitution of Parent as guarantor thereunder and the release and
discharge in full of the Nokia Guaranty), to permit the Reorganization to
occur without resulting in a default under the Nokia Credit; and, in either
event, the Series A Stockholder shall have been released and discharged in
full from the Nokia Guaranty on or prior to the Effective Time.
(h) Intercompany Accounts. All Intercompany Accounts shall have been
settled and paid in cash based on financial information available at the
Effective Time.
(i) Tax Allocation Agreement. The Tax Allocation Agreement shall have
been terminated.
(j) Parent Stockholder Agreement. The Parent Stockholders shall have
executed and delivered the Parent Stockholder Voting Agreement.
(k) Omnipoint Agreement. There shall have been no amendments to the
Omnipoint Agreement or the transactions contemplated thereby except for
amendments which would not, individually or in the aggregate, have a
Material Adverse Effect on Parent or on the transactions contemplated by
this Agreement.
(l) Registration Rights Agreement. Parent shall have executed and
delivered the Registration Rights Agreement.
(m) FCC Opinion. The Company shall have received an opinion of FCC
counsel to Parent, dated the Effective Time, substantially in the form
attached hereto as Annex I.
(n) Corporate Opinion. The Company shall have received an opinion of
corporate and state regulatory counsel to Parent, dated the Effective Time,
in substantially the form attached hereto as Annex J.
(o) Nasdaq. The shares of Parent Company Stock to be issued pursuant
to Section 2.1(c) shall have been listed on the Nasdaq National Market.
(p) Year 2000. There shall not have occurred and be continuing a
Material Adverse Effect with respect to Parent relating to the Year 2000
Issue, provided, however, that for purposes of this condition, clauses (i)
and (ii) of the definition of Material Adverse Effect shall be disregarded.
Notwithstanding anything contained to the contrary in Section 7.2(a) or
anywhere else in this Agreement, Parent may enter into any Subsequent
Transaction, and no changes of any representation or warranty of Parent
contained in this Agreement as a result of any Subsequent Transaction shall
result in a failure of the conditions set forth in Section 7.2(a); provided, in
each case, that any such Subsequent Transaction would not, or would reasonably
not be expected to prevent, impair or materially delay the ability of the
Company or Parent to consummate the transactions contemplated by this Agreement.
SECTION 7.3 Conditions to Obligations of Parent and Merger Sub C to Effect
the Reorganization. The obligation of Parent and Merger Sub C to effect the
Reorganization shall be subject to the fulfillment at or prior to the Effective
Time of the following additional conditions:
(a) Performance of Obligations; Representations and Warranties. The
Company shall have performed each of its agreements contained in this
Agreement required to be performed at or prior to the Effective Time, and
each of the representations and warranties of the Company contained in this
Agreement (disregarding all qualifications and exceptions contained therein
relating to materiality or a Material Adverse Effect or any similar
standard or qualification) shall
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be true and correct at and as of the Effective Time as if made at and as of
the Effective Time, in each case except as contemplated or permitted by
this Agreement and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company or
Parent or the transactions contemplated by this Agreement; and Parent shall
have received a certificate signed on behalf of the Company by its Chief
Executive Officer and its Chief Financial Officer to such effect.
(b) Tax Opinion. Parent shall have received an opinion of Jones, Day,
Reavis & Pogue, in form and substance reasonably satisfactory to Parent,
dated the Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective Time,
(i) for federal income tax purposes, no gain or loss will be
recognized by Holding, Merger Sub C or the Company solely as a result of
the Reorganization; and
(ii) in the case of the VoiceStream Merger, (x) such merger will be
treated for federal income tax purposes as a reorganization described in
section 368(a) of the Code, and each of VoiceStream, Holding and, in the
case of a reorganization described in section 368(a)(2)(E) of the Code,
Merger Sub A, will be a party to the reorganization within the meaning
of section 368(b) of the Code, or (y) such merger will be treated as a
transfer of property by the VoiceStream stockholders, other than holders
of dissenting shares, to Holding described in section 351(a) of the
Code.
In rendering such opinion, Jones, Day, Reavis & Pogue may receive and rely
upon representations from others, including representations from the
Company and VoiceStream contained in certificates substantially in the form
of the Company Tax Certificate, the VoiceStream Certificate and the Tax
Matters Certificate attached hereto as Annex M, Annex M-1 and Annex M-2,
representations from Holding contained in certificates substantially in the
form of the Parent Tax Certificate and the VoiceStream Wireless Holding
Certificate attached hereto as Annex N and Annex N-1, and representations
substantially in the form of the Tax Matters Certificate attached hereto as
Annex O from certain persons who own, as of the Effective Time, five
percent (5%) or more of the total number of shares of the Company or of
VoiceStream (or, in such counsel's discretion, of Omnipoint).
(c) FCC Opinion. Parent shall have received an opinion of FCC counsel
of the Company, dated the Effective Time substantially in the form attached
hereto as Annex K.
(d) Corporate Opinion. Parent shall have received an opinion of
corporate and state regulatory counsel to the Company in form and substance
reasonably acceptable to Parent substantially in the form attached hereto
as Annex L.
(e) Consents Under Agreements. The Company shall have obtained the
consent or approval of each person whose consent or approval shall be
required in connection with the transactions contemplated hereby under any
indenture, mortgage, evidence of indebtedness, lease or other agreement or
instrument to which the Company or one of its Subsidiaries is a party,
except where the failure to obtain the same would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect on the Company or Parent or upon the transactions contemplated by
this Agreement.
(f) Indemnity Agreement. The Indemnity Agreement shall have been
authorized, executed and delivered by the parties thereto.
(g) Year 2000. There shall not have occurred and be continuing a
Material Adverse Effect with respect to the Company relating to the Year
2000 Issue, provided, however, that for
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purposes of this condition, clauses (i) and (ii) of the definition of
Material Adverse Effect shall be disregarded.
(h) Dissenting Shares. No more than 7.5% of the shares of VoiceStream
Common Stock outstanding immediately prior to the Effective Time shall be
Dissenting Shares.
(i) Parent shall have received from the Company, the Series A
Stockholder and the Investor, a Certificate, dated the Effective Date, in
substantially the same form as Anne O (in the case of the Series A
Stockholder and the Investor) or Annex M-2 (in the case of the Company).
(j) Parent shall have received a written fairness opinion from
Goldman, Sachs & Co. confirming its oral fairness opinion referred to in
Section 4.19, within 5 Business Days of the execution of this Agreement.
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after any approval by the stockholders
of Parent or the Company of the matters presented in connection with the
Reorganization:
(a) by mutual written consent of Parent, Merger Sub C and the Company;
(b) by either Parent or the Company:
(i) if the Reorganization has not been effected on or prior to the
close of business on September 17, 2000 (the "Termination Date");
provided, however, that if the Reorganization has not occurred by such
date due to the fact that the condition set forth in Section 7.1(f) has
not been satisfied but all other conditions hereto have been satisfied
or waived or are then capable of promptly being satisfied, the
Termination Date shall be December 17, 2000; provided, further, that the
right to terminate this Agreement pursuant to this Section 8.1(b)(i)
shall not be available to any party whose failure to fulfill any
obligation of this Agreement has been the cause of, or resulted in, the
failure of the Reorganization to have occurred on or prior to such date;
or
(ii) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action permanently enjoining, restraining
or otherwise prohibiting the transactions contemplated by this Agreement
and such order, decree or ruling or other action shall have become final
and nonappealable; provided, however, that the right to terminate this
Agreement pursuant to this Section 8.1(b)(ii) shall not be available to
any party who has not used its best efforts to cause such order to be
lifted or otherwise taken such action as is required to comply with
Section 6.14;
(c) by Parent if (i) the Company shall have failed to comply with any
of its covenants or agreements contained in this Agreement required to be
complied with prior to the date of such termination, except as would not
reasonably be expected to have a Material Adverse Effect on the Company or
Parent or the transactions contemplated by this Agreement, which failure to
comply cannot be or has not been cured within 30 days after receipt by the
Company of written notice of such failure to comply or (ii) the
stockholders of the Company shall not approve the Reorganization at the
Company Stockholders Meeting or any adjournment thereof;
(d) by the Company if (i) Parent or Merger Sub C shall have failed to
comply with any of its respective covenants or agreements contained in this
Agreement required to be complied with prior to the date of such
termination, except as would not reasonably be expected to have a
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Material Adverse Effect on the Company or Parent or the transactions
contemplated by this Agreement, which failure to comply cannot be or has
not been cured within 30 days after receipt by Parent of written notice of
such failure to comply or (ii) the stockholders of Parent shall not approve
the Parent Share Issuance at the Parent Stockholders Meeting or any
adjournment thereof; or
(e) by either Parent or the Company if there has been a breach by the
other (or Merger Sub C if the Company is the terminating party) of any
representation or warranty (disregarding all qualifications and exceptions
contained therein relating to materiality or a Material Adverse Effect or
any similar standard or qualification) except any breach that would not
reasonably be expected to have a Material Adverse Effect on the Company or
Parent or the transactions contemplated by this Agreement, in each case
which breach cannot be or has not been cured within 30 days after receipt
by the breaching party of written notice of the breach.
SECTION 8.2 Effect of Termination. In the event of a termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Merger Sub C or the Company or their
respective officers or directors, except with respect to Section 3.18, Section
4.14, Section 6.9, this Section 8.2 and Article IX); provided, however, that
nothing in this Article VIII shall relieve any party for liability for any
breach of this Agreement; provided, further, that the parties hereto agree that
any damages for a breach of this Agreement by the Company shall be reduced by
the amount of any payment to Parent pursuant to Section 6.9(b)(ii).
SECTION 8.3 Amendment. This Agreement may be amended by the parties hereto,
by or pursuant to action taken by their respective Boards of Directors, at any
time before or after approval by the stockholders of Parent and the Company of
the matters presented to them in connection with the Reorganization; provided,
however, that after any such approval, no amendment shall be made if applicable
law would require further approval by such stockholders, unless such further
approval shall be obtained. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations and Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time or, except as set forth in Section 8.2 hereof, the termination of this
Agreement pursuant to the terms hereof. This Section 9.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time of the Reorganization.
SECTION 9.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, sent by
overnight courier (providing proof of delivery)
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or telecopied (with a confirmatory copy sent by overnight courier) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to:
VoiceStream Wireless Corporation
3650 131st Avenue SE, Suite 400
Bellevue, WA 98006
Attn: General Counsel
Telecopy No.: 425-586-8080
with a copy to:
Preston Gates & Ellis LLP
5000 Columbia Center
701 Fifth Avenue
Seattle, WA 98104
Attn: Richard B. Dodd, Esq.
Telecopy No: 206-623-7022
(b) if to the Company, to:
Aerial Communications, Inc.
8410 West Bryn Mawr, Suite 1100
Chicago, Illinois 60631
Attn: President
Telecopy No.: 773-399-4147
with a copy to:
Aerial Communications, Inc.
c/o Telephone and Data Systems, Inc.
30 North LaSalle, Suite 4000
Chicago, Illinois 60602
Attn: Chairman
Telecopy No.: 312-853-9299
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: Michael G. Hron, Esq.
