<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 25, 2000.
REGISTRATION NO. 333-89735
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
POST-EFFECTIVE AMENDMENT NO. 1
------------------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
VOICESTREAM WIRELESS HOLDING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4812 91-1983600
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBERS) IDENTIFICATION NO.)
</TABLE>
3650 131ST AVENUE S.E.
BELLEVUE, WASHINGTON 98006
(425) 653-4600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ALAN R. BENDER, ESQ.
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
VOICESTREAM WIRELESS HOLDING CORPORATION
3650 131ST AVENUE S.E.
BELLEVUE, WASHINGTON 98006
(425) 653-4600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
<TABLE>
<S> <C> <C> <C>
G. SCOTT GREENBURG, ESQ. BARRY A. ADELMAN, ESQ. EDWIN M. MARTIN, JR., ESQ. MICHAEL G. HRON, ESQ.
MATTHEW S. TOPHAM, ESQ. GREGG S. LERNER, ESQ. JAY G. FINKELSTEIN, ESQ. ALFRED N. SACHA, ESQ.
MARGARET C. INOUYE, ESQ. FRIEDMAN KAPLAN & SEILER LLP PIPER MARBURY RUDNICK SIDLEY & AUSTIN
PRESTON GATES & ELLIS LLP 875 THIRD AVENUE & WOLFE LLP BANK ONE PLAZA
5000 COLUMBIA CENTER NEW YORK, NEW YORK 10022 1200 19TH STREET, N.W. 10 SOUTH DEARBORN
701 5TH AVENUE WASHINGTON, D.C. 20036 CHICAGO, ILLINOIS 60603
SEATTLE, WASHINGTON 98104
</TABLE>
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this registration statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 426(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value... 213,472,789 Shares (2) (3) $ (4)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the maximum number of shares of common stock of VoiceStream
Wireless Holding Corporation to be issued in the reorganizations described
in this registration statement, based upon an exchange ratio for shares of
common stock of VoiceStream Wireless Corporation equal to 1 to 1, for shares
of common stock of Omnipoint Corporation equal to 0.825 to 1, and for shares
of common stock of Aerial Communications, Inc. equal to 0.455 to 1.
(2) Not applicable.
(3) Not applicable.
(4) Fee paid previously.
<PAGE> 2
[VoiceStream Logo] [OmniPoint Logo] [Aerial Logo]
PROPOSED TRANSACTIONS -- YOUR VOTE IS VERY IMPORTANT
January 25, 2000
Dear Fellow Stockholders:
We are pleased to propose transactions that will result in VoiceStream
Wireless Corporation and either or both of the following corporations becoming
subsidiaries of VoiceStream Wireless Holding Corporation:
- Omnipoint Corporation, and
- Aerial Communications, Inc.
These transactions, which will take the form of reorganizations as
described in this joint proxy statement-prospectus, will bring together three
major providers of PCS services in the United States. Each company, as a
subsidiary of VoiceStream Holdings, will principally operate its existing
business under the VoiceStream brand name.
These transactions are expected to result in the issuance of as many as 214
million shares of common stock, $.001 par value, of VoiceStream Wireless Holding
Corporation. Upon completion of the first transaction, VoiceStream Wireless
Holding Corporation will change its name to VoiceStream Wireless Corporation,
and its shares will trade on the Nasdaq Stock Market under the symbol "VSTR",
which is the current symbol for VoiceStream Wireless Corporation.
We cannot complete the reorganizations unless we obtain the necessary
governmental and stockholder approvals. 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 read this joint proxy statement-prospectus to learn
about the transactions and to vote "FOR" the reorganization of your company. The
board of directors of each company has voted unanimously in favor of these
reorganizations.
SEE "RISK FACTORS" BEGINNING ON PAGE 27 TO READ ABOUT CERTAIN FACTORS YOU
SHOULD CONSIDER IN CONNECTION WITH THIS JOINT PROXY STATEMENT-PROSPECTUS.
We enthusiastically support these transactions 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>
/s/ JOHN W. STANTON /s/ DOUGLAS G. SMITH /s/ LEROY T. CARLSON, JR.
- -------------------------------- ----------------------- ---------------------------
John W. Stanton Douglas G. Smith LeRoy T. Carlson, Jr.
Chairman and Chairman and Chairman
Chief Executive Officer Chief Executive 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 JANUARY 25, 2000
AND FIRST MAILED TO STOCKHOLDERS ON OR ABOUT JANUARY 25, 2000
<PAGE> 3
[VoiceStream Logo]
-------------------------
VOICESTREAM WIRELESS CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 24, 2000
-------------------------
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
Thursday, February 24, 2000, at 8:00 a.m. local time, at the offices of Preston
Gates & Ellis LLP, 701 Fifth Avenue, Suite 5000, 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 and amended as of December 30, 1999, among VoiceStream,
Omnipoint Corporation, a Delaware corporation, and VoiceStream Wireless
Holding Corporation, a Delaware corporation, 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, 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, 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 January 17, 2000 as the record date for 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
/s/ ALAN R. BENDER
----------------------------------
Alan R. Bender
Secretary
January 25, 2000
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 FEBRUARY 24, 2000
-------------------------
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 Thursday, February 24,
2000, at 11:00 a.m. local time, at the offices of Piper Marbury Rudnick & Wolfe
LLP, 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 and amended as of December 30, 1999, among Omnipoint,
VoiceStream Wireless Corporation, a Washington corporation, and
VoiceStream Wireless Holding Corporation, a Delaware corporation, 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 January 17, 2000 as the record date for 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
/s/ EDWIN M. MARTIN, JR.
----------------------------------
Edwin M. Martin, Jr.
Secretary
January 25, 2000
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 FEBRUARY 24, 2000
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 Thursday, February
24, 2000 at 10:00 a.m. local time, at the Hotel Allegro Chicago, 171 West
Randolph Street, Chicago, Illinois, on the third floor in the Goodman Theater B
Room, 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, 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, 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 January 17, 2000 as the record date for the special meeting and
any adjournments or postponements 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
/s/ MICHAEL G. HRON
----------------------------------
Michael G. Hron
Secretary
January 25, 2000
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>
QUESTIONS AND ANSWERS ABOUT THE
PROPOSED TRANSACTIONS............... 1
SUMMARY............................... 9
The Companies....................... 9
The Reorganizations................. 9
Why We Are Proposing to Combine..... 10
Regulatory Approval................. 10
Comparative Per Share Market Price
and Dividend Information......... 11
The Omnipoint Reorganization........ 11
The Aerial Reorganization........... 15
The Investments..................... 19
Dissenters' Rights of Appraisal..... 20
Selected Historical and Unaudited
Pro Forma Financial Data......... 21
RISK FACTORS.......................... 27
OWNERSHIP OF VOICESTREAM HOLDINGS
FOLLOWING EITHER OR BOTH
REORGANIZATIONS..................... 34
THE OMNIPOINT REORGANIZATION.......... 36
The Omnipoint Reorganization
Agreement........................ 36
Background of the Omnipoint
Reorganization................... 47
Recommendations of the VoiceStream
Board; Reasons for the Omnipoint
Reorganization................... 49
VoiceStream Fairness Opinion........ 51
Fee Arrangement with Goldman
Sachs............................ 59
Recommendations of the Omnipoint
Board; Reasons for the Omnipoint
Reorganization................... 59
Omnipoint Fairness Opinion.......... 60
Fee Arrangements with Lehman
Brothers and Allen & Co. ........ 70
Agreement to Vote in Favor of the
Omnipoint Reorganization......... 71
Timing of Closing................... 71
Accounting Treatment................ 71
Transaction Costs................... 71
Dissenters' Rights of Appraisal..... 71
Cook Inlet Transactions............. 72
Hutchison Investments............... 73
Hutchison Standstill Agreement...... 74
$500 Million Sonera Investment in
VoiceStream Holdings............. 75
Material United States Federal
Income Tax Consequences of the
Omnipoint Reorganization......... 75
Consequences of the Omnipoint
Reorganization Under
VoiceStream's Tax Sharing
Agreement........................ 82
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Interests of Certain Persons in the
Omnipoint Reorganization......... 85
THE AERIAL REORGANIZATION............. 90
The Aerial Reorganization
Agreement........................ 90
Background of the Aerial
Reorganization................... 103
Recommendations of the VoiceStream
Board; Reasons for the Aerial
Reorganization................... 121
VoiceStream Fairness Opinion........ 123
Fee Arrangement with Goldman
Sachs............................ 130
Recommendations of the Aerial Board;
Reasons for the Aerial
Reorganization................... 130
Aerial Fairness Opinion............. 133
Fee Arrangements with Donaldson,
Lufkin & Jenrette................ 140
Recommendations of the Aerial
Special Committee................ 141
Aerial Special Committee Fairness
Opinion.......................... 143
Fee Arrangements with Wasserstein
Perella.......................... 156
Agreements Relating to the Aerial
Reorganization................... 156
Sonera Settlement Agreement and
Release.......................... 160
Timing of Closing................... 161
Accounting Treatment................ 161
Transaction Costs................... 161
Dissenters' Rights of Appraisal..... 161
Litigation.......................... 162
Material United States Federal
Income Tax Consequences of the
Aerial Reorganization............ 162
Consequences of the Aerial
Reorganization under
VoiceStream's Tax Sharing
Agreement........................ 164
Interests of Certain Persons in the
Aerial Reorganization............ 164
VOICESTREAM HOLDINGS VOTING
AGREEMENT........................... 177
THE INVESTMENTS....................... 179
Hutchison Investments............... 179
$500 million Sonera Investment...... 180
$230 Million Sonera Investment...... 180
$420 Million TDS Debt Replacement... 180
REGULATORY APPROVAL................... 181
FINANCIAL INFORMATION................. 183
Unaudited Pro Forma Condensed
Combined Financial Statements.... 183
</TABLE>
i
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE SPECIAL MEETINGS.................. 201
VoiceStream Record Date; Quorum;
Vote Required.................... 201
Omnipoint Record Date; Quorum; Vote
Required......................... 202
Aerial Record Date; Quorum; Vote
Required......................... 202
Agreements to Vote in Favor of the
Omnipoint Reorganization......... 203
Agreements to Vote in Favor of the
Aerial Reorganization............ 203
Solicitation of Proxies............. 204
Dissenters' Rights of Appraisal..... 205
BUSINESS OF VOICESTREAM HOLDINGS...... 211
Background -- The Wireless
Communications Industry.......... 211
The Business of VoiceStream Holdings
After the Reorganizations........ 214
Executive Compensation.............. 252
Business of VoiceStream, Omnipoint
and Aerial....................... 262
CERTAIN LEGAL INFORMATION............. 263
Description of VoiceStream Holdings
Capital Stock.................... 263
Comparison of Stockholder Rights.... 264
Opinions from Legal Counsel......... 285
Experts............................. 285
WHERE YOU CAN FIND MORE INFORMATION... 286
</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
QUESTIONS AND ANSWERS ABOUT
THE PROPOSED TRANSACTIONS
Q: HOW WILL THE REORGANIZATION TRANSACTIONS BRING TOGETHER THE THREE COMPANIES?
A: If both the Omnipoint reorganization and the Aerial reorganization are
approved, all three companies will become subsidiaries of VoiceStream
Holdings. The following diagrams show the existing structure of VoiceStream
and how it will change following both or either reorganization:
- VoiceStream's current structure is as follows:
[DIAGRAM]
- Assuming completion of both the Omnipoint reorganization and the Aerial
reorganization, VoiceStream Holdings' structure will be as follows:
[DIAGRAM]
- ---------------
(1) Wholly-owned subsidiary of VoiceStream Holdings, which will be a borrower
under the $3.0 billion anticipated new credit facility to be entered into at
the completion of the Omnipoint reorganization.
1
<PAGE> 9
- Assuming completion of only the Omnipoint reorganization, VoiceStream
Holdings' structure will be as follows:
[DIAGRAM]
- Assuming completion of only the Aerial reorganization, VoiceStream
Holdings' structure will be as follows:
[DIAGRAM]
2
<PAGE> 10
Q: WHEN DO WE EXPECT TO COMPLETE THE TRANSACTIONS?
A:We plan to complete the Omnipoint reorganization during the first quarter of
2000 and the Aerial reorganization during the second 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. We expect the
Omnipoint reorganization to be completed first.
Q: WHAT WILL VOICESTREAM STOCKHOLDERS RECEIVE?
A: As a VoiceStream stockholder 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.
Q: WHAT WILL OMNIPOINT STOCKHOLDERS RECEIVE?
A: As an Omnipoint stockholder you will have three choices as to what you will
receive for each share of Omnipoint common stock that you own. You may elect
to receive:
- cash and stock, 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;
- stock, by which you ask to receive a number of shares of VoiceStream
Holdings common stock equal to the sum of
- 0.825 of a share of VoiceStream Holdings common stock, plus
- a fraction of a share of VoiceStream Holdings common stock
calculated by dividing $8.00 by the VoiceStream 15 day average
price, provided that the actual number of shares will be subject to
proration and adjustment and determined as described below; or
- cash, by which you ask to receive an amount of cash equal to the sum
of
- the VoiceStream 15 day average price multiplied by 0.825, plus
- $8.00, provided that the actual amount of cash will be subject to
proration and adjustment and determined as described below.
For the purposes of these elections, the VoiceStream 15 day average price
will be determined by calculating the average closing price of a share of
VoiceStream common stock during the 15 trading days ending the business day
prior to the date of completion of the Omnipoint reorganization.
The following table estimates the total values, as of the date of completion
of the Omnipoint reorganization, that you will receive for each share of
Omnipoint common stock depending on:
- which election you make;
- the VoiceStream 15 day average price; and
- various assumed prices of VoiceStream Holdings common stock on the
first trading day after completion of the Omnipoint reorganization.
3
<PAGE> 11
Since VoiceStream common stock will be exchanged for VoiceStream Holdings
common stock on a one-for-one basis, the table shows a range of values that
may be received by Omnipoint stockholders at approximately the current price
of VoiceStream common stock and prices above and below such price. The last
sale price of VoiceStream common stock on January 14, 2000 was $112.69. This
price is subject to change.
<TABLE>
<CAPTION>
PRICE OF VALUE OF
VOICESTREAM VOICESTREAM CASH AND VALUE OF VALUE OF
15 DAY HOLDINGS STOCK STOCK CASH
AVERAGE COMMON ELECTION ELECTION ELECTION
PRICE STOCK PER SHARE PER SHARE PER SHARE
- ------------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C>
100.00 90.00 82.25 81.45 90.50
100.00 100.00 90.50 90.50 90.50
100.00 110.00 98.75 99.55 90.50
110.00 100.00 90.50 89.77 98.75
110.00 110.00 98.75 98.75 98.75
110.00 120.00 107.00 107.72 98.75
120.00 110.00 98.75 98.08 107.00
120.00 120.00 107.00 107.00 107.00
120.00 130.00 115.25 115.92 107.00
130.00 120.00 107.00 106.38 115.25
130.00 130.00 115.25 115.25 115.25
130.00 140.00 123.50 124.12 115.25
</TABLE>
The total values indicated for the stock election and the cash election will
vary based on proration and adjustment as noted below. The total values of
each of the elections, except in the case of an all cash payment, will vary
following the completion of the Omnipoint reorganization based on changes in
the trading price of VoiceStream Holdings common stock.
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 VoiceStream 15 day average price.
Proration and adjustment. There is a fixed number of total shares and a fixed
amount of total cash that VoiceStream Holdings will issue and pay to holders
of Omnipoint common stock. As a result if you choose the stock election or
the cash election, the consideration you actually receive may consist of a
mix of VoiceStream Holdings common stock and cash.
Q: WHAT WILL AERIAL STOCKHOLDERS RECEIVE?
A: As a holder of Aerial common stock you will receive 0.455 of a share of
VoiceStream Holdings common stock for each share of Aerial common stock that
you own, 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.
Alternatively, stockholders other than TDS and Sonera may elect to receive
$18.00 per share in cash for each share of Aerial common stock with respect
to all or any portion of their shares of Aerial common stock.
Prior to making the election to receive cash in the amount of $18.00 per
share of Aerial common stock, Aerial stockholders should consider carefully
the then current market value of the VoiceStream Holdings common stock that
will otherwise be received.
4
<PAGE> 12
The following table estimates the total value, as of the date of the Aerial
reorganization, that you will receive for each share of Aerial common stock.
If you receive stock, the value will vary based on the value of a share of
VoiceStream Holdings common stock at the completion of the Aerial
reorganization. Since VoiceStream common stock will be exchanged for
VoiceStream Holdings common stock on a one-for-one basis, the following table
shows a range of values that may be received by Aerial stockholders at
approximately the current price of VoiceStream common stock and prices above
and below such price. The last sale price of VoiceStream common stock on
January 14, 2000 was $112.69. This price is subject to change.
<TABLE>
<CAPTION>
PRICE OF VALUE OF VALUE OF
VOICESTREAM HOLDINGS STOCK CONSIDERATION PER CASH ELECTION PER
COMMON STOCK SHARE SHARE
- -------------------- ----------------------- -------------------
<S> <C> <C>
$ 90 $40.95 $18.00
$100 $45.50 $18.00
$110 $50.05 $18.00
$120 $54.60 $18.00
$130 $59.15 $18.00
$140 $63.70 $18.00
</TABLE>
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.
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 -- The Omnipoint Reorganization Agreement -- Election
Procedure; Exchange of Certificates." If you fail to return the election form
in a timely or proper manner, you will receive cash and stock consisting of
0.825 of a share of VoiceStream Holdings common stock and $8.00 in cash for
each share of Omnipoint common stock that you own.
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 -- The Aerial
Reorganization Agreement -- Election Procedure; Exchange of Certificates." If
you fail to return the election form in a timely or proper manner, you will
receive 0.455 of a share of VoiceStream Holdings common stock for each share
of Aerial common stock that you own.
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 at the latest.
5
<PAGE> 13
Q: WHEN SHOULD I EXPECT TO RECEIVE PAYMENT FOR MY STOCK?
A:VoiceStream stockholders: Your common stock will be traded as VoiceStream
Holdings common stock immediately upon completion of the first to occur of the
Omnipoint reorganization or the Aerial reorganization.
Omnipoint stockholders: If you are a record holder, following completion of
the Omnipoint reorganization:
- You will no longer be able to trade your Omnipoint common stock.
- We will send to all holders of Omnipoint common stock election forms
and letters of transmittal that will allow you to make your election
and receive your VoiceStream Holdings stock and/or cash.
- You will not be able to trade the shares of VoiceStream Holdings
common stock you receive in exchange for your Omnipoint common stock
until your receipt of those shares.
- We anticipate a period of ten to twenty business days between the time
you are no longer able to trade your Omnipoint common stock and the
time you are able to commence trading of the VoiceStream Holdings
common stock you receive. This delay is due to the time period
required to distribute, receive and process election forms and letters
of transmittal and to mail stock certificates.
- During this ten to twenty business day period the price of the
VoiceStream Holdings common stock could fluctuate significantly.
If you hold your shares in street name, you should contact your broker
about your ability to trade shares of VoiceStream Holdings common stock after
completion of the Omnipoint reorganization.
Aerial stockholders: If you are a record holder, following completion of the
Aerial reorganization:
- You will no longer be able to trade your Aerial common stock.
- We will send to all holders of Aerial common stock election forms and
letters of transmittal that will allow you to make your election and
receive your VoiceStream Holdings stock and/or cash.
- You will not be able to trade the shares of VoiceStream Holdings
common stock you receive in exchange for your Aerial common stock
until your receipt of those shares.
- We anticipate a period of ten to twenty business days between the time
you are no longer able to trade your Aerial common stock and the time
you are able to commence trading of the VoiceStream Holdings common
stock you receive. This delay is due to the time period required to
distribute, receive and process election forms and letters of
transmittal and to mail stock certificates.
- During this ten to twenty business day period the price of VoiceStream
Holdings common stock could fluctuate significantly.
If you hold your shares in street name, you should contact your broker
about your ability to trade shares of VoiceStream Holdings common stock after
completion of the Aerial reorganization.
6
<PAGE> 14
Q: WILL I HAVE TO PAY FEDERAL INCOME TAXES ON THE PAYMENT I RECEIVE?
A: 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 the 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.
- Omnipoint's counsel is currently opining that the receipt of shares
of VoiceStream Holdings common stock by Omnipoint stockholders in
the Omnipoint reorganization will be tax free to Omnipoint
stockholders based upon the express assumption that the Omnipoint
merger will occur before or at the same time as the Aerial merger.
- It is a waivable condition that prior to the closing of the
Omnipoint reorganization, Omnipoint's counsel must deliver a
second, confirming opinion that the receipt of shares of
VoiceStream Holdings common stock by Omnipoint stockholders in the
Omnipoint reorganization will be tax free to Omnipoint
stockholders.
- If counsel is unable, to issue the confirming opinion prior to the
closing of the Omnipoint reorganization, we will recirculate the
joint proxy statement-prospectus and resolicit stockholder approval
of the Omnipoint reorganization as a taxable transaction.
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. The obligation of
Aerial to consummate the Aerial reorganization is conditioned on Aerial's
receipt of an opinion of legal counsel to the effect that the stockholders of
Aerial will not recognize any gain or loss for U.S. federal income tax
purposes due to the Aerial reorganization except with respect to any cash
they receive. This condition may not be waived by the Aerial board unless the
Aerial board resolicits and obtains approval of the Aerial stockholders of
the Aerial reorganization.
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. Aerial stockholders do not have
dissenters' rights.
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.
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
7
<PAGE> 15
proposal as to which you are entitled to vote, which will have the same
effect as voting against such proposal.
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: If you have questions about the reorganizations or anything discussed in this
joint proxy statement-prospectus, you may call ChaseMellon Consulting
Services, which is serving as the information agent for VoiceStream,
Omnipoint and Aerial, toll-free at: 1-800-737-9864.
You may also call this number for information concerning the price of
VoiceStream or VoiceStream Holdings common stock, as applicable.
8
<PAGE> 16
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 13 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.
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 communications
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
9
<PAGE> 17
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
carefully 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.
WHY WE ARE PROPOSING TO COMBINE
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 23 of the 25 largest markets in the continental United States and over 218
million people, and will serve over 1.7 million customers. We will be the
largest company in the United States deploying technology based on the wireless
communications standard known as Global System for Mobile Communications,
commonly known as GSM. With only VoiceStream and Omnipoint combined, our
licenses together with those of joint ventures in which we will be an investor,
will cover 17 of such 25 markets and over 193 million people, and we will serve
over 1.4 million customers. With only VoiceStream and Aerial combined, our
licenses together with those of joint ventures in which we will be an investor,
will cover 17 of such 25 markets and over 116 million people, and we will serve
over 1 million customers.
REGULATORY APPROVAL
Completion of each of the reorganizations is subject to approval of the
FCC. We currently anticipate FCC action on all applications necessary for
completion of the Omnipoint reorganization by the end of February 2000. We
currently anticipate FCC action on all applications necessary for completion of
the Aerial reorganization by the end of April 2000. The receipt of FCC approval,
however, within the times anticipated or in general, cannot be assured.
10
<PAGE> 18
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 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 their 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>
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
Fourth Quarter............... $142.31 $ 59.06 $120.63 $53.81 $60.88 $26.13
First Quarter 2000 through
1/14/00.................... $126.63 $100.13 $108.25 $89.50 $54.75 $43.44
</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 $29.38 and the closing price of Omnipoint common stock was
$20.75. 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 January 14, 2000, the most recent practicable date prior to the
printing of this joint proxy statement-prospectus, the closing price was $112.69
for VoiceStream common stock, $98.00 for Omnipoint common stock and $49.19 for
Aerial common stock. We urge you to obtain current market quotations prior to
making any decision with respect to the reorganizations.
Following the first to occur of the Omnipoint reorganization or the Aerial
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.
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.
11
<PAGE> 19
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;
- Hutchison PCS (USA)'s investment of a total of $957 million in
VoiceStream Holdings; and
- the transactions whereby in order to comply with FCC requirements,
Omnipoint will contribute its C and F Block PCS licenses, along with
assets and liabilities associated with these licenses, in exchange for
49.9% membership interests in each of two joint venture entities
controlled by Cook Inlet Region, Inc., an Alaskan native corporation.
Separately, Sonera Corporation will invest a total of $500 million in
VoiceStream Holdings at the time of the Omnipoint reorganization.
The aggregate dollar value of cash and stock to be received by Omnipoint
stockholders as a result of the Omnipoint reorganization cannot be accurately
stated until closing. Based on the last sale price of $112.69 for VoiceStream
common stock on January 14, 2000, the total aggregate value would be $8.0
billion. The total value will rise or fall with increases and decreases in the
value of VoiceStream common stock until closing.
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. Directors
and executive officers of VoiceStream, together with their affiliates,
collectively hold rights to vote approximately 42% of the outstanding shares of
VoiceStream. Approval of these transactions will constitute approval of the
merger of a subsidiary of VoiceStream Holdings with and into VoiceStream.
Stockholders collectively holding rights to vote approximately 40% of the
outstanding shares of VoiceStream have agreed to vote in favor of these
transactions.
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. Directors and executive
officers of Omnipoint, together with their affiliates, collectively hold rights
to vote approximately 26% of the outstanding shares of Omnipoint. Stockholders
collectively holding rights to vote approximately 25% of the outstanding shares
of Omnipoint have agreed to vote in favor of these transactions.
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;
12
<PAGE> 20
- 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 $957 million Hutchison PCS (USA) investments and
formation of the joint ventures with Cook Inlet;
- receipt of legal opinions regarding 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 changes occur which prevent VoiceStream Holdings from refinancing
Omnipoint indebtedness that will become due and payable or redeemable
prior to its stated maturity as a result of the Omnipoint reorganization.
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 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 or recommendation 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.
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
13
<PAGE> 21
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
interests as stockholders, and may conflict with your interests as stockholders.
The following is a summary of the interests of officers and directors of
Omnipoint that may be different from your interests:
- As a result of the Omnipoint reorganization, vesting will accelerate with
respect to stock options held by Omnipoint's executive officers, which
will result in an aggregate implied gain to these officers of
approximately $59 million, based on the closing price of VoiceStream
common stock on January 14, 2000.
- If executive officers of Omnipoint are terminated or resign their
positions following the Omnipoint reorganization, these officers may be
entitled to severance payments of approximately $3.3 million in the
aggregate (based on their current salary and bonus schedules).
- Douglas G. Smith, Chairman, President and Chief Executive Officer of
Omnipoint will become entitled to receive an incentive bonus of $900,000
as a result of the closing of the Omnipoint reorganization.
- Loans currently aggregating approximately $2.8 million in principal and
accrued interest owed to Omnipoint by George Schmitt and Kjell Andersson,
both Executive Vice Presidents of Omnipoint, would be forgiven under the
terms of their employment agreements following the Omnipoint
reorganization if their employment were to be terminated without cause or
if they resigned with good reason following the completion of the
Omnipoint reorganization.
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., based upon and subject to the
assumptions, limitations and qualifications set forth in such opinion, that as
of the date of such opinion the merger consideration to be paid by VoiceStream
for each share of Omnipoint pursuant to the Omnipoint reorganization agreement
was fair from a financial point of view to VoiceStream. 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, that the consideration to be offered to the Omnipoint
common stockholders in the Omnipoint reorganization is fair to such
stockholders. 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.
14
<PAGE> 22
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.
RECENT OMNIPOINT DEVELOPMENTS
East/West Transaction: On October 22, 1999, Omnipoint entered into an
agreement to acquire East/West Communications, Inc., a Delaware corporation.
East/West holds five 10MHz PCS licenses for which it was the high bidder at an
auction conducted by the FCC. The East/West PCS licenses cover two major United
States markets: Los Angeles, California and Washington, D.C., as well as the
Sarasota, Florida, Reno, Nevada, and Santa Barbara, California markets,
representing a total population of approximately 22 million persons. None of the
East/West licenses are in service.
If the East/West merger is completed, the stockholders of East/West, other
than Omnipoint which made a $3 million equity investment in East/West, will be
entitled to receive the equivalent of 1,800,000 shares, subject to adjustment,
of Omnipoint common stock, which includes shares payable in connection with fees
related to the East/West transaction. Each of such shares, upon completion of
the Omnipoint reorganization, will be exchangeable for 0.825 of a share of
VoiceStream Holdings common stock, plus $8.00 in cash. Furthermore, in order to
comply with FCC rules, the licenses of East/West will be transferred to a joint
venture with Cook Inlet in which we will have a 49.9% minority interest.