Telecopy No.: 312-853-7036
SECTION 9.3 Interpretation; Definitions. When a reference is made in this
Agreement to an Article, Section, Schedule, Annex or Exhibit, such reference
shall be to an Article, Section, Schedule, Annex or Exhibit of this Agreement
unless otherwise indicated or unless the context otherwise requires. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." References to a Person are also references to its assigns and
successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
References to a document are to such document as amended, waived and otherwise
modified from time to time and references to a statute or other governmental
rule are to such statute or rule as amended and
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otherwise modified from time to time (and references to any provision thereof
shall include references to any successor provision). The definitions set forth
herein are equally applicable both to the singular and plural forms and the
feminine, masculine and neuter forms of the terms defined. The term "hereof" and
similar terms refer to this Agreement as a whole. As used in this Agreement, the
phrase "made available" shall mean that the information referred to has been
made available if requested by the party to whom such information is to be made
available.
As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 9.3.
"Acquisition Proposal" means any offer or proposal for, or any indication
of interest in (i) a merger, consolidation, share exchange, business
combination, reorganization, recapitalization, liquidation, dissolution or other
similar transaction involving the Company or any of its Subsidiaries; (ii) the
acquisition, directly or indirectly, in a single transaction or series of
related transactions, of (A) an equity interest representing greater than 15% of
the voting power of the Company or any of its Subsidiaries or (B) assets,
securities or ownership interests representing an amount equal to or greater
than 15% of the consolidated assets or earning power of the Company and its
Subsidiaries, other than the transactions contemplated by this Agreement; or
(iii) the consummation of any other transaction or the entering into of any
other agreement or arrangement with respect to any other transactions, the
effect of which would have the same result as the occurrence of (i) or (ii).
"Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
"Adjusted Fully Diluted Shares" shall have the meaning set forth in Section
2.1(e).
"Affiliate" shall mean with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person provided that, for purposes of this definition, "control"
(including, with correlative meanings, the terms "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 and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agreement" shall mean this Agreement and Plan of Reorganization dated the
date hereof among Parent, Merger Sub C and the Company and shall include the
Schedules, Annexes, Exhibits and disclosure letters attached or related thereto.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City, Chicago, Illinois or Seattle,
Washington are authorized or required by law to close.
"Cash Consideration Fund" shall have the meaning set forth in Section
2.2(a).
"Cash Election" shall have the meaning set forth in Section 2.1(c).
"Cash Election Form" shall have the meaning set forth in Section 2.1(d).
"Cash Management Agreement" shall mean the Cash Management Agreement, dated
April 15, 1996, between Series A Stockholder and the Company, as amended.
"Certificate of Merger" shall have the meaning set forth in Section 1.3.
"Closing" shall have the meaning set forth in Section 1.2.
"Closing Date" shall have the meaning set forth in Section 1.2.
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"Closing Date Market Price" means with respect to one share of Parent
Common Stock, the average of the Mean Price (calculated on a weighted average
based upon the volume of shares traded on each day) for such share during the
period of the 15 most recent trading days ending on the Business Day prior to
the Effective Time.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Communications Act" shall mean the Communications Act of 1934, as amended,
and the Telecommunications Act of 1996, as amended, together with the rules,
regulations and published decisions of the FCC promulgated thereunder.
"Company" shall have the meaning set forth in the introductory paragraph of
this Agreement.
"Company Benefit Plan" shall mean any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, life insurance, supplemental unemployment
benefits, employee stock purchase, stock appreciation, restricted stock or other
employee benefit plan, policy or arrangement providing benefits to any current
or former employee, officer or director of the Company or any of its
Subsidiaries.
"Company Certificates" shall have the meaning set forth in Section 2.2(a).
"Company Common Shares" shall have the meaning set forth in the first
recital of this Agreement.
"Company Common Stock" shall have the meaning set forth in the recital
provision of this Agreement.
"Company Employee" shall mean any employee of the Company or any of its
Subsidiaries.
"Company Filed SEC Documents" shall have the meaning set forth in Section
3.7.
"Company Financial Advisor" shall have the meaning set forth in Section
3.17.
"Company Letter" shall mean the letter from the Company to Parent dated the
date hereof, which letter relates to this Agreement and is designated therein as
the Company Letter.
"Company Permits" shall have the meaning set forth in Section 3.9.
"Company Preferred Stock" shall have the meaning set forth in Section 3.3.
"Company Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated April 15, 1996, between Series A Stockholder and the Company,
as amended.
"Company Restricted Stock Units" shall mean restricted stock units granted
under the Company Restricted Stock Unit Plan.
"Company SEC Documents" shall have the meaning set forth in Section 3.6.
"Company Series A Common Shares" shall have the meaning set forth in the
first recital of this Agreement.
"Company Stockholders Meeting" shall have the meaning set forth in Section
6.3.
"Company Stock Options" shall have the meaning set forth in Section 3.3.
"Company Subsidiaries" shall have the meaning set forth in Section 3.1.
"Confidentiality Agreement" shall have the meaning set forth in Section
6.6.
"Constituent Corporations" shall have the meaning set forth in the
introductory paragraph of this Agreement.
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"Conversion Number" shall have the meaning set forth in Section 2.1(c).
"D&O Insurance" shall have the meaning set forth in Section 6.13(b).
"Debt/Equity Replacement Agreement" shall mean the Debt/Equity Replacement
Agreement in the form attached hereto as Annex F.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Dissenting Shares" shall have the meaning set forth in Section
1.0(c)(vii).
"Effective Date" shall have the meaning set forth in Section 6.26(a).
"Effective Time" shall have the meaning set forth in Section 1.3.
"Election Deadline" shall have the meaning set forth in Section 2.1(e).
"Employee Benefit Plans Agreement" shall mean the Employee Benefit Plans
Agreement, dated April 15, 1996, between Series A Stockholder and the Company,
as amended.
"Employee Benefit Plans Separation Agreement" shall mean the Employee
Benefit Plans Separation Agreement in the form attached hereto as Annex D.
"Environmental Laws" shall mean any applicable statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to or regulating or imposing liability or standards of conduct with respect to
pollution, protection of the environment or environmental regulation or control
or regarding Hazardous Substances or occupational health or safety.
"Environmental Permits" shall mean, with respect to any Person, all
permits, licenses, franchises, certificates, approvals and other similar
authorizations of any Governmental Entity relating to or required by
Environmental Laws and affecting, or relating in any way to, the business of
such Person or any of its Subsidiaries as currently conducted.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean (i) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as the Company; (ii) any partnership, trade or business (whether or
not incorporated) which on the day before the Closing Date was under common
control (within the meaning of Section 414(c) of the Code) with the Company; and
(iii) any entity which is a member of the same affiliated service group (within
the meaning of Section 414(m) of the Code as either the Company, any corporation
described in clause (i) or any partnership, trade or business described in
clause (ii).
"ERISA Benefit Plan" shall mean a Company Benefit Plan maintained as of the
date of this Agreement which is also an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) or which is also an "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Exchange Agent" shall have the meaning set forth in Section 2.2(a).
"Exchange Agreement" shall mean the Exchange Agreement, dated April 15,
1996, between Series A Stockholder and the Company, as amended.
"Exchange Fund" shall have the meaning set forth in Section 2.2(a).
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"Exchange Rate" shall mean the "Exchange Rate Applicable to Aerial Common
Shares" as defined in Section 7.2 of the Investment Agreement as adjusted
pursuant to Section 7.3 of the Investment Agreement, as specified in Item 3.2 of
the "Company Letter."
"FAA" shall mean the Federal Aviation Administration and any successor
agency or body.
"FCC" shall mean the Federal Communications Commission and any successor
agency or body.
"Final Order" shall mean action by the applicable regulatory authority (the
"Agency") which is in full force and effect, with respect to which no petition
or other request for Agency or court stay, reconsideration or review of any kind
is pending, and as to which all time periods have expired within which the
Agency or a court may be asked to stay, reconsider or review the action or may
stay, reconsider or review the action sua sponte.
"Governmental Entity" shall mean any federal, state or local government or
any court, tribunal, administrative agency or commission or other governmental
or other regulatory authority or agency, domestic, foreign or supranational,
including the FAA, FCC and any state public utility or service commission or
similar agency.
"Hazardous Substance" shall mean any material defined as toxic or
hazardous, including any petroleum and petroleum products, under any applicable
Environmental Law.
"Holding" shall have the meaning set forth in the recitals hereto.
"Holding Common Stock" shall have the meaning set forth in Section 4.3.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indebtedness" of any Person at any date shall mean (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under financing leases,
(d) all obligations of such Person in respect of acceptances issued or created
for the account of such Person and with respect to unpaid reimbursement
obligations related to letters of credit issued for the account of such Person
and (e) all liabilities secured by any Lien on any property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof.
"Indemnified Person" shall have the meaning set forth in Section 6.13(a).
"Insurance Cost Sharing Agreement" shall mean the Insurance Cost Sharing
Agreement, dated April 15, 1996, between Series A Stockholder and the Company,
as amended.
"Intellectual Property Rights" shall mean any right to use, all patents,
patent rights, trademarks, trade names, trade dress, logos, service marks,
copyrights, know how and other proprietary intellectual property rights and
computer programs held or used by the Company or any of its Subsidiaries.
"Intercompany Accounts" shall have the meaning set forth in Section 6.23.
"Intercompany Agreement" shall mean the Intercompany Agreement, dated April
15, 1996, by and between the Company and Series A Stockholder, as amended.
"Intercompany Service Agreements" shall have the meaning set forth in
Section 6.19.
"Investment Agreement" shall mean the Investment Agreement, dated as of
September 8, 1998, by and among the Company, Series A Stockholder, Operating
Company and Investor, as amended.
"Investment Entity" shall mean an entity in which the Company or any of its
Subsidiaries has an Investment Interest.
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"Investment Interest" shall mean a direct or indirect ownership of (i)
capital stock, bonds, debentures, partnership, membership interests or other
ownership interests or other securities of any Person; (ii) any deposit with or
advance, loan or other extension of credit (including the purchase of property
from another Person subject to an understanding or agreement, contingent or
otherwise to resell such property to such other Person) to any other Person;
(iii) any revenue or profit interests pursuant to any agreement or license or
(iv) any agreement, commitment, right, understanding or arrangement with respect
to any of the items referred to in (i), (ii) or (iii) of this definition.
"Investor" shall mean Sonera, Ltd., a Finnish limited liability company,
which holds an investment in Operating Company.
"Joint Proxy Statement" shall have the meaning set forth in Section 3.8.
"Joint Venture Agreement" shall mean the Joint Venture Agreement dated as
of September 8, 1998, by and among the Company, Operating Company and Sonera
Corporation U.S.
"knowledge" shall mean the actual knowledge of the executive officers of
the Company or its Subsidiaries or the executive officers of Parent, as the case
may be who have exercised reasonable due diligence with respect to the
representation and warranty to which such knowledge statement is made.
"Liabilities" shall mean any and all debts, liabilities and obligations,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, whenever arising (unless otherwise specified in this
Agreement), including all costs and expenses relating thereto, and including,
without limitation, those debts, liabilities and obligations arising under any
law, rule, regulation, Action, threatened Action, order or consent decree of any
governmental entity or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
"Liens" shall mean any pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
"Long-Term Incentive Plan" shall mean the Company's 1996 Long-Term
Incentive Plan.
"Losses" shall mean losses, Liabilities, claims, damages, payments,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown (including, without limitation, the costs
and expenses of any and all Actions, threatened Actions, demands, assessments,
judgments, settlements and compromises relating thereto and attorneys' fees and
any and all expenses whatsoever reasonably incurred in investigating, preparing
or defending against any such Actions or threatened Actions.
"Management Side Letter" shall mean the letter dated September 8, 1998,
among Series A Stockholder, the Company and Investor.
"Material Adverse Change" or "Material Adverse Effect" shall mean, when
used in connection with the Company or Parent, as the case may be, any change or
effect (or any development that, insofar as can reasonably be foreseen, is
likely to result in any change or effect) or fact or condition that is
materially adverse to the business, properties, assets, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole, or
Parent and its Subsidiaries taken as a whole, as the case may be, provided,
however, that (i) any adverse change, effect or development that is primarily
caused by conditions affecting the United States economy generally or the
economy of any nation or region in which the Company or Parent, as the case may
be, or its Subsidiaries conducts business that is material to the business of
the Company or Parent, as the case may be, and its Subsidiaries, taken as a
whole, shall not be taken into account in determining whether there has been (or
whether there could reasonably be foreseen) a "Material Adverse Change" or
"Material Adverse Effect" with respect to the Company or Parent, as the case may
be, (ii) any adverse change,
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effect or development that is primarily caused by conditions generally affecting
the industries in which the Company or Parent, as the case may be, conducts its
business shall not be taken into account in determining whether there has been
(or whether there could reasonably be foreseen) a "Material Adverse Change" or
"Material Adverse Effect" with respect to the Company or Parent, as the case may
be, and (iii) any adverse change, effect or development that is primarily caused
by the announcement or pendency of this Agreement, the Reorganization or the
transactions contemplated hereby shall not be taken into account in determining
whether there has been (or whether there could reasonably be foreseen) a
"Material Adverse Change" or "Material Adverse Effect" with respect to the
Company or Parent, as the case may be; and a "Material Adverse Effect" with
respect to the transactions contemplated by this Agreement shall mean any event,
fact or condition which would reasonably be expected to materially delay,
interfere with, impair or prevent the transactions contemplated by this
agreement in a manner which would have a material adverse effect on such
transactions taken as a whole considering the intentions and expectations of the
parties hereto; provided, however, that for the purpose of Section 7.1(b),
clause (iii) above shall not be excluded.
"Mean Price" means, on any day in which shares are traded on Nasdaq, the
average of the high and low trading prices for which one share of Parent Common
Stock is traded on Nasdaq as reported by The Wall Street Journal.
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
"Merger Documents" shall have the meaning set forth in Section 1.0.
"Merger Sub A" shall have the meaning set forth in the recitals to this
Agreement.
"Merger Sub B" shall have the meaning set forth in the recitals to this
Agreement.
"Merger Sub C" shall have the meaning set forth in the recitals to this
Agreement.
"Nasdaq" shall have the meaning set forth in Section 2.2(e).
"Nokia" shall mean Nokia Telecommunications, Inc., a Delaware corporation.
"Nokia Credit Agreement" shall mean the Credit Agreement dated as of June
30, 1998 among the Company, Nokia and the financial institutions named therein,
as amended.
"Nokia Guaranty" shall mean the Guaranty, dated June 30, 1998, by Series A
Stockholder of the obligations of the Company to Nokia under the Nokia Credit
Agreement.
"Omnipoint Agreement" shall mean the transactions contemplated by the
Agreement and Plan or Reorganization dated as of June 23, 1999 by and among
Parent, VoiceStream Wireless Holding Corporation and Omnipoint Corporation.
"Omnipoint Merger" shall have the meaning set forth in the recitals to this
Agreement.
"Omnipoint Reorganization" shall have the meaning set forth in the recitals
hereto.
"Omnipoint End Date" shall mean the "End Date", as defined in the Omnipoint
Agreement, provided that such date shall be no later than June 30, 2000.
"Operating Company" shall mean Aerial Operating Company, Inc., a Delaware
corporation and Subsidiary of the Company.
"Operating Company Shares" shall mean shares of common stock, $.001 par
value, of Operating Company.
"Parent" shall have the meaning set forth in Section 1.0.
"Parent Certificates" shall have the meaning set forth in Section 2.2(a).
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"Parent Common Stock" shall have the meaning set forth in the recitals of
this Agreement.
"Parent Filed SEC Documents" shall have the meaning set forth in Section
4.7.
"Parent Letter" shall mean the letter from Parent to the Company dated the
date hereof, which letter relates to this Agreement and is designated therein as
the Parent Letter.
"Parent Permits" shall have the meaning set forth in Section 4.9.
"Parent SEC Documents" shall have the meaning set forth in Section 4.6.
"Parent Share Issuance" shall have the meaning set forth in Section 4.4.
"Parent Stockholders" shall have the meaning set forth in Section 6.25.
"Parent Stockholder Meeting" shall have the meaning set forth in Section
6.3(b).
"Parent Subsidiaries" shall have the meaning set forth in Section 4.1.
"Per Share Cash Consideration" shall have the meaning set forth in Section
2.1(c).
"Per Share Cash Value" shall have the meaning set forth in Section 2.1(c).
"Per Share Stock Consideration" shall have the meaning set forth in Section
2.1(d).
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company,
unincorporated syndicate, unincorporated organization, trust, trustee, executor,
administrator or other legal representative, governmental authority or agency,
political subdivision, or any group of Persons acting in concert.
"Public Holders" shall have the meaning set forth in Section 2.1(d).
"Registration Rights Agreement" shall mean the Registration Rights
Agreement attached to the Stockholder Agreement to be entered into between
Series A Stockholder and Parent.
"Registration Statement" shall have the meaning set forth in Section 4.4.
"Reorganization" shall have the meaning set forth in the recitals to this
Agreement.
"Restricted Stock Plan" shall mean the Company's Retention Restricted Stock
Unit Plan.
"Retained Employee" shall have the meaning set forth in Section 6.1(a).
"Revolving Credit Agreement" shall mean the Revolving Credit Agreement,
dated August 31, 1998, between Series A Stockholder and Operating Company, as
amended.
"Revolving Credit Agreement Guaranty" shall mean the Guaranty dated August
31, 1998 by the Company of the obligations of Operating Company to Series A
Stockholder under the Revolving Credit Agreement, as reaffirmed in connection
with any amendment to the Revolving Credit Agreement.
"Rule 145 Affiliates" shall have the meaning set forth in Section 6.7.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Series A Guaranty" shall mean the Guaranty by the Series A Stockholder of
the obligations of the Company under the Series A Notes.
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"Series A Indenture" shall mean the Indenture dated as of November 4, 1996,
among the Company, Series A Stockholder and The First National Bank of Chicago,
as supplemented, relating to the Series A Notes.
"Series A Notes" shall mean the Series A Zero Coupon Notes due 2006, of the
Company.
"Series A Stockholder" shall mean Telephone and Data Systems, Inc., a
Delaware corporation, the parent of the Company.
"Series A Stockholder's Group" shall mean any "affiliated group" (as
defined in Section 1504 of the Code without regard to the limitations contained
in Section 1504(b) of the Code) that includes the Series A Stockholder or any
predecessor of or successor to the Series A Stockholder (or another such
predecessor or successor).
"Series B Guaranty" shall mean the Guaranty by the Series A Stockholder of
the obligations of the Company under the Series B Notes.
"Series B Indenture" shall mean the Indenture dated as of February 5, 1998
among the Company, Series A Stockholder and The First National Bank of Chicago,
as supplemented, relating to the Series B Notes.
"Series B Notes" shall mean the Series B Zero Coupon Notes due 2008, of the
Company.
"Significant Employee" shall mean any Employee of the Company or any of its
Subsidiaries who (i) is an officer of the Company or any of its Subsidiaries,
(ii) has a written employment contract with the Company or any of its
Subsidiaries which calls for annual compensation in excess of $90,000, or (iii)
is compensated by the Company and/or its Subsidiaries at an annual rate greater
than $90,000.
"Stock Consideration Fund" shall have the meaning set forth in Section
2.2(a).
"Stock Equivalents" shall have the meaning set forth in Section 3.3.
"Stockholder Agreement" shall mean the Stockholder Agreement to be entered
into between Series A Stockholder and Parent attached hereto as Annex D.
"Subsequent Transaction" shall mean any transaction, including the
Omnipoint Transaction, whereby (i) Parent or any of its Subsidiaries would
acquire (by merger, consolidation, acquisition of stock or assets or otherwise)
any corporation, limited liability company, partnership, other business
organization or assets or division thereof, which is in the business of
providing wireless communication services, (ii) Parent or any of its
Subsidiaries would acquire an Investment Interest in any of the foregoing, (iii)
Parent or any of its Subsidiaries would issue any equity interest or incur any
Indebtedness whether in connection with any item described in (i) or (ii) or
otherwise, (iv) Parent or any of its Subsidiaries enters into or engages in a
strategic alliance or other commercial relationship or (v) Parent or any of its
Subsidiaries is acting in the ordinary course consistent with past practice;
provided, however,in connection with a Subsequent Transaction described in items
(i), (ii), (iii) or (iv) of this definition, Parent must receive an opinion from
a nationally recognized investment bank, acting as financial advisor to Parent,
to the effect that, from a financial point of view, such Subsequent Transaction
is fair to the holders of Parent Common Stock or, if applicable, Parent.
"Subsidiary" or "subsidiary" shall mean a person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by another Person.
"Substitute Options" shall have the meaning set forth in Section 6.2(b).
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"Supplemental Agreement" shall mean the Supplemental Agreement, dated as of
September 8, 1998, by and among the Company, Operating Company and Investor.
"Surviving Corporation" shall have the meaning set forth in Section 1.1.
"Tag-Along Right" shall have the meaning set forth in Section 2.1(c).
"Tax" and "Taxes" shall mean any federal, state, local or foreign net
income, gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to Tax or additional amount
imposed by any Governmental Entity.
"Tax Allocation Agreement" shall mean the Tax Allocation Agreement, dated
September 8, 1998, between Series A Stockholder and the Company, as amended.
"Tax Deferred Savings Plan" shall mean the Telephone and Data Systems, Inc.
Tax Deferred Savings Plan.
"Tax Return" shall mean any return, report or similar statement required to
be filed with respect to any Tax including, without limitation, any information
return, claim for refund, amended return or declaration of estimated tax.
"Tax Settlement Agreement" shall mean the Tax Settlement Agreement dated
March 12, 1999 among Series A Stockholder, the Company and Operating Company, as
amended.
"Termination Fee" shall have the meaning set forth in Section 6.9(b).
"Transfer Taxes" shall have the meaning set forth in Section 6.11.
"Transition Services Agreement" shall mean the Transition Services
Agreement in the form attached hereto as Annex C.
"VoiceStream Common Stock" shall have the meaning set forth in Section 4.3.
"VoiceStream ESPP" shall have the meaning set forth in Section 4.3.
"VoiceStream ERSP" shall have the meaning set forth in Section 4.3.
"VoiceStream Merger" shall have the meaning set forth in the recitals to
this Agreement.
"VoiceStream Option Plan" shall have the meaning set forth in Section 4.3.
"VoiceStream Preferred Stock" shall have the meaning set forth in Section
4.3.
"Year 2000 Issue" means a failure of a system to recognize and properly
process date-sensitive functions involving dates prior to, on and after December
31, 1999 (including, but not limited to calculation, comparison and sequencing,
and including, without limitation, leap year calculations).
SECTION 9.4 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
SECTION 9.5 Entire Agreement; No Third-Party Beneficiaries. Except for the
Confidentiality Agreement, this Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof. This Agreement, except
for the provisions of Sections 6.1, 6.13, and 6.19 through 6.24, is not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
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SECTION 9.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS.
SECTION 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 9.8 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
SECTION 9.9 Enforcement of this Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached in any material respect. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the material terms and provisions
hereof in any court of the United States or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party is entitled at
law or in equity.