In order to accomplish the East/West transaction, VoiceStream Holdings has
agreed to issue up to 1,485,000 shares, subject to adjustment, and pay cash in
the amount of $8.00 per share in addition to the fixed number of shares and
fixed amount of cash set forth in the Omnipoint reorganization agreement.
Washington/Baltimore GSM Infrastructure Acquisition: On December 23, 1999,
Omnipoint and VoiceStream entered into a joint venture agreement for the
purposes of acquiring the GSM network infrastructure equipment in the Baltimore,
MD and Washington, D.C. metropolitan area from Sprint PCS. In return for its
share of the new joint venture, VoiceStream contributed to the venture
approximately $150 million in cash, which was equivalent to the value of the
assets being acquired, plus an additional approximately $2.5 million for
operating expenses.
The newly-formed joint venture entity is owned 25% by Omnipoint and 75% by
VoiceStream, will be managed by VoiceStream and will operate the system under
the VoiceStream name. Under the agreement with Sprint PCS, the newly-formed
joint venture entity purchased on December 28, 1999 network infrastructure. In
connection with the acquisition of the assets, the newly formed joint venture,
three Omnipoint subsidiaries holding FCC licenses in the Baltimore-Washington
area as well as Sprint PCS have entered into a Special Temporary Authority
arrangement approved by the FCC in order to temporarily operate on a portion of
the Sprint PCS A Block license during a transition period. The completion of
this acquisition will enable a combined VoiceStream and Omnipoint to provide
contiguous GSM coverage in the Northeast corridor from Maine to Virginia. In
addition to the acquisition of the Sprint assets and spectrum arrangements,
VoiceStream and Omnipoint plan to upgrade the existing facilities and market
services to new customers.
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.
15
<PAGE> 23
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;
- the $420 million TDS debt replacement, whereby on November 1, 1999 TDS
replaced debt owed by an Aerial subsidiary with an equity investment in
Aerial; and
- the $230 million Sonera investment in Aerial and an Aerial subsidiary,
which occurred on November 1, 1999.
The aggregate dollar value of cash and stock to be received by Aerial
stockholders as a result of the Aerial reorganization cannot be accurately
stated until the closing of the Aerial reorganization. Based on the last sale
price of $112.69 for VoiceStream common stock on January 14, 2000, the total
aggregate value would be $5.9 billion, assuming all Aerial stockholders select
the Aerial stock election. The total aggregate value will rise or fall with
increases and decreases in the value of VoiceStream common stock until the
closing.
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. Directors and executive
officers of VoiceStream, together with their affiliates, collectively hold
rights to vote approximately 42% of the outstanding shares of VoiceStream.
Approval of these transactions will constitute approval of the merger of a
subsidiary of VoiceStream Holdings with and into VoiceStream. Stockholders
collectively holding rights to vote approximately 40% of the outstanding shares
of VoiceStream common stock have agreed to vote in favor of these transactions.
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. Directors and executive
officers of Aerial, together with their affiliates, collectively hold 98% of the
combined voting power of the outstanding shares of Aerial. 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.
CONDITIONS TO THE AERIAL REORGANIZATION
The completion of the Aerial reorganization depends upon meeting
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;
16
<PAGE> 24
- 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;
- acquisition, repayment or amendment of Aerial debt;
- receipt of legal opinions regarding 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
Aerial has agreed to pay VoiceStream and VoiceStream Holdings a cash amount
equal to $40 million 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.
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 interests as stockholders and may
conflict with your interests as stockholders.
The following is a summary of the interests of officers and directors of
Aerial that may be different from your interests:
- Directors and officers of Aerial who are officers, directors or
beneficial owners of shares of TDS may have an interest in the Aerial
reorganization as a result of arrangements between TDS and Aerial,
pursuant to which TDS has an implied gain of approximately $559 million
as of January 14, 2000.
- Directors and officers of Aerial who are officers of Sonera may have an
interest in the Aerial reorganization as a result of the investments by
Sonera in Aerial and an Aerial subsidiary and in VoiceStream Holdings,
pursuant to which Sonera has an aggregate implied gain of approximately
$795 million as of January 14, 2000.
- Directors who are officers of Aerial may have an interest in the Aerial
reorganization as a result of options with respect to shares of Aerial
common stock, pursuant to which such
17
<PAGE> 25
directors and officers have an aggregate implied gain of approximately
$22.3 million as of January 14, 2000.
- Directors who are officers of Aerial may have an interest in the Aerial
reorganization as a result of restricted stock units with respect to
shares of Aerial common stock, pursuant to which such directors and
officers have an aggregate implied gain of approximately $12.8 million as
of January 14, 2000.
- Directors who are officers of Aerial may have an interest in the Aerial
reorganization as a result of severance payments to which they will
become entitled as a result of the Aerial reorganization. The aggregate
amount of such severance payments to officers is approximately $4.3
million.
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, based upon and subject to the assumptions,
limitations and qualifications set forth in such opinion, that as of the date of
such opinion the merger consideration to be paid by VoiceStream pursuant to the
Aerial reorganization agreement was fair from a financial point of view to
VoiceStream stockholders. 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 the opinion of
Aerial's financial advisor, Donaldson, Lufkin & Jenrette, dated September 17,
1999, that, as of such date, and based on and subject to the assumptions,
limitations and qualifications as set forth in the opinion, the 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
this opinion 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., dated September 17, 1999
that, as of the date of such opinion, 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. The full text of this opinion 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.
18
<PAGE> 26
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 Hutchison PCS (USA) 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.
Based on the last sale price of $112.69 for VoiceStream common stock on
January 14, 2000, such investment has an implied value of $3.7 billion,
resulting in an implied unrealized gain to Hutchison PCS (USA) of $2.8 billion
if the Omnipoint reorganization were to have been completed on that date. This
unrealized gain is due to an increase in the market price of VoiceStream common
stock since the time that the pricing of the transaction was negotiated.
Sonera Investments. At the closing of the Omnipoint reorganization, Sonera
will invest $500 million directly in VoiceStream Holdings by purchasing shares
of common stock at $57.00 per share.
Based on the last sale price of $112.69 for VoiceStream common stock on
January 14, 2000, such investment has an implied value of approximately $989
million, resulting in an unrealized gain to Sonera of approximately $489 million
if the Omnipoint reorganization were to have been completed on that date. This
unrealized gain is due primarily to an increase in the market price of
VoiceStream common stock since the time that the pricing of such investments was
negotiated.
On November 1, 1999, Sonera invested $75 million in Aerial and $155 million
in an Aerial subsidiary at an equivalent price of $22.00 per share of Aerial
common stock. Subject to the satisfaction or waiver of all conditions to the
Aerial reorganization agreement, 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 by
Sonera of $230 million in Aerial.
Based on the exchange ratio of 0.455 and the last sale price of $112.69 for
VoiceStream common stock on January 14, 2000, such investment has an implied
value of approximately $536 million, resulting in an unrealized gain to Sonera
of approximately $306 million if the Aerial reorganization were to have been
completed on that date. This unrealized gain is due primarily to an increase in
the market price of VoiceStream common stock since the time that the pricing of
such investments was negotiated.
TDS Debt Replacement. On November 1, 1999, TDS replaced $420 million of
Aerial subsidiary debt owed to TDS with equity of Aerial at $22.00 per share of
Aerial common stock.
Based on the exchange ratio of 0.455 and the last sale price of $112.69 for
VoiceStream common stock on January 14, 2000, such shares of Aerial common stock
have an implied value of approximately $979 million, resulting in an unrealized
gain to TDS of approximately $559 million if the Aerial reorganization were to
have been completed on that date. This unrealized gain is due primarily to an
increase in the market price of VoiceStream common stock since the time that the
pricing of such transaction was negotiated.
19
<PAGE> 27
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 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.
20
<PAGE> 28
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 nine months ended September 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 and unaudited 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 newly formed joint ventures with Cook Inlet;
- the $957 million Hutchison investments;
- the assumed conversion and subsequent exchange of all outstanding shares
of the Omnipoint 7% Convertible Preferred;
- the $420 million TDS debt replacement;
- the $230 million Sonera investment in Aerial and an Aerial subsidiary;
- the $500 million Sonera investment in VoiceStream Holdings;
- the East/West merger with Omnipoint; and
- the issuance by VoiceStream and VoiceStream Holdings of $1.5 billion, net
of discount, of 10 3/8% Senior Notes due 2009 and 11 7/8% Senior Discount
Notes due 2009.
21
<PAGE> 29
VOICESTREAM HOLDINGS UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma condensed combined balance sheet data as
of September 30, 1999, assumes that both the Omnipoint reorganization and the
Aerial reorganization occurred on September 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>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
PRO FORMA COMBINED STATEMENTS OF OPERATIONS DATA:
Revenues:
Subscriber revenues....................................... $ 558,969 $ 357,039
Roamer revenues........................................... 27,393 16,236
Equipment revenues........................................ 104,764 96,445
License fees and engineering services..................... 2,521 4,784
----------- -----------
Total revenues.................................... 693,647 474,504
----------- -----------
Operating Expenses:
Cost of service........................................... 197,885 212,566
Cost of equipment sales................................... 230,598 254,866
Cost of engineering services.............................. 1,831 4,168
Research and development.................................. 1,832 16,639
General and administrative................................ 298,975 332,427
Sales and marketing....................................... 287,910 261,278
Depreciation and amortization............................. 584,568 671,863
Stock based compensation.................................. 59,413
----------- -----------
Total operating expenses.......................... 1,663,012 1,753,807
----------- -----------
Operating loss.............................................. (969,365) (1,279,303)
Other income (expense):
Interest and financing expense, net....................... (242,284) (208,746)
Equity in net loss of unconsolidated affiliates........... (80,409) (97,663)
Gain on sale of subsidiary stock.......................... 37,120
Interest income and other, net............................ 21,749 14,410
----------- -----------
Total other income (expense)...................... (263,824) (291,999)
----------- -----------
Loss before income taxes.......................... (1,233,189) (1,571,302)
Income tax benefit (expense)................................ 112,654 (2,579)
----------- -----------
Net loss.......................................... $(1,120,535) $(1,573,881)
=========== ===========
PRO FORMA COMBINED BALANCE SHEET DATA:
Current assets.............................................. $ 2,231,565
Property and equipment, net................................. 2,239,923
Licensing costs and other intangible assets, net............ 9,445,886
Other assets................................................ 246,525
-----------
Total assets...................................... $14,163,899
===========
Current liabilities......................................... $ 649,322
Long-term debt.............................................. 4,650,420
Deferred tax liability, net................................. 18,027
VoiceStream Holdings Junior Preferred....................... 633,000
Shareholders' equity........................................ 8,213,130
-----------
Total liabilities and shareholders' equity........ $14,163,899
===========
</TABLE>
22
<PAGE> 30
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 nine months ended September
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. Financial data as of and for the nine
months ended September 30, 1999, were derived from VoiceStream's unaudited
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>
NINE MONTHS YEARS ENDED DECEMBER 31,
ENDED SEPTEMBER 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.................... $ 245,209 $ 123,966 $ 52,360 $ 7,794
Roamer revenues........................ 6,205 3,506 227
Equipment revenues..................... 48,554 40,490 25,143 9,745
----------- ----------- ----------- -----------
Total revenues..................... 299,968 167,962 77,730 17,539
----------- ----------- ----------- -----------
Operating expenses:
Cost of service........................ 62,375 50,978 43,183 12,470
Cost of equipment sales................ 93,904 77,071 53,469 20,789
General and administrative............. 83,938 75,343 51,678 20,209 $ 3,069
Sales and marketing.................... 134,689 85,447 59,466 31,505 339
Depreciation and amortization.......... 96,280 83,767 66,875 14,395 269
Stock based compensation............... 53,935
----------- ----------- ----------- ----------- -----------
Total operating expenses........... 525,121 372,606 274,671 99,368 3,677
----------- ----------- ----------- ----------- -----------
Operating loss........................... (225,153) (204,644) (196,941) (81,829) (3,677)
Other income (expense):
Interest and financing expense, net.... (58,800) (34,118) (57,558) (3,607) (40)
Equity in net loss of unconsolidated
affiliates........................... (34,139) (24,120) (9,327) (954) (11)
Interest income and other, net......... 15,055 8,616 11 40
----------- ----------- ----------- ----------- -----------
Net loss........................... $ (303,037) $ (254,266) $ (263,815) $ (86,350) $ (3,728)
=========== =========== =========== =========== ===========
CONSOLIDATED BALANCE SHEET DATA:
Current assets........................... $ 158,695 $ 59,398 $ 49,945 $ 59,515 $ 1,684 $ 10,000
Property and equipment, net.............. 770,170 619,280 420,638 318,473 37,914 220
Licensing cost and other intangible
assets, net............................ 321,412 312,040 315,653 227,997 145,728
Other assets............................. 218,978 60,938 36,055 8,142 8,484
----------- ----------- ----------- ----------- ----------- --------
Total assets....................... $ 1,469,255 $ 1,051,656 $ 822,291 $ 614,127 $ 193,810 $ 10,220
=========== =========== =========== =========== =========== ========
Current liabilities...................... $ 185,043 $ 125,026 $ 126,184 $ 155,769 $ 25,444 $ 10,158
Long-term debt........................... 1,165,000 540,000 300,000 143,000 13,000
Other long-term liabilities.............. 173,705 7,613
Shareholders' equity..................... 119,212 386,630 396,107 141,653 147,753 62
----------- ----------- ----------- ----------- ----------- --------
Total liabilities and shareholders'
equity........................... $ 1,469,255 $ 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).................... 19,754,000 16,121,000 12,529,000 6,133,000
Subscribers/Users:
Subscribers............................ 675,700 322,400 128,600 35,500
Prepaid users.......................... 9,300 10,400
Adjusted EBITDA(2)....................... $ (74,938) $ (120,877) $ (130,066) $ (67,434) $ (3,408)
CASH FLOWS PROVIDED BY (USED IN):
Operating activities..................... $ (107,874) $ (112,931) $ (198,129) $ (81,272) $ (4,115) $(10,220)
Investing activities..................... $ (440,326) $ (253,633) $ (370,202) $ (342,587) $ (145,632) $ (220)
Financing activities..................... $ 589,009 $ 374,284 $ 563,254 $ 429,250 $ 149,770 $ 10,000
</TABLE>
- -------------------------
(1) Represents population that is covered by our consolidated systems.
(2) Adjusted EBITDA represents operating loss before depreciation and
amortization and non-cash stock based compensation. Management believes
Adjusted 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. Adjusted
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 Adjusted EBITDA is considered to be an indicator of future profitability,
especially in a capital-intensive industry such as wireless
telecommunications. Adjusted EBITDA should not be construed as an
alternative to operating income (loss) as determined in accordance with
generally accepted accounting principles, referred to as GAAP, as an
alternate to cash flows from operating activities, as determined in
accordance with GAAP, or as a measure of liquidity. Because Adjusted 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.
23
<PAGE> 31
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 nine months ended September 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.
Financial data as of and for the nine months ended September 30, 1999, were
derived from Omnipoint's unaudited 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>
NINE MONTHS YEARS ENDED DECEMBER 31,
ENDED -------------------------------------------------------------------
SEPTEMBER 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.................. $ 200,607 $ 127,594 $ 29,448 $ 269
Roamer revenues...................... 19,135 9,999 1,318
Equipment revenues................... 40,595 26,616 11,611 262
License fees and engineering
services........................... 2,521 4,784 9,573 $ 3,000
------------ ----------- ----------- ----------- -----------
Total revenues................. 262,858 168,993 51,950 531 3,000
------------ ----------- ----------- ----------- -----------
Operating expenses:
Cost of service...................... 103,881 120,634 45,367 3,230
Cost of equipment sales.............. 114,286 100,074 61,895
Cost of engineering services......... 1,831 4,168 1,073
Research and development............. 1,832 16,639 23,932 34,975 $ 14,345 7,018
General and administrative........... 120,656 128,031 38,246 24,407
Sales and marketing.................. 114,422 127,211 67,129 22,733 12,619 6,290
Depreciation and amortization........ 143,360 129,043 52,644 15,587 11,038 1,125
Stock based compensation............. 5,478
------------ ----------- ----------- ----------- ----------- -----------
Total operating expenses....... 605,746 625,800 290,286 100,932 38,002 14,433
------------ ----------- ----------- ----------- ----------- -----------
Operating loss......................... (342,888) (456,807) (238,336) (100,401) (38,002) (11,433)
Other income (expense):
Interest and financing expense....... (192,639) (187,187) (89,061) (37,226) (517) (1,519)
Equity in loss of unconsolidated
affiliates......................... (4,718) (11,879)
Interest income and other............ 8,559 3,206 12,978 10,697 749 428
Gain on sale of subsidiary stock..... 37,120 3,194
------------ ----------- ----------- ----------- ----------- -----------
Loss before extraordinary
item......................... (494,566) (652,667) (314,419) (126,930) (37,770) (9,330)
Extraordinary loss..................... (11,115) (6,591)
------------ ----------- ----------- ----------- ----------- -----------
Net loss....................... $ (494,566) $ (663,782) $ (321,010) $ (126,930) $ (37,770) $ (9,330)
============ =========== =========== =========== =========== ===========
CONSOLIDATED BALANCE SHEET DATA:
Current assets......................... $ 497,303 $ 321,669 $ 197,279 $ 344,657 $ 64,134 $ 6,348
Property and equipment, net............ 1,060,078 1,013,225 579,050 186,851 18,957 3,015
Licensing cost and other intangible
assets, net.......................... 726,405 711,823 995,187 751,965 391,020 347,090
Other assets........................... 27,491 13,402 6,937 135,999 879 4,492
------------ ----------- ----------- ----------- ----------- -----------
Total assets................... $ 2,311,277 $ 2,060,119 $ 1,778,453 $ 1,419,472 $ 474,990 $ 360,945
============ =========== =========== =========== =========== ===========
Current liabilities.................... $ 417,584 $ 362,969 $ 289,444 $ 98,342 $ 65,544 $ 3,253
Long-term debt......................... 2,716,249 2,283,170 1,670,915 1,187,356 395,867 349,206
Manditorily Redeemable Preferred
stock................................ 44,127 15,902
Shareholders' equity (deficit)......... (822,556) (586,020) (181,906) 133,774 (30,548) (7,416)
------------ ----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity
(deficit).................... $ 2,311,277 $ 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).................. 46,700,000 45,600,000 16,000,000
Subscribers............................ 698,000 370,000 139,800
Adjusted EBITDA(2)..................... $ (194,050) $ (327,764) $ (185,692) $ (84,814) $ (26,964) $ (10,308)
CASH FLOWS PROVIDED BY (USED IN):
Operating activities................... $ (404,373) $ (422,665) $ (217,666) $ (64,508) $ (19,747) $ (7,895)
Investing activities................... $ (185,710) $ (563,411) $ (441,503) $ (290,490) $ (43,991) $ 720
Financing activities................... $ 646,653 $ 1,117,227 $ 507,721 $ 512,243 $ 115,979 $ (126)
</TABLE>
- -------------------------
(1) Represents population that is covered by our consolidated, directly managed
systems.
(2) Adjusted EBITDA represents operating loss before depreciation and
amortization and non-cash stock based compensation. Management believes
Adjusted 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. Adjusted 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
Adjusted EBITDA is considered to be an indicator of future profitability,
especially in a capital-intensive industry such as wireless
telecommunications. Adjusted 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 Adjusted
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.
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<PAGE> 32
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 nine months ended September 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. Financial data as of and for the nine months ended
September 30, 1999, were derived from Aerial's unaudited 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>
NINE MONTHS YEARS ENDED DECEMBER 31,
ENDED ----------------------------------------------------------------
SEPTEMBER 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...................... $ 139,974 $ 121,160 $ 32,316
Roamer revenues.......................... 4,128 3,231
Equipment revenues....................... 21,134 31,514 23,645
----------- ----------- -----------
Total revenues..................... 165,236 155,905 55,961
----------- ----------- -----------
Operating expenses:
Cost of service.......................... 50,303 57,396 23,210
Cost of equipment sales.................. 39,671 87,715 71,454
General and administrative............... 99,654 139,458 95,058 $ 28,843 $ 4,795 $ 858
Sales and marketing...................... 54,742 67,920 38,077
Depreciation and amortization............ 66,681 83,401 40,554
Development costs........................ 5,773 15,107 2,767 1,119
----------- ----------- ----------- ----------- ----------- --------
Total operating expenses........... 311,051 435,890 274,126 43,950 7,562 1,977
----------- ----------- ----------- ----------- ----------- --------
Operating loss............................ (145,815) (279,985) (218,165) (43,950) (7,562) (1,977)
Other income (expense):
Interest and financing
expense -- affiliate................... (52,261) (62,137) (21,558) (1,960) (1,051) (50)
Interest and financing
expense -- other....................... (16,040) (18,010) (5,507) (802)
Equity in loss of unconsolidated
affiliates............................. (100) (128) (2,518) (304)
Minority share of loss................... 5,381 23,620
Interest income and other -- affiliate... 95 4,488 49 2
Interest income and other
(expense) -- other..................... (2,625) 1,324 2,402 1,158
Gain on sale of PCS licenses............. 2,582
----------- ----------- ----------- ----------- ----------- --------
Loss before income taxes........... (211,460) (335,316) (245,251) (38,788) (8,564) (2,025)
Income tax benefit (expense).............. 112,654 (2,579) (1,806) 867 2,096 742
----------- ----------- ----------- ----------- ----------- --------
Net loss........................... $ (98,806) $ (337,895) $ (247,057) $ (37,921) $ (6,468) $ (1,283)
=========== =========== =========== =========== =========== ========
CONSOLIDATED BALANCE SHEET DATA:
Current assets............................ $ 51,815 $ 48,724 $ 58,009 $ 109,131 $ 42,323 $ 254
Property and equipment, net............... 574,382 576,953 553,174 252,423 12,087
Licensing costs and other intangible
assets, net.............................. 324,807 333,816 347,973 304,354 305,818 20,401
Other assets.............................. 2,732 1,854 1,492 6,919 216 665
----------- ----------- ----------- ----------- ----------- --------
Total assets....................... $ 953,736 $ 961,347 $ 960,648 $ 672,827 $ 360,444 $ 21,320
=========== =========== =========== =========== =========== ========
Current liabilities....................... $ 149,157 $ 86,124 $ 109,769 $ 119,326 $ 9,182 $ 105
Long-term debt............................ 857,362 827,953 644,673 103,743 60,238 22,659
Deferred tax liability, net............... 18,027 16,357 13,779 11,973 9,742
Minority interest......................... 5,835
Shareholders' (deficit) equity............ (70,810) 25,078 192,427 437,785 281,282 (1,444)
----------- ----------- ----------- ----------- ----------- --------
Total liabilities and shareholders'
equity........................... $ 953,736 $ 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)..................... 22,232,000 22,196,000 21,367,000
Subscribers............................... 363,100 311,900 125,000
EBITDA(2)................................. $ (79,134) $ (196,584) $ (177,611) $ (42,016) $ (7,515) $ (1,977)
CASH FLOWS PROVIDED BY (USED IN):
Operating activities...................... $ (33,379) $ (228,801) $ (206,863) $ (17,781) $ 126 $ (1,564)
Investing activities...................... $ (64,665) $ 368,134 $ 568,333 $ 230,029 $ 297,397 $ 22,009
Financing activities...................... $ 100,660 $ (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. 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.
25
<PAGE> 33
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 nine months ended
September 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 "Financial Information."
<TABLE>
<CAPTION>
NET LOSS AND BOOK VALUE DATA
NINE MONTHS
ENDED
SEPTEMBER 30, 1999
------------------
(UNAUDITED)
<S> <C>
VoiceStream historic per common share data:
Net loss, basic and diluted.......................... $ (3.17)
Book value......................................... $ 1.24
Omnipoint historic per common share data:
Net loss, basic and diluted........................ $ (9.57)
Book value......................................... $(15.30)
Aerial historic per common share data:
Net loss, basic and diluted........................ $ (1.37)
Book value......................................... $ (0.98)
VoiceStream, Omnipoint and Aerial unaudited pro forma
combined per equivalent common share data:
Pro forma net loss, basic and diluted.............. $ (5.56)
Book value......................................... $ 39.75
VoiceStream and Omnipoint unaudited pro forma
combined per equivalent common share data:
Pro forma net loss, basic and diluted.............. $ (6.07)
Book value......................................... $ 23.04
VoiceStream and Aerial unaudited pro forma combined
per equivalent common share data:
Pro forma net loss, basic and diluted.............. $ (3.53)
Book value......................................... $ 34.02
</TABLE>
26
<PAGE> 34
RISK FACTORS
You should carefully consider the risk factors described below before
voting your stock. VoiceStream Holdings will face all of these risks whether
either or both of the reorganizations are completed.
WE FACE INTENSE COMPETITION FROM OTHER WIRELESS SERVICE PROVIDERS, 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. Proposed or future rules may increase the number of licenses
available. With so many companies targeting many of the same customers,
competition is intense. VoiceStream, Omnipoint and Aerial compete against AT&T
Wireless Services, Inc., Bell Atlantic Mobile Systems, Nextel Communications,
Inc., SBC Communications, Sprint Corp. (PCS Group), US West Wireless LLC and
Vodafone AirTouch Cellular Communications, Inc., 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 $225.2 million for
the nine months ended September 30, 1999, and $204.6 million in fiscal 1998,
$196.9 million in fiscal 1997 and $81.8 million in fiscal 1996. At September 30,
1999, VoiceStream had an accumulated deficit of $911.2 million and equity, net
of accumulated deficit, of $119.2 million. Omnipoint sustained operating losses
of approximately $342.9 million for the nine months ended September 30, 1999,
and $456.8 million in fiscal 1998, $238.3 million in fiscal 1997 and $100.4
million in fiscal 1996. At September 30, 1999, Omnipoint had an accumulated
deficit of $1.7 billion and negative equity, net of accumulated deficit, of
$822.6 million. Aerial sustained operating losses of approximately $145.8
million for the nine months ended September 30, 1999, and $280 million in fiscal
1998, $218.2 million in fiscal 1997 and $44 million in fiscal 1996. At September
30, 1999, Aerial had an accumulated deficit of $729.6 million and negative
equity, net of accumulated deficit, of $70.8 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 WILL LIMIT OUR ABILITY TO BORROW ADDITIONAL FUNDS TO
FINANCE OUR GROWTH, CREATE FINANCIAL AND OPERATING RISKS, AND WILL MAKE US
VULNERABLE TO INCREASES IN INTEREST RATES
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. We anticipate total debt of approximately
27
<PAGE> 35
$4.8 billion. Our level of debt, and the incurrence of additional debt in the
future, could have important consequences to you. For example, it could:
- make it more difficult for us to satisfy our obligations with respect to
our existing indebtedness;
- 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 applicable financial
and restrictive covenants in such indebtedness; 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.
WE WILL HAVE TO REPAY OMNIPOINT DEBT IF WE ARE UNABLE 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 is completed, the holders of a
substantial amount of Omnipoint's debt will have the right either to cause such
debt to become due and payable prior to its stated maturity or to require
Omnipoint to repurchase its debt. If we are unable 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, we will have to fully repay or repurchase such debt using funds
that we expected to use in the build out of our systems, reducing our ability to
generate operating revenues.
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, or will be, 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.
THERE IS A RISK THAT OUR EXPANSION WILL BE CONSTRAINED BECAUSE OUR ABILITY TO
EXPAND AND PROVIDE SERVICE NATIONALLY IS LIMITED BY OUR ABILITY TO OBTAIN FCC
LICENSES
VoiceStream, Omnipoint and Aerial each obtained licenses for markets in the
FCC auctions or from the winning bidders or their successors, but even combined
the three companies do not have licenses covering the entire United States. Our
ability to expand is limited to those markets where we have obtained or can
obtain licenses with sufficient spectrum to provide PCS service, or where we can
economically become resellers of service. Because there are a limited number of
licenses available, and because resale agreements require mutual consent of the
incumbent PCS license holders, there is a risk that we may not be able to obtain
the licenses we need for expansion.