SECTION 9.10 Obligations of Subsidiaries. Whenever this Agreement requires
any Subsidiary of Parent (including Sub) or of the Company to take any action,
such requirement shall be deemed to include an undertaking on the part of Parent
or the Company, as the case may be, to cause such Subsidiary to take such
action.
SECTION 9.11 Reliance on Representations. Notwithstanding any
investigation, knowledge or review made at any time by or on behalf of any party
hereto, the parties acknowledge and agree that all representations and
warranties contained in this Agreement, the Annexes, the Company Letter, the
Parent Letter or in any of the documents, certification or agreements delivered
in connection therewith, are being relied upon as a material inducement to enter
into this Agreement and the transactions contemplated hereby.
D-58
<PAGE> 403
In Witness Whereof, Parent, Merger Sub C and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
VOICESTREAM WIRELESS CORPORATION
By: /s/ CREGG B. BAUMBAUGH
------------------------------------
Name: Cregg B. Baumbaugh
Title: Executive Vice
President --
Strategy, Finance and
Development
VOICESTREAM WIRELESS HOLDING
CORPORATION
By: /s/ CREGG B. BAUMBAUGH
------------------------------------
Name: Cregg B. Baumbaugh
Title: Executive Vice
President --
Strategy, Finance and
Development
VOICESTREAM SUBSIDIARY III CORPORATION
By: /s/ CREGG B. BAUMBAUGH
------------------------------------
Name: Cregg B. Baumbaugh
Title: Executive Vice
President --
Strategy, Finance and
Development
AERIAL COMMUNICATIONS, INC.
By: /s/ LEROY T. CARLSON, JR.
------------------------------------
Name: LeRoy T. Carlson, Jr.
Title: Chairman
In addition, this Agreement is signed by the undersigned solely for the purposes
of Sections 6.16, 6.17, 6.18, 6.19, 6.20, 6.21, 6.23, 6.24, and 6.26.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LEROY T. CARLSON
------------------------------------
Name: LeRoy T. Carlson
Title: Chairman
SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION
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[OPINION OF GOLDMAN, SACHS & CO. (AERIAL REORGANIZATION)]
ANNEX E
PERSONAL AND CONFIDENTIAL
September 17, 1999
Board of Directors
VoiceStream Wireless Corporation
3650 131st Avenue SE
Suite 400
Bellevue, WA 98006
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to VoiceStream Wireless Corporation ("VoiceStream") of the Merger
Consideration (as defined below) to be paid by VoiceStream under the Agreement
and Plan of Reorganization (the "Aerial Agreement"), dated as of September 17,
1999, among VoiceStream, VoiceStream Wireless Holding Corporation ("Holding"),
VoiceStream Subsidiary III Corporation ("Merger Sub C"), a wholly-owned direct
subsidiary of Holding, Aerial Communications, Inc. ("Aerial"), and Telephone and
Data Systems, Inc. (the "Series A Stockholder"), which provides for the merger
of Merger Sub C with and into Aerial and, if the transactions contemplated by
the Omnipoint Agreement (as defined below) are terminated or not consummated by
the Omnipoint End Date (as defined in the Aerial Agreement), for the merger of
VoiceStream Subsidiary I, a wholly-owned subsidiary of Holding ("Merger Sub A"),
with and into VoiceStream. We understand that VoiceStream has also entered into
an Agreement and Plan of Reorganization (the "Omnipoint Agreement"), dated as of
June 23, 1999, among VoiceStream, Holding and Omnipoint Corporation
("Omnipoint"), which provides for the merger of Merger Sub A with and into
VoiceStream and the merger of VoiceStream Subsidiary II, a wholly-owned
subsidiary of Holding, with and into Omnipoint (the "Omnipoint Reorganization"),
whereby VoiceStream and Omnipoint will become wholly-owned subsidiaries of
Holding.
Pursuant to the Aerial Agreement, each outstanding share of Common Stock,
no par value, of VoiceStream ("VoiceStream Common Stock"), will be converted
into one share of Common Stock, $0.001 par value, of Holding ("Holding Common
Stock"), and each outstanding Series A Common Share, par value $1.00, and each
outstanding Common Share, par value $1.00, of Aerial (together, "Aerial Common
Stock") will be converted into the following consideration (the "Merger
Consideration"): (i) in the case of the Series A Stockholder and Sonera, Ltd.
("Sonera"), the right to receive the Conversion Number (as defined below) of
shares of Holding Common Stock and (ii) in the case of stockholders of Aerial
other than the Series A Stockholder or Sonera, the right to receive the
Conversion Number of shares of Holding Common Stock or, at the election of such
stockholders, $18.00 in cash. The Conversion Number will be equal to 0.455;
provided, however, (i) in the event that (a) the Omnipoint Agreement is
terminated or the transactions contemplated by the Omnipoint Agreement are not
consummated by the Omnipoint End Date and (b) the Closing Date Market Price (as
defined in the Aerial Agreement) is less than $39.56, the Conversion Number will
be equal to the number determined by dividing $18.00 by the Closing Date Market
Price, but will not be greater than 0.50 or less than 0.455 (or, if applicable,
the quotient calculated as described in clause (ii)); and (ii) in the event that
the number of Adjusted Fully Diluted Shares (as defined in the Aerial Agreement)
exceeds 85,839,161 as of the Effective Time, the Conversion Number will be equal
to the number determined by dividing 39,056,818 by such number of Adjusted Fully
Diluted Shares as of the Effective Time (subject to further adjustment as
described in clause (i), if applicable). In addition, pursuant to the
Debt/Equity Replacement Agreement, to be entered into by and among the Series A
Stockholder, Aerial, VoiceStream and Holding (the "Debt/Equity
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VoiceStream Wireless Corporation
September 17, 1999
Page 2
Replacement Agreement"), debt of Aerial in the amount of $420,000,000 held by
the Series A Stockholder will be converted into shares of Aerial Common Stock at
a conversion price of $22.00. In addition, you have advised us that Sonera will
acquire 10.45 million shares of Aerial Common Stock at a price of $22.00 per
share.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with VoiceStream, having provided certain investment banking services
to VoiceStream and its former parent, Western Wireless Corporation ("Western"),
from time to time, including having acted as lead manager in the initial public
offering of 11 million shares of common stock, no par value (the "Western Common
Stock"), of Western in May 1996; having acted as lead manager in the public
offering of $200 million aggregate principal amount of 10.5% senior subordinated
notes due June 2006, of Western in May 1996; having acted as lead manager in the
private offering of $200 million aggregate principal amount of 10.5% senior
subordinated notes due February 2007, of Western in October 1996; having acted
as lead manager in the public offering of 12.1 million shares of Western Common
Stock in April 1998; having acted as Western's financial advisor in connection
with the sale of 19.9% of the outstanding shares of VoiceStream Common Stock to
Hutchison Telecommunications PCS (USA) Limited in February 1998; and having
acted as VoiceStream's financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Aerial Agreement and
the Omnipoint Agreement. Investment funds affiliated with Goldman, Sachs & Co.
have a principal investment in VoiceStream in the amount of 9,730,208 shares of
VoiceStream Common Stock and have the right to designate a nominee for election
to VoiceStream's Board of Directors. Terrence O'Toole, a Managing Director of
Goldman, Sachs & Co., is a director of VoiceStream. In addition, we have
provided certain investment banking services to Aerial from time to time,
including having acted as co-manager in the initial public offering of 12.25
million shares of Aerial Common Stock in April 1996. Goldman, Sachs & Co.
provides a full range of financial advisory and securities services and, in the
course of its normal trading activities, may from time to time effect
transactions and hold securities, including derivative securities, of
VoiceStream and Aerial for its own account and for the accounts of customers. As
of September 10, 1999, Goldman, Sachs & Co. had a short position in 4,061 shares
of Aerial Common Stock and a short position in 150 put contracts on Aerial
Common Stock. As of the same date and in addition to the principal investment
referred to above, Goldman, Sachs & Co. had a long position of $8.5 million of
VoiceStream bank loans.
In connection with this opinion, we have reviewed, among other things, the
Aerial Agreement; the Omnipoint Agreement; the Debt/Equity Replacement
Agreement; the Registration Statement on Form 10 of VoiceStream dated April 13,
1999; Annual Reports to Stockholders and Annual Reports on Form 10-K of Western
for the three years ended December 31, 1998; Annual Reports to Stockholders and
Annual Reports on Form 10-K of Aerial for the two years ended December 31, 1998;
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of
VoiceStream, Western and Aerial; certain other communications from VoiceStream,
Western and Aerial to their respective stockholders; certain internal financial
analyses and forecasts for VoiceStream prepared by the management of
VoiceStream, certain financial analyses and forecasts for Aerial prepared by the
management of VoiceStream, and certain internal financial analyses and forecasts
for Aerial prepared by the management of Aerial (collectively, the "Forecasts").
We also have held discussions with
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<PAGE> 406
VoiceStream Wireless Corporation
September 17, 1999
Page 3
members of senior management of VoiceStream and Aerial regarding the strategic
rationale for, and the potential benefits of, the transactions contemplated by
the Aerial Agreement and the past and current business operations, financial
condition and future prospects of their respective companies. In addition, we
have reviewed the reported price and trading activity for the VoiceStream Common
Stock and Aerial Common Stock, compared certain financial and stock market
information for VoiceStream and Aerial with similar information for certain
other companies the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the U.S. wireless
communications industry specifically and in other industries generally and
performed such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In this regard, we have
assumed with your consent that the Forecasts have been reasonably prepared on a
basis reflecting the best currently available estimates and judgments of
VoiceStream and Aerial, as the case may be. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of VoiceStream
or Aerial or any of their subsidiaries and we have not been furnished with any
such evaluation or appraisal. We have also taken into account VoiceStream's view
as to the possible tax consequences of the transactions contemplated by the
Aerial Agreement as described to us by VoiceStream. We have assumed that all
material governmental, regulatory or other consents and approvals necessary for
the consummation of the transaction contemplated by the Aerial Agreement will be
obtained without any adverse effect on VoiceStream or Aerial or on the
contemplated benefits of the transactions contemplated by the Aerial Agreement.
Our advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of VoiceStream in
connection with its consideration of the transactions contemplated by the Aerial
Agreement and such opinion does not constitute a recommendation as to how any
holder of shares of VoiceStream Common Stock should vote with respect to such
transactions.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the Merger
Consideration to be paid by VoiceStream pursuant to the Aerial Agreement is fair
from a financial point of view to VoiceStream stockholders.
Very truly yours,
(GOLDMAN, SACHS & CO.)
E-3
<PAGE> 407
ANNEX F
[OPINION OF DONALDSON, LUFKIN & JENRETTE (AERIAL REORGANIZATION)]
September 17, 1999
Board of Directors
Aerial Communications, Inc.
8410 West Bryn Mawr
Suite 1100
Chicago, Illinois 60631
Members of the Board:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders of Aerial Communications, Inc. (the "Company") of the
consideration to be received by such stockholders pursuant to the terms of the
Agreement and Plan of Reorganization, dated September 17, 1999 (the
"Agreement"), by and among VoiceStream Wireless Corporation, a Washington
corporation ("VoiceStream"), VoiceStream Wireless Holding Corporation, a
Delaware corporation ("Holding"), VoiceStream Subsidiary III Corporation, a
Delaware corporation ("Sub"), which shall be a wholly-owned direct subsidiary of
Holding as of the effective time of the Merger, the Company and Telephone and
Data Systems, Inc., a Delaware Corporation ("TDS"), pursuant to which Sub will
be merged (the "Merger") with and into the Company. The Merger is conditioned
upon the consummation or termination of the acquisition of Omnipoint Corporation
("Omnipoint"), pursuant to the Agreement and Plan of Reorganization, dated as of
June 23, 1999 (the "Omnipoint Reorganization Agreement"), among VoiceStream,
Holding and Omnipoint (the "Omnipoint Acquisition"); provided, that such
condition shall be deemed to have been satisfied on the earlier of the "End
Date," as defined in the Omnipoint Reorganization Agreement, or June 30, 2000.
Subsequent to the Merger, each of the Company, VoiceStream and, if the Omnipoint
Acquisition is consummated, Omnipoint, will continue as a subsidiary of Holding.
Pursuant to the Agreement, each share of common stock of the Company
("Company Common Stock") will be converted into the right to receive 0.455
shares of common stock, $.001 par value per share (the "Holding Common Stock")
of Holding; provided, that if the Omnipoint Acquisition is terminated or not
consummated prior to the Merger and the 15-day average of the high and low
trading prices for Holding Common Stock or the common stock of VoiceStream, as
applicable, immediately prior to the effective time of the Merger (the "Closing
Date Market Price") is less than $39.56, then each share of Company Common Stock
will be converted into the right to receive the amount determined by dividing
$18.00 by the Closing Date Market Price, but shall not be greater than 0.500 or
less than 0.455; and, provided, further, that any such exchange ratio shall be
subject to adjustment below 0.455 by dividing 39,056,818 by the aggregate number
of shares of Company Common Stock and stock appreciation rights, phantom stock
rights or other contractual rights the value of which is determined in whole or
in part by the value of any capital stock of the Company, not including shares
issued or to be issued pursuant to the Debt/Equity Replacement Agreement (as
defined below), to TDS and Sonera Ltd. ("Sonera") and pursuant to performance
options (the "Adjusted Fully Diluted Shares"), if the aggregate number of
Adjusted Fully Diluted Shares exceeds 85,839,161 at the effective time of the
Merger (any such ratio whether or not the Omnipoint Acquisition is consummated
prior to the Merger, the "Exchange Ratio"). Stockholders of the Company, other
than TDS and Sonera, will have the option to receive $18.00 in cash in lieu of
the Exchange Ratio (together with the Exchange Ratio, the "Merger
Consideration"). The terms of the Merger are more fully set forth in the
Agreement.
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<PAGE> 408
Board of Directors
Aerial Communications, Inc.
Page 2
In arriving at our opinion, we have reviewed: (i) the Agreement; (ii) the
Stockholder Agreement, dated the date of the Agreement, among VoiceStream, TDS
and Holding; (iii) the Debt/Equity Replacement Agreement, dated the date of the
Agreement, among TDS, VoiceStream, Holding, Aerial Operating Company, Inc., a
majority-owned subsidiary of the Company ("Operating Company"), and the Company;
(iv) the Indemnity Agreement, dated the date of the Agreement, among TDS,
Operating Company, VoiceStream, Holding and the Company; (v) the Stockholder
Agreement, dated the date of the Agreement, among certain stockholders of
VoiceStream; (vi) a draft of the Investor Agreement to be entered into by TDS,
VoiceStream and Holding at or prior to the effective time of the Merger; (vii) a
draft of the Registration Rights Agreement to be entered into by TDS and Holding
at or prior to the effective time of the Merger; and (viii) the exhibits
thereto. We also have reviewed financial and other information that was publicly
available, including certain research analysts' projections for VoiceStream
(both on a standalone basis and pro forma for the Omnipoint Acquisition), or
furnished to us by the Company and VoiceStream, including information provided
during discussions with their respective managements (which, with respect to
VoiceStream includes VoiceStream management's comments on the research analysts'
projections referred to above) (such research analysts' projections, as
commented on by management of VoiceStream, the "Analyst Projections"). Included
in the information provided during discussions with the management of the
Company were certain financial projections of the Company prepared by the
management of the Company. In addition, we have compared certain financial and
securities data of the Company, VoiceStream and Omnipoint with various other
companies whose securities are traded in public markets, reviewed the historical
stock prices and trading volumes of the common stock of the Company, VoiceStream
and Omnipoint, reviewed prices and premiums paid in certain other business
combinations and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed without
independent verification the accuracy and completeness of all of the financial
and other information that was available to us from public sources, that was
provided to us by the Company and VoiceStream and their respective
representatives, or that was otherwise reviewed by us and have assumed that the
Company is not aware of any information prepared by it or its advisors that
might be material to our opinion that has not been made available to us. With
respect to the financial projections supplied to us, we have relied on
representations that they have been reasonably prepared on the basis reflecting
the best currently available estimates and judgments of the management of the
Company as to the future operating and financial performance of the Company.
With respect to the Analyst Projections, we have assumed that they have been
prepared on a basis that does not materially differ from the view of management
of VoiceStream as to the future operating and financial performance of
VoiceStream. We have not assumed any responsibility for making any independent
evaluation of any assets or liabilities or for making any independent
verification of any of the information reviewed by us. We have relied as to
certain legal matters on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
prices at which Holding Common Stock will actually trade at any time. Our
opinion does not address the relative merits of the Merger, as contrasted with
other business strategies being considered by the Company's Board of Directors,
nor does it address the Board's decision to proceed with the Merger.
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<PAGE> 409
Board of Directors
Aerial Communications, Inc.
Page 3
Our opinion does not constitute a recommendation to any stockholder as to how
such stockholder should vote on the proposed transaction. This opinion is not to
be quoted or referred to, in whole or in part, in any document, nor shall this
opinion be used for any other purposes or publicly disclosed, without our prior
written consent; provided, however, the Company is authorized to include this
opinion in its entirety in the proxy materials specifically contemplated by the
Agreement.
We have acted as financial advisor to the Board of Directors of the Company
in connection with the transactions contemplated by the Agreement and will
receive a fee for our services, a substantial portion of which is contingent
upon consummation of the transactions contemplated by the Agreement. Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its investment
banking services, is regularly engaged in the valuation of businesses and
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. In the ordinary course of our
business we actively trade the debt and equity securities of companies,
including the Company, TDS, VoiceStream and Omnipoint, for our own account and
for the accounts of customers and may hold a long or short position in such
securities at any time. DLJ has performed investment banking and other services
for the Company, TDS, Omnipoint, Western Wireless Corp. ("Western Wireless"),
the former owner of VoiceStream, and Hutchison Whampoa Limited ("Hutchison") in
the past, including (i) acting as the lead manager for an offering of
convertible preferred stock of Omnipoint in May 1998, (ii) acting as a
co-manager for an offering of Class A Shares of Western Wireless in April, 1998,
(iii) acting as a co-manager for an offering of Trust Originated Preferred
Securities of TDS in February 1998, (iv) arranging a senior secured credit
facility for Omnipoint in February 1998 and (v) acting as financial advisor to
Hutchison in its purchase of common stock of Western Wireless in October 1997,
and has received usual and customary compensation for such services.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Merger Consideration to be received pursuant to the
Agreement by the stockholders of the Company, other than VoiceStream, Holding
and Omnipoint and any of their respective affiliates, is fair to such
stockholders from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ LOUIS P. FRIEDMAN
------------------------------------
Louis P. Friedman
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ANNEX G
[OPINION WASSERSTEIN PERELLA & CO., INC (AERIAL REORGANIZATION)]
September 17, 1999
Special Committee of the Board of Directors
Aerial Communications, Inc.
8410 West Bryn Mawr
Suite 1100
Chicago, IL 60631
Members of the Special Committee:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the stockholders of Aerial Communications, Inc. (the
"Company") (other than Telephone and Data Systems, Inc. ("TDS") and Sonera Ltd.
("Sonera")) (the "Public Stockholders") of the Merger Consideration (as defined
below) provided for pursuant to the terms of the Agreement and Plan of
Reorganization (the "Reorganization Agreement"), among the Company, TDS,
VoiceStream Wireless Corporation ("VoiceStream"), VoiceStream Wireless Holding
Corporation ("Holding") and VoiceStream Subsidiary III Corporation, a wholly
owned subsidiary of Holding ("Sub"). The Reorganization Agreement provides for,
among other things, a merger of Sub with and into the Company (the "Merger").
The Merger is conditioned upon the consummation or termination of the
acquisition of Omnipoint Corporation ("Omnipoint"), pursuant to the Agreement
and Plan of Reorganization, dated as of June 23, 1999 (the "Omnipoint
Reorganization Agreement"), among VoiceStream, Holding and Omnipoint (the
"Omnipoint Acquisition"); provided, that such condition shall be deemed to have
been satisfied on the earlier of the End Date (as defined in the Omnipoint
Reorganization Agreement) or June 30, 2000 (the "Omnipoint End Date"). In the
Merger, each outstanding Series A Common Share, $1.00 par value, of the Company
and each outstanding Common Share, $1.00 par value, of the Company (other than
any such shares held in the treasury of the Company or owned by VoiceStream,
Holding or their respective subsidiaries) (collectively "Company Common Stock")
will be converted into 0.455 shares (the "Exchange Ratio") of common stock, par
value $0.001 per share, of Holding (the "Holding Common Stock"), subject to
increase if the Omnipoint Acquisition is terminated or not consummated prior to
the Omnipoint End Date and the 15-day average of the high and low trading prices
for Holding Common Stock or the common stock of VoiceStream, as applicable,
immediately prior to the effective time of the Merger (the "Closing Date Market
Price") is less than $39.56, in which case each share of Company Common Stock
will be converted into the right to receive the amount determined by dividing
$18.00 by the Closing Date Market Price, but shall not be greater than 0.500 or
less than 0.455, and subject to decrease if the Adjusted Fully Diluted Shares
(as defined in the Reorganization Agreement) exceed a specified limit. Each
Public Stockholder may elect to receive $18.00 cash in lieu of the Exchange
Ratio (such cash election together with the Exchange Ratio, the "Merger
Consideration"). The terms and conditions of the Merger are set forth in more
detail in the Reorganization Agreement.
In connection with rendering our opinion, we have reviewed (i) the
Reorganization Agreement; (ii) the Stockholder Agreement, dated the date of the
Reorganization Agreement, among VoiceStream, TDS and Holding; (iii) the
Debt/Equity Replacement Agreement, dated the date of the Reorganization
Agreement, among TDS, VoiceStream, Holding, Aerial Operating Company, Inc., a
majority-owned subsidiary of the Company ("Operating Company"), and the Company;
(iv) the Parent Stockholder Agreement, dated the date of the Reorganization
Agreement, among the Company, TDS, VoiceStream, Holding and certain stockholders
of VoiceStream; (v) a draft of the
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Investor Agreement to be entered into by TDS, VoiceStream and Holding at or
prior to the effective time of the Merger; (vi) the Indemnity Agreement, dated
the date of the Reorganization Agreement, among TDS, Operating Company,
VoiceStream, Holding and the Company; (vii) a draft of the Registration Rights
Agreement to be entered into by TDS and Holding at or prior to the effective
time of the Merger; and (viii) the exhibits thereto, and for purposes hereof, we
have assumed that the final forms of those documents reviewed by us in draft
form will not differ in any material respect from the drafts provided to us. We
have also reviewed and analyzed certain publicly available business and
financial information relating to the Company, VoiceStream, and Omnipoint for
recent years and interim periods to date, as well as certain internal financial
and operating information of the Company, including financial forecasts,
analyses and projections prepared by or on behalf of the Company and provided to
us for purposes of our analysis, and we have discussed with the Special
Committee and management of the Company and of VoiceStream such information and,
among other matters, each of the Company's and VoiceStream's business,
operations, assets, financial condition and future prospects. As you are aware,
VoiceStream did not make available to us its projections of expected future
performance. Accordingly, our review of such information for purposes of
rendering our opinion was limited to discussions with management of VoiceStream
of certain research analysts' projections of VoiceStream's future performance
both on a stand alone basis and pro forma for the Omnipoint Acquisition (as
commented on by management, the "Analyst Projections").