28
<PAGE> 36
WE ARE AT RISK OF LOSING COVERAGE IN CERTAIN VOICESTREAM MARKETS BECAUSE WE HAVE
ENTERED INTO JOINT VENTURES THAT WE DO NOT CONTROL IN AN ATTEMPT TO EXPAND INTO
THOSE MARKETS
When implementing the PCS licensing scheme in the United States, the FCC
adopted rules that granted a narrow category of entities the right to bid for
and own C and F Block licenses. VoiceStream did not qualify to obtain C and F
Block licenses. In order to continue expansion of the VoiceStream system,
VoiceStream obtained 49.9% minority ownership interests in two joint ventures
controlled by Cook Inlet Region, Inc., each of which qualified to bid for and
obtain licenses that VoiceStream could not directly obtain. In all markets where
the joint ventures operate we are at risk because Cook Inlet is in control and
can choose to operate independently of VoiceStream. If the joint venture
entities determine to operate independently our ability to compete on a national
scale may be adversely affected.
WE ARE AT RISK OF LOSING COVERAGE IN CERTAIN OMNIPOINT MARKETS, AND WE WILL LOSE
THE ABILITY TO CONSOLIDATE MARKET REVENUES AND EXPENSES, BECAUSE TO COMPLY WITH
FCC RULES OMNIPOINT MUST TRANSFER C AND F BLOCK LICENSES TO JOINT VENTURES THAT
WE DO NOT CONTROL
Although Omnipoint qualified to hold and operate under C and F Block PCS
licenses, VoiceStream Holdings does not qualify and therefore on completion of
the Omnipoint reorganization 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
C and F Block PCS licenses are being transferred to two new joint venture
entities controlled by Cook Inlet Region, Inc. VoiceStream Holdings will have a
49.9% minority interest in each of such entities. Philadelphia is among the
Omnipoint markets that will be transferred to one of the Cook Inlet controlled
entities and will be operated by the joint venture using the VoiceStream brand
name.
In all markets where the joint ventures operate we will be at risk because
Cook Inlet is in control and can choose to operate independently. If the joint
venture entities determine to operate independently our ability to compete on a
national scale may be adversely affected. Also, in each such market we will
reflect VoiceStream's net share of the revenues and expenses using the equity
method of accounting on a single line item in VoiceStream's consolidated
statement of operations.
OUR CURRENT AND FUTURE INVESTMENT IN EACH CURRENT JOINT VENTURE IS AT RISK
BECAUSE WE HAVE LIMITED INVESTOR PROTECTIONS, AND WE MAY BE REQUIRED TO RELY ON
ADDITIONAL JOINT VENTURES FOR FURTHER EXPANSION
We will not have control and will maintain limited investor protection
rights after the Omnipoint reorganization in the four joint venture entities
controlled by Cook Inlet Region, Inc. 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.
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.
29
<PAGE> 37
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.
THE FCC AND OTHER 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. Completion of 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 boards of directors of the parties to each
reorganization, in the exercise of their business judgment, without seeking
stockholder approval, may waive finality as a condition of closing, we cannot
assure you that they will do so.
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.
Conditions imposed on any licenses granted or delays in granting of the licenses
could impair the value of the licenses and reduce the value of our stock, and
could lead to our inability to obtain financing necessary for our growth. If we
are denied a license in a market we will not be able to operate in that market
unless we maintain another license or acquire a new license for that market.
THERE IS A RISK THAT WE COULD LOSE THE NEW YORK MTA LICENSE OR OTHER LICENSES AS
A RESULT OF COURT OR REGULATORY PROCEEDINGS
Omnipoint holds two licenses to operate in New York, an A Block license
covering the New York Major Trading Area, or MTA, and a D Block license covering
the New York Basic Trading Area, or BTA. Omnipoint's New York MTA A Block
license was issued pursuant to the FCC's pioneer preference program which
extended preferential licensing treatment to three parties that helped foster
the development of PCS, 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 preference license was based. The FCC has
never specifically defined 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 our other licenses contains a similar condition. If we
lose the New York MTA A Block 30MHz license, we would only hold the New York BTA
D Block 10MHz license and would be required to make significant capital
expenditures to be able to continue to operate in the New York City BTA, our
largest market, and we would cease to have licenses in certain BTAs in the
30
<PAGE> 38
New York MTA. In such event, our ability to compete in the New York market would
be adversely affected.
THERE IS A RISK THAT THE JOINT VENTURE ENTITIES IN WHICH WE HOLD INTERESTS COULD
LOSE LICENSES AS A RESULT OF COURT PROCEEDINGS
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 is seeking judicial review of two orders in the FCC's
rulemaking proceeding on payment financing for PCS licenses. 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 returned to the Commission for reauction.
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. A secured creditor of the debtors
appealed and, as a result, the bankruptcy court stayed its order. Because the
appeal 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.
Loss of any license by any Cook Inlet entity will reduce or eliminate our
ability to own interests in markets where the licenses are lost, thereby
reducing our ability to compete with other national competitors.
THERE IS A RISK THAT WE WILL LOSE LICENSES IF THEY ARE NOT RENEWED BY THE FCC
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. East/West's licenses will expire in 2007. We cannot assure you that the
FCC will renew the licenses of VoiceStream, Omnipoint and Aerial. If we lose a
license for a market we will not be able to operate in that market unless we
maintain another license or acquire a new license for that market.
THERE IS A RISK THAT 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 Internal Revenue 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
31
<PAGE> 39
and, thus, that Western Wireless recognized gain as a result of the spin-off.
The precise standard that must be met by VoiceStream to rebut the presumption is
not presently clear. Thus, counsel is unable to opine on the issue and 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 was not effected
pursuant to a prohibited plan, and there is a risk that a court would concur
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. VoiceStream estimates that the
range of its indemnity exposure, not including penalties and interest, is from
zero to $400 million. Thus, if VoiceStream is required to make an indemnity
payment to Western Wireless, it could have a material adverse effect on
VoiceStream Holdings.
CONCERNS OVER RADIO FREQUENCY EMISSIONS OR OTHER HEALTH AND SAFETY RISKS MAY
DISCOURAGE USE OF WIRELESS SERVICES AND ADVERSELY EFFECT OUR BUSINESS
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.
Negative findings of studies concerning health and safety risks of wireless
handsets 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 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 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 has been completed.
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 have taken the necessary corrective action. If these third parties did
not take the necessary corrective action it may have an adverse effect on our
business.
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THERE IS A RISK THAT ONE OF THE PROPOSED REORGANIZATIONS WILL NOT OCCUR, AND THE
RESULTING COMPANY WILL BE SMALLER THAN YOU EXPECT
There is a risk that one of the reorganizations will not be completed. If
only one of the reorganizations is completed, the resulting company will operate
in fewer markets and have less assets than the company that will result if both
reorganizations are approved and completed, which could materially limit our
ability to compete in the wireless telecommunications industry.
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.
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OWNERSHIP OF VOICESTREAM HOLDINGS
FOLLOWING EITHER OR BOTH REORGANIZATIONS
The following table sets forth certain information with respect to the pro
forma beneficial ownership of VoiceStream Holdings taking into consideration
three possible alternatives:
- both the Omnipoint reorganization and the Aerial reorganization are
completed;
- only the Omnipoint reorganization is completed; and
- only the Aerial reorganization is completed.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
BOTH THE OMNIPOINT OMNIPOINT AERIAL
REORGANIZATION AND THE REORGANIZATION REORGANIZATION
AERIAL REORGANIZATION(1)(2) ONLY(1) ONLY(2)
- -------------------------------------------------------------------------------------------------------------
VoiceStream Stockholders 55%(3) 70%(3) 65%
- -------------------------------------------------------------------------------------------------------------
Omnipoint Stockholders 24% 30% --
- -------------------------------------------------------------------------------------------------------------
Aerial Stockholders 21% -- 35%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes that:
- all VoiceStream common stock will be exchanged for VoiceStream Holdings
common stock on a one-for-one basis;
- each share of Omnipoint common stock will be exchanged for $8.00 in cash
and 0.825 of a share of VoiceStream Holdings common stock;
- all outstanding options to acquire VoiceStream common stock will convert
to VoiceStream Holdings options;
- all outstanding options and warrants to acquire Omnipoint common stock
will convert to options or warrants to acquire VoiceStream Holdings
common stock or warrants, with appropriate adjustments in the number of
shares and the exercise price to reflect the Omnipoint reorganization
exchange rate to be received by Omnipoint stockholders upon completion of
the Omnipoint reorganization; and
- the closing price of VoiceStream common stock on the day immediately
preceding the completion of the Omnipoint reorganization is $100.00.
(2) Assumes that:
- all VoiceStream common stock will be exchanged for VoiceStream Holdings
common stock on a one-for-one basis;
- all Aerial common stock will be exchanged for 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;
- all outstanding options to acquire VoiceStream common stock will convert
to VoiceStream Holdings options; and
- 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.
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(3) Includes the VoiceStream Holdings common stock to be issued to Hutchison PCS
(USA) arising from the $957 million Hutchison investments in VoiceStream
Holdings, and includes the VoiceStream Holdings common stock to be issued to
Sonera arising from the $500 million Sonera investment in VoiceStream
Holdings.
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 person or entity has the right to acquire at any time within
60 days.
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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 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.
Under the Omnipoint reorganization agreement, the number of shares of
VoiceStream Holdings common stock that will be issued to holders of Omnipoint
common stock, including Omnipoint common stock subject to issuance upon the
conversion of the Omnipoint 7% Convertible Preferred Stock, will be a fixed
number equal to the product of (1) 0.825 and (2) the number of Omnipoint common
shares, outstanding or subject to issuance upon the conversion of the Omnipoint
7% Convertible Preferred Stock.
The amount of cash to be issued will be a fixed amount of cash equal to the
product of (1) $8.00 and (2) the number of Omnipoint common shares, outstanding
or subject to issuance upon the conversion of the Omnipoint 7% Convertible
Preferred Stock.
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.
- 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 VoiceStream
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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 average closing price of a share of
VoiceStream common stock during the 15 trading days ending the business day
prior to the date of completion of the Omnipoint reorganization 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 average
closing price of a share of VoiceStream common stock during the 15 trading days
ending the business day prior to the date of completion of the Omnipoint
reorganization 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 average closing price of a share of
VoiceStream common stock during the 15 trading days ending the business day
prior to the date of completion of the Omnipoint reorganization is $100.00, 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 905 shares of VoiceStream Holdings common stock; or
- the Omnipoint cash election which, assuming no proration or adjustment,
will consist of cash in the amount of $90,500.
PRORATION PROCEDURES
There is a fixed number of total shares and a fixed amount of total cash
that VoiceStream Holdings will issue and pay to holders of Omnipoint common
stock. The fixed number of shares is equal to 0.825 times the number of shares
of Omnipoint common stock outstanding at the completion of the Omnipoint
reorganization. The fixed amount of cash is equal to $8.00 times the number of
shares of Omnipoint common stock outstanding at the completion of the Omnipoint
reorganization.
If the number of Omnipoint stockholders making the Omnipoint stock election
shall request, in the aggregate, a number of shares which, together with the
shares issuable to the Omnipoint stockholders making the Omnipoint standard
election, is greater than the fixed number of shares available for issuance, the
number of shares an Omnipoint stockholder making the Omnipoint stock election
will receive shall be cut back on a prorata basis with the other Omnipoint
stockholders making such election, and such holder will receive an amount in
cash equal to the value, based on the VoiceStream 15 day average price, of the
shares that were cut back. 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.
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Alternatively, if the number of Omnipoint stockholders making the Omnipoint
cash election shall request, in the aggregate, an amount of cash which, together
with the cash payable to the Omnipoint stockholders making the Omnipoint
standard election, is greater than the fixed amount of cash available for
payment, the amount of cash an Omnipoint stockholder making the Omnipoint cash
election shall receive will be cut back on a prorata basis with the other
Omnipoint stockholders making such election, and such holder will receive a
number of shares of VoiceStream Holdings common stock equal to the value, based
on the VoiceStream 15 day average price, of the cash that was cut back. 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 average closing price of a share
of VoiceStream common stock during the 15 trading days ending the business day
prior to the date of completion of the Omnipoint reorganization 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
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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 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 has outstanding 325,000 shares
of Omnipoint 7% Convertible Preferred Stock represented by 6.5 million
Depository Shares and 12,500 shares of Omnipoint Series A Preferred Stock.
Each outstanding share of Omnipoint 7% Convertible Preferred Stock 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 Stock or shares of
Omnipoint common stock issued on conversion of Omnipoint Series A Preferred
Stock held by VoiceStream will remain outstanding after the closing of the
Omnipoint reorganization. All outstanding shares of Omnipoint Series A Preferred
Stock or shares of Omnipoint common stock issued on conversion of the Omnipoint
Series A Preferred Stock held by Hutchison PCS (USA) will be exchanged directly
for VoiceStream Holdings common stock in connection with the closing of the
Omnipoint reorganization.
In connection with the East/West transaction, VoiceStream and Omnipoint
agreed that prior to or simultaneously with the completion of the Omnipoint
reorganization, holders of Omnipoint's 7% Convertible Preferred Stock and Series
A Non-Voting Convertible Preferred Stock will be given the right to vote with
respect to any and all matters presented to the stockholders of Omnipoint. The
holders of Omnipoint's 7% Convertible Preferred Stock and Series A Non-Voting
Convertible Preferred Stock will be entitled to vote with the holders of shares
of Omnipoint's common stock and any other class of stock entitled to vote and
not as a separate class. This change will be effected by means of an amendment
to Omnipoint's charter, effected simultaneously with the Omnipoint
reorganization, and therefore will not entitle the holders of either such series
of preferred stock to vote on 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.
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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 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 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 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
The following summarizes covenants contained in the Omnipoint
reorganization agreement which are 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 Delaware
General Corporation Law 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
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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.
CONDUCT OF OMNIPOINT'S BUSINESS PENDING THE OMNIPOINT REORGANIZATION
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 mutually agreed exceptions described in the Omnipoint reorganization
agreement and the schedules thereto, pursuant to which 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 in related transactions, or $10,000,000 in the aggregate;
- incur or assume any indebtedness other than up to $300 million and other
indebtedness, in each case as permitted under the Omnipoint
reorganization agreement;
- 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 material employment or other similar agreements;
- establish or amend any of its bonus plans or benefits;
- increase the total compensation or benefits payable;
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- 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
- 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 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 make 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
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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
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 VOICESTREAM AND 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;
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- absence of conflicts with organizational documents, applicable law or
material agreements;
- capitalization;
- ownership of subsidiaries and minority investments;
- accuracy of filings with the SEC;
- accuracy of financial statements;
- absence of material changes since a specified balance sheet date;
- absence of undisclosed material liabilities;
- litigation;
- tax matters;
- employee and employee benefits matters;
- 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 waiver
of the following conditions.
The following are non-waivable 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; and
- receipt of all requisite orders and approvals of the FCC.
The parties have determined that the condition of receipt of opinions of
counsel that the Omnipoint reorganization will qualify as a tax-free
transaction, except with respect to any cash
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received, will not be waived by the boards of VoiceStream Holdings and
VoiceStream, on the one hand, or Omnipoint, on the other hand, unless the
stockholders as to whom the transaction is not tax free are resolicited and
approve such waiver.
The following conditions may be waived by the boards of VoiceStream
Holdings and VoiceStream, on the one hand, and Omnipoint, on the other hand, in
the exercise of their business judgment without seeking stockholder approval:
- finality 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 $957 million Hutchison investments at closing;
- consummation of the formation of the joint ventures with Cook Inlet 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.
ADDITIONAL VOICESTREAM CONDITIONS
VoiceStream's obligation to complete the transactions provided for in 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.
The preceding conditions may be waived by the VoiceStream board in the
exercise of its business judgment without seeking stockholder approval.
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
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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
- 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 or recommendation 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
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- 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.
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.
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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.
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. Cook Inlet replied affirmatively,
leading to ongoing discussions as to structure.
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 $957
million Hutchison
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investments, and among representatives of VoiceStream, Omnipoint and Cook Inlet
in connection with preparation, negotiation and execution of documents
associated with the formation of joint ventures with Cook Inlet. Cook Inlet's
board approved the principal terms of the transactions on June 12, 1999.
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 Rudnick & Wolfe LLP, formerly Piper & Marbury L.L.P., 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 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 $957 million Hutchison investments and the formation of joint
ventures with Cook Inlet.
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 considered a merger with or investment in another
company to create a company that would be a stronger competitor in the rapidly
expanding telecommunications industry. The VoiceStream board believes that
combining VoiceStream's and Omnipoint's resources and markets will create a
strong national competitor in the wireless telecommunications industry. 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 following factors were considered to be positive:
- 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 terms and availability of equity financing from Hutchison PCS (USA)
in connection with the Omnipoint reorganization and the impact of the
corresponding increase in the equity
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ownership by Hutchison PCS (USA) and the number of board members
designated by Hutchison PCS (USA);
- the consistency of the strategies that the two companies were pursuing;
- the synergies which the combined company might realize, and other
expected benefits of the Omnipoint reorganization, if completed;
- 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 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;
- 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 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; and
- 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.
In addition, the VoiceStream board of directors considered the following
negative factors:
- the impact the transaction could 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 requirement that VoiceStream make an interim investment in Omnipoint;
- the risks that potential synergies and other expected benefits would not
be realized;
- the impact that the transaction would be expected to have on the combined
company's balance sheet, earnings and cash flow;
- the other potential major transactions which might be available to
VoiceStream as alternatives to the Omnipoint reorganization, and the
effect of the Omnipoint reorganization on the ability of VoiceStream to
pursue those transactions; and
- the historical operating results and substantial indebtedness of
Omnipoint.
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 further
believes that no other potential merger candidate provided the compatibility of
technology and geographic fit in the markets where Omnipoint operates, making
Omnipoint preferable to other merger candidates. 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.
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Taking into account all of the material facts, matters and information,
including those described above, the VoiceStream board determined that the
positive factors outweighed the potential negative factors and that the terms of
the Omnipoint reorganization agreement and the transactions provided for therein
are fair to and in the best interests 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.
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 of a
share of VoiceStream common stock during the 15 trading days ending the
business day prior to the date of completion of the Omnipoint
reorganization 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 average closing price of a
share of VoiceStream common stock during the 15 trading days ending the
business day prior to the date of completion of the Omnipoint
reorganization; 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. 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;
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- 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.
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 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 did not assume that there would be no adverse tax consequences to
VoiceStream as a result of the transaction, but determined that the possibility
of any such consequences implicating the tax indemnification obligations of
VoiceStream to Western Wireless would not affect its conclusion as to the
fairness of the merger consideration. 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 performed an analysis the purpose of which was to determine
how the price per Omnipoint POP represented by the merger consideration compared
both to VoiceStream's price per POP and the price per POP for selected
companies. The selected companies were chosen because they are publicly traded
companies with operations that are similar to those of VoiceStream and
Omnipoint. The price per POP in each case was calculated by dividing the
respective company's
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license value and adjusted enterprise value by different measures of that
company's POPs. In this analysis, 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. The analysis was performed using share prices as of June 23,
1999.
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>
Goldman Sachs noted that this analysis demonstrated that the merger
consideration being paid by VoiceStream resulted in a lower price per Omnipoint
POP than VoiceStream's own price per POP. Furthermore, Goldman Sachs noted that
this analysis demonstrated that the merger consideration being paid by
VoiceStream resulted in a lower price per Omnipoint POP than two of the three
selected companies' prices per POP.
DISCOUNTED CASH FLOW ANALYSES
Goldman Sachs performed an analysis the purpose of which was to compare the
percentage in the combined company that the VoiceStream stockholders would own,
using discounted cash flow methodologies, to the percentage ownership resulting
from the Omnipoint reorganization agreement. Goldman Sachs performed this
analysis by determining ranges of enterprise values and equity values for
VoiceStream on a stand-alone basis and for Omnipoint based on three different
sets of assumptions regarding Omnipoint's future performance. Specifically,
Goldman Sachs compared 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.
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The following table presents the 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, no conversion of Omnipoint's convertible
preferred securities and no investment in VoiceStream by Hutchison, 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 noted that this analysis demonstrated that the 59.6%
percentage ownership that VoiceStream stockholders would receive based on the
Omnipoint reorganization agreement, assuming an all-stock transaction, no
conversion of Omnipoint's convertible preferred securities and no investment in
VoiceStream by Hutchison, was within the 55% to 71% range of VoiceStream
stockholders' percentage ownership in the combined company implied by the range
of values described above. Goldman Sachs used the 59.6% percentage ownership
which excluded such cash components because it allowed Goldman Sachs to compare
the equity values of the two companies on an equivalent basis. Goldman Sachs
also noted that the 66.6% percentage ownership for VoiceStream stockholders
which would result from the Omnipoint reorganization assuming all Omnipoint
stockholders made the standard election was within the 55% to 71% range.
Goldman Sachs also performed an analysis the purpose of which was to
compare a range of discounted values for VoiceStream on a stand-alone basis to a
range of discounted values for the combined company based on the three cases for
Omnipoint described above. Goldman Sachs performed this analysis by comparing
for VoiceStream and 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. The ranges were based on forward EBITDA multiples for VoiceStream
ranging from 10.0x to 12.0x and for the combined company ranging from 11.0x to
13.0x and a discount rate of 13%.
<TABLE>
<CAPTION>
COMBINED COMPANY
---------------------------------------------------------
CASE A CASE B
CASE C VOICESTREAM
STANDALONE OMNIPOINT WITH MANAGEMENT
VOICESTREAM OMNIPOINT VOICESTREAM MODEL OF
MANAGEMENT MANAGEMENT DRIVERS OMNIPOINT
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Goldman Sachs noted that this analysis demonstrated that the ranges of
discounted values for the combined company were higher than the ranges of
discounted values for VoiceStream assuming
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that VoiceStream never consummated the Omnipoint reorganization, other than with
respect to Case B where the ranges were in general comparable.
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 B
CASE C 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>
Goldman Sachs again noted that this analysis demonstrated that the ranges
of discounted values for the combined company were higher than the ranges of
discounted values for VoiceStream assuming that VoiceStream never consummated
the Omnipoint reorganization, other than with respect to Case B where the ranges
were in general comparable.
RELATIVE CONTRIBUTION ANALYSIS
Goldman Sachs performed an analysis the purpose of which was to determine
how the contribution of VoiceStream and Omnipoint to the combined company, based
on various factors described below, compared to the percentage ownerships of the
combined company by the stockholders of each of VoiceStream and Omnipoint which
would result from the Omnipoint reorganization agreement. 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>
Goldman Sachs noted that this analysis demonstrated that the 59.6%
percentage ownership that VoiceStream stockholders would receive based on the
Omnipoint reorganization agreement, assuming an all-stock transaction, no
conversion of Omnipoint's preferred securities and no investment in VoiceStream
by Hutchison, was within the range of VoiceStream's contribution to the combined
company's equity free cash flows of 49% to 60% described above. Goldman Sachs
used the 59.6% percentage ownership which excluded such cash components in order
to be able to analyze the equity value of the two companies on an equivalent
basis. Goldman Sachs also noted that this range of VoiceStream's contribution to
the combined company's equity free cash flows compared favorably to
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the 66.6% percentage ownership for VoiceStream stockholders which would result
from the Omnipoint reorganization agreement assuming all Omnipoint stockholders
made the standard election.
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 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>
Goldman Sachs noted that this analysis demonstrated that the 59.6%
percentage ownership that VoiceStream stockholders would receive based on the
Omnipoint reorganization agreement, assuming an all-stock transaction, no
conversion of Omnipoint's convertible preferred securities and no investment in
VoiceStream by Hutchison, was within the range of VoiceStream's contribution to
the combined company, based on the various factors listed above, of 34% to 60%.
Goldman Sachs used the 59.6% percentage ownership which excluded such cash
components in order to be able to analyze the equity value of the two companies
on an equivalent basis. Goldman Sachs also noted that this range of
VoiceStream's contribution to the combined company, based on the various factors
listed above, compared favorably to the 66.6% percentage ownership for
VoiceStream stockholders which would result from the Omnipoint reorganization
assuming all Omnipoint stockholders made the standard election.
TRANSACTION PREMIUM ANALYSIS
Goldman Sachs performed an analysis the purpose of which was to assess the
premiums represented by the consideration to be paid in the Omnipoint
reorganization in light of the actual price per Omnipoint POP represented by the
merger consideration. Goldman Sachs performed this analysis based on the
Omnipoint common stock price at points or over periods of time and based on the
Omnipoint historical price per POP based on June 23, 1999 stock prices. 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.
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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>
Goldman Sachs noted the following concerning the results of this analysis.
Although the consideration to be paid in the Omnipoint reorganization
represented a range of premiums over Omnipoint's common stock price of 27% to
101% and over Omnipoint's price per POP of 17% to 19%, the actual price per
Omnipoint POP represented by the merger consideration was lower than
VoiceStream's price per POP.
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.
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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 PCS (USA) in February 1998; having acted
as VoiceStream's financial advisor in connection with, and having participated
in certain of the negotiations leading to, the Omnipoint reorganization
agreement; and having acted as co-manager in the private offering of $1.1
billion aggregate principal amount of 10.375% senior notes due November 2009 of
VoiceStream and VoiceStream Holdings and $720 million aggregate principal amount
of 11.875% senior discount notes due November 2009 of VoiceStream and
VoiceStream Holdings in November 1999. 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 executed a
commitment letter to underwrite $500 million of the $3 billion credit facility
anticipated to be entered into by VoiceStream Holdings in connection with the
Omnipoint reorganization. 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 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.
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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. Goldman Sachs' estimated
out-of-pocket expenses relating to the Omnipoint reorganization are $160,972.
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.
In light of the developing trends in the telecommunications industry and
consolidation in the GSM market, the Omnipoint board considered strategic and
financial alternatives to raise additional equity. 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.
The following factors were considered to be positive:
- 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;
- 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;
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- 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 Holdings board of directors and the
designation by Omnipoint of four new members to serve on the VoiceStream
Holdings 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.
In addition, the Omnipoint board of directors considered the following
negative factors:
- the risks that potential synergies and other expected benefits of the
Omnipoint reorganization, if consummated, may not be achieved;
- the possibility that accepting an investment from a different strategic
partner could have resulted in subsequently achieving a higher stock
price for Omnipoint than the price offered by VoiceStream; and
- the recognition by the Omnipoint board that, under the terms of the
Omnipoint reorganization agreement, under certain circumstances in the
event of termination of the reorganization, Omnipoint would be obligated
to pay VoiceStream a termination fee of $70 million.
The Omnipoint board of directors determined that the positive factors
outweighed the potential negative factors.
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 further believes
that no other potential merger candidate provided the compatibility of
technology and geographic fit in the markets where VoiceStream and its
affiliates operate or will operate, making VoiceStream preferable to other
merger candidates. 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 interests 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. Upon advice of Omnipoint and its legal
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advisors, Lehman Brothers has assumed that the exchange of shares of common
stock of Omnipoint 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.
See "Material United States Federal Income Tax Consequences of the Omnipoint
Reorganization -- Consequences of the Omnipoint Merger."
The full text of Lehman Brothers' written opinion, dated June 23, 1999, is
attached as Annex C to this joint proxy statement-prospectus. Stockholders are
urged to, and should 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 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
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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;
- a trading history of Omnipoint's common stock from June 17, 1998 to June
18, 1999 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 date of the opinion 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
financial condition of Omnipoint with those of other companies that
Lehman Brothers deemed relevant;
- a comparison of the historical financial and operating results and
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 joint ventures with Cook Inlet;
- the terms of the $957 million 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
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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 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 also took into account VoiceStream's view as to the possible tax
consequences of the transactions contemplated by the Omnipoint reorganization
agreement. Lehman Brothers did not assume that there would be no potential
adverse tax consequences to VoiceStream which might result from the transactions
contemplated by the Omnipoint reorganization agreement. Rather, Lehman Brothers
took into account the possibility that there could be adverse tax consequences
implicating the tax indemnification obligations of VoiceStream to Western
Wireless and determined that the possibility of any such consequences would not
affect its conclusion as to the fairness of the merger consideration. 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 the material 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. As of June 21, 1999, Lehman Brothers estimated
that the price per share Omnipoint would receive in the Omnipoint reorganization
would be $32.75, based on the VoiceStream closing price per share as of June 18,
1999 of $30.00. This price per share represented a 72.9% premium over the
Omnipoint June 18, 1999 closing price of $18.94.
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DISCOUNTED CASH FLOW ANALYSIS
Lehman Brothers performed discounted cash flow analyses of the Omnipoint
and VoiceStream businesses and then compared the range of valuations implied by
such analyses in the case of Omnipoint, to the estimated price per share that
Omnipoint shareholders would receive in the Omnipoint reorganization and in the
case of VoiceStream, to the closing price of VoiceStream's stock used to derive
such estimated price per share. A discounted cash flow analysis is one method
used to value businesses and involves an analysis of the present value of
projected cash flows of a business for a specified number of years into the
future and the present value of the projected value of the business at the end
of that period of years. Lehman Brothers performed two separate discounted cash
flow cases for Omnipoint, the first based on management projections of cash
flows received on June 14, 1999 and the other based on Lehman Brothers' recent
equity research analyst's projections of cash flows 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 value 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. Lehman
Brothers noted that, based on its purchase price analysis, the estimated price
per share Omnipoint shareholders would receive in the Omnipoint reorganization
as of June 21, 1999, $32.75, fell within the implied range of values determined
by this analysis.
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 value 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 noted that the estimated price per share of $32.75 fell
within the range of values.
Lehman Brothers analyzed VoiceStream's business using a management forecast
of cash flow for the period beginning January 1, 1999 and ending December 31,
2008. Lehman Brothers used discount rates ranging from 12% to 14% and terminal
value multiples of estimated 2008 EBITDA ranging from 8.0x to 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. Lehman Brothers noted that the estimated price
per share of $32.75 fell within this range of values.
PEER GROUP COMPARISON
Lehman Brothers performed a peer group comparison analysis to consider and
compare different prices per POP that have been attributed to Omnipoint's,
VoiceStream's and the peer group's POPs in order to determine how the market
valuations of Omnipoint and VoiceStream compared to their peer companies. Lehman
Brothers compared certain financial statistics of Omnipoint with corresponding
financial statistics for the following six PCS companies:
- Aerial
- Microcell
- Nextel
- Powertel
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- 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 (the market
valuation of a company's stock plus the amount of its outstanding debt less the
amount of cash it has on hand) 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 of the coverage area). 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>
Lehman Brothers noted that the market valuation of Omnipoint (based upon
the trading multiples of Omnipoint's stock) were generally lower than its peer
companies when Nextel and Sprint PCS were included and generally in line with
its peer companies when Nextel and Sprint PCS were excluded. Lehman Brothers
also noted that the market valuation of VoiceStream (based upon the trading
multiples of VoiceStream's stock) were generally in line with its peer companies
when Nextel and Sprint PCS were included and generally higher than its peer
companies when Nextel and Sprint PCS were excluded.
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 VoiceStream, respectively, that would affect the trading
values of Omnipoint, VoiceStream and the comparable companies. In particular,
Lehman Brothers considered the size and desirability of the
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markets of operation and current levels and historical rates of growth of
Omnipoint, VoiceStream and their respective 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 including, without limitation, the fact that Nextel and
Sprint PCS offered substantially nationwide networks and coverage, while
Omnipoint, VoiceStream and the other peer group companies offered principally
regional networks and coverage.
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 in order
to compare the prices paid in these transactions with the price being paid to
Omnipoint stockholders in the Omnipoint reorganization:
- 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. The multiple per Omnipoint POP being paid by VoiceStream in the
Omnipoint reorganization is approximately $45.00 which is generally in line with
these other transactions.
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. In particular, Lehman Brothers
considered the size and desirability of the markets of operation, the strategic
fit of the acquired company, the form of consideration offered and the tax
characteristics of the transaction.
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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 in order to compare it to the estimated price per share each Omnipoint
stockholder would receive in the Omnipoint reorganization. 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 noted that the estimated price per share of $32.75 that
each Omnipoint stockholder would receive in the Omnipoint reorganization was
higher than Omnipoint's closing common stock price on June 18, 1999, Omnipoint's
52-week low common stock price and Omnipoint's 52-week high common stock price.
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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 in order to compare it to VoiceStream's stock price at the
time of announcement of the Omnipoint reorganization. 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]
Lehman Brothers noted that VoiceStream's stock generally traded within the
range of its average closing price over the 10 days preceding announcement of
the Omnipoint reorganization and of its closing price on the day prior to the
announcement of the Omnipoint reorganization.
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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]
Lehman Brothers noted that Omnipoint common stock traded at a discount
relative to its peers over much of this period.
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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 noted that VoiceStream common stock traded at a premium
relative to its peers during this period.
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 its 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 1997 in connection with
any opportunities for investment in or sale of Omnipoint. Omnipoint has agreed
to pay Allen & Co. $7.5 million upon consummation of the Omnipoint
reorganization for work related to seeking a strategic partner begun in 1997,
and to pay Lehman Brothers $3.5 million for work since October 1998, upon
consummation of the Omnipoint reorganization. In addition, Omnipoint retained
Lehman Brothers as the lead manager for its $205 million high yield debt
offering in September 1999, for which Lehman received approximately $4.5
million. Omnipoint also has agreed to reimburse Lehman
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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
Stockholders of VoiceStream currently holding the right to vote
approximately 40% of the outstanding shares of VoiceStream and stockholders of
Omnipoint currently holding the right to vote approximately 28% of the
outstanding shares of Omnipoint have entered into an agreement to vote in favor
of the Omnipoint reorganization. For a discussion of this agreement, see "The
Special Meetings -- Agreement to Vote in Favor of the Omnipoint Reorganization."
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 "Financial Information -- 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
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 Washington Business
Corporation Act 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.
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Holders of Omnipoint common stock who dissent from the Omnipoint merger and
follow certain statutory procedures have the right under the Delaware General
Corporation Law 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
Washington Business Corporation Act and Delaware General Corporation Law.
COOK INLET TRANSACTIONS
All Omnipoint C and F Block licenses, together with assets and liabilities
associated with these licenses, will be transferred to Cook Inlet/VoiceStream
GSM II PCS, LLC and Cook Inlet/VoiceStream GSM III PCS, LLC at the closing of
the Omnipoint reorganization pursuant to separate purchase agreements with
Omnipoint. Cook Inlet/VoiceStream GSM II and 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 Cook Inlet/VoiceStream GSM II and III.
Prior to becoming a subsidiary of VoiceStream Holdings, Omnipoint will
contribute to Cook Inlet/VoiceStream GSM II C and F Block licenses for 54 BTA
markets together with certain associated assets. The licenses contributed to
Cook Inlet/VoiceStream GSM II include licenses for Philadelphia, which is a
significant Omnipoint market currently in operation. In consideration for such
licenses and assets, Cook Inlet/VoiceStream GMS II will issue to Omnipoint Class
B membership interests in Cook Inlet/VoiceStream GSM II entitling Omnipoint to a
49.9% interest in Cook Inlet/VoiceStream GSM II and an initial capital account
of $85.7 million. Cook Inlet/VoiceStream GSM II will also assume liabilities of
Omnipoint associated with such licenses and assets.
The Cook Inlet/VoiceStream GSM 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 Cook Inlet/VoiceStream
GSM II purchase agreement in the ordinary course;
- the liabilities of Omnipoint to be assumed by Cook Inlet/VoiceStream GSM
II shall not exceed the amount such that, when netted, together with
other debt assumed by Cook Inlet/VoiceStream GSM 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 Cook Inlet/VoiceStream GSM
II.
In conjunction with the Cook Inlet/VoiceStream GSM II purchase agreement
and formation of Cook Inlet/VoiceStream GSM II, VoiceStream Holdings agreed to
grant to Cook Inlet certain rights to exchange Cook Inlet's interest in Cook
Inlet/VoiceStream GSM II for VoiceStream Holdings common stock during the 30-day
period beginning five years after the issuance date of the licenses held by Cook
Inlet/VoiceStream GSM II.
Pursuant to the Cook Inlet/VoiceStream GSM III purchase agreement,
Omnipoint agreed to contribute to Cook Inlet/VoiceStream GSM III certain C and F
Block licenses for 34 BTA markets. In consideration for such contribution, Cook
Inlet/VoiceStream GSM III will issue to Omnipoint Class B membership interests
in Cook Inlet/VoiceStream GSM III entitling Omnipoint to a 49.9%
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interest in Cook Inlet/VoiceStream GSM III and an initial capital account of
$21.4 million. Cook Inlet/VoiceStream GSM III will also assume liabilities of
Omnipoint associated with such licenses.
The Cook Inlet/VoiceStream GSM III purchase agreement also provides as
follows:
- liabilities of Omnipoint to be assumed by Cook Inlet/VoiceStream GSM 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; and
- prior to the consummation of the sale by Omnipoint, Cook Inlet GSM, Inc.
shall have contributed at least $15 million to Cook Inlet/VoiceStream GSM
III.
In conjunction with the Cook Inlet/VoiceStream GSM III purchase agreement
and formation of Cook Inlet/VoiceStream GSM III, VoiceStream Holdings agreed to
grant to Cook Inlet certain rights to exchange Cook Inlet's interest in Cook
Inlet/VoiceStream GSM III for VoiceStream Holdings common stock during the
30-day period beginning five years after the issuance date of the licenses held
by Cook Inlet/VoiceStream GSM III.
As a result of the transfers to Cook Inlet/VoiceStream GSM II and III,
VoiceStream's net share of the revenues and expenses of markets operated by Cook
Inlet/VoiceStream GSM II and III will be reflected using the equity method of
accounting on a single line in VoiceStream Holding's consolidated operating
statements. Also, we will not be in a position to control the PCS systems in the
markets covered by the transferred licenses unless we own other licenses
covering such markets. Cook Inlet/VoiceStream GSM II and III will have entered
into agreements allowing operation of such markets under the VoiceStream brand
name, however, and we expect to provide technical services to help serve
customers in such markets. Based on the experience of VoiceStream in dealing
with other Cook Inlet entities holding licenses and operating under the
VoiceStream brand, we expect customers will be provided with services and
products comparable to our own, and we will realize the benefits of having the
VoiceStream brand extended into markets we would otherwise not be able to serve.
Stockholders will benefit from our joint venture investments because of the
additional market size afforded by the VoiceStream brand's availability in a
greater number of markets. However, since results will be accounted for using
the equity method of accounting, our net share of the revenues and expenses of
such joint ventures will be reflected on a single line in our consolidated
statement of operations.
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 $957 million
Hutchison investments. In the $957 million 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 2.5%
Convertible Junior Preferred Stock, for a purchase price of $100,000 per share.
The total purchase price of the VoiceStream Holdings common stock and the
VoiceStream Holdings 2.5% Convertible Junior Preferred Stock will be $957
million, consisting of $807 million in cash and $150 million in shares of
Omnipoint Series A Preferred Stock purchased by Hutchison PCS (USA) from
Omnipoint under a securities purchase agreement. The Omnipoint Series A
Preferred Stock or all shares of Omnipoint common stock obtained prior to the
Omnipoint reorganization on conversion of the Omnipoint Series A Preferred
Stock, 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 2.5% Convertible
Junior Preferred Stock that it will hold so long as it holds at
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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 $957 million 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 $957 million Hutchison investments will be
33 million shares. After giving effect to the Omnipoint reorganization, the
Aerial reorganization, the $957 million Hutchison investments and the $500
million Sonera investment in VoiceStream Holdings, Hutchison PCS (USA) 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.
The VoiceStream Holdings 2.5% Convertible Junior Preferred Stock 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 VoiceStream Holdings 2.5% Convertible Junior Preferred Stock is convertible
at any time by Hutchison PCS (USA) at $29.00 a share. Hutchison PCS (USA) cannot
require VoiceStream Holdings to redeem these shares prior to maturity. Upon
conversion of the VoiceStream Holdings 2.5% Convertible Junior Preferred Stock
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 2.5% Convertible Junior Preferred
Stock to be converted into VoiceStream Holdings common stock.
HUTCHISON STANDSTILL AGREEMENT
In connection with the $957 million Hutchison investments, Hutchison PCS
(USA) and certain of its affiliates entered into a standstill agreement with
VoiceStream Holdings. With 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 Hutchison PCS (USA)
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 Hutchison PCS (USA) 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;
- 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.
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$500 MILLION SONERA INVESTMENT IN VOICESTREAM HOLDINGS
On September 17, 1999, VoiceStream Holdings and Sonera entered into an
agreement providing for the $500 million Sonera investment in VoiceStream
Holdings. In the $500 million Sonera investment in VoiceStream Holdings, Sonera
agreed to invest $500 million directly in VoiceStream Holdings at the closing of
the Omnipoint reorganization by purchasing 8,771,930 shares of VoiceStream
Holdings common stock at a price of $57.00 per share. The $500 million Sonera
investment in VoiceStream Holdings is desirable to us in light of the fact that
Omnipoint is substantially leveraged, and the $500 million Sonera investment in
VoiceStream Holdings 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 discussion of the material United States federal income
tax consequences of the VoiceStream merger to holders of VoiceStream common
stock. It does not address 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 address tax consequences that may apply to you if you are a
taxpayer that is subject to special treatment under the federal income tax laws,
such as 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 address any aspect of state,
local or foreign taxation or any consequences to you if, in addition to holding
VoiceStream common stock, you own stock in Omnipoint or Aerial. The discussion
assumes that you will hold your VoiceStream common stock as a capital asset at
the closing of the VoiceStream merger.
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 Internal Revenue Code of 1986, as amended (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
- 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 or, if the Omnipoint
reorganization has not previously occurred, in accordance with the terms of the
Aerial 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, in the case of a reorganization
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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; and
- 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.
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, 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 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 discussion 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 discussion does not address 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 address tax consequences that may apply to you if you
are a taxpayer that is subject to special treatment under
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the federal income tax laws, such as 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
discussion 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 discussion also does not address any consequences to you if,
in addition to holding stock in Omnipoint, you also own stock in VoiceStream or
Aerial, or any tax consequences to holders of Omnipoint Series E Preferred
Stock, if any.
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 Rudnick & Wolfe
LLP, 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.
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 Rudnick & Wolfe LLP 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 tax free
to the holders under 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
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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 General Corporation 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
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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 $500
million Sonera investment in VoiceStream Holdings 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
Hutchison PCS (USA), 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.
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
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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 exchange will be calculated separately for
each block of Omnipoint common stock and each 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
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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
$500 million Sonera investment 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 Hutchison PCS (USA),
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. In such
case, the tax treatment to you of any cash allocable to a block of Omnipoint
common stock surrendered by you would be determined in the same manner as the
tax treatment determined under section 304 of the Code for any cash received by
holders of Omnipoint common stock who exchange such stock for a combination of
VoiceStream Holdings common stock and cash as described under the heading
"-- Exchange of Omnipoint Common Stock for a Combination of VoiceStream Holdings
Common Stock and Cash."
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
- 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 $957 million Hutchison investments and the $500
million Sonera investment 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 Rudnick & Wolfe LLP would be
unable to render the opinion described above, in which case Omnipoint would not
be required to consummate the Omnipoint reorganization. Omnipoint does not
intend to waive the condition of
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receipt of a favorable tax opinion, and will not waive the condition without
resoliciting and obtaining shareholder approval.
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.
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 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. This statement
and such records must include, among other things, the adjusted tax basis and
number of Omnipoint shares which you transfer in the exchange and the number of
shares and fair market value of the VoiceStream Holdings common stock received
by you.
CONSEQUENCES OF THE OMNIPOINT REORGANIZATION UNDER VOICESTREAM'S TAX SHARING
AGREEMENT
BACKGROUND
On May 3, 1999, Western Wireless distributed to its stockholders all of its
shares of VoiceStream's stock. Western Wireless had previously received a ruling
from the IRS to the effect
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that the distribution, or "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 $957 million Hutchison
investments, the $500 million Sonera investment in VoiceStream Holdings, the
Aerial reorganization 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 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.
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 pursuant to a contract
entered into 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 $957 million
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Hutchison investments, the $500 million Sonera investment, the Aerial
reorganization, 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. In addition, Hutchison's acquisition 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 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
communicating with each other because each was participating, directly or
indirectly, in an FCC auction of spectrum licenses and applicable FCC rules
prohibited the participants from communicating with 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 communicated 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
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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 $957 million Hutchison investments, the $500 million Sonera
investment, the Aerial reorganization, 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. VoiceStream estimates that the
range of its indemnity exposure, not including interest and any penalties, is
from zero to $400 million. Thus, if VoiceStream is required to make an indemnity
payment to Western Wireless, it could have a material adverse effect on
VoiceStream Holdings.
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, 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.
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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.
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 -- Executive Officers and Directors."
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.
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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 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 a one-time incentive bonus
equal to four times his base salary plus bonus, which equals $2.4 million, of
which $1.5 million was paid on signing of the Omnipoint reorganization
agreement. The remaining $900,000 will be paid upon closing of the Omnipoint
reorganization. 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. 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 one year after Mr. Smith's termination.
The employment agreement between Omnipoint and George Schmitt, an Executive
Vice President of Omnipoint and President of Omnipoint Communications Services,
LLC 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
current amount due on the promissory note, including accrued interest, is
approximately $1,100,000. These restrictions will lapse if Mr. Schmitt is
terminated after the Omnipoint reorganization. The employment agreement provides
that if Mr. Schmitt's employment terminates for any reason other than "cause",
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
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medical benefits for one year. When the Omnipoint reorganization is completed,
vesting will accelerate for 474,875 of Mr. Schmitt's stock options, adjusted to
reflect the exchange ratio in the Omnipoint reorganization assuming that the
Omnipoint reorganization is completed on March 1, 2000 and the price of
VoiceStream common stock is $112.69 per share at that time. The weighted average
exercise price of these accelerated stock options would be $17.56 per share.
Assuming that the per share price of VoiceStream common stock is $112.69 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 $45.2 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 current amount due on the promissory note, including accrued
interest, is approximately $1,700,000. 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, in each case 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 68,812 of Mr. Andersson's stock options, adjusted to reflect the
exchange ratio in the Omnipoint reorganization assuming that the Omnipoint
reorganization is completed on March 1, 2000 and the price of VoiceStream common
stock is $112.69 per share at that time. The weighted average exercise price of
these accelerated stock options would be $24.37 per share. Assuming that the
price per share of VoiceStream common stock is $112.69 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 $6.1 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 70,528 of
Mr. Plonskier's stock options, adjusted to reflect the exchange ratio in the
Omnipoint reorganization assuming that the Omnipoint reorganization is completed
on March 1, 2000 and the price of VoiceStream common stock is $112.69 per share
at that time. The weighted average exercise price of these accelerated stock
options would be $17.58 per share. Assuming that the price per share of
VoiceStream common stock is $112.69 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 $6.7 million
at the time of the Omnipoint reorganization.
The employment agreement between Omnipoint and Evelyn Goldfine, Omnipoint's
Chief Administrative Officer and a director, 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. One year after the
Omnipoint reorganization is completed, vesting will accelerate for 10,393 of Ms.
Goldfine's stock options, adjusted to reflect the exchange ratio in the
Omnipoint reorganization assuming the price of VoiceStream common stock is
$112.69 per share at that time. The weighted average exercise price of these
accelerated stock options would be $16.93 per
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share. Assuming that the price per share of VoiceStream common stock is $112.69
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 $1.0 million at the time of the Omnipoint
reorganization.
The following table identifies the directors and executive officers of
Omnipoint who may have an interest in the Omnipoint reorganization, and if
applicable and practicable, a quantification of the benefit to be received by
those persons as a result of the Omnipoint reorganization, other than any
interest arising solely from the ownership of Omnipoint common stock in which
these persons receive no extra or special benefit not shared on a pro rata basis
with other Omnipoint stockholders.
<TABLE>
<CAPTION>
APPROXIMATE
NATURE OF DOLLAR
TITLE OR POSITION INTEREST IN OMNIPOINT AMOUNT
PERSON WITH OMNIPOINT REORGANIZATION OF INTEREST(1)
------ ----------------- --------------------- --------------
<S> <C> <C> <C>
Douglas G. Smith Chairman, President and VoiceStream Holdings Directorship --
Chief Executive Officer Incentive Bonus $ 2,400,000
Potential Severance Payment $ 1,200,000
George Schmitt Executive Vice President Stock Options $45,173,000
and Director Potential Loan Forgiveness $ 1,100,000
Potential Severance Payment $ 1,200,000
Kjell S. Andersson Executive Vice President Stock Options $ 6,077,000
and President of Omnipoint Potential Severance Payment $ 474,000
Technology Holdings, Inc. Potential Loan Forgiveness $ 1,700,000
Harry Plonskier Treasurer and Acting Chief Stock Options $ 6,708,000
Financial Officer Potential Severance Payment $ 240,500
Evelyn Goldfine Chief Administrative Stock Options $ 995,000
Officer
Potential Severance Payment $ 150,000
Richard L. Fields Director VoiceStream Holdings Directorship --
James N. Perry Director VoiceStream Holdings Directorship --
James J. Ross Vice Chairman and Director VoiceStream Holdings Directorship --
</TABLE>
- ---------------
(1) The calculations set forth in this column are based upon assumptions and
other facts described in the preceding paragraphs.
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
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 exchange ratio of 0.455 per share of
Aerial common stock, except as provided in the following two paragraphs.
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- 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 $420 million TDS debt replacement or
the $230 million Sonera investment in Aerial and an Aerial subsidiary 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. For this purpose, 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 do 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.
- The Aerial Cash Election. Public stockholders of Aerial who elect to
receive cash will 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. The Aerial
stockholders entitled to make the Aerial cash election owned an aggregate
of 13,646,787 shares of Aerial common stock as of January 14, 2000.
- 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
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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 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
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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.
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
Aerial has a retention restricted stock unit plan that provides for the
grant of stock unit awards and is intended to assist in the retention of key
employees. Each stock unit is a right to receive one Aerial Common Share or the
fair market value of one Aerial Common Share as of the date the stock unit
vests. Stock units are restricted and subject to forfeiture if the recipient
does not remain employed by Aerial until the vesting date. As of January 14,
2000, stock units with respect to 431,000 Aerial Common Shares were granted and
outstanding, of which 172,400 are scheduled to vest on February 1, 2000 and
258,600 are scheduled to vest on February 1, 2001. However, under the terms of
the retention restricted stock unit plan, each outstanding restricted stock unit
will become immediately vested upon approval by Aerial's stockholders of the
Aerial reorganization agreement. Under the terms of the plan, the vested stock
units 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 otherwise have the same terms and conditions in
effect immediately prior to the date the Aerial reorganization becomes
effective.
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
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or provide access to any other party who Aerial knows is considering an
alternative acquisition proposal;
- approve any transaction under the anti-takeover statutes of the Delaware
General Corporation Law 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 exceptions described in the Aerial
reorganization agreement and the schedules thereto. 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;
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- split, combine or reclassify any of its capital stock or authorize the
issuance of any other securities;
- 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) 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
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
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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;
- 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 make 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 Internal Revenue Code
and/or as part of a transaction described in section 351(a) of the Internal
Revenue Code.
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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 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.
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 40% of the
VoiceStream outstanding 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
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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
- 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.
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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.
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;
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- 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."
CONDITIONS TO THE COMPLETION OF THE AERIAL REORGANIZATION
MUTUAL CLOSING CONDITIONS
The obligations of VoiceStream and VoiceStream Holdings, on the one hand,
and Aerial, on the other hand, to complete the transactions provided for in the
Aerial reorganization agreement are subject to the satisfaction or waiver of the
following conditions.
The following conditions may not be waived:
- 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; and
- receipt of all requisite orders and approvals of the FCC.
The following conditions may be waived by the boards of VoiceStream and
VoiceStream Holdings, on the one hand, and Aerial, on the other hand, in the
exercise of their business judgment without seeking stockholder approval:
- finality of all requisite orders and approvals of the FCC;
- 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 at
the latest.
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 waiver
of the following conditions. The following
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conditions may be waived by the Aerial board in the exercise of its business
judgment without seeking stockholder approval:
- 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 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 between TDS and
Aerial;
- consummation of the transactions contemplated by the $420 million TDS
debt replacement;
- 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 between TDS and
Aerial;
- termination of the tax allocation agreement between TDS and Aerial;
- 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.
In addition, the obligation of Aerial to complete the Aerial reorganization
is subject to the condition that Aerial receives an opinion of counsel to the
effect that the Aerial merger will qualify as a tax-free transaction, except
with respect to any cash received. This condition will not be waived by the
Aerial board unless the Aerial board resolicits and obtains approval of the
Aerial stockholders of the Aerial reorganization.
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. The following conditions may be waived by the
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VoiceStream and VoiceStream Holdings boards in the exercise of their business
judgment without seeking stockholder approval:
- 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 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;
- absence of any continuing material adverse effect with respect to Aerial
relating to the Year 2000 issues; and
- exercise of statutory dissenters' rights with respect to no more than
7.5% of the shares of VoiceStream.
In addition, the obligation of VoiceStream and VoiceStream Holdings to
complete the Aerial reorganization is subject to the condition that VoiceStream
Holdings receive an opinion of counsel to the effect that the VoiceStream merger
will qualify as a tax-free transaction. This condition will not be waived by the
boards of VoiceStream or VoiceStream Holdings without resoliciting and obtaining
the approval of their stockholders of the Aerial reorganization.
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
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- 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
$420 million TDS debt replacement, the TDS tax settlement agreement, the
relationship between TDS and Aerial and the arrangements with Sonera.
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
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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. The investors who purchased such notes were institutional buyers who
are unrelated to TDS, Aerial or VoiceStream. 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 investors who purchased the Series A and Series B zero coupon notes
were institutional buyers who are unrelated to TDS, Aerial or VoiceStream. 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
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 -- 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 -- 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. TDS desired
to reduce its risk as the primary source of financing for Aerial and believed
that Aerial's financial strength and operating performance could be improved if
it were financed entirely as a stand-alone entity. TDS considered whether these
goals could be
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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 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." As described
in that section, prior to the investment by Sonera, Aerial Operating Company was
a wholly-owned subsidiary of Aerial. Immediately after the Sonera investment,
Aerial owned 80.6% and Sonera owned 19.4% of the common equity of Aerial
Operating Company. Aerial Operating Company owns 100% of the equity interests in
the entities which operate Aerial's six PCS markets.
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
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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. 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.
Through November 15, 1999, Mr. Foster and Mr. Wilson have received fees of
$56,500 and $60,000, respectively, and have been reimbursed for $17,758 in
aggregate out-of-pocket expenses in connection with services on the special
committee since it was created.
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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 alternative 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.
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
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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 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.
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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.
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,
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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
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.
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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 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.
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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 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.
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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
$420 million TDS debt 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.
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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 $420 million 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 $420 million TDS debt replacement with a representative of
VoiceStream. The Aerial representative advised that TDS was willing to effect
the $420 million 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 $420
million 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 $420 million TDS debt replacement. Accordingly,
TDS was indifferent to the alternatives of paying a lower price in the $420
million 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 $420
million TDS debt replacement.
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 $420 million 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
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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 $420 million 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 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
$420 million TDS debt replacement and the $230 million Sonera investment in
Aerial and an Aerial subsidiary, 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 $420
million TDS debt replacement and the
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$230 million Sonera 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 $420 million TDS debt replacement if the
$230 million Sonera investment in Aerial and an Aerial subsidiary 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 $420 million 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 $420
million TDS debt replacement and the $230 million Sonera investment in Aerial
and an Aerial subsidiary 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 $230 million Sonera investment, VoiceStream would
permit Sonera to acquire newly issued shares of VoiceStream Holdings common
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
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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 $420 million TDS debt replacement, the $230 million Sonera
investment in Aerial and an Aerial subsidiary, the $500 million Sonera
investment in VoiceStream Holdings 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.
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
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- 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 and advised the Aerial board that there was a risk that
Entity Two might ultimately not make a firm offer. The representatives of
Donaldson, Lufkin & Jenrette also advised the Aerial board that there was a risk
that VoiceStream might withdraw from the process if it was extended to provide
additional time for Entity Two.
Donaldson, Lufkin & Jenrette also discussed the terms of the $420 million
TDS debt replacement, the $230 million Sonera investment in Aerial and an Aerial
subsidiary, the $500 million Sonera investment in VoiceStream Holdings 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. There then followed a number of questions
from, and discussion among, the directors.
Considering the factors set forth under the caption "-- Recommendations of
the Aerial Board; Reasons for the Reorganization" and that (1) Entity Two did
not comply with the bid requirements by not delivering a mark-up of the merger
agreement by the original due date and by submitting a letter of interest rather
than a firm proposal, (2) Entity Two advised Donaldson, Lufkin & Jenrette on
September 7, 1999 that it would require another two to four weeks to deliver a
firm proposal, (3) there was a risk that Entity Two might ultimately not make a
firm offer, (4) there was no assurance that any offer by Entity Two would be
superior to the terms of the Aerial reorganization agreement negotiated with
VoiceStream and (5) there was a risk that VoiceStream might withdraw from the
process if extended to provide additional time, the Aerial board determined that
the Aerial reorganization was the best alternative available to Aerial and its
stockholders. Accordingly, 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.