We have reviewed and considered certain financial and stock market data
relating to the Company, VoiceStream and Omnipoint and we have compared that
data with similar data for certain other companies, the securities of which are
publicly traded, that we believe may be relevant or comparable in certain
respects to the Company, VoiceStream and Omnipoint or one or more of their
respective businesses or assets, and we have reviewed and considered the
financial terms of certain recent acquisitions and business combination
transactions in the wireless communications industry that we believe to be
reasonably comparable to the Merger or otherwise relevant to our inquiry. We
have also performed such other financial studies, analyses, and investigations
and reviewed such other information as we considered appropriate for purposes of
this opinion.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to or discussed with us or publicly available, and we have
not assumed any responsibility for independent verification of any of such
information. We have also assumed and relied upon the reasonableness and
accuracy of the financial projections, forecasts and analyses provided to us,
and we have assumed that such projections, forecasts and analyses were
reasonably prepared in good faith and on bases reflecting the best currently
available judgments and estimates of the Company's management with respect to
the projections prepared by the Company. With respect to the Analyst
Projections, we have assumed that they have been prepared on a basis that does
not materially differ from the view of management of VoiceStream as to the
future operating and financial performance of VoiceStream. We express no opinion
with respect to such projections, forecasts and analyses or the assumptions upon
which they are based. In addition, we have not reviewed any of the books and
records of the Company or VoiceStream, or assumed any responsibility for
conducting a physical inspection of the properties or facilities of the Company
or VoiceStream, or for making or obtaining an independent valuation or appraisal
of the assets or liabilities of the Company or VoiceStream, and no such
independent valuation or appraisal was provided to us. We note that the Merger
is intended to qualify as a tax free reorganization for United States Federal
tax purposes, and we have assumed that the Merger will so qualify. We also have
assumed that obtaining all regulatory and other approvals and third party
consents required for consummation of the Merger will not have an adverse impact
on the Company or VoiceStream or on the anticipated benefits of the Merger, and
we have assumed that the transactions described in the Reorganization Agreement
will be consummated without waiver or
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modification of any of the material terms or conditions contained therein by any
party thereto. Our opinion is necessarily based on economic and market
conditions and other circumstances as they exist and can be evaluated by us as
of the date hereof. We are not expressing any opinion herein as to the prices at
which any securities of Holding, VoiceStream or the Company will actually trade
at any time.
In the ordinary course of our business, we may actively trade the debt and
equity securities of the Company, Holding and VoiceStream for our own account
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in such securities.
We are acting as financial advisor to the Special Committee in connection
with the proposed Merger and will receive a fee for our services as well as a
fee for rendering this opinion, a significant portion of which is contingent
upon the consummation of the Merger. We have performed certain other financial
advisory services for the Special Committee in the past and have received
customary fees for rendering such services.
Our opinion addresses only the fairness from a financial point of view to
the Public Stockholders of the Merger Consideration provided for pursuant to the
Reorganization Agreement. Our opinion does not address the Company's underlying
business decision to effect the transactions contemplated by the Reorganization
Agreement.
It is understood that this letter is for the benefit and use of the Special
Committee of the Board of Directors of the Company in its consideration of the
Merger and, except for inclusion in its entirety in any registration statement
or proxy statement required to be circulated to stockholders of the Company
relating to the Merger, may not be quoted, referred to or reproduced at any time
or in any manner without our prior written consent. This opinion does not
constitute a recommendation to any stockholder or as to how such holder should
vote with respect to the Merger or whether any Public Stockholder should elect
to receive cash in lieu of the Exchange Ratio, and should not be relied upon by
any stockholder as such.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that as of the date hereof
the Merger Consideration provided for pursuant to the Reorganization Agreement
is fair to the Public Stockholders from a financial point of view.
Very truly yours,
WASSERSTEIN PERELLA & CO., INC.
/s/ WASSERSTEIN PERELLA & CO., INC.
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ANNEX H
RESTATED CERTIFICATE OF INCORPORATION
OF
VOICESTREAM WIRELESS HOLDING CORPORATION
VoiceStream Wireless Holding Corporation, a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is VOICESTREAM WIRELESS HOLDING CORPORATION.
The date of filing of its original Certificate of Incorporation with the
Secretary of State was June 18, 1999.
2. This Restated Certificate of Incorporation restates and integrates and
amends the Certificate of Incorporation of this corporation by revising such
document in its entirety. The Certificate of Incorporation as amended or
supplemented heretofore is further amended hereby to read as herein set forth in
full:
ARTICLE I.
NAME
The name of this corporation is VoiceStream Wireless Holding Corporation.
ARTICLE II.
REGISTERED OFFICE AND AGENT
The address of the registered office of this corporation in the State of
Delaware is 1013 Centre Road, Wilmington, Delaware 19805 in the City of
Wilmington, County of New Castle, and the name of its registered agent at that
address is Corporation Service Company.
ARTICLE III.
PURPOSE
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
Delaware.
ARTICLE IV.
DURATION
This corporation is to have perpetual existence.
ARTICLE V.
AUTHORIZED SHARES
5.1 The total number of shares of stock that this corporation shall have
authority to issue is four hundred five million (405,000,000), which shall
consist of four hundred million (400,000,000) shares of Common Stock, par value
$0.001 per share, and five million (5,000,000) shares of Preferred Stock, par
value $0.001 per share.
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5.2 Rights and Preferences of Common Stock. The holders of Common Stock
shall have the following rights and preferences, subject to the rights and
preferences of holders of Preferred Stock, as determined by the Board of
Directors pursuant to Section 5.3 of this Article V.
(a) Dividends. Holders of Common Stock shall be entitled to receive such
dividends, payable in cash or otherwise, as may be declared thereon by the Board
of Directors from time to time out of assets or funds of the corporation that
are legally available therefor.
(b) Voting.
(i) On all matters upon which shareholders are entitled to vote,
every holder of Common Stock shall be entitled to one (1) vote in person or by
proxy for each share of Common Stock standing in its name on the transfer books
of the corporation.
(ii) (A) Notwithstanding anything to the contrary contained in this
Restated Certificate of Incorporation, if a Regulated Shareholder and its
Affiliates own and have the right to vote shares of Common Stock having
aggregate Voting Power in excess of 24.9% (the "Maximum Voting Percentage") of
the Total Voting Power, then, for so long as such Regulated Shareholder and its
Affiliates shall own and have the right to vote shares of Common Stock having
aggregate Voting Power in excess of the Maximum Voting Percentage, that number
of shares of Common Stock which results in such Regulated Shareholder and its
Affiliates having aggregate Voting Power in excess of the Maximum Voting
Percentage shall not be entitled to vote on any matter on which the stockholder
of the corporation shall be entitled to vote, and such number of shares shall
not be included in determining the number of shares voting or entitled to vote
on any such matters.
(B) As used in this Section 5.2(b)(ii) and Article XII, the
following terms shall have the following meanings:
(1) "Affiliate" shall mean with respect to any Person, any
other Person, directly or indirectly controlling, controlled by or under common
control with such Person. For the purpose of the above definition, the term
"control" (including with correlative meaning, 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 and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
(2) "Person" shall mean an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.
(3) "Regulated Shareholder" shall mean any holder of shares
of capital stock of the Company that is, or an Affiliate of which is, subject to
the provisions of Rule 312(g) of the General Rules of the New York Stock
Exchange (or any successor to such Rule) and was, or its Affiliate was, a holder
of shares of capital stock of the Company on the date that capital stock is held
by shareholders other than the shareholders on the date hereof.
(4) "Total Voting Power" shall mean the total number of
votes attributable to all shares of capital stock of the corporation outstanding
and entitled to vote on any particular matter, other than the number of shares,
if any, held by the Regulated Shareholders or their Affiliates which, pursuant
to this Section 5.2(b)(ii), are non-voting.
(5) "Voting Power" shall mean the number of votes
attributable to the total number of shares of capital stock of the corporation
owned by a Regulated Shareholder and its Affiliates and with respect to which
they shall have the right to vote on any particular matter before giving effect
to this Section 5.2(b)(ii).
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(c) Liquidation or Dissolution. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation, holders
of Common Stock shall receive a per share distribution of any assets remaining
after payment or provision for liabilities and the liquidation preference on
Preferred Stock, if any.
5.3 Rights and Preferences of Preferred Stock. The Board of Directors
shall have the full authority permitted by law to divide the authorized and
unissued shares of Preferred Stock into series, and to provide for the issuance
of such shares in an aggregate amount not exceeding in the aggregate the number
of shares of Preferred Stock authorized by this Restated Certificate of
Incorporation, as amended from time to time, and to determine with respect to
each such series the voting powers, if any (which voting powers, if granted, may
be full or limited), designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions relating thereto, including without limiting the generality of the
foregoing, the voting rights relating to shares of Preferred Stock of any series
(which may be one or more votes per share or a fraction of a vote per share,
which may vary over time and which may be applicable generally or only upon the
happening and continuance of stated events or conditions), the rate of dividend
to which holders of Preferred Stock of any series may be entitled (which may be
cumulative or noncumulative), the rights of holders of Preferred Stock of any
series in the event of liquidation, dissolution or winding up of the affairs of
the corporation, the rights, if any, of holders of Preferred Stock of any series
to convert or exchange such shares of Preferred Stock of such series for shares
of any other series of capital stock or for any other securities, property or
assets of the corporation (including the determination of the price or prices or
the rate or rates applicable to such rights to convert or exchange and the
adjustment thereof, the time or times during which the right to convert or
exchange shall be applicable and the time or times during which a particular
price or rate shall be applicable), whether or not the shares of that series
shall be redeemable, and if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be redeemable, and
the amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates, and whether any shares
of that series shall be redeemed pursuant to a retirement or sinking fund or
otherwise and the terms and conditions of such obligation.
Before the corporation shall issue any shares of Preferred Stock of any
series, it shall file with the Secretary of State of the State of Delaware in
the manner prescribed by the General Corporation Law of Delaware an amendment to
this Restated Certificate of Incorporation setting forth the terms of the series
and fixing the voting powers, designations, preferences, the relative,
participating, optional, or other special rights, if any, and the
qualifications, limitations and restrictions, if any, relating to the shares of
Preferred Stock of such series, and the number of shares of Preferred Stock of
such series authorized by the Board of Directors to be issued. The Board of
Directors is further authorized to increase or decrease (but not below the
number of such shares of such series then outstanding) the number of shares of
any series subsequent to the issuance of shares of that series.
5.4 Issuance of Stock. The shares of capital stock of the corporation may
be issued by the corporation from time to time for such consideration as from
time to time may be fixed by the Board of Directors of the corporation; and all
issued shares of the capital stock of the corporation shall be deemed fully paid
and non-assessable.
ARTICLE VI.
NUMBER OF DIRECTORS
The number of directors which shall constitute the whole Board of Directors
of this corporation shall be as specified in the Bylaws of this corporation.
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ARTICLE VII.