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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.
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's stockholders.
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 $500 million Sonera 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 VoiceStream 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.
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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 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.
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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.
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 considered a merger with or investment in another
company to continue its effort to build a stronger competitor in the rapidly
expanding telecommunications industry. The VoiceStream board believes that
combining VoiceStream's and Aerial's resources and markets, alone or with
Omnipoint, will create a strong national competitor. 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 factors were considered to be positive:
- 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 other
expected benefits of the Aerial reorganization, if completed;
- 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 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 effect of the $420 million TDS debt replacement;
- the effect of the $500 million Sonera investment in VoiceStream Holdings
and the $230 million Sonera investment in Aerial and an Aerial
subsidiary;
- the other potential major transactions which might be available to
VoiceStream in addition to the Aerial reorganization, and the effect of
the Aerial reorganization on the ability of VoiceStream to pursue those
transactions;
- 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; and
- 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.
In addition, the VoiceStream board of directors considered the following
negative factors:
- the impact the transaction could 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 other potential major transactions which might be available to
VoiceStream as alternatives to the Aerial reorganization, and the effect
of the Aerial reorganization on the ability of VoiceStream to pursue
those transactions;
- the historical operating results and substantial indebtedness of Aerial;
- the assumption of certain Aerial or Aerial Operating Company debt by
VoiceStream or VoiceStream Holdings, as the case may be; and
- the risks that the synergies and other expected benefits would not be
realized.
The VoiceStream board of directors determined that the positive factors
outweighed the potential negative factors.
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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 further
believes that no other potential merger candidate provided the compatibility of
technology and geographic fit in the markets where Aerial operates, making
Aerial preferable to other merger candidates. 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 interests 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.
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 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 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 June 30, 2000 and (b)
the average of the mean price, calculated on a weighted average based upon the
volume of shares traded on each day, for a share of VoiceStream common stock
during the 15 trading days ending on the business day prior to the completion of
the Aerial reorganization is less than $39.56, the conversion number will be
equal to the number determined by dividing $18.00 by such average 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 completion of the
Aerial reorganization, the conversion number will be equal to the number
determined by dividing 39,056,818 by such number as of the completion of the
Aerial reorganization, subject to further adjustment as described in clause (1),
if applicable. For this purpose 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. 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.
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The full text of the Goldman Sachs opinion is attached as Annex E to this
joint proxy statement-prospectus and 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 management of VoiceStream and
certain internal financial analyses and forecasts for Aerial prepared by
the management of Aerial.
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 did not assume that there would be no adverse tax consequences to
VoiceStream as a result of the transaction, but determined that the possibility
of any such consequences implicating the tax indemnification obligations of
VoiceStream to Western Wireless would not affect its conclusion as to the
fairness of the merger consideration. 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
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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 performed an analysis the purpose of which was to determine
how the price per Aerial POP represented by the merger consideration compared
both to VoiceStream's price per POP and the price per POP for the following
selected companies: Microcell Communications, Inc., Omnipoint, Powertel, Inc.,
and Sprint PCS. The selected companies were chosen because they are publicly
traded companies with operations that are similar to those of VoiceStream and
Aerial. The price per POP in each case was calculated by dividing the respective
company's license value and adjusted enterprise value by different measures of
that company's POPs. In this analysis, 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
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 analysis was performed using share prices as of
September 17, 1999.
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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.
Goldman Sachs noted that this analysis demonstrated that the merger
consideration being paid by VoiceStream, while higher than three of the four
selected companies' price per POP, resulted in a lower price per POP than
VoiceStream's own price per POP and a lower price per POP than Sprint PCS's
price per POP.
DISCOUNTED CASH FLOW ANALYSIS
Goldman Sachs performed an analysis the purpose of which was to compare the
percentage in the combined company that the VoiceStream stockholders would own,
using discounted cash flow methodologies, to the percentage ownership resulting
from the Aerial reorganization agreement. Goldman Sachs performed this analysis
by determining ranges of enterprise values and equity values for VoiceStream on
a stand-alone basis and for Aerial based on two different sets of assumptions
regarding Aerial's future performance and by determining ranges of enterprise
and equity values for VoiceStream on a stand-alone basis and for Aerial, in each
case based on Goldman Sachs research. Specifically, Goldman Sachs compared 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").
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The following tables present the 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>
<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>
Goldman Sachs noted that this analysis demonstrated that the 71.5%
percentage ownership that VoiceStream stockholders would receive based on the
Aerial reorganization agreement, assuming an all-stock transaction, was within
the 65% to 83% range of percentage ownership of VoiceStream stockholders in the
combined company implied by the range of values described above. Goldman Sachs
used the 71.5% percentage ownership which excluded any cash election in order to
be able to analyze the equity value of the two companies on an equivalent basis.
RELATIVE CONTRIBUTION ANALYSIS
Goldman Sachs performed an analysis the purpose of which was to determine
how the contribution of VoiceStream and Aerial to the combined company, based on
various factors described below, compared to the percentage ownerships of the
combined company by the stockholders of each of VoiceStream and Aerial which
would result from the Aerial reorganization agreement. 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>
Goldman Sachs noted that this analysis demonstrated that the 71.5%
percentage ownership that VoiceStream stockholders would receive based on the
Aerial reorganization agreement, assuming an
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all-stock transaction, was within the range of VoiceStream's contribution to the
combined company, based on the various factors listed above, of 51% to 73%.
Goldman Sachs used the 71.5% percentage ownership which excluded any cash
election in order to be able to analyze the equity value of the two companies on
an equivalent basis.
TRANSACTION PREMIUM ANALYSIS
Goldman Sachs performed an analysis the purpose of which was to assess the
premiums represented by the consideration to be paid in the Aerial
reorganization in light of the actual price per Aerial POP represented by the
merger consideration. Goldman Sachs performed this analysis based on the Aerial
common stock price at points or over periods of time and based on the Aerial
historical price per POP based on September 17, 1999 stock prices. 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.
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>
Goldman Sachs noted the following concerning the results of this analysis.
Although the consideration to be paid in the Aerial reorganization represented a
range of premiums over Aerial's common stock price of 27.5% to 74.1% and a
premium over Aerial's price per POP of 22%, the actual price per Aerial POP
represented by the merger consideration was lower than VoiceStream's price per
POP.
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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. 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 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 PCS (USA) in February 1998; 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; and having acted as co-manager in
the private offering of $1.1 billion aggregate principal amount of 10.375%
senior notes due November 2009 of VoiceStream and VoiceStream Holdings and $720
million aggregate principal amount of 11.875% senior discount notes due November
2009 of VoiceStream and VoiceStream Holdings in November 1999. 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.
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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. Goldman Sachs' estimated out-of-pocket expenses
relating to the Aerial reorganization are $110,972.
RECOMMENDATIONS OF THE AERIAL BOARD; REASONS FOR THE AERIAL REORGANIZATION
As more fully discussed under "Background of Events Leading to Aerial
Reorganization," the Aerial board determined to explore the possibility of a
business combination transaction in connection with its consideration of the
best strategic alternative available to Aerial, considering TDS's decision to
spin-off Aerial and to seek to cause Aerial to be financed by parties other than
TDS. After conducting the auction process described under "Background of Events
Leading to Aerial Reorganization," only VoiceStream and one other party
submitted a bid to acquire Aerial. Such other party did not deliver a firm
proposal in spite of efforts by Aerial and its representatives to obtain a firm
proposal. The Aerial board of directors concluded that such other party was
unlikely to deliver a firm proposal that was superior to the terms of the Aerial
reorganization negotiated with VoiceStream, if such other party ultimately
delivered a firm proposal at all. The Aerial board further believes that no
potential merger candidate other than VoiceStream would provide the
compatibility of GSM technology and geographic fit, making VoiceStream
preferable to other potential merger candidates. Considering these circumstances
and the factors described below, the Aerial board of directors believes that the
Aerial reorganization is the best alternative available to Aerial and its
stockholders.
The Aerial board of directors 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 completed.
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 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.
The following factors were considered to be positive:
- 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 of a share of
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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 equivalent cash value of $25.08 and the cash election value of $18.00
per share of Aerial common stock as compared to 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;
- the fact that VoiceStream had entered into the Omnipoint reorganization
agreement and the belief that this had a positive impact on VoiceStream
and the combined company;
- the potential increase in 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 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;
- 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 positive impact that the Aerial reorganization would be expected to
have on the balance sheet, earnings and cash flow of the combined
company;
- the expectation that the Aerial reorganization would have a positive
impact on the ability of the combined company to deliver high-quality
services to customers;
- the expectation that the Aerial reorganization would have a positive
impact on the ability of the combined company to maintain a high-quality,
highly-motivated work force;
- the fact that the geographical scope of the business operations of the
combined company, including Omnipoint in the event that the Omnipoint
reorganization is completed, would be significantly greater than the
current geographical scope of Aerial's business operations;
- the expected greater ability of the combined company, including Omnipoint
in the event that the Omnipoint reorganization is completed, to compete
against larger wireless carriers as compared to Aerial's current ability
to compete against such carriers;
- the fact that the Aerial reorganization agreement provides an opportunity
for Aerial's stockholders who elect to receive and hold VoiceStream
common stock in the Aerial
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reorganization to continue to retain an interest in the wireless
telecommunications market through a larger and more geographically
diverse combined company;
- the expected impact of the Aerial reorganization in relation to the
current conditions and trends in the highly competitive
telecommunications and wireless industries, which suggest that
consolidation will continue to increase the size and strength of
competitors;
- the current positive general economic and market conditions, overall and
regionally;
- the opportunities presented by the Aerial reorganization considering the
historical financial condition, results of operations, and cash flows of
Aerial and the business and strategic objectives of Aerial;
- the expected benefits of the Aerial reorganization considering the risks
involved in achieving the projected financial condition, results of
operations and cash flows and the business prospects of Aerial as a
stand-alone company;
- the likelihood that the combined company would be able to obtain the
necessary resources following a business combination as compared to the
risks that Aerial would be able to obtain the necessary resources on a
stand-alone basis considering the continuing need for significant
financial resources to execute Aerial's business plan and strategies;
- the fact that the Aerial reorganization contemplated 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 results of 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,
which indicated that the proposed Aerial reorganization was the best
alternative available to Aerial;
- Aerial's management's views to the effect that a superior transaction was
unlikely;
- the detailed financial and valuation analyses presented to the Aerial
board by Aerial's financial advisor relating to the Aerial
reorganization;
- 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
assumptions, limitations and qualifications set forth in its opinion, the
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 to any their
respective affiliates, is fair from a financial point of view;
- the fact that the terms and conditions of the proposed Aerial
reorganization were extensively negotiated on behalf of Aerial and were
believed to be favorable overall to Aerial and its stockholders;
- the fact that there is no financing condition in the Aerial
reorganization agreement;
- the positive recommendation of Aerial's management with respect to the
Aerial reorganization agreement;
- the positive recommendation of the Aerial special committee, which was
represented by independent legal counsel and independent financial
advisors, and the positive recommendation of the Aerial transaction
committee with respect to the Aerial reorganization;
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- the fact that TDS, Aerial's majority stockholder, had agreed 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 belief that the Aerial reorganization offered greater advantages than
the strategic and financial alternatives available to Aerial, including
the alternative of operating as a separate company after a spin-off by
TDS;
- the expected tax-free treatment of the proposed Aerial reorganization to
the stockholders of Aerial; and
- the fact that the special committee, the transaction committee and the
Aerial board took an active role in connection with the Aerial
reorganization agreement.
In addition, the Aerial board of directors considered the following
negative factors:
- the possibility that the Omnipoint reorganization would not be completed
and the risks to Aerial if that transaction were not consummated;
- the risks that potential synergies and other expected benefits of the
Aerial reorganization or the Omnipoint reorganization, if consummated,
may not be achieved;
- the fact that, as a condition to entering into the Aerial reorganization
agreement, VoiceStream required Aerial to agree to call and hold a
meeting of stockholders of Aerial, even if the Aerial board withdraws or
modifies its recommendation with respect to the Aerial reorganization
agreement; and
- the recognition by the Aerial board that, under the terms of the Aerial
reorganization agreement, in the event of termination of the
reorganization agreement, Aerial may become obligated to pay VoiceStream
a termination fee of $40,000,000.
The Aerial board of directors determined that the positive factors
outweighed the potential negative factors.
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
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 interests of Aerial's stockholders.
THE AERIAL BOARD UNANIMOUSLY RECOMMENDS THAT AERIAL'S STOCKHOLDERS VOTE
"FOR" ADOPTION OF, AND APPROVAL OF THE 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
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based on and subject to the assumptions, limitations and qualifications as set
forth in the opinion, the 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. 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 Aerial. In addition, Donaldson, Lufkin &
Jenrette compared certain financial and securities data of
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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.
Donaldson, Lufkin & Jenrette also took into account VoiceStream's view as
to the possible tax consequences of the transactions contemplated by the Aerial
reorganization agreement. Donaldson, Lufkin & Jenrette did not assume that there
would be no potential adverse tax consequences to VoiceStream which might result
from the transactions contemplated by the Aerial reorganization agreement.
Rather, Donaldson, Lufkin & Jenrette took into account the possibility that
there could be adverse tax consequences implicating the tax indemnification
obligations of VoiceStream to Western Wireless and determined that the
possibility of any such consequences would not affect its conclusion as to the
fairness of the merger consideration.
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,
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(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 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
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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.
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 VoiceStream
when it was 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.
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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.
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, Donaldson, Lufkin & Jenrette
derived a reference range of $30.00 to $44.00 pre-announcement and $50.00 to
$65.00 post-announcement. For Aerial common stock, Donaldson, Lufkin & Jenrette
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.
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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.
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
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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 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 was paid on December 30, 1999, (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) in order to incent Donaldson, Lufkin &
Jenrette to seek the transaction leading to the highest value for Aerial
stockholders, 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.
Based on the aggregate market value of VoiceStream common stock on January 14,
2000 and an exchange ratio of 0.455, Donaldson, Lufkin & Jenrette's aggregate
fee would have been approximately
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$34.6 million, of which $3.5 million has been paid, as of such date. Therefore,
the net fee payable to Donaldson, Lufkin & Jenrette upon consummation of the
merger is estimated to be $31.1 million. The actual fee paid to Donaldson,
Lufkin & Jenrette may be higher or lower than this estimate. 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.
Through January 14, 2000, Donaldson, Lufkin & Jenrette's out-of-pocket expenses
related to the Aerial reorganization have totaled approximately $205,000.
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.
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, VoiceStream TDS, Omnipoint, Western Wireless and Hutchison in the past,
including (1) acting as a co-manager for VoiceStream's offering of 10 3/8%
Senior Notes due 2009 and 11 7/8% Senior Discount Notes due 2009 in November
1999, (2) acting as the lead manager for an offering of convertible preferred
stock of Omnipoint in May 1998, (3) acting as a co-manager for an offering of
Class A Shares of Western Wireless in April, 1998, (4) acting as a co-manager
for an offering of Trust Originated Preferred Securities of TDS in February
1998, (5) arranging a senior secured credit facility for Omnipoint in February
1998 and (6) 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;
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- 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 importance VoiceStream placed on knowing the maximum number of shares
it would be required to issue in the transaction and the insistence of
VoiceStream on pricing the $420 million TDS debt replacement and the $230
million Sonera investment based on a fixed dollar amount rather than the
value of the exchange ratio on a specified date;
- the fact that had the $420 million TDS debt replacement and the $230
million Sonera investment been structured based on the value of the
exchange ratio implied by the closing market price of VoiceStream common
stock on September 16, 1999, instead of $22.00 per share, together with a
corresponding increase in the exchange ratio for the benefit of all
Aerial stockholders so as to maintain as constant the aggregate number of
shares to be issued by VoiceStream pursuant to the Aerial reorganization
and the related transactions, including the $420 million TDS debt
replacement and the $230 million Sonera investment, the increase in the
implied value of the exchange ratio per share of Aerial common stock
would have been $0.82 based on the closing 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
$420 million TDS debt replacement and the $230 million Sonera 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 $420 million 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
$420 million TDS debt replacement than the price VoiceStream proposed to
offer to Sonera in the $230 million Sonera 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;
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- 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 $420 million TDS debt replacement and the $230 million
Sonera 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.
While the Aerial special committee considered the pricing of the $420
million TDS debt replacement and the $230 million Sonera investment at $22.00
per share, instead of at the implied transaction price, together with a
corresponding increase in the exchange ratio, a negative factor, after
considering all relevant factors, the special committee determined to recommend
approval of the Aerial reorganization.
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
that, as of such date, 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. 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. THE FOLLOWING IS A SUMMARY OF THE WRITTEN OPINION OF
WASSERSTEIN PERELLA. 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.
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
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- 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 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 took into
account VoiceStream's view as to the possible tax consequences of the
transactions contemplated by the Aerial reorganization agreement. Wasserstein
Perella did not assume that there would be no potential adverse tax consequences
which might result from the transactions contemplated by the Aerial
reorganization agreement. Rather Wasserstein Perella took into account the
possibility that there could be adverse tax consequences implicating the tax
indemnification obligations of VoiceStream to Western Wireless and determined
that the possibility of any such consequences would not affect its conclusion as
to the fairness of the merger consideration. 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
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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. This analysis indicated that the proposed
exchange ratio for the Aerial reorganization was in excess of the mean market
ratio during the period and the current market ratio as well as in excess of the
market ratio on all but five trading days during the period and, therefore, that
the per share value of Aerial common stock relative to the per share value of
VoiceStream common stock implied by the proposed exchange ratio was in excess of
the relative value implied by the mean trading prices of Aerial common stock and
VoiceStream common stock during the period, and the relative value implied by
the current market prices of Aerial common stock and VoiceStream common stock,
as well as the then relative value implied by the market prices of Aerial common
stock and VoiceStream common stock on all but five trading days during the
period.
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 transaction price implied by the exchange ratio of 0.455 shares of
VoiceStream common stock per share of Aerial common stock and the closing price
per share of VoiceStream common stock on September 16, 1999 of $55.13. The
following table presents the results of this analysis and shows the premiums and
discounts represented by the
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$18.00 cash election price and the $25.08 implied transaction price to the
trading price of Aerial common stock on the dates shown:
<TABLE>
<CAPTION>
PREMIUM/(DISCOUNT) OF PREMIUM OF $25.08
$18.00 AERIAL CASH IMPLIED TRANSACTION
ELECTION PRICE TO PRICE OVER
DATE TRADING PRICE TRADING PRICE TRADING PRICE
---- ------------- --------------------- -------------------
<S> <C> <C> <C>
September 16, 1999 -- one day prior
to the Aerial reorganization
agreement......................... $19.13 (5.9)% 31.1%
August 31, 1999 -- 10 trading days
prior to the Aerial reorganization
agreement........................... 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>
Wasserstein Perella selected the dates shown above to illustrate the stock
market performance of Aerial common stock on various dates and during the period
prior to the date of the Aerial reorganization agreement. This analysis
indicated that the implied transaction price on September 16, 1999 of $25.08 was
significantly greater than the trading price of Aerial common stock throughout
the prior 52-week period and that the $18.00 cash election price also was
significantly greater than the trading price of Aerial common stock on a number
of days during the same period.
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
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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.
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>
This analysis indicated that whether Aerial's share of the combined
entity's enterprise value implied by the exchange ratio and by the closing
market price of VoiceStream common stock on September 16, 1999 was more than or
less than Aerial's relative contribution to the combined entity's
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operating and financial items depends on the assumptions used -- including
assumptions regarding whether the Omnipoint transaction closes and assumptions
regarding the future performance of Aerial, VoiceStream and Omnipoint -- and on
the operating and financial items selected. In particular, this analysis
indicated that Aerial's relative contribution of proportionate POPs to the
combined entity was less than Aerial's relative share of the combined entity's
enterprise value. This analysis also indicated that for each of the other
operating and financial items selected -- proportionate covered POPs,
proportionate subscribers, and proportionate service revenues -- Aerial's
relative contribution to the combined entity, based on operating and financial
items at June 30, 1999 or projected by the Aerial management case for the year
ending December 31, 1999 was more than Aerial's relative share of the combined
entity's enterprise value; but that for each of these operating and financial
items, Aerial's projected relative contribution at or for the period ending
December 31, 2001 was less than its relative contribution at June 30, 1999 or
for the period ending December 31, 1999; and in many instances (all instances
under the Aerial sensitivity case) these projected relative contributions were
less than Aerial's relative share of the combined entity's enterprise value.
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. EBITDA as used throughout this summary represents operating
income (loss) plus depreciation and amortization. Each of the multiples
calculated by Wasserstein Perella were believed by Wasserstein Perella to be
relevant to understanding the valuation of a wireless communications company.
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 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
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reorganization and for 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 AERIAL IMPLIED BASED VALUE VALUE
ENTERPRISE IMPLIED OMNIPOINT ON BASED BASED
VALUE AT AERIAL CASH REORGANIZATION OMNIPOINT ON TRADING ON TRADING
EXCHANGE ELECTION ENTERPRISE TRADING PRICE PRICE
RATIO 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
POPs.................... 133.9 106.7 78.6 110.3 83.8 147.4
Proportionate
subscribers - 6/30/99... 8,673.1 6,914.7 7,340.3 10,306.5 3,315.0 10,306.5
1999E service revenues.... 14.1x 11.3x 15.0x 21.0x 8.1x 21.0x
2000E service revenues.... 9.3 7.4 8.2 11.6 4.8 11.6
2002E EBITDA.............. 18.1 14.5 21.1 29.6 7.3 29.6
</TABLE>
This analysis indicated that the valuation multiples for Aerial resulting
from both the implied transaction price based on the exchange ratio at September
16, 1999 of $25.08 and the $18.00 cash election price were within the range of
trading multiples for the Aerial selected companies for each of the measures
selected. This analysis also indicated that the valuation multiples for Aerial,
resulting from the implied transaction price based on the exchange ratio at
September 16, 1999 of $25.08 were on some measures greater than and on some
measures less than the valuation multiples for Omnipoint.
VALUATION OF AERIAL
Wasserstein Perella analyzed the value of Aerial utilizing a number of
different valuation methodologies as set forth below. In each case, Wasserstein
Perella performed the valuation analysis in order to compare the value of Aerial
implied by the transaction to the value of Aerial derived through the analysis.
Comparable Trading Analysis
Wasserstein Perella calculated a range of implied values per share for
Aerial by applying a 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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<PAGE> 157
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>
This analysis indicated that the implied transaction price based on the
exchange ratio at September 16, 1999 of $25.08 was above the range of implied
values per share for Aerial based on the Aerial selected companies adjusted
multiples for each of the measures selected, and the $18.00 cash election price
was within or above the range of implied values for Aerial based on Aerial
selected companies adjusted multiples for each of the measures selected.
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.
Wasserstein Perella noted that both the implied transaction price of $25.08 per
share and the cash election price of $18.00 per share were in excess of both of
these prices.
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 value per Aerial share 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>
This analysis indicated that the implied transaction price based on the
exchange ratio at September 16, 1999 of $25.08 was above or within the range of
implied per share values for Aerial
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based on the Omnipoint valuation multiples at announcement of the Omnipoint
reorganization and the current Omnipoint trading multiples for each selected
measure and that the $18.00 cash election price was on one measure above, on one
measure within and on one measure below the range of implied per share values
for Aerial based on the Omnipoint valuation multiples at announcement of the
Omnipoint reorganization and the current Omnipoint trading multiples.
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 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>
This analysis indicated that the implied transaction price based on the
exchange ratio at September 16, 1999 of $25.08 and the $18.00 cash election
price were within the range of implied values for Aerial based on the management
case and within or above the range of implied values for Aerial based on the
sensitivity case.
VALUATION OF VOICESTREAM
Wasserstein Perella analyzed the value of VoiceStream utilizing a number of
different valuation methodologies as set forth below. In each case, Wasserstein
Perella performed the valuation analysis in order to compare the market value of
VoiceStream common stock to the per share value of VoiceStream derived through
the analysis and to determine whether the VoiceStream common stock to be
received by Aerial stockholders who do not elect to receive cash in the Aerial
reorganization was fairly valued at its then current market price.
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
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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>
<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>
This analysis indicated that, based on the VoiceStream selected companies
adjusted multiples for VoiceStream on a stand-alone basis, the $55.13 closing
market price of VoiceStream common stock on September 16, 1999 was at the low
end of the range of implied values of VoiceStream based on the proportionate
POPs multiple but higher than the range of implied values of VoiceStream based
on the other multiples of financial and operating data shown above. This
analysis also indicated that, based on the VoiceStream selected companies
adjusted multiples for VoiceStream/Omnipoint on a combined basis, the $55.13
closing market price of VoiceStream common stock on September 16, 1999 was lower
than the range of implied values of VoiceStream based on proportionate POPs and
covered proportionate POPs multiples but higher than the range of implied values
of VoiceStream based on the other multiples of financial and operating data
shown above.
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
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<PAGE> 160
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>
This analysis indicated that the $55.13 closing market price of VoiceStream
common stock on September 16, 1999 was higher than the range of implied per
share values for VoiceStream on a stand-alone basis but within the range of
implied per share values for VoiceStream/Omnipoint on a combined basis.
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 $420 million TDS debt replacement price to TDS and the $230
million Sonera investment price to Sonera.
ANALYSIS OF $420 MILLION TDS DEBT REPLACEMENT, $230 MILLION SONERA
INVESTMENT, AERIAL CASH ELECTION AND COLLAR
Under the proposed terms of the TDS $420 million debt replacement
transaction and the $230 million Sonera investment, an additional 29.55 million
shares of Aerial common stock are to be issued to TDS and Sonera at $22.00 per
share. In order to determine the potential impact on the value to be received by
Aerial common stockholders of a change in the price at which Aerial common stock
was to be issued to TDS and Sonera in the $420 million TDS debt replacement and
the $230 million Sonera investment, Wasserstein Perella performed the following
analysis. Wasserstein Perella calculated the potential change in the exchange
ratio that could have occurred if the $420 million TDS debt replacement and $230
million Sonera investment were effected at $25.08 per share, the implied deal
price based on the VoiceStream common stock price at September 16, 1999, 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. Wasserstein
Perella calculated that these changes could have resulted in an increase in the
exchange ratio of 0.015. Wasserstein Perella also calculated the potential
changes in the exchange ratio that could have occurred if the $420 million TDS
debt replacement and $230 million Sonera investment were effected at $23.66 per
share or $20.56 per share -- the transaction prices implied by the exchange
ratio and the average trading price for VoiceStream common stock for each of the
10 and 30 day periods ending on September 16, 1999 -- assuming again that the
exchange ratio was adjusted so that the
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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 noted that other per share values might have been
selected as the basis for pricing the $420 million TDS debt replacement and the
$230 million Sonera investment -- including the Aerial closing stock price on
September 16, 1999 of $19.125 and the average Aerial closing stock price for
each of the 10 and 30 day periods ending September 16, 1999 of $18.519 and
$16.008, respectively, were lower than the $22.00 price that was selected.
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, the collar protection is inapplicable and, therefore,
has no value. As shown in the following table, this analysis indicated that the
theoretical value of the Aerial cash election option available to the Aerial
public stockholders was greater than the theoretical value of the downside price
protection collar available to all Aerial stockholders by amounts which varied
based on the assumptions from $0.289 to $4.466 per share of Aerial common stock.
<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>
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<PAGE> 162
<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 $420 million TDS debt replacement and from the collar
protection, the potential benefit or cost to Sonera from the $230 million Sonera
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 $420 million TDS debt replacement and the $230
million Sonera investment, respectively, and for the Aerial public stockholders
on the basis of the actual number of Aerial shares owned. 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 analysis indicated that there were scenarios among those considered in
which the benefits received by the Aerial public stockholders from the Aerial
cash election option would exceed the benefits received by TDS and Sonera from
the $420 million TDS debt replacement, the $230 million Sonera investment and
the collar protection and that there were other scenarios among those considered
in which the opposite would be the case.
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. Wasserstein Perella did not attribute any particular weight to any
analysis or factor considered by them, nor, except as set forth above, did they
derive any value from, or draw any conclusion with respect to fairness based on
any particular analysis. Rather, Wasserstein Perella made their determination as
to fairness on the basis of their experience and professional judgment after
considering the results of all such analyses. 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, 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
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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 and VoiceStream 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 thereafter an additional
advisory fee of $150,000 per two-month period 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 $112.69 per share of VoiceStream common stock on
January 14, 2000 and the exchange ratio, this additional financial advisory and
opinion fee would equal approximately $7 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. As of January 14, 2000, the
aggregate out of pocket expenses of Wasserstein Perella were approximately
$52,000.
AGREEMENTS RELATING TO THE AERIAL REORGANIZATION
VOICESTREAM STOCKHOLDERS VOTING AGREEMENT
Pursuant to a stockholders voting agreement, stockholders who currently
hold approximately 40% of the outstanding shares of VoiceStream common stock
have agreed to vote for the Aerial reorganization, even if the VoiceStream 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> 164
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 assigned 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 consist of 6,166,758 Aerial
Common Shares and 12,924,151 Aerial Series A Common Shares. Concurrently with
such issuance to TDS, Aerial
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issued 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 were made to the TDS
revolving credit agreement.
Immediately after the completion of such equity issuances by Aerial, Aerial
assigned 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
issued 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 paid by each of Aerial and Sonera for such shares
of Aerial Operating Company common stock was $148.04, which represents the
$22.00 price per Aerial share multiplied by the applicable exchange rate of
6.72919. These 1,046,999 shares of Aerial Operating Company common stock will be
exchanged immediately prior to the Aerial reorganization for 7,045,455 Aerial
Common Shares. On January 17, 2000, Aerial Operating Company contributed to its
subsidiaries, as a contribution to capital, approximately $1.2 billion of the
receivables owed by such subsidiaries to Aerial Operating Company. Because
Aerial Operating Company owns, directly or indirectly, 100% of each such
subsidiary, no additional shares or partnership interests were issued to Aerial
Operating Company in exchange for such contributions.
The following summarizes the value of VoiceStream Holdings common stock
that TDS and Sonera will receive as a result of these transactions, based on the
closing price of VoiceStream common stock on January 14, 2000 of $112.69 per
share.
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF SHARES EQUIVALENT SHARES OF IMPLIED VALUE OF
AND EQUIVALENT VOICESTREAM HOLDINGS VOICESTREAM HOLDINGS
SHARES OF AERIAL COMMON STOCK BASED COMMON STOCK BASED
COMMON SOCK ON THE EXCHANGE ON CLOSING PRICE ON
ACQUIRED RATIO OF 0.455 JANUARY 14, 2000 IMPLIED GAIN
---------------- -------------------- -------------------- ------------
<S> <C> <C> <C> <C>
TDS................... 19,090,909 8,686,364 $978,866,000 $558,866,000
Sonera................ 10,454,546 4,756,818 $536,046,000 $306,046,000
</TABLE>
As a result of such transactions, Aerial issued an aggregate of $495
million in new equity and Aerial Operating Company issued an aggregate of $650
million in new equity, $420 million of debt previously owed by Aerial Operating
Company to TDS was extinguished, the maximum commitment under the TDS revolving
credit agreement was reduced from $775 million to $355 million and debt
previously owed to Aerial Operating Company by subsidiaries of Aerial Operating
Company was extinguished. In addition, immediately after the transactions which
occurred on November 1, 1999, each of the interest rate and the default interest
rate under the TDS revolving credit agreement was reduced by 65 basis points and
the guaranty issued by Aerial in favor of TDS with respect to Aerial Operating
Company's obligations under the TDS revolving credit agreement was 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, except as set forth
below, 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
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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 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.
VoiceStream or VoiceStream Holdings is obligated to pay to TDS the amount
of the loans outstanding under the TDS revolving credit agreement or the amended
and restated credit agreement, as applicable, if (1) the Omnipoint
reorganization has been completed, (2) the anticipated $3.0 billion new credit
facility currently under negotiation by VoiceStream has been completed and (3)
VoiceStream is not obligated to purchase as a result of the Omnipoint
reorganization certain outstanding Omnipoint debt. If all three of these
conditions are satisfied prior to the completion of the Aerial reorganization,
then such loans will be repaid at the completion of the Aerial reorganization
and TDS and Aerial Operating Company will not be required to enter into the
amended and restated credit agreement. If all three of these conditions are
satisfied within one year after the completion of the Aerial reorganization,
then such loans will be repaid on the date on which such conditions are
satisfied and the amended and restated credit agreement will terminate prior to
the scheduled one-year maturity date of the loans thereunder.
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 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
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<PAGE> 167
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, 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 $420 million 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 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
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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 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 "Financial Information -- 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 $61 million, based
on the closing price of $112.69 per share of VoiceStream common stock on January
14, 2000. This includes transaction costs to be paid by Aerial of approximately
$42 million related to investment banking fees and $3 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 $10 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 Washington Business
Corporation Act and Delaware General Corporation Law.
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<PAGE> 169
LITIGATION
On September 21, 1999, Herbert Behrens, who purports 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, VoiceStream and the
following directors of TDS and/or Aerial: LeRoy T. Carlson, Jr., Donald W.
Warkentin, J. Clarke Smith, LeRoy T. Carlson, Murray L. Swanson, Rudolph E.
Hornacek, James Barr III, Walter C.D. Carlson, Thomas W. Wilson, Jr., John D.
Foster and Perti Miettunen. The complaint alleges a breach of fiduciary duties
by the defendants in connection with the transactions contemplated by the Aerial
reorganization, including the replacement of $420 million of debt owed by Aerial
Operating Company to TDS with equity at $22.00 per share of Aerial common stock.
The complaint asserts that TDS acquired additional Aerial common stock at $22.00
per share prior to the announcement of the Aerial reorganization agreement
whereby all Aerial shareholders would receive stock worth $25.50, based on the
conversion ratio of 0.455 and the closing price of VoiceStream common stock of
$56.06 on September 17, 1999. 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.
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 discussion of the material United States federal income
tax consequences of the Aerial merger to holders of Aerial common stock. It does
not address 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 address tax consequences that may apply to you if you are a taxpayer that is
subject to special treatment under the federal income tax laws, such as 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, or if you have an excess loss account with respect to your
Aerial common stock. It also does not address any aspect of state, local or
foreign taxation. The discussion 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.
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 Internal Revenue
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 Internal Revenue Code, or part of a transaction described
in section 351(a) of the Internal Revenue Code.
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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,
it is the opinion of Sidley & Austin that, under current United States federal
income tax law:
- the Aerial merger will constitute a reorganization within the meaning of
section 368(a) of the Internal Revenue 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
Internal Revenue Code; and
- 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.
This conclusion is based on the Internal Revenue 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 as a reorganization described
in section 368(a) of the Internal Revenue Code for United States federal income
tax purposes:
- each holder of Aerial common stock who does not elect to receive any cash
in the Aerial merger will have an aggregate tax basis in the VoiceStream
Holdings common stock received, including any fractional share of
VoiceStream Holdings common stock for which cash is received, equal to
his or her aggregate tax basis in the Aerial common stock surrendered;
- 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.
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<PAGE> 171
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 Holdings 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
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 VOICESTREAM'S TAX SHARING
AGREEMENT
VoiceStream believes that the consequences of the Aerial reorganization
under VoiceStream's Tax Sharing Agreement should be the same as set forth under
the heading, "The Omnipoint Reorganization -- Consequences of the Omnipoint
Reorganization Under VoiceStream's 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.
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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.
The following identifies directors and executive officers of Aerial who may
have an interest in the Aerial reorganization and, if applicable and
practicable, a quantification of the benefit that could be deemed to be
attributable to such person as a result of the Aerial reorganization, other than
any interest arising solely from the ownership of securities of Aerial in which
such person receives no extra or special benefit not shared on a pro rata basis
with other Aerial stockholders.
<TABLE>
<CAPTION>
TITLE OR OTHER NATURE OF AMOUNT OF PERSON'S
RELATIONSHIP INTEREST IN AERIAL AMOUNT OF POTENTIAL INTEREST
PERSON TO AERIAL REORGANIZATION TRANSACTION IN TRANSACTION
------ -------------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C>
LeRoy T. Carlson, Jr. Director and Director and President of TDS; son of $558,866,000(1) $11,912,000(2)
Chairman of Aerial LeRoy T. Carlson and brother of Walter
C.D. Carlson; trustee and beneficiary
of voting trust which controls TDS;
beneficial owner of TDS common stock
LeRoy T. Carlson Director of Aerial Director and Chairman of TDS; father of $558,866,000(1) $10,150,000(2)
LeRoy T. Carlson, Jr. and Walter C.D.
Carlson; beneficiary of voting trust
which controls TDS; beneficial owner of
TDS common stock
Walter C.D. Carlson Director of Aerial Director of TDS; son of LeRoy T. $558,866,000(1) $10,076,000(2)
Carlson and brother of LeRoy T. Carlson
Jr.; trustee and beneficiary of voting
trust which controls TDS; beneficial
owner of TDS common stock
Sandra L. Helton Director of Aerial Director and Executive Vice President- $558,866,000(1) $ 357,000(2)
Finance and Chief Financial Officer of
TDS; beneficial owner of TDS common
stock
Rudolph E. Hornacek Director of Aerial Vice President-Engineering of TDS; $558,866,000(1) $ 474,000(2)
beneficial owner of TDS common stock
James Barr III Director of Aerial Director of TDS and Director and $558,866,000(1) $ 220,000(2)
President of TDS Telecommunications
Corporation, a wholly-owned subsidiary
of TDS; beneficial owner of TDS common
stock
Matti Makkonen Director of Aerial Executive Vice President of Sonera; $794,555,000(3) $ 11,000(4)
beneficial owner of Sonera common stock
Pertti Miettunen Director of Aerial Senior Vice President of Sonera $794,555,000(3) $ --(4)
Donald W. Warkentin Director and Stock Options(5) $ 4,531,000 $ 4,531,000
President of Aerial Restricted Stock Units(6) $ 2,214,000 $ 2,214,000
Severance Payment(7) $ 1,086,000 $ 1,086,000
J. Clarke Smith Director and Vice Stock Options(5) $ 2,070,000 $ 2,070,000
President-Finance Restricted Stock Units(6) $ 1,328,000 $ 1,328,000
and Administration, Severance Payment(7) $ 488,000 $ 488,000
Chief Financial
Officer and
Treasurer of Aerial
</TABLE>
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<TABLE>
<CAPTION>
TITLE OR OTHER NATURE OF AMOUNT OF PERSON'S
RELATIONSHIP INTEREST IN AERIAL AMOUNT OF POTENTIAL INTEREST
PERSON TO AERIAL REORGANIZATION TRANSACTION IN TRANSACTION
------ -------------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C>
David B. Lowry Chief Technical Stock Options(5) $ 497,000 $ 497,000
Officer of Aerial Restricted Stock Units(6) $ 1,328,000 $ 1,328,000
Severance Payment(7) $ 486,000 $ 486,000
Carol J. Ogren Vice President-Human Stock Options(5) $ 1,456,000 $ 1,456,000
Resources Restricted Stock Units(6) $ 738,000 $ 738,000
Severance Payment(7) $ 252,000 $ 252,000
Gary F. Ballard Vice President-Sales Stock Options(5) $ 2,082,000 $ 2,082,000
Restricted Stock Units(6) $ 1,328,000 $ 1,328,000
Severance Payment(7) $ 389,000 $ 389,000
B. Scott Dailey Vice President- Stock Options(5) $ 681,000 $ 681,000
Controller and Restricted Stock Units(6) $ 738,000 $ 738,000
Assistant Secretary Severance Payment(7) $ 177,000 $ 177,000
</TABLE>
- ---------------
(1) TDS has an interest in the Aerial reorganization as a result of an
arrangement pursuant to which TDS replaced $420 million of debt from Aerial
with Aerial equity at a price of $22.00 per share of Aerial common stock.
Based on the last sale price of $112.69 for VoiceStream common stock on
January 14, 2000, and based on the exchange ratio of 0.455, the implied gain
to TDS from such transaction is approximately $559 million. See "Agreements
Relating to the Aerial Reorganization -- Debt Replacement Agreement."
(2) This amount is intended to represent the potential indirect interest of such
person in the implied gain to TDS from the transaction described in
footnote(1). Such person does not have any direct interest in or any legal
right to receive any portion of the implied gain which may be realized by
TDS. This amount was determined as the product of (a) the number of shares
of common stock beneficially owned by such person in TDS and (b) the implied
gain per share of TDS common stock. The implied gain per share of TDS common
stock was determined by dividing the amount of the aggregate implied gain of
$559 million by the number of outstanding shares of TDS common stock.
(3) Sonera has an interest in the Aerial reorganization as a result of two
arrangements. In one arrangement with Aerial, Sonera invested $230 million
in Aerial and an Aerial subsidiary at an equivalent price of $22.00 per
share of Aerial common stock. Based on the last sale price of $112.69 for
VoiceStream common stock on January 14, 2000, and based on the exchange
ratio of 0.455, the implied gain to Sonera from such transaction is
approximately $306 million. See "Arrangements Relating to the Aerial
Reorganization -- Debt Replacement Agreement." In the other arrangement,
VoiceStream agreed to permit Sonera to invest, at the closing of the
Omnipoint reorganization, $500 million in VoiceStream Holdings common stock
at a price of $57.00 per share. Based on the last sale price of $112.69 for
VoiceStream common stock on January 14, 2000, the implied gain to Sonera
from such transaction is approximately $489 million. See "The Omnipoint
Reorganization -- $500 Million Sonera Investment in VoiceStream Holdings."
The total implied gain from these two transactions is approximately $795
million.
(4) This amount is intended to represent the potential indirect interest of such
person in the implied gain to Sonera from the transactions described in
footnote(3). Such person does not have any direct interest in or any legal
right to receive any portion of the implied gain which may be realized by
Sonera. This amount was determined as the product of (a) the number of
shares of common stock beneficially owned by such person in Sonera and (b)
the implied gain per share of Sonera common stock. The implied gain per
share of Sonera common stock was determined by dividing the amount of the
aggregate implied gain of $795 million by the number of outstanding shares
of Sonera common stock.
(5) Unvested options with respect to shares of Aerial common stock held by such
persons will accelerate and become fully vested upon approval of the Aerial
reorganization by Aerial stockholders. In the Aerial reorganization, all
options with respect to shares of Aerial common stock held by such persons
will be
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converted into substantially identical fully-vested options to acquire
VoiceStream Holdings common stock based on the exchange ratio of 0.455. See
"1996 Long-Term Incentive Plan" below. The dollar amount reported in the
table represents the implied gain to such person as a result of Aerial
options which will be converted into options for VoiceStream Holdings common
stock, based on the last sale price of $112.69 for VoiceStream common stock
on January 14, 2000.
(6) Unvested restricted stock units with respect to shares of Aerial common
stock held by such persons will accelerate and become fully vested upon
approval of the Aerial reorganization by Aerial stockholders. All restricted
stock units will be paid out promptly after such stockholders meeting in
cash or shares of Aerial common stock at the discretion of the chairman of
Aerial. See "Retention Restricted Stock Unit Plan" below. The dollar amount
reported in the table represents the implied gain to such person as a result
of restricted stock units held by such person based on the last sale price
of $49.19 for Aerial common stock on January 14, 2000.
(7) Such persons will be entitled to receive executive severance payments as a
result of the closing of the Aerial reorganization. See "Executive Severance
Payments" below.
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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 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/or officers of TDS or its
affiliates (other than Aerial and its subsidiaries) are: LeRoy T. Carlson,
director and Chairman of TDS; LeRoy T. Carlson, Jr., director, President and CEO
of TDS; Sandra L. Helton, director and Executive Vice President-Finance of TDS;
Walter C. D. Carlson, director of TDS; James Barr III, director of TDS and
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 $420 million TDS debt replacement,
TDS would receive 35,570,494 shares of VoiceStream Holdings common stock in the
Aerial reorganization, representing approximately 16% 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
$420 million 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 of 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 the 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 $49.19 per Aerial Common Share on January 14,
2000, the aggregate amount that would have been payable to employees under the
retention restricted stock unit plan would be approximately $21.2 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 his or her termination, if not yet paid, (2) the executive's
prorated target bonus for the year in which
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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 1999 BASE SALARY/ ESTIMATED EXTENDED
NAME MULTIPLE TARGET BONUS SEVERANCE PAYMENT BENEFIT PERIOD
---- ---------- ----------------- ----------------- --------------
<S> <C> <C> <C> <C>
D. Warkentin.................... 2.25 $482,850 $1,086,413 27 months
C. Smith........................ 1.5 325,605 488,408 18 months
D. Lowry........................ 1.5 324,275 486,413 18 months
G. Ballard...................... 1.5 259,000 388,500 18 months
C. Ogren........................ 1.25 201,630 252,038 15 months
A. Fountaine.................... 1.0 204,750 204,750 12 months
R. Rowe......................... 1.0 203,775 203,775 12 months
S. Dailey....................... 1.0 177,450 177,450 12 months
T. McDowell..................... 1.0 203,775 203,775 12 months
B. O'Connor..................... 1.0 203,775 203,775 12 months
D. Howe......................... 1.0 227,500 227,500 12 months
M. Guerrieri.................... 1.0 195,000 195,000 12 months
E. Branham...................... 1.0 188,500 188,500 12 months
----------
TOTAL........................... $4,306,297
==========
</TABLE>
As indicated above, the estimated cost of the executive severance
agreements is $4.3 million.
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
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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 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 manager-and director-level 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% for a
director-level employee or 50% for a manager-level 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% for a director-
level employee or 50% for a manager-level 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 retention 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
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requirement that the employee be based more than 30 miles from the employee's
office at the time of 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".
The estimated cost of the special retention plan is $4.6 million.
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 estimated cost of the special severance plan is $3.8 million.
Non-Compete Agreements
At the time of the completion 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 contractual and other relationships with Aerial as described below.
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Following the Aerial reorganization, Aerial will be a wholly-owned
subsidiary of VoiceStream Holdings. However, TDS and Aerial have entered into,
or will enter into, other arrangements to facilitate the Aerial Reorganization,
as described below.
AGREEMENTS RELATING TO THE AERIAL REORGANIZATION
In contemplation of the Aerial reorganization, TDS and Aerial have entered
or will enter into 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 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
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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.
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. Under the Aerial
reorganization agreement, this claim will be withdrawn by Aerial at the closing
of the Aerial reorganization.
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.
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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 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
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Aerial that TDS may hold at any time. This registration rights agreement will be
terminated in connection with the Aerial reorganization.
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. 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 was
replaced with equity and certain modifications were made to the TDS revolving
credit agreement. As a result, the maximum commitment under the TDS revolving
credit agreement was reduced from $775 million to $355 million. Also on November
1, 1999, Sonera invested an aggregate amount of $230 million in Aerial and
Aerial Operating Company. The funds invested by Sonera were used to repay
outstanding debt under the TDS revolving credit agreement and are 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 unless (1) the Omnipoint
reorganization has been completed, (2) the anticipated $3.0 billion new credit
facility currently under negotiation by VoiceStream has been completed and (3)
VoiceStream is not obligated to purchase as a result of the Omnipoint
reorganization certain outstanding Omnipoint debt. See "The Aerial
Reorganization -- Agreements Relating to the Aerial Reorganization -- Amended
and Restated Credit Agreement."
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VOICESTREAM HOLDINGS VOTING AGREEMENT
The principal stockholders of VoiceStream are parties to 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 Hellman & Friedman, Goldman Sachs &
Co., John W. Stanton, Providence Media Partners L.P. and Hutchison PCS (USA) and
entities affiliated with each of them, 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. As a result of the distribution by Hellman & Friedman and
Providence Media Partners L.P. and entities affiliated with them of their shares
of VoiceStream to the beneficial owners of these entities, neither Hellman &
Friedman nor Providence Media Partners L.P. will be a party to the new voting
agreement.
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 a board consisting of 15 members, subject to adjustments, of the VoiceStream
Holdings board designated as follows:
- Mr. Stanton, as long as he is the chief executive officer of VoiceStream
Holdings;
- One member designated by Mr. Stanton, so long as he or entities
affiliated with him beneficially owns at least 4,500,000 shares of
VoiceStream Holdings common stock;
- Four members designated by Hutchison PCS (USA) and its affiliated
entities, which number of designees shall be subject to increases or
decreases depending upon increases or reductions in Hutchison PCS (USA)'s
percentage ownership of outstanding VoiceStream Holdings common stock,
including shares of VoiceStream Holdings common stock issuable to the
Hutchison PCS (USA) upon conversion of the Voice Stream Holdings 2.5%
Convertible Junior Preferred Stock.
- one member designated by the Goldman, Sachs & Co. and affiliated
entities, so long as the Goldman Sachs entities beneficially own at least
4,500,000 shares of VoiceStream Holdings common stock;
- 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 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. This agreement 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
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<PAGE> 185
described above agree to enter into this agreement and the Omnipoint
reorganization has been completed.
At the time the stock purchase agreement for the $500 million Sonera
investment in VoiceStream Holdings 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. This agreement 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 Stock owned
by them into Omnipoint common stock.
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<PAGE> 186
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 $957 million Hutchison
investments. In the $957 million 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 2.5% Convertible
Junior Preferred Stock, for a purchase price of $100,000 per share. The total
purchase price of the VoiceStream Holdings common stock and the VoiceStream
Holdings 2.5% Convertible Junior Preferred Stock will be $957 million,
consisting of $807 million in cash and $150 million in shares of Omnipoint
Series A Preferred Stock purchased by Hutchison PCS (USA) from Omnipoint under a
securities purchase agreement. The Omnipoint Series A Preferred Stock, and all
shares of Omnipoint common stock obtained prior to the Omnipoint reorganization
on conversion of the Omnipoint Series A Preferred Stock, 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 2.5% Convertible Junior Preferred Stock 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. The VoiceStream Holdings 2.5% Convertible Junior Preferred Stock
is convertible at any time by Hutchison PCS (USA) at $29.00 a share.
VoiceStream Holdings entered into the $957 million 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 $957 million Hutchison investments will be
33 million shares. After giving effect to the Omnipoint reorganization, the
Aerial reorganization, the $957 million Hutchison investments and the $500
million Sonera investment in VoiceStream Holdings, Hutchison PCS (USA) would own
55,899,252 shares (approximately 23%) of VoiceStream Holdings common stock. The
consummation of the purchases will take place in connection with the completion
of the Omnipoint reorganization.
The VoiceStream Holdings 2.5% Convertible Junior Preferred Stock 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 2.5% Convertible Junior Preferred Stock
cannot require VoiceStream Holdings to redeem these shares prior to maturity.
Upon conversion of the VoiceStream Holdings 2.5% Convertible Junior Preferred
Stock 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 2.5% Convertible Junior
Preferred Stock to be converted into VoiceStream Holdings common stock.
Based on the last sale price of $112.69 for VoiceStream common stock on
January 14, 2000, such investment has an implied value of $3.7 billion,
resulting in an implied unrealized gain to Hutchison PCS (USA) of $2.8 billion
if the Omnipoint reorganization were to have been completed on that date. This
unrealized gain is due to an increase in the market price of VoiceStream common
stock since the time that the pricing of the transaction was negotiated.
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<PAGE> 187
$500 MILLION SONERA INVESTMENT
On September 17, 1999, VoiceStream Holdings and Sonera entered into an
agreement providing for the $500 million Sonera investment. In the $500 million
Sonera 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 $500 million
Sonera investment is desirable to us in light of the fact that Omnipoint is
substantially leveraged, and the $500 million Sonera investment will provide us
with additional capital. Based on the last sale price of $112.69 for VoiceStream
common stock on January 14, 2000, such investment has an implied value of
approximately $989 million, resulting in an unrealized gain to Sonera of
approximately $489 million if the Omnipoint reorganization were to have been
completed on that date. This unrealized gain is due primarily to an increase in
the market price of VoiceStream common stock since the time that the pricing of
such investment was negotiated.
$230 MILLION SONERA INVESTMENT
As of September 17, 1999, TDS, Aerial, Aerial Operating Company and Sonera
entered into the settlement agreement and release providing for an investment by
Sonera in Aerial and Aerial Operating Company. In this transaction, on November
1, 1999, Sonera invested 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 issued to Sonera 3,409,091 Aerial Common
Shares in consideration for $75 million, and (2) Aerial Operating Company issued
to Sonera 1,046,999 shares of Aerial Operating Company common stock in
consideration for $155 million. Immediately prior to the Aerial reorganization,
such 1,046,999 shares of Aerial Operating Company common stock will be exchanged
for 7,045,455 Aerial Common Shares. As a result, Sonera effectively acquired an
aggregate of 10,454,546 Aerial Common Shares pursuant to the agreements entered
into on September 17, 1999. Based on the exchange ratio of 0.455 and the last
sale price of $112.69 for VoiceStream common stock on January 14, 2000, such
10,454,546 Aerial Common Shares have an implied value of approximately $536
million, resulting in an unrealized gain to Sonera of approximately $306
million. This unrealized gain is due primarily to an increase in the market
price of VoiceStream common stock since the time that the pricing of such
investment was negotiated. See "Agreements Relating to the Aerial
Reorganization -- Debt Replacement Agreement" and "Sonera Settlement Agreement
and Release."
$420 MILLION 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 replacement of debt with equity. In
this transaction, on November 1, 1999, TDS replaced $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 issued 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. Based on the exchange
ratio of 0.455 and the last sale price of $112.69 for VoiceStream common stock
on January 14, 2000, such 19,090,909 shares of Aerial common stock have an
implied value of approximately $979 million, resulting in an unrealized gain to
TDS of approximately $559 million. This unrealized gain is due primarily to an
increase in the market price of VoiceStream common stock since the time that the
pricing of such transaction was negotiated. See "Agreements Relating to the
Aerial Reorganization -- Debt Replacement Agreement" and "Sonera Settlement
Agreement and Release."
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REGULATORY APPROVAL
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. Qualcomm has filed a petition
to deny transfer of Omnipoint's New York MTA PCS license to VoiceStream with the
FCC.
Completion of 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 transfers, there may be post-grant challenges by
private parties or actions by the FCC or the courts that would delay or prevent
finality. The boards of directors of the parties to each reorganization, in the
exercise of their business judgment, without seeking stockholder approval, may
waive finality as a condition of closing.
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.
VoiceStream has filed a voluntary notice under Exon-Florio requesting
confirmation that the minority Hutchison investments in VoiceStream and
VoiceStream Holdings do not raise concerns under the Exon-Florio amendment.
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 national security concerns of such agencies.
Negotiations with DOJ staff relating to this agreement have concluded,
VoiceStream has signed the agreement, and final approval and signature by the
FBI and DOJ could take several weeks.
On December 23, 1999, the FCC granted Special Temporary Authority until
January 31, 2000 to certain Omnipoint subsidiaries holding PCS licenses in BTAs
within the Washington-Baltimore Major Trading Area to operate outside of their
licensed frequency bands on 20 MHz of the 30 MHz of spectrum comprising PCS
frequency Block A. A subsidiary of Sprint Corporation holds the Block A PCS
license for the MTA and has consented to such out-of-band operation by the
Omnipoint licensees for a period of six months on 20 MHz, and for a year
thereafter on 10 MHz as part of the acquisition from Sprint of the
Washington/Baltimore infrastructure equipment. VoiceStream has provided
approximately $153 million to a joint venture entity with Omnipoint to purchase
the network and for operating expenses and in return therefor VoiceStream will
acquire a 75% ownership interest in that joint venture. The Omnipoint licensees
have agreed to make available to the joint venture on a wholesale basis the PCS
Block A spectrum authorized for use under the Special Temporary Authority during
an 18 month transition period during which the Omnipoint licensees will clear
their permanently authorized spectrum of incumbent microwave users. The Special
Temporary Authority will, therefore, have to be extended, and there is no
guarantee that the
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<PAGE> 189
FCC will grant such extensions. The Special Temporary Authority is conditioned,
among other factors, upon a certification by the Omnipoint licensees that they
will retain control of their authorized spectrum and upon the Omnipoint
licensees and Sprint filing a request for a waiver concerning the out-of-band
operations authorized by the Special Temporary Authority by January 7, 2000.
There is no guarantee that the FCC will not terminate the Special Temporary
Authority at any time, at its own discretion.
On December 1 and 2, 1999, VoiceStream and Aerial filed applications
requesting consent to the Aerial reorganization with the FCC. The applications
were listed on public notice as accepted for filing on January 7, 2000. Such
notice commenced a 30-day period in which interested parties may file comments
or petitions to deny.
Closing of each of the reorganizations will result in VoiceStream Holdings'
attribution with spectrum in excess of the FCC's spectrum aggregation limits.
Temporary waivers of such limits have been sought in connection with the
respective reorganization applications and are expected to be acted upon at the
time the FCC acts on such applications.
We currently anticipate FCC action on all applications necessary for
completion of the Omnipoint reorganization by the end of February 2000 and for
completion of the Aerial reorganization by the end of April 2000.