LIMITATION OF DIRECTOR'S LIABILITY
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of Title 8 of the Delaware Code, or
(iv) for any transaction from which the director derived an improper personal
benefit. Neither the amendment nor repeal of this Article VII, nor the adoption
of any provision of this Restated Certificate of Incorporation or Bylaws or of
any statute inconsistent with this Article VII, shall eliminate or reduce the
effect of this Article VII in respect of any acts or omissions occurring, or any
causes of action, suits or claims that, but for this Article VII would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent provision.
ARTICLE VIII.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
8.1 Indemnification. The corporation shall indemnify its directors and
officers to the full extent permitted by applicable law. The corporation shall
advance expenses for such persons pursuant to the terms set forth in the Bylaws,
or in a separate directors' resolution or contract.
8.2 Authorization. The Board of Directors may take such action as is
necessary to carry out these indemnification and expense advancement provisions.
It is expressly empowered to adopt, approve, and amend from time to time such
Bylaws, resolutions, contracts, or further indemnification and expense
advancement arrangements implementing these provisions as may be permitted by
law, including the purchase and maintenance of insurance. Such Bylaws,
resolutions, contracts, or further arrangements shall include but not be limited
to implementing the manner in which determinations as to any indemnity, or
advancement of expenses shall be made.
8.3 Amendment. No amendment or repeal of this Article VIII shall apply to
or have any effect on any right to indemnification provided hereunder with
respect to acts or omissions occurring prior to such amendment or repeal.
ARTICLE IX.
REDEMPTION
9.1 Redemption. Notwithstanding any other provision of this Restated
Certificate of Incorporation to the contrary, outstanding shares of capital
stock of the corporation held by Disqualified Holders shall always be subject to
redemption by the corporation, by action of the Board of Directors, if, in the
judgment of the Board of Directors, such action should be taken, pursuant to
Section 105(b) of Title 8 of the Delaware Code or any other applicable provision
of law, to the extent necessary to prevent the loss or secure the reinstatement
of any license or franchise from any governmental agency held by the corporation
or any of its subsidiaries to conduct any portion of the business of the
corporation or any of its subsidiaries, which license or franchise is
conditioned upon some or all of the holders of the corporation's stock
possessing prescribed qualifications. The terms and conditions of such
redemption shall be as follows:
(a) the redemption price of the shares to be redeemed pursuant to this
Article VIII shall be equal to the lesser of (i) the Fair Market Value or (ii)
if such stock was purchased by such Disqualified Holder within one year of the
Redemption Date, such Disqualified Holder's purchase price for such shares;
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(b) the redemption price of such shares may be paid in cash, Redemption
Securities or any combination thereof;
(c) if less than all the shares held by Disqualified Holders are to be
redeemed, the shares to be redeemed shall be selected in such manner as shall be
determined by the Board of Directors, which may include selection first of the
most recently purchased shares thereof, selection by lot or selection in any
other manner determined by the Board of Directors;
(d) at least 30 days' written notice of the Redemption Date shall be
given to the record holders of the shares selected to be redeemed (unless waived
in writing by any such holder); provided, however, that only 10 days' written
notice of the Redemption Date shall be given to record holders if the cash or
Redemption Securities necessary to effect the redemption shall have been
deposited in trust for the benefit of such record holders and subject to
immediate withdrawal by them upon surrender of the stock certificates for their
shares to be redeemed; provided, further, that the record holders of the shares
selected to be redeemed may transfer such shares prior to the Redemption Date to
any holder that is not a Disqualified Holder and thereafter, for so long as such
shares are not held by a Disqualified Holder, such shares shall not be subject
to redemption by the corporation;
(e) from and after the Redemption Date; any and all rights of whatever
nature (including without limitation any rights to vote or participate in
dividends declared on stock of the same class or series as such shares) with
respect to the shares selected from redemption held by Disqualified Holders on
the Redemption Date shall cease and terminate and such Disqualified Holders
thenceforth shall be entitled only to receive the cash or Redemption Securities
payable upon redemption; and
(f) such other terms and conditions as the Board of Directors shall
determine.
9.2 Definitions. For purposes of this Article IX:
(a) "Disqualified Holder" shall mean any holder of capital shares of
stock of the corporation whose holding of such stock, either individually or
when taken together with the holding of shares of capital stock of the
corporation by any other holders, may result, in the judgment of the Board of
Directors, in the loss of, or the failure to secure the reinstatement, of, any
license or franchise from any governmental agency held by the corporation or any
of its subsidiaries or affiliates to conduct any portion of the business of the
corporation or any of its subsidiaries or affiliates.
(b) "Fair Market Value" of a share of the corporation's stock of any
class or series shall mean the average Closing Price for such a share for each
of the forty-five (45) most recent days on which shares of stock of such class
or series shall have been traded preceding the day on which notice of redemption
shall be given pursuant to Section 9.1(d) of this Article IX; provided, however,
that if shares of stock of such class or series are not traded on any United
States securities exchange registered under the Securities Exchange Act of 1934
(a "Securities Exchange") or in the National Association of Securities Dealers,
Inc. Automated Quotations Systems or any other system then in use (a "Quotation
System"), "Fair Market Value" shall be determined by the Board of Directors in
good faith. For purposes of this definition "Closing Price" on any day means the
reported closing sales price or, in case no such sale takes place, the average
of the reported closing bid and asked prices on the principal Securities
Exchange on which such stock is listed, or, if such stock is not listed on any
such exchange, the highest closing sales price or bid quotation for such stock
on the applicable Quotation System.
(c) "Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of the corporation pursuant
to this Article IX.
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(d) "Redemption Securities" shall mean any debt or equity securities of
the corporation, any of its subsidiaries or affiliates or any other corporation,
or any combination thereof, having such terms and conditions as shall be
approved by the Board of Directors and which, together with any cash to be paid
as part of the redemption price, in the opinion of any nationally recognized
investment banking firm selected by the Board of Directors (which may be a firm
which provides other investment banking, brokerage or other services to the
corporation),has a value, at the time notice of redemption is given pursuant to
Section 9.1(d) of this Article IX, at least equal to the price required to be
paid pursuant to Section 9.1(a) of this Article X (assuming, in the case of
Redemption Securities to be publicly traded, such Redemption Securities were
fully distributed and subject only to normal trading activity).
ARTICLE X.
NO PREEMPTIVE RIGHTS
Stockholders of the corporation shall not have preemptive rights to acquire
additional shares issued by the corporation.
ARTICLE XI.
NO CUMULATIVE VOTING
Stockholders of the corporation shall not have cumulative voting rights.
ARTICLE XII.
REPEAL AND AMENDMENT
12.1 Repeal of and Amendment to Restated Certificate of
Incorporation. Unless otherwise provided herein, the provisions of this Restated
Certificate of Incorporation may be repealed or amended upon the affirmative
vote of the holders of not less than a majority of the Total Voting Power of the
corporation. The provisions set forth in Article IX, Article X, Article XI and
this sentence of Section 12.1 of Article XII herein may not be repealed or
amended in any respect, unless such action is approved by the affirmative vote
of the holders of not less than 66 2/3% of the Total Voting Power.
12.2 Repeal of and Amendment to Bylaws. In furtherance and not in
limitation of the powers conferred by the Act, the Board of Directors is
expressly authorized to make, adopt, repeal, alter, amend, and rescind the
Bylaws of the corporation by a resolution adopted by a majority of the
directors. The shareholders shall also have the power to adopt, amend or repeal
the Bylaws of the corporation as set forth therein.
ARTICLE XIII.
CONFLICTING INTERESTS
A director or officer of the corporation shall not in the absence of fraud
be disqualified by his office from dealing or contracting with the corporation
either as a vendor, purchaser or otherwise, nor in the absence of fraud shall a
director or officer of the corporation be liable to account to the corporation
for any profit realized by him from or through any transaction or contract of
the corporation by reason of the fact that he, or any firm of which he is a
member, or any corporation of which he is an officer, director or stockholder,
was interested in such transaction or contract if such transaction or contract
has been authorized, approved or ratified in the manner provided in the
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General Corporation Law of Delaware for authorization, approval or ratification
of transactions or contracts between the corporation and one or more of its
directors or officers, or between the corporation and any other corporation,
partnership, association or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest.
This Restated Certificate of Incorporation was duly adopted by the Board of
Directors in accordance with Section 245 of the General Corporation Law of the
State of Delaware.
This Restated Certificate of Incorporation was duly adopted by unanimous
written consent of the stockholders in accordance with the applicable provisions
of Sections 228, 242 and 245 of the General Corporation Law of the Sate of
Delaware.
IN WITNESS WHEREOF, , of VOICESTREAM WIRELESS
HOLDING CORPORATION has signed these Restated Articles of Incorporation as
duplicate signed originals on , 1999.
VOICESTREAM WIRELESS HOLDING CORPORATION
,
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ANNEX I
TITLE 23B. WASHINGTON BUSINESS CORPORATION ACT
CHAPTER 23B.13. DISSENTERS' RIGHTS
23B.13.010. DEFINITIONS
As used in this chapter:
(1) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under RCW 23B.13.020 and who exercises that right when and in
the manner required by RCW 23B.13.200 through 23B.13.280.
(3) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
23B.13.020. RIGHT TO DISSENT
(1) A shareholder is entitled to dissent from, and obtain payment of the
fair value of the shareholder's shares in the event of, any of the following
corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by RCW
23B.11.030, 23B.11.080, or the articles of incorporation and the
shareholder is entitled to vote on the merger, or (ii) if the corporation
is a subsidiary that is merged with its parent under RCW 23B.11.040;
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one year after the date of sale;
(d) An amendment of the articles of incorporation that materially
reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under
RCW 23B.06.040; or
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(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action fails to comply with
the procedural requirements imposed by this title, RCW 25.10.900 through
25.10.955, the articles of incorporation, or the bylaws, or is fraudulent with
respect to the shareholder or the corporation.
(3) The right of a dissenting shareholder to obtain payment of the fair
value of the shareholder's shares shall terminate upon the occurrence of any one
of the following events:
(a) The proposed corporate action is abandoned or rescinded;
(b) A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
(c) The shareholder's demand for payment is withdrawn with the written
consent of the corporation.
23B.13.030. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(1) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the shareholder's name only if the shareholder dissents
with respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the shareholder asserts dissenters' rights. The rights of a partial dissenter
under this subsection are determined as if the shares as to which the dissenter
dissents and the dissenter's other shares were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on the beneficial shareholder's behalf only if: (a) The beneficial
shareholder submits to the corporation the record shareholder's written consent
to the dissent not later than the time the beneficial shareholder asserts
dissenters' rights; and (b) The beneficial shareholder does so with respect to
all shares of which such shareholder is the beneficial shareholder or over which
such shareholder has power to direct the vote.
23B.13.200. NOTICE OF DISSENTERS' RIGHTS
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.
(2) If corporate action creating dissenters' rights under RCW 23B.13.020 is
taken without a vote of shareholders, the corporation, within ten days after
[the] effective date of such corporate action, shall notify in writing all
shareholders entitled to assert dissenters' rights that the action was taken and
send them the dissenters' notice described in RCW 23B.13.220.
23B.13.210. NOTICE OF INTENT TO DEMAND PAYMENT
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights must (a) deliver to the corporation before
the vote is taken written notice of the shareholder's intent to demand payment
for the shareholder's shares if the proposed action is effected, and (b) not
vote such shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1)
of this section is not entitled to payment for the shareholder's shares under
this chapter.
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23B.13.220. DISSENTERS' NOTICE
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of RCW 23B.13.210.
(2) The dissenters' notice must be sent within ten days after the effective
date of the corporate action, and must:
(a) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not the person acquired beneficial
ownership of the shares before that date;
(d) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days
after the date the notice in subsection (1) of this section is delivered;
and
(e) Be accompanied by a copy of this chapter.
23B.13.230. DUTY TO DEMAND PAYMENT
(1) A shareholder sent a dissenters' notice described in RCW 23B.13.220
must demand payment, certify whether the shareholder acquired beneficial
ownership of the shares before the date required to be set forth in the
dissenters' notice pursuant to RCW 23B.13.220(2)(c), and deposit the
shareholder's certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits the shareholder's
share certificates under subsection (1) of this section retains all other rights
of a shareholder until the proposed corporate action is effected.
(3) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter.
23B.13.240. SHARE RESTRICTIONS
(1) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is effected or the restriction is released under RCW 23B.13.260.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until the
effective date of the proposed corporate action.
23B.13.250. PAYMENT
(1) Except as provided in RCW 23B.13.270, within thirty days of the later
of the effective date of the proposed corporate action, or the date the payment
demand is received, the corporation shall pay each dissenter who complied with
RCW 23B.13.230 the amount the corporation estimates to be the fair value of the
shareholder's shares, plus accrued interest.
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(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(b) An explanation of how the corporation estimated the fair value of
the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under RCW
23B.13.280; and
(e) A copy of this chapter.
23B.13.260. FAILURE TO TAKE ACTION
(1) If the corporation does not effect the proposed action within sixty
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release any transfer
restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation wishes to undertake the proposed action, it must
send a new dissenters' notice under RCW 23B.13.220 and repeat the payment demand
procedure.
23B.13.270. AFTER-ACQUIRED SHARES
(1) A corporation may elect to withhold payment required by RCW 23B.13.250
from a dissenter unless the dissenter was the beneficial owner of the shares
before the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of the dissenter's demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares, an explanation of
how the interest was calculated, and a statement of the dissenter's right to
demand payment under RCW 23B.13.280.
23B.13.280. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER
(1) A dissenter may notify the corporation in writing of the dissenter's
own estimate of the fair value of the dissenter's shares and amount of interest
due, and demand payment of the dissenter's estimate, less any payment under RCW
23B.13.250, or reject the corporation's offer under RCW 23B.13.270 and demand
payment of the dissenter's estimate of the fair value of the dissenter's shares
and interest due, if:
(a) The dissenter believes that the amount paid under RCW 23B.13.250
or offered under RCW 23B.13.270 is less than the fair value of the
dissenter's shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under RCW 23B.13.250 within
sixty days after the date set for demanding payment; or
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(c) The corporation does not effect the proposed action and does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(2) A dissenter waives the right to demand payment under this section
unless the dissenter notifies the corporation of the dissenter's demand in
writing under subsection (1) of this section within thirty days after the
corporation made or offered payment for the dissenter's shares.
23B.13.300. COURT ACTION
(1) If a demand for payment under RCW 23B.13.280 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(2) The corporation shall commence the proceeding in the superior court of
the county where a corporation's principal office, or, if none in this state,
its registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The corporation may join as a party to the proceeding any shareholder
who claims to be a dissenter but who has not, in the opinion of the corporation,
complied with the provisions of this chapter. If the court determines that such
shareholder has not complied with the provisions of this chapter, the
shareholder shall be dismissed as a party.
(5) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(6) Each dissenter made a party to the proceeding is entitled to judgment
(a) for the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the corporation,
or (b) for the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under RCW 23B.13.270.
23B.13.310. COURT COSTS AND COUNSEL FEES
(1) The court in a proceeding commenced under RCW 23B.13.300 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court. The court shall assess the costs
against the corporation, except that the court may assess the costs against all
or some of the dissenters, in amounts the court finds equitable, to the extent
the court finds the dissenters acted arbitrarily, vexatiously, or not in good
faith in demanding payment under RCW 23B.13.280.
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(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of RCW 23B.13.200 through 23B.13.280; or
(b) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by chapter 23B.13 RCW.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
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ANNEX J
DELAWARE GENERAL CORPORATION LAW
Section 262 Appraisal Rights. -- (a) Any stockholder of a corporation of
this State who holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to such shares, who
continuously holds such shares through the effective date of the merger or
consolidation, who has otherwise complied with subsection (d) of this section
and who has neither voted in favor of the merger or consolidation nor consented
thereto in writing pursuant to ss. 228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of his shares of stock
under the circumstances described in subsections (b) and (c) of this section. As
used in this section, the word "stockholder" means a holder of record of stock
in a stock corporation and also a member of record of a nonstock corporation;
the words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss. 251 (other than a merger effected pursuant to
subsection (g) of Section 251), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263 or
ss. 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of ss. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to ss.ss.
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to ss. 228 or
ss. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of the notice, demand in writing from the surviving or resulting
corporation the appraisal of his shares. Such demand will be sufficient if
it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of his
shares. If such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such constituent corporation
shall send a second notice before the effective date of the merger or
consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of
the effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all
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such holders on or within 10 days after such effective date; provided,
however, that if such second notice is sent more than 20 days following the
sending of the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer agent
of the corporation that is required to give either notice that such notice
has been given shall, in the absence of fraud, be prima facie evidence of
the facts stated therein. For purposes of determining the stockholders
entitled to receive either notice, each constituent corporation may fix, in
advance, a record date that shall be not more than 10 days prior to the
date the notice is given; provided that, if the notice is given on or after
the effective date of the merger or consolidation, the record date shall be
such effective date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the close of business
on the day next proceeding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall by borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
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(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding
in the Court of Chancery shall be dismissed as to any stockholder without the
approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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PROXY
VOICESTREAM WIRELESS CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints John W. Stanton and Alan R. Bender with power
to act without the other and with full power of substitution, and hereby
authorizes them to represent and vote, as designated below all the shares of
common stock of VoiceStream Wireless Corporation held of record in the name of
the undersigned as of ________________, 1999, with all powers that the
undersigned would possess if present at the Special Meeting of Shareholders to
be held on November __, 1999, at ____________ a.m., local time, at ____________,
Seattle, Washington, and at any adjournment or adjournments thereof, upon the
following matter:
(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
<PAGE> 431
Please mark [X]
your votes as
indicated in
this example.
1. Proposal to adopt, and approve the transactions
contemplated by, the Agreement and Plan of
Reorganization whereby VoiceStream Wireless FOR AGAINST ABSTAIN
Corporation will become a wholly-owned subsidiary [ ] [ ] [ ]
of VoiceStream Wireless Holding Corporation, and
VoiceStream Wireless Corporation stockholders
will receive stock of VoiceStream Wireless Holding
Corporation. A copy of the Agreement and Plan of
Reorganization is attached as Annex A to the joint
proxy statement-prospectus for the special
meeting.
This proxy will be voted as
specified by the shareholder,
but if no choice is specified,
this proxy will, if signed, be
voted FOR approval of the
Agreement and Plan of
Reorganization.
PLEASE MARK, DATE, SIGN AND
RETURN THIS PROXY IN THE
ENCLOSED PROXY RETURN ENVELOPE,
WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF
AN ENVELOPE IS NOT ENCLOSED OR
HAS BEEN MISPLACED, PLEASE
RETURN THIS COMPLETED PROXY TO
CHASEMELLON SHAREHOLDERS
SERVICES, L.L.C._______________.
Signature(s)__________________________________________________ Dated:_____, 1999
IMPORTANT: Please sign exactly as name or names appear on this Proxy. Joint
owners should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title as such. When
signing as a corporation or a partnership, please sign in the name of the
entity by an authorized person.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE> 432
PROXY
OMNIPOINT CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Douglas G. Smith and Harry Plonskier, with power
to act without the other and with full power of substitution, and hereby
authorizes them to represent and vote, as designated below all the shares of
common stock of Omnipoint Corporation held of record in the name of the
undersigned as of ________, 1999, with all powers that the undersigned would
possess if present at the Special Meeting of Shareholders to be held on November
______, 1999, at ____ a.m., local time, at Piper & Marbury, L.L.P., 1200
Nineteenth Street, N.W., Washington, D.C. and at any adjournment or adjournments
thereof, upon the following matter:
(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE> 433
<TABLE>
<S> <C>
Please mark [X]
your vote as
indicated in
this example.
FOR AGAINST ABSTAIN
1. Proposal to adopt, and approve the transactions contemplated by, the Agreement and Plan of
Reorganization, whereby Omnipoint Corporation will become a wholly-owned subsidiary of [ ] [ ] [ ]
VoiceStream Wireless Holding Corporation, and Omnipoint Corporation stockholders will receive
common stock of VoiceStream Wireless Holding Corporation and/or cash. A copy of the Agreement
and Plan of Reorganization is attached as Annex A to the joint proxy statement-prospectus for
the special meeting.
This proxy will be voted as specified by
the shareholder, but if no choice is
specified, this proxy will, if signed,
be voted FOR approval of the Agreement
and Plan of Reorganization.
PLEASE MARK, DATE, SIGN AND RETURN THIS
PROXY IN THE ENCLOSED PROXY RETURN
ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF AN
ENVELOPE IS NOT ENCLOSED OR HAS BEEN
MISPLACED, PLEASE RETURN THIS COMPLETED
PROXY TO CHASEMELLON SHAREHOLDERS
SERVICES, L.L.C. _____________________.
Signature(s) ______________________________________________________________________________________ Dated: ___________________, 1999
IMPORTANT: Please sign exactly as name or names appear on this Proxy. Joint owners should each sign personally. When signing as
attorney, executor, administrator, trustee or guardian, please give your full title as such. When signing as a corporation or a
partnership, please sign in the name of the entity by an authorized person.
- ------------------------------------------------------------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
</TABLE>
<PAGE> 434
PROXY
AERIAL COMMUNICATIONS, INC.
SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints LeRoy T. Carlson, Jr. and Don W. Warkentin,
with power to act without the other and with full power of substitution, and
hereby authorizes them to represent and vote, as designated below all the
Common Shares, $1.00 par value, of Aerial Communications, Inc., held of record
in the name of the undersigned as of ___________, 1999, with all powers that the
undersigned would possess if present at the Special Meeting of Shareholders to
be held on November __, 1999, at ____ a.m., local time, at _____________________
and at any adjournment or adjournment thereof, upon the following matter:
(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE> 435
PLEASE MARK
YOUR VOTES AS [X]
INDICATED IN
THIS EXAMPLE
1. Proposal to adopt, and approve the transactions contemplated by, the
Agreement and Plan of Reorganization, whereby Aerial Communications, Inc. will
become a wholly-owned subsidiary of VoiceStream Wireless Holding Corporation,
and Aerial Communications, Inc. stockholders will receive common stock of
VoiceStream Wireless Holding Corporation and/or cash. A copy of the Agreement
and Plan of Reorganization is attached as Annex D to the joint proxy
statement-prospectus for the special meeting.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
This proxy will be voted as specified by the shareholder, but if no choice is
specified, this proxy will, if signed, be voted FOR approval of the Agreement
and Plan of Reorganization.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED PROXY RETURN
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF AN
ENVELOPE IS NOT ENCLOSED OR HAS BEEN MISPLACED, PLEASE RETURN THIS COMPLETED
PROXY TO CHASEMELLON SHAREHOLDERS SERVICES, L.L.C. _______________________.
Signature(S) Dated:
--------------------------------------- --------------------
IMPORTANT: Please sign exactly as name or names appear on this Proxy. Joint
owners should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title as such. When
signing as a corporation or a partnership, please sign in the name of the
entity by an authorized person.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