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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 nine months ended September 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
nine months ended September 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 September 30, 1999 gives effect to
each reorganization as if it had occurred on September 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.
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VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(OMNIPOINT REORGANIZATION ONLY AND OMNIPOINT REORGANIZATION AND AERIAL
REORGANIZATION)
SEPTEMBER 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...... $ 798,796 $ 416,687 $ (529,991) Note 3 $2,007,142 $ 46,320
32,650 Note 3b
(18,000) Note 3f
807,000 Note 4
500,000 Note 9
Accounts receivable, net....... 75,931 64,089 $ (4,433) 135,587 31,139
Inventory...................... 21,011 49,593 70,604 9,012
Prepaid expenses and other
current assets............... 12,887 14,430 (1,789) 25,528 4,105
---------- ----------- --------- ---------- ---------- ----------
Total current assets....... 908,625 544,799 (6,222) 791,659 2,238,861 90,576
---------- ----------- --------- ---------- ---------- ----------
Property and equipment, net..... 770,170 1,060,078 (164,707) 1,665,541 574,382
Licensing costs and other
intangible assets, net......... 362,643 726,405 (225,499) 3,906,297 Note 3 4,769,846 324,807
Investment in and advances to
unconsolidated affiliates...... 252,364 999 67,859 39,099 Note 3g 210,321 2,455
(150,000) Note 5, 8
Other assets.................... 14,110 26,492 (7,130) 33,472 277
---------- ----------- --------- ---------- ---------- ----------
$2,307,912 $ 2,358,773 $(335,699) $4,587,055 $8,918,041 $ 992,497
========== =========== ========= ========== ========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable............... $ 85,010 $ 117,679 $ (4,586) $ 198,103 $ 37,039
Accrued liabilities............ 100,033 158,333 (9,509) 248,857 29,746
Current portion of long-term
debt......................... 141,572 (5,995) 135,577 82,372
---------- ----------- --------- ---------- ----------
Total current
liabilities.............. 185,043 417,584 (20,090) 582,537 149,157
---------- ----------- --------- ---------- ----------
Long-term debt (Note 6)......... 2,003,657 2,716,249 (315,609) 4,404,297 246,123
---------- ----------- --------- ---------- ----------
Deferred tax liability, net..... 18,027
----------
Contingencies (See Notes)
VoiceStream Holdings Junior
Preferred...................... $ 633,000 Note 4 633,000
---------- ----------
Shareholders' equity (deficit):
Common stock and paid-in
capital...................... 1,054,911 311,353 1,584,995 Note 3 4,236,185 984,490
770,000 Note 3e
150,000 Note 5, 8
174,000 Note 4
(309,074) Note 7
500,000 Note 9
Series A Common Shares and
paid-in capital.............. 324,331
Omnipoint 7% Convertible
Preferred.................... 291,880 (291,880) Note 3b
Series A Preferred............. 300,000 (300,000) Notes 5, 8
Deferred compensation.......... (24,503) (10,228) 10,228 Note 7 (24,503)
Notes receivable from
shareholders................. (2,279) (2,279)
Accumulated deficit............ (911,196) (1,665,786) 1,665,786 Note 7 (911,196) (729,631)
---------- ----------- --------- ---------- ---------- ----------
Total shareholders' equity
(deficit)................ 119,212 (775,060) 3,954,055 3,298,207 579,190
---------- ----------- --------- ---------- ---------- ----------
$2,307,912 $ 2,358,773 $(335,699) $4,587,055 $8,918,041 $ 992,497
========== =========== ========= ========== ========== ==========
<CAPTION>
AERIAL VOICESTREAM,
REORGANIZATION OMNIPOINT AND
ADJUSTMENTS AERIAL
-------------- -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...... $ (82,372) Note 12 $ 1,955,590
Note
(15,500) 10g
Accounts receivable, net....... 166,726
Inventory...................... 79,616
Prepaid expenses and other
current assets............... 29,633
----------- -----------
Total current assets....... (97,872) 2,231,565
----------- -----------
Property and equipment, net..... 2,239,923
Licensing costs and other
intangible assets, net......... 4,351,233 Note 10 9,445,886
Investment in and advances to
unconsolidated affiliates...... 212,776
Other assets.................... 33,749
----------- -----------
$ 4,253,361 $14,163,899
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable............... $ 235,142
Accrued liabilities............ 278,603
Current portion of long-term
debt......................... $ (82,372) Note 12 135,577
----------- -----------
Total current
liabilities.............. (82,372) 649,322
----------- -----------
Long-term debt (Note 6)......... 4,650,420
-----------
Deferred tax liability, net..... 18,027
-----------
Contingencies (See Notes)
VoiceStream Holdings Junior
Preferred...................... 633,000
-----------
Shareholders' equity (deficit):
Common stock and paid-in
capital...................... 4,871,923 Note 10 9,151,108
Note
43,000 10f
(984,490) Note 11
Series A Common Shares and
paid-in capital.............. (324,331) Note 11
Omnipoint 7% Convertible
Preferred....................
Series A Preferred.............
Deferred compensation.......... (24,503)
Notes receivable from
shareholders................. (2,279)
Accumulated deficit............ 729,631 Note 11 (911,196)
----------- -----------
Total shareholders' equity
(deficit)................ 4,335,733 8,213,130
----------- -----------
$ 4,253,361 $14,163,899
=========== ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
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VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(OMNIPOINT REORGANIZATION ONLY AND OMNIPOINT REORGANIZATION AND AERIAL
REORGANIZATION)
NINE MONTHS ENDED SEPTEMBER 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........ $ 245,209 $200,607 $(26,821) $ 418,995 $ 139,974
Roamer revenues........... 6,205 19,135 (2,075) 23,265 4,128
Equipment revenues........ 48,554 40,595 (5,519) 83,630 21,134
License fees and
engineering services.... 2,521 2,521
--------- --------- -------- --------- ---------
Total revenues......... 299,968 262,858 (34,415) 528,411 165,236
--------- --------- -------- --------- ---------
Operating expenses:
Cost of service........... 62,375 103,881 (18,674) 147,582 50,303
Cost of equipment sales... 93,904 114,286 (17,263) 190,927 39,671
Cost of engineering
services................ 1,831 1,831
Research and development.. 1,832 1,832
General and
administrative.......... 83,938 120,656 (5,273) 199,321 99,654
Sales and marketing....... 134,689 114,422 (15,943) 233,168 54,742
Depreciation and
amortization............ 96,280 143,360 (19,760) $ 139,278 Note 13 359,158 66,681
Stock based
compensation............ 53,935 5,478 59,413
--------- --------- -------- --------- --------- ---------
Total operating
expenses............. 525,121 605,746 (76,913) 139,278 1,193,232 311,051
--------- --------- -------- --------- --------- ---------
Operating loss............. (225,153) (342,888) 42,498 (139,278) (664,821) (145,815)
--------- --------- -------- --------- --------- ---------
Other income (expense):
Interest and financing
expense, net............ (66,402) (192,639) 25,195 7,602 Note 1a (226,244) (16,040)
Equity in net loss of
unconsolidated Notes 2,
affiliates.............. (34,139) (4,718) (40,169) (1,283) 14 (80,309) (100)
Interest income and other
(expense), net.......... 15,055 8,559 760 24,374 (2,625)
Gain on sale of subsidiary
stock................... 37,120 37,120
Minority share of loss.... 5,381
--------- --------- -------- --------- --------- ---------
Total other income
(expense)............ (85,486) (151,678) (14,214) 6,319 (245,059) (13,384)
--------- --------- -------- --------- --------- ---------
Loss before income
taxes................ (310,639) (494,566) 28,284 (132,959) (909,880) (159,199)
Income tax benefit......... 112,654
--------- --------- -------- --------- --------- ---------
Net (loss) income...... $(310,639) $(494,566) $ 28,284 $(132,959) $(909,880) $ (46,545)
========= ========= ======== ========= ========= =========
<CAPTION>
AERIAL VOICESTREAM
REORGANIZATION OMNIPOINT
ADJUSTMENTS AND AERIAL
-------------- -----------
<S> <C> <C> <C>
Revenues:
Subscriber revenues........ $ 558,969
Roamer revenues........... 27,393
Equipment revenues........ 104,764
License fees and
engineering services.... 2,521
-----------
Total revenues......... 693,647
-----------
Operating expenses:
Cost of service........... 197,885
Cost of equipment sales... 230,598
Cost of engineering
services................ 1,831
Research and development.. 1,832
General and
administrative.......... 298,975
Sales and marketing....... 287,910
Depreciation and
amortization............ $ 158,729 Note 13 584,568
Stock based
compensation............ 59,413
--------- -----------
Total operating
expenses............. 158,729 1,663,012
--------- -----------
Operating loss............. (158,729) (969,365)
--------- -----------
Other income (expense):
Interest and financing
expense, net............ (242,284)
Equity in net loss of
unconsolidated
affiliates.............. (80,409)
Interest income and other
(expense), net.......... 21,749
Gain on sale of subsidiary
stock................... 37,120
Minority share of loss.... (5,381) Note 15
--------- -----------
Total other income
(expense)............ (5,381) (263,824)
--------- -----------
Loss before income
taxes................ (164,110) (1,233,189)
Income tax benefit......... 112,654
--------- -----------
Net (loss) income...... $(164,110) $(1,120,535)
========= ===========
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Pro forma loss per common share calculation (Note 16):
Net loss.................................................... $(909,880) $(1,120,535)
Preferred dividends attributable to VoiceStream Holdings
Junior Preferred......................................... (10,275) (10,275)
--------- -----------
Net loss attributable to common shareholders............... $(920,155) $(1,130,810)
========= ===========
Weighted average common shares used in computing basic and
diluted loss per common share............................ 151,520 203,469
========= ===========
Basic and diluted loss per common share.................... $ (6.07) $ (5.56)
========= ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
185
<PAGE> 193
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) $ 185,703 Note 13 376,823 83,401
--------- --------- -------- --------- ----------- ----------
Total operating
expenses............... 372,606 625,800 (77,831) 185,703 1,106,278 435,890
--------- --------- -------- --------- ----------- ----------
Operating loss................ (204,644) (456,807) 59,475 (185,703) (787,679) (279,985)
--------- --------- -------- --------- ----------- ----------
Other income (expense):
Interest and financing
expense, net............... (47,258) (187,187) 30,569 13,140 Note 1a (190,736) (18,010)
Equity in net loss of
unconsolidated Notes 2,
affiliates................. (24,120) (11,879) (59,825) (1,711) 14 (97,535) (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) 11,429 (275,185) 6,806
--------- --------- -------- --------- ----------- ----------
Loss before income
taxes.................. (267,406) (652,667) 31,483 (174,274) (1,062,864) (273,179)
Income tax expense............ (2,579)
--------- --------- -------- --------- ----------- ----------
Net (loss) income...... $(267,406) $(652,667) $ 31,483 $(174,274) $(1,062,864) $ (275,758)
========= ========= ======== ========= =========== ==========
<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............... $ 211,639 Note 13 671,863
--------- -----------
Total operating
expenses............... 211,639 1,753,807
--------- -----------
Operating loss................ (211,639) (1,279,303)
--------- -----------
Other income (expense):
Interest and financing
expense, net............... (208,746)
Equity in net loss of
unconsolidated
affiliates................. (97,663)
Interest income and other,
net........................ 14,410
Minority share of loss....... (23,620) Note 15
--------- -----------
Total other income
(expense).............. (23,620) (291,999)
--------- -----------
Loss before income
taxes.................. (235,259) (1,571,302)
Income tax expense............ (2,579)
--------- -----------
Net (loss) income...... $(235,259) $(1,573,881)
========= ===========
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Pro forma loss per common share calculation (Note 16):
Net loss.................................................... $(1,062,864) $(1,573,881)
Preferred dividends attributable to VoiceStream Holdings
Junior Preferred......................................... (13,700) (13,700)
----------- -----------
Net loss attributable to common shareholders............... $(1,076,564) $(1,587,581)
=========== ===========
Weighted average common shares used in computing basic and
diluted loss per common share............................ 147,042 198,991
=========== ===========
Basic and diluted loss per common share.................... $ (7.32) $ (7.98)
=========== ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
186
<PAGE> 194
VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(AERIAL REORGANIZATION ONLY)
SEPTEMBER 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........ $ 798,796 $ 46,320 $ (82,372) Note 12 $ 747,244
(15,500) Note 10g
Accounts receivable, net......... 75,931 31,139 107,070
Inventory........................ 21,011 9,012 30,023
Prepaid expenses and other
current assets................ 12,887 4,105 16,992
---------- ---------- ---------- ----------
Total current assets..... 908,625 90,576 (97,872) 901,329
---------- ---------- ---------- ----------
Property and equipment, net........ 770,170 574,382 1,344,552
Licensing costs and other
intangible assets, net........... 362,643 324,807 4,351,233 Note 10 5,038,683
Investment in and advances to
unconsolidated affiliates........ 252,364 2,455 254,819
Other assets....................... 14,110 277 14,387
---------- ---------- ---------- ----------
$2,307,912 $ 992,497 $4,253,361 $7,553,770
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable................. $ 85,010 $ 37,039 $ 122,049
Accrued liabilities.............. 100,033 29,746 129,779
Current portion of long-term
debt.......................... 82,372 $ (82,372) Note 12
---------- ---------- ---------- ----------
Total current
liabilities............ 185,043 149,157 (82,372) 251,828
---------- ---------- ---------- ----------
Long-term debt (Note 6)............ 2,003,657 246,123 2,249,780
---------- ---------- ----------
Deferred tax liability, net........ 18,027 18,027
---------- ----------
Contingencies (See Notes)
Shareholders' equity:
Common stock and paid-in
capital....................... 1,054,911 984,490 4,871,923 Note 10 5,969,834
43,000 Note 10f
(984,490) Note 11
Series A Common Shares and
paid-in capital............... 324,331 (324,331) Note 11
Deferred compensation............ (24,503) (24,503)
Accumulated deficit.............. (911,196) (729,631) 729,631 Note 11 (911,196)
---------- ---------- ---------- ----------
Total shareholders'
equity................. 119,212 579,190 4,335,733 5,034,135
---------- ---------- ---------- ----------
$2,307,912 $ 992,497 $4,253,361 $7,553,770
========== ========== ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
187
<PAGE> 195
VOICESTREAM WIRELESS HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(AERIAL REORGANIZATION ONLY)
NINE MONTHS ENDED SEPTEMBER 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............... $ 245,209 $ 139,974 $ 385,183
Roamer revenues................. 6,205 4,128 10,333
Equipment revenues.............. 48,554 21,134 69,688
--------- --------- ---------
Total revenues.......... 299,968 165,236 465,204
--------- --------- ---------
Operating expenses:
Cost of service................. 62,375 50,303 112,678
Cost of equipment sales......... 93,904 39,671 133,575
General and administrative...... 83,938 99,654 183,592
Sales and marketing............. 134,689 54,742 189,431
Depreciation and amortization... 96,280 66,681 $ 158,729 Note 13 321,690
Stock based compensation........ 53,935 53,935
--------- --------- --------- ---------
Total operating
expenses............. 525,121 311,051 158,729 994,901
--------- --------- --------- ---------
Operating loss.................... (225,153) (145,815) (158,729) (529,697)
--------- --------- --------- ---------
Other income (expense):
Interest and financing expense,
net.......................... (66,402) (16,040) (82,442)
Equity in net loss of
unconsolidated affiliates.... (34,139) (100) (34,239)
Interest income and other
(expense), net............... 15,055 (2,625) 12,430
Minority share of loss.......... 5,381 (5,381) Note 15
--------- --------- --------- ---------
Total other income
(expense)............ (85,486) (13,384) (5,381) (104,251)
--------- --------- --------- ---------
Loss before income
taxes................ (310,639) (159,199) (164,110) (633,948)
Income tax benefit................ 112,654 112,654
--------- --------- --------- ---------
Net (loss) income....... $(310,639) $ (46,545) $(164,110) $(521,294)
========= ========= ========= =========
</TABLE>
<TABLE>
<S> <C>
Pro forma loss per common share calculation (Note 16):
Net loss attributable to common shareholders................ $(521,294)
=========
Weighted average common shares used in computing basic and
diluted loss per common
share..................................................... 147,544
=========
Basic and diluted loss per common share..................... $ (3.53)
=========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
188
<PAGE> 196
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 $ 211,639 Note 13 378,807
--------- --------- --------- ---------
Total operating expenses... 372,606 435,890 211,639 1,020,135
--------- --------- --------- ---------
Operating loss....................... (204,644) (279,985) (211,639) (696,268)
--------- --------- --------- ---------
Other income (expense):
Interest and financing expense,
net............................. (47,258) (18,010) (65,268)
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 15
--------- --------- --------- ---------
Total other income
(expense)............... (62,762) 6,806 (23,620) (79,576)
--------- --------- --------- ---------
Loss before income taxes... (267,406) (273,179) (235,259) (775,844)
Income tax expense................... (2,579) (2,579)
--------- --------- --------- ---------
Net loss................... $(267,406) $(275,758) $(235,259) $(778,423)
========= ========= ========= =========
</TABLE>
<TABLE>
<S> <C>
Pro forma loss per common share calculation (Note 16):
Net loss attributable to common shareholders................ $(778,423)
=========
Weighted average common shares used in computing basic and
diluted loss per common share............................. 144,336
=========
Basic and diluted loss per common share..................... $ (5.39)
=========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
189
<PAGE> 197
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 following transactions: i) remaining $47.5 million of the $150 million
investment in Omnipoint acquired by VoiceStream on October 1, 1999; ii) the
issuance by VoiceStream on November 9, 1999, of a total of $1.8 billion in
a combination of 10 3/8% senior notes and 11 7/8% senior discount notes due
November 15, 2009; net proceeds of which were $1.5 billion net of
underwriting discounts, commissions and expenses of the offering; and iii)
the repayment of $265 million of the outstanding borrowing on the revolver
of VoiceStream's existing credit facility and $400 million of existing
Senior Debentures using a portion of the proceeds from the senior notes.
Therefore, this column includes the effects of these adjustments as follows
(in thousands):
<TABLE>
<CAPTION>
HISTORICAL
VOICESTREAM INTERIM VOICESTREAM
SEPTEMBER 30, 1999 TRANSACTIONS SUBTOTAL
------------------ ------------ -----------
<S> <C> <C> <C>
Cash and cash equivalents.................. $ 48,866 $ 749,930 $798,796
Licensing costs and other intangible
assets, net........................... 321,412 41,231 362,643
Investments in and advances to
unconsolidated affiliates............. 204,868 47,496 252,364
Long-term debt........................... 1,165,000 838,657 2,003,657
</TABLE>
The statements of operations have been adjusted for interest and financing
expenses that would have been incurred due to the increase in borrowings
related to the $150 million investment in Omnipoint. These adjustments
assume that VoiceStream purchases Omnipoint Series A Preferred Stock 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 nine months ended September
30, 1999 and for the year ended December 31, 1998 at a market interest
rate of 9% and 8.8%, respectively. The adjustment to reflect the
VoiceStream purchase of Omnipoint Series A Preferred Stock 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 Stock and the conversion price will be reduced from $24
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 $150 million committed
by VoiceStream. VoiceStream purchased an additional 1,979 shares of Series
A Preferred Stock on October 1, 1999 for a purchase price of $47.5 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 $47.5 million portion of interim investment as an increase to cash
and cash equivalents and Series A Preferred Stock. 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.
190
<PAGE> 198
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
1c. Represents the historical financial position of Aerial adjusted for the
$230 million Sonera investment in Aerial and an Aerial subsidiary at $22.00
per share, the use of these proceeds to pay down a portion of the Aerial
debt to TDS and the $420 million 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
SEPTEMBER 30, 1999 TRANSACTIONS SUBTOTAL
------------------ ------------ --------
<S> <C> <C> <C>
Cash and cash equivalents.................... $ 7,559 $ 38,761 $ 46,320
Long-term debt............................. $857,362 $(611,239) $246,123
Common Shares and paid-in capital.......... $618,821 $ 365,669 $984,490
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 $420 million TDS debt replacement. The entire $230
million Sonera investment in Aerial and an Aerial subsidiary was assumed to
be entirely of Aerial Common Shares.
Interest expense for the nine months ended September 30, 1999 and the
twelve months ended December 31, 1998 has been reduced to reflect the $420
million TDS debt replacement and the repayment of the remaining debt to TDS
with the proceeds of the Sonera investment in Aerial and an Aerial
subsidiary.
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 VoiceStream
Holdings' interests in these entities 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 operations, assets and liabilities associated with these licenses and
operations are being transferred to two new joint venture entities
controlled by Cook Inlet. VoiceStream will account for this transfer of
non-monetary assets as an investment at VoiceStream's historical cost,
which equates to the fair value of these assets and liabilities as the
result of the purchase accounting performed for the reorganization. The
excess purchase price attributed to these assets will be allocated between
license costs and goodwill and amortized into the loss on unconsolidated
affiliates over 40 or 20 years, respectively. Each of these joint venture
entities, Cook Inlet/VoiceStream GSM II PCS, LLC and Cook Inlet/
VoiceStream GSM III PCS, LLC, is expected to qualify as a Designated
Entity. Cook Inlet/ VoiceStream GSM II PCS, LLC will own all C and F Block
licenses previously held by Omnipoint. Cook Inlet/VoiceStream GSM III PCS,
LLC will own the C Block licenses
191
<PAGE> 199
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
acquired by Omnipoint in the 1999 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 and will have substantial financial commitments to, joint
venture entities that we will not control to maintain PCS coverage and
expand in some of our most valuable 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 Cook Inlet/VoiceStream GSM II and
III. For Cook Inlet/VoiceStream GSM II, this date is in the second quarter
of 2002, and for Cook Inlet/VoiceStream GSM III in the fourth quarter of
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 Inlet has the ability to exchange its investment in the joint
ventures for a fixed number of VoiceStream Holdings shares. 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 September 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
September 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.
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.
192
<PAGE> 200
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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.... 54,004
Assumed conversion of Omnipoint 7% Convertible Preferred
Stock -- Note 3b......................................... 10,445
Shares issued for East/West merger -- Note 3c.............. 1,800
----------
Total estimated Omnipoint shares outstanding............ 66,249
VoiceStream Holdings exchange ratio per share.............. 0.825
----------
Equivalent VoiceStream Holdings common shares.............. 54,655
The Omnipoint conversion price -- Note 3d.................. $ 29.00
----------
Subtotal................................................ $1,584,995
Cash consideration of $8 per share......................... 529,991
Fair value of liabilities of Omnipoint at September 30,
1999..................................................... 2,798,134
Option/warrant conversion costs -- Note 3e................. 770,000
Reorganization related costs -- Note 3f.................... 18,000
----------
Total Consideration........................................ 5,701,120
Fair value of assets of Omnipoint acquired (excluding FCC
licenses) -- Note 3g..................................... 1,293,917
Fair value of FCC licenses acquired (net book value of
licenses equal to $500,906).............................. 885,360
----------
Preliminary goodwill....................................... $3,521,843
==========
</TABLE>
3a. Outstanding shares of Omnipoint common stock used for purposes of
this pro forma are as of November 15, 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 Stock
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 September
30, 1999 the amount held in escrow was $32.7 million.
Our assumption that the holders of Omnipoint's 7% Convertible
Preferred Stock would exercise their conversion option is based on
the fact that such conversion likely would result in more favorable
tax treatment than conversion after closing of the reorganization.
If the holders of the Omnipoint 7% Convertible Preferred Stock were
to choose to continue to hold their preferred stock in Omnipoint,
VoiceStream Holdings would report a minority interest on its balance
sheet, reflected as preferred stock, and the accretion of dividends
would be reported as minority interest expense. The amount as of
September 30, 1999 that would have been recorded as preferred stock
was $291.9 million and the amount that would have been accreted as
minority interest expense would have been $15.7 million for the nine
months ended September 30, 1999 and $13.9 million for the year ended
December 31, 1998.
193
<PAGE> 201
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3c. The terms of the East/West merger provide that all of the
outstanding shares of East/West Class A and B common stock will be
converted into 1,775,000 shares of Omnipoint newly-authorized
Series E Preferred Stock which will subsequently be converted into
VoiceStream Holdings stock and cash at the conversion ratio of
0.825 per share and cash of $8.00 per share. Additionally, 25,000
shares of Omnipoint newly-authorized Series E Preferred Stock will
be issued as a fee to the investment bankers associated with this
deal.
3d. 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.
3e. 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 November 15, 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 and accordingly, the estimated fair
value of these options and warrants has been recorded as additional
purchase price.
3f. 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>
3g. Includes an adjustment to reflect the step-up of the investment in
the two new Cook Inlet joint venture entities, Cook
Inlet/VoiceStream GSM II and Cook Inlet/VoiceStream GSM 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 2.5%
Convertible Junior Preferred Stock 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 2.5% Convertible
Junior Preferred Stock 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
$633 million
194
<PAGE> 202
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
representing 6,330 shares of VoiceStream Holdings Junior Preferred and $174
million, representing 6 million shares, of VoiceStream Holdings common
stock.
The VoiceStream Holdings 2.5% Convertible Junior Preferred Stock 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 2.5% Convertible Junior Preferred Stock 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
September 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>
Three months ending December 31, 1999................... $2,142
Year ending December 31, 2000........................... 148
2001.................................................... 32
2002.................................................... 0
2003.................................................... 0
Thereafter.............................................. 230
------
$2,552
======
</TABLE>
We assume that the remaining outstanding long-term debt originating from
Aerial after the Aerial reorganization will consist only of long term debt
used to refinance the Aerial Series A zero coupon notes and Series B zero
coupon notes.
7. Represents the elimination in consolidation of Omnipoint's historical
common stock and paid-in capital of $311.4 million, the recording of the
$2.3 million shareholder note receivable of Omnipoint to be carried forward
to VoiceStream Holdings, the elimination of Omnipoint's historical deferred
compensation of $10.2 million, and the elimination of Omnipoint's
historical accumulated deficit of $1.7 billion.
8. Represents the elimination in consolidation of VoiceStream's $150 million
Omnipoint Series A Preferred Stock investment in Omnipoint and the
conversion of Hutchison's $150 million Omnipoint Series A Stock investment
to VoiceStream Holdings common stock.
9. Represents the Sonera 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.
195
<PAGE> 203
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
10. 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. Each $10 change in the current
market price of VoiceStream's common stock results in a change in
intangible assets of approximately $520 million, and a resulting change in
the annual amortization of intangible assets of approximately $26 million.
The aggregate purchase price was calculated as follows (in thousands,
except per share data):
<TABLE>
<S> <C>
Total Aerial common stock outstanding -- Note 10a........... 94,728
Additional Sonera investment -- Note 10b.................... 7,045
Conversion of Sonera shares of Aerial Operating Company to
Aerial common stock -- Note 10c........................... 11,971
Aerial restricted common stock -- Note 10d.................. 431
----------
Total estimated Aerial shares outstanding................. 114,175
VoiceStream Holdings exchange ratio per share............... 0.455
----------
Equivalent VoiceStream Holdings common stock................ 51,950
The Aerial conversion price -- Note 10e..................... $ 93.781
----------
Subtotal.................................................. $4,871,923
Fair value of liabilities of Aerial at September 30, 1999... 413,307
Option conversion costs -- Note 10f......................... 43,000
Reorganization related costs -- Note 10g.................... 15,500
----------
Total Consideration....................................... 5,343,730
Fair value of assets of Aerial acquired (excluding FCC
licenses)................................................. 667,690
Fair value of FCC licenses acquired (net book value of
licenses equal to $324,807)............................... 561,700
----------
Preliminary goodwill........................................ $4,114,340
==========
</TABLE>
10a. Outstanding shares of Aerial common stock used for purposes of this
pro forma are as of November 15, 1999, the latest practicable date.
10b. Represents the conversion of the portion of the $230 million Sonera
investment that was made in Aerial Operating Company into shares of
Aerial common stock at $22.00 per share (see Note 1c).
10c. Sonera's original investment, as adjusted, 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.
196
<PAGE> 204
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
10d. Represents 431,000 shares of restricted common stock assumed to be
issued to certain Aerial employees upon shareholder approval of the
reorganization.
10e. The conversion price is based on the closing price of VoiceStream
common stock on November 15, 1999, the latest practicable date.
10f. 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 November 15, 1999, the
latest practicable date. Upon stockholder approval of the Aerial
reorganization, each outstanding and unexercised Aerial option will
vest. 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.
10g. 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>
11. Represents the elimination in consolidation of Aerial's Common Shares and
paid-in capital of $984.5 million, Aerial's Series A Common Shares of
$324.3 million, and Aerial's accumulated deficit of $729.6 million.
12. Current portion of long-term debt has been reduced to reflect the payoff of
the Nokia credit agreement of $82.4 million. Additionally, interest expense
for the nine months ended September 30, 1999 and the 12 months ended
December 31, 1998 has been reduced to reflect this payoff.
13. 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.
14. 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.
15. Represents the elimination of Aerial's historical minority interest loss,
resulting from Sonera's conversion of its equity in Aerial Operating
Company to equity in Aerial prior to the Aerial reorganization.
197
<PAGE> 205
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
16. 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 Stock holders 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 a $150.0 million investment in Omnipoint
Series A Preferred Stock as of September 30, 1999, which is
exchangeable for 5.2 million shares of VoiceStream Holdings common
stock; Hutchison PCS (USA) purchased 1.6 million shares on September
30, 1999.
(C) Hutchison PCS (USA) will elect to purchase all VoiceStream Holdings
2.5% Convertible Junior Preferred Stock for its $807 million
investment. For pro forma purposes, it is considered factually
supportable that $548.0 million of the total $807 million will be used
to pay the cash portion of the Omnipoint purchase price as well as the
$18 million in reorganization related costs (see note 3f), and
accordingly, only that portion of the total investment is used 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>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
VoiceStream weighted average common shares.................. 95,595 92,387
Conversion of Omnipoint outstanding common stock(1)......... 44,553 44,553
Conversion of Omnipoint 7% Convertible Preferred Stock...... 8,617 8,617
Exchange of Omnipoint Series A Preferred Stock.............. 1,270
Conversion of East/West Communications shares............... 1,485 1,485
Conversion of Aerial shares................................. 51,753 51,753
Aerial restricted stock units............................... 196 196
----------- -----------
Total weighted average common shares.............. 203,469 198,991
=========== ===========
VoiceStream Holdings unadjusted pro forma net loss.......... $(1,120,535) $(1,573,881)
VoiceStream Holdings 2.5% Convertible Junior Preferred Stock
dividends................................................. (10,275) (13,700)
----------- -----------
Pro forma net loss attributable to common shareholders...... $(1,130,810) $(1,587,564)
=========== ===========
Basic and diluted pro forma loss per common share........... $ (5.56) $ (7.98)
=========== ===========
</TABLE>
- -------------------------
(1) Shares outstanding as of November 15, 1999.
198
<PAGE> 206
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)
---------------------------- ----------------------------
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
1999 1998 1999 1998
------------- ------------ ------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
VoiceStream weighted average common
shares............................... 95,595 92,387 95,595 92,387
Conversion of Omnipoint outstanding
common stock......................... 44,553 44,553 44,553 44,553
Conversion of Omnipoint 7% Convertible
Preferred Stock...................... 8,617 8,617
Exchange of Omnipoint Series A
Preferred Stock...................... 1,270 1,270
Conversion of East/West Communications
shares............................... 1,485 1,485 1,485 1,485
Hutchison additional investment........ 18,889 18,889
Conversion of Aerial shares............ 51,753 51,753 51,753 51,753
Aerial restricted stock units.......... 196 196 196 196
----------- ----------- ----------- -----------
Total common shares.......... 194,852 190,374 222,358 217,880
=========== =========== =========== ===========
VoiceStream Holdings unadjusted pro
forma net loss....................... $(1,120,535) $(1,573,881) $(1,120,535) $(1,573,881)
Omnipoint 7% Convertible Preferred
Stock minority interest.............. (15,688) (13,946)
VoiceStream Holdings 2.5% Convertible
Junior Preferred Stock............... (10,275) (13,700)
----------- ----------- ----------- -----------
Pro forma net loss attributable to
common shareholders.................. $(1,146,498) $(1,601,527) $(1,120,535) $(1,573,881)
=========== =========== =========== ===========
Basic and diluted pro forma loss per
common share......................... $ (5.88) $ (8.41) $ (5.04) $ (7.22)
=========== =========== =========== ===========
</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 $1.0 million and $1.4 million for the periods
ended September 30, 1999 and December 31, 1998, respectively, and loss per
share would increase by $0.05 per share and $0.07 per share, respectively.
In the event holders of Aerial restricted stock units receive cash instead
of stock, the loss per share would increase $0.01 for each of the periods ended
September 30, 1999 and December 31, 1998.
199
<PAGE> 207
VOICESTREAM WIRELESS HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 $0.17 per share and $0.25 per share for the periods ended September
30, 1999 and December 31, 1998, respectively.
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.
200
<PAGE> 208
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
Thursday, February 24, 2000, at the offices of Preston Gates & Ellis LLP,
at 701 Fifth Avenue, Suite 5000, Seattle, Washington, at 8:00 a.m., local
time.
- The special meeting of the Omnipoint stockholders will be held on
Thursday, February 24, 2000, at the offices of Piper Marbury Rudnick &
Wolfe LLP, at 1200 19th Street, N.W., Washington, D.C., at 11:00 a.m.,
local time.
- The special meeting of the Aerial stockholders will be held on Thursday,
February 24, 2000, at the Hotel Allegro Chicago, 171 West Randolph
Street, Chicago, Illinois, on the third floor in the Goodman Theater B
Room at 10:00 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
January 17, 2000 will be entitled to notice of, and to vote at, the VoiceStream
special meeting and any adjournments or postponements of the special meeting. On
January 17, 2000, there were 96,348,127 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. 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.
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.
201
<PAGE> 209
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.
OMNIPOINT RECORD DATE; QUORUM; VOTE REQUIRED
Only Omnipoint stockholders of record as of the close of business on
January 17, 2000 will be entitled to notice of, and to vote at, the Omnipoint
special meeting and any adjournments or postponements of the special meeting. On
January 17, 2000, there were outstanding 55,385,831 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 the requisite majority vote. Certain stockholders of Omnipoint
will have the right to dissent from the proposal and, subject to strict
compliance with certain provisions of the Delaware General Corporation Law, to
receive in lieu of VoiceStream Holdings common stock and cash 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 January
17, 2000 will be entitled to notice of, and to vote at, the Aerial special
meeting and any adjournments or postponements of the special meeting. On January
17, 2000, there were issued and outstanding 42,308,636 Aerial Common Shares and
52,924,151 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 793,862,265 votes, and the total
voting power of all outstanding shares of Aerial capital stock was 836,170,901
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 A 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.
202
<PAGE> 210
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 vote.
Regardless of how they vote, Aerial stockholders will not have dissenters'
rights in connection with the Aerial reorganization.
AGREEMENTS TO VOTE IN FAVOR OF THE OMNIPOINT REORGANIZATION
Concurrently with the execution of the Omnipoint reorganization agreement,
VoiceStream, Omnipoint, certain stockholders of VoiceStream who currently hold
approximately 40% of the outstanding shares of VoiceStream common stock and
certain stockholders of Omnipoint who currently hold approximately 25% of the
outstanding shares of Omnipoint common stock, 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 number 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 25,252,758 Aerial Common Shares and 52,924,151
Aerial Series A Common Shares, representing 819,115,023 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 40% 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.
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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 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 proxy is executed and returned 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 both
reorganizations. Proxies voted against the merger will not be voted in favor of
any adjournment or postponement of the special meeting for the purpose of
soliciting additional proxies. VoiceStream stockholders should not send any
stock certificates with their proxy cards.
VoiceStream has retained ChaseMellon Consulting Services to aid in the
solicitation of proxies and to verify certain records related to the
solicitations. ChaseMellon Consulting Services will also act as information
agent with respect to each reorganization. ChaseMellon Consulting Services will
receive a fee of approximately $7,500 as compensation for its services and
reimbursement for its related out-of-pocket expenses. VoiceStream has agreed to
indemnify ChaseMellon Consulting Services against liabilities arising out of or
in connection with its engagement.
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 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. Proxies
voted against the merger will not be voted in favor of any adjournment or
postponement of the special meeting for the purpose of soliciting additional
proxies. Omnipoint stockholders should not send any stock certificates with
their proxy cards.
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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. Proxies
voted against the merger will not be voted in favor of any adjournment or
postponement of the special meeting for the purpose of soliciting additional
proxies. Aerial stockholders should not send any stock certificates with their
proxy cards.
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 Washington
Business Corporation Act, 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 WASHINGTON BUSINESS CORPORATION ACT 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.
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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 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 Washington Business Corporation Act 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
Washington Business Corporation Act the amount
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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 Washington Business Corporation Act; 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 January 17, 2000, 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 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
Washington Business Corporation Act 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
Washington Business Corporation Act, 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
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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 Washington Business Corporation Act, "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 Washington Business Corporation Act, 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 Washington Business Corporation Act 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 Omnipoint stockholders to read section 262
of the Delaware General Corporation Law, 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 Delaware General Corporation Law. 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
Delaware General Corporation Law.
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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.
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;
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- 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
Delaware General Corporation Law 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, and either or both of Omnipoint and Aerial
and their subsidiaries, subject to the contribution of certain assets to joint
ventures with Cook Inlet. The operations and assets of, and our relationship
with, Cook Inlet 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 enhanced specialized
mobile radio networks. Each such application is licensed in a distinct radio
frequency block.
Since its introduction in 1983, wireless service has grown dramatically. As
of June 30, 1999, according to the Cellular Telephone Industry Association,
referred to as CTIA, there were 76 million wireless subscribers in the United
States, representing a penetration rate of 28%.
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. 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
technology enables enhanced capacity, along with improvements in digital
signaling, thereby allowing digital-based wireless carriers 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."
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
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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: Time Division Multiple
Access, referred to as TDMA; or Code Division Multiple Access, referred to as
CDMA.
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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 following sets forth our view as to the relative advantages and
disadvantages of the three different technologies:
GSM is the most widely used wireless technology in the world, serving over
215 million customers. GSM's main advantages include:
- An open system architecture, supported by a variety of vendors, that
allows operators to achieve cost economies in infrastructure and mobile
terminal equipment
- The benefits of a single phone number and transparent services on a
global roaming basis
- High-capacity, as well as high voice quality
- Industry-leading encryption and authentication technology which provides
customers with a high level of subscription and conversation privacy
- GSM has supported wireless data from its inception, and is currently
evolving to support high-speed wireless data access to allow subscribers
access to internet and mobile data services
GSM's drawback is that the technology has not historically been widely
deployed by North American wireless operators, and is based on a different
network protocol than other North American standards, making system
interoperability and roaming with other North American cellular or PCS systems
more difficult.
CDMA has been widely deployed in North America and parts of Asia. CDMA's
main advantages include:
- It has been adopted by more PCS licensees in the United States than GSM
or TDMA, and currently has significantly greater market share and
penetration than GSM
- High voice quality
- Radio architecture that permits maximum frequency reuse, theoretically
increasing system capacity and freeing the wireless operator from
detailed frequency planning
- It has easier interoperability with North American analog cellular
systems
CDMA's drawback is that it is a closed architecture, dependent upon
intellectual property rights owned by a few manufacturers which increases the
costs of infrastructure and handsets. In addition, it has had limited global
deployment as compared to GSM, thus limiting the customers' ability to use their
CDMA service on a global basis.
213
<PAGE> 221
TDMA has been widely deployed in North and South America. TDMA's main
advantages include:
- It has easier interoperability with North American analog cellular
systems
- Infrastructure and terminal costs that are lower than those of CDMA
systems
- As a result of the convergence agreement with the GSM MOU, TDMA will have
access to the data capabilities of GSM
TDMA's drawbacks include a narrow radio channel which limits voice quality
and support for advanced, higher-speed data services. In addition, its low level
of global deployment limits the number of equipment vendors, thus raising costs,
and also limits the customers' ability to use their TDMA service on a global
basis.
THE BUSINESS OF VOICESTREAM HOLDINGS AFTER THE REORGANIZATIONS
After the reorganizations, we will:
- be a leading PCS provider in the United States with a nearly nationwide
wireless footprint utilizing a single technology and common frequencies;
- own, collectively with joint venture entities in which we will have
interests, 338 broadband PCS licenses covering:
- 23 of the 25 largest U.S. markets; and
- over 218 million persons;
- serve more than 1.7 million customers through more than 6,900 operational
cell sites; and
- be the largest PCS provider using GSM technology in the United States.
The following table sets forth the markets currently owned and operated by
each company or by joint ventures in which it holds interests:
OPERATING MARKETS
<TABLE>
<CAPTION>
VOICESTREAM OMNIPOINT AERIAL
----------- --------- ------
<S> <C> <C>
Phoenix/Tucson New York Houston
Seattle/Tacoma Philadelphia Minneapolis
Denver Detroit Tampa
Portland Boston Pittsburgh
San Antonio Miami/Ft. Lauderdale Kansas City
Salt Lake City Providence Columbus
Oklahoma City Hartford Orlando
Austin Indianapolis Sarasota
Honolulu Albany Daytona Beach
Albuquerque New Haven Melbourne
Boise
Des Moines
El Paso
</TABLE>
214
<PAGE> 222
Our goal is to establish our service offerings as one of the best values in
wireless communications and achieve significant market penetration, particularly
in the fast growing "new to wireless" segment. Our value message is delivered
through VoiceStream's "Get More" marketing campaign. Our 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 our
reputation as a superior value service provider. This marketing message is
delivered with a celebrity spokesperson -- Jamie Lee Curtis. We believe 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 and balanced 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. The
advantages include an open architecture that allows greater flexibility in
selecting from a larger group of proven North American, European and Asian
equipment vendors. GSM is the leading international standard serving over 215
million customers in 137 countries worldwide.
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
strive 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.
215
<PAGE> 223
- 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 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 will strive 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.
- Acquire PCS licenses and systems opportunistically. We have acquired our
current licenses in a disciplined fashion, paying what we 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 the East/West merger closes before the Omnipoint reorganization and both
the Omnipoint and Aerial reorganizations occur, we will own, collectively with
joint venture entities in which we have interests, 338 broadband PCS licenses
covering over 218 million persons, and we will serve more than 1.7 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, 332
licenses covering over 193 million persons, and we will serve more than 1.4
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 we will serve more than 1.0 million customers.
Both the markets we own and those operated by joint ventures in which we
hold interests will use the VoiceStream brand name. Our financial accounting for
joint ventures in which we hold interests differs from that for markets we own
because we account for our interests in joint ventures as investments using the
equity method of accounting. Our net share of the revenues and expenses of
markets operated by joint ventures are reflected using the equity method of
accounting on a single line in VoiceStream Holding's consolidated statement of
operations. Additionally, VoiceStream Holdings' portion of the assets and
liabilities of each joint venture will be reflected, net of VoiceStream
Holdings' portion of each joint ventures' cumulative net income or loss, in one
line on its balance sheet.
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. The
markets in which we, or joint ventures in which we will hold interests, are
currently operating are listed in the table entitled "Operating Markets." Each
table lists MTA markets in descending order by covered population, largest
population listed first with BTAs within such markets listed alphabetically.
Depending on the completion of either or both of the reorganizations, the
licenses which we and the
216
<PAGE> 224
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 by applying Claritas' growth
factors from 1997 to 1998.
VOICESTREAM LICENSES
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
SAN FRANCISCO-SAN JOSE
San Francisco........................................ 6,965,000 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
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
PHOENIX
Flagstaff............................................ 119,000 D 10 MHz
Nogales.............................................. 40,000 D 10 MHz
Phoenix(2)........................................... 3,191,000 D 10 MHz
Prescott............................................. 153,000 D 10 MHz
Sierra Vista-Douglas................................. 114,000 D 10 MHz
Tucson(2)............................................ 807,000 D 10 MHz
Yuma................................................. 126,000 D 10 MHz
----------
4,550,000
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
</TABLE>
217
<PAGE> 225
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
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
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
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
SEATTLE
Olympia-Centralia.................................... 327,000 E 10 MHz
Seattle-Tacoma(2).................................... 3,090,000 E 10 MHz
----------
3,417,000
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>
218
<PAGE> 226
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
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
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
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
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
LITTLE ROCK
Fayetteville-Springdale.............................. 292,000 E 10 MHz
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
</TABLE>
219
<PAGE> 227
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
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
SAN ANTONIO
San Antonio.......................................... 1,805,000 D 10 MHz
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
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
Walla Walla-Pendleton(2)............................. 169,000 D 10 MHz
----------
1,399,000
----------
CINCINNATI-DAYTON
Dayton-Springfield................................... 1,209,000 E 10 MHz
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
</TABLE>
220
<PAGE> 228
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
WICHITA
Hutchinson........................................... 124,000 D 10 MHz
Salina............................................... 143,000 D 10 MHz
Wichita.............................................. 652,000 D 10 MHz
----------
919,000
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
KANSAS CITY
Manhattan-Junction City.............................. 110,000 D 10 MHz
CHICAGO
Jacksonville......................................... 71,000 E 10 MHz
TULSA
Coffeyville.......................................... 61,000 D 10 MHz
----------
VOICESTREAM TOTAL...................................... 62,593,000
==========
</TABLE>
- -------------------------
(1) VoiceStream contributed portions of the Des Moines BTA 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.
(2) Cook Inlet PCS also owns 10 MHz F Block licenses for these BTAs.
OMNIPOINT LICENSES
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
NEW YORK
Albany................................................. 1,042,000 A, E 40 MHz
Allentown............................................ 714,000 A 30 MHz
Binghamton........................................... 338,000 A 30 MHz
Burlington........................................... 395,000 A 30 MHz
Elmira............................................... 313,000 A 30 MHz
Glens Falls.......................................... 122,000 A, E 40 MHz
Hartford............................................. 1,103,000 A 30 MHz
Ithaca............................................... 96,000 A 30 MHz
New Haven............................................ 976,000 A 30 MHz
New London........................................... 358,000 A 30 MHz
New York............................................. 18,572,000 A, D 40 MHz
Oneonta.............................................. 108,000 A 30 MHz
Pittsburgh........................................... 115,000 A 30 MHz
Poughkeepsie......................................... 429,000 A 30 MHz
Rutland.............................................. 99,000 A 30 MHz
Scranton............................................. 659,000 A 30 MHz
Stroudsburg.......................................... 128,000 A 30 MHz
Syracuse............................................. 782,000 A 30 MHz
Utica................................................ 288,000 A 30 MHz
Watertown............................................ 303,000 A 30 MHz
----------
26,940,000
</TABLE>
221
<PAGE> 229
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
DETROIT
Adrian(1)(2)......................................... 99,000 E 10 MHz
Detroit(1)(2)........................................ 5,020,000 E 10 MHz
Findlay-Tiffin....................................... 152,000 D, E 20 MHz
Flint................................................ 513,000 E 10 MHz
Grand Rapids(1)(2)................................... 1,043,000 E 10 MHz
Jackson(1)(2)........................................ 204,000 E 10 MHz
Lansing(1)........................................... 519,000 E 10 MHz
Lima................................................. 251,000 D, E 20 MHz
Mt. Pleasant......................................... 129,000 E 10 MHz
Muskegon(2).......................................... 221,000 E 10 MHz
Petoskey............................................. 100,000 D 10 MHz
Saginaw-Bay City..................................... 636,000 E 10 MHz
Toledo(1)............................................ 777,000 D 10 MHz
----------
9,664,000
BOSTON-PROVIDENCE
Bangor(2)............................................ 321,000 E 10 MHz
Boston............................................... 4,259,000 D, E 20 MHz
Hyannis.............................................. 232,000 D 10 MHz
Keene................................................ 115,000 D, E 20 MHz
Lewiston-Auburn...................................... 215,000 E 10 MHz
Manchester-Nashua-Concord............................ 582,000 D, E 20 MHz
Pittsfield(2)........................................ 134,000 E 10 MHz
Portland-Brunswick................................... 495,000 D 10 MHz
Presque Isle(1)...................................... 75,000 D, E 20 MHz
Providence-Pawtucket-New Bedford-Fall River(1)....... 1,502,000 D 10 MHz
Springfield-Holyoke(2)............................... 659,000 D 10 MHz
Waterville-Augusta................................... 168,000... D, E 20 MHz
Worcester-Fitchburg-Leominster....................... 726,000 D, E 20 MHz
----------
9,483,000
WASHINGTON-BALTIMORE
Charlottesville...................................... 217,000 E 10 MHz
Cumberland........................................... 159,000 E 10 MHz
Fredericksburg....................................... 159,000 D 10 MHz
Hagerstown-Chambersburg-Martinsburg.................. 353,000 D 10 MHz
Salisbury............................................ 178,000 D, E 20 MHz
Washington, D.C...................................... 4,516,000 E 10 MHz
----------
5,582,000
MIAMI-FT. LAUDERDALE
Miami-Ft. Lauderdale(1).............................. 3,743,000 E 10 MHz
ST. LOUIS
Columbia............................................. 208,000 D 10 MHz
Kirksville........................................... 56,000 D 10 MHz
Mt. Vernon-Centralia(2).............................. 122,000 E 10 MHz
Quincy-Hannibal...................................... 180,000 E 10 MHz
St. Louis(2)......................................... 2,822,000 D 10 MHz
----------
3,388,000
INDIANAPOLIS
Bloomington-Bedford.................................. 237,000 E 10 MHz
Columbus(1).......................................... 154,000 E 10 MHz
Indianapolis......................................... 1,468,000 E 10 MHz
Kokomo-Logansport(2)................................. 185,000 D 10 MHz
</TABLE>
222
<PAGE> 230
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ---------
<S> <C> <C> <C>
Lafayette.............................................. 267,000 E 10 MHz
Marion............................................... 107,000 E 10 MHz
Terre Haute(1)....................................... 246,000 E 10 MHz
Vincennes-Washington(1).............................. 94,000 E 10 MHz
----------
2,758,000
BUFFALO-ROCHESTER
Jamestown-Dunkirk.................................... 183,000 E 10 MHz
Olean-Bradford....................................... 243,000 D, E 20 MHz
Rochester(2)......................................... 1,143,000 D 10 MHz
----------
1,569,000
CHICAGO
Elkhart(2)........................................... 256,000 E 10 MHz
Galesburg............................................ 74,000 E 10 MHz
----------
330,000
WICHITA
Hutchinson........................................... 124,000 E 10 MHz
Salina(2)............................................ 143,000 E 10 MHz
----------
267,000
LITTLE ROCK
El Dorado-Magnolia-Camden............................ 103,000 E 10 MHz
----------
OMNIPOINT TOTAL........................................ 63,827,000
==========
</TABLE>
- ---------------
(1) Cook Inlet/VoiceStream GSM II also will own licenses for these BTAs upon the
completion of the Omnipoint reorganization.
(2) Cook Inlet/VoiceStream GSM III also will own licenses for these BTAs upon
the completion of the Omnipoint reorganization.
AERIAL LICENSES
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
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
</TABLE>
223
<PAGE> 231
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
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
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
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
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
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
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
</TABLE>
224
<PAGE> 232
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
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
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
Zanesvile............................................... 187,000 B 30 MHz
----------
2,320,000
----------
AERIAL TOTAL.............................................. 28,085,000
==========
</TABLE>
RELATIONSHIP WITH COOK INLET -- JOINT VENTURES IN WHICH WE HOLD INTERESTS
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 sold them to the
high bidders in a series of auctions.
As part of the process, the FCC adopted rules that granted a narrow
category of designated entities the right to bid for and own C and F Block
licenses. VoiceStream did not qualify as a designated entity and was unable to
obtain C and F Block licenses.
In order to continue expansion of the VoiceStream system, however,
VoiceStream obtained 49.9% minority ownership interests in two joint ventures
controlled by Cook Inlet Region, Inc., each of which qualified as a designated
entity and was able to bid for and obtain C and F Block licenses. These joint
ventures generally acquired licenses in markets where VoiceStream either did not
hold licenses or held licenses with limited spectrum. The markets owned by these
joint ventures include Tulsa and Spokane, which are currently operating, and
Chicago and Dallas, which are in the early stages of development. VoiceStream
executed agreements with each of the joint venture entities allowing the
entities to operate under the VoiceStream brand name in licensed markets where
VoiceStream did not hold licenses. In Seattle, Phoenix and other markets where
the joint ventures hold licenses, and VoiceStream also holds licenses,
VoiceStream owns and operates the network equipment and a system using the
VoiceStream brand name. Each of VoiceStream and the joint ventures utilize air
time, through reciprocal arrangements, on the other's spectrum in such markets
and pay each other for such use. The joint venture also pays VoiceStream for the
joint venture's use of any network equipment.
Although Omnipoint qualified as a designated entity under FCC rules and was
therefore able to hold and operate under C and F Block PCS licenses, VoiceStream
Holdings does not qualify as a designated entity and therefore on completion of
the Omnipoint reorganization 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
C and F Block PCS licenses are being transferred to two new joint venture
entities controlled by Cook Inlet Region, Inc. VoiceStream Holdings will have a
49.9% minority interest in each of such entities. We will execute agreements
with each of the joint venture entities permitting them to operate under the
VoiceStream brand name in licensed markets where we do not also hold licenses.
Philadelphia is among the Omnipoint markets that will be transferred to one of
the Cook Inlet controlled entities and will be operated by the joint venture
using the VoiceStream brand name. Licenses for Miami and
225
<PAGE> 233
San Antonio will also be transferred to joint venture entities, but because we
will also hold licenses for those markets, we will own and operate the network
equipment and a system in those markets using the VoiceStream brand name. Each
of VoiceStream and the joint ventures will utilize air time, through reciprocal
arrangements, on the other's spectrum in those markets and will pay each other
for such use. The joint ventures will also pay VoiceStream for the joint
ventures' use of any network equipment.
We expect that following the Omnipoint reorganization all markets owned by
the four 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 continue to 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.
Our interests in these joint ventures allow us to extend the VoiceStream
brand into markets where we otherwise would not be able to operate. Our
interests in these joint ventures are recorded as investments on our balance
sheet and we do not consolidate the revenues and expenses associated with
operations of these joint ventures in our financial statements.
We will not have control and will maintain limited investor protection
rights after the Omnipoint reorganization in the four joint venture entities
controlled by Cook Inlet Region, Inc. 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.
- Cook Inlet/VoiceStream PV/SS PCS, LP
Cook Inlet/VoiceStream PV/SS PCS, LP, 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 PV/SS PCS. Cook
Inlet PV/SS 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 PV/SS PCS has not yet finalized its
construction plans for the other licenses it owns. Cook Inlet PV/SS 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>
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(1)....................................... 3,090,000 F 10 MHz
Wenatchee............................................... 211,000 C 15 MHz
Yakima.................................................. 259,000 C 15 MHz
----------
4,147,000
PHOENIX
Phoenix(1).............................................. 3,191,000 F 10 MHz
Tucson(1)............................................... 807,000 F 10 MHz
----------
3,998,000
</TABLE>
226
<PAGE> 234
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
CINCINNATI-DAYTON
Cincinnati.............................................. 2,139,000 F 10 MHz
TULSA
Bartlesville............................................ 47,000 C 15 MHz
Coffeyville(1).......................................... 61,000 C 15 MHz
Muskogee................................................ 159,000 C 15 MHz
Tulsa................................................... 910,000 C 15 MHz
----------
1,177,000
----------
SPOKANE-BILLINGS
Spokane................................................. 733,000 C 15 MHz
Walla Walla-Pendleton................................... 169,000 C 15 MHz
----------
902,000
EL PASO-ALBUQUERQUE
El Paso................................................. 772,000 F 10 MHz
DALLAS-FORT WORTH
Temple-Killeen.......................................... 354,000 F 10 MHz
KANSAS CITY
Pittsburg-Parsons....................................... 90,000 F 10 MHz
----------
COOK INLET PCS TOTAL...................................... 13,579,000
==========
</TABLE>
- ---------------
(1) VoiceStream also owns 10 MHz D or E Block licenses for these BTAs.
- Cook Inlet/VoiceStream PCS LLC
Cook Inlet/VoiceStream PCS was formed on February 12, 1999. We will hold a
49.9% membership interest in Cook Inlet/VoiceStream PCS. Cook Inlet/VoiceStream
PCS 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(1)......................................... 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
</TABLE>
227
<PAGE> 235
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
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
----------
LITTLE ROCK
El Dorado-Magnolia...................................... 103,000 C 30 MHz
MINNEAPOLIS
Aberdeen................................................ 87,000 C 30 MHz
----------
COOK INLET/VOICESTREAM PCS TOTAL.......................... 20,461,000
==========
</TABLE>
- -------------------------
(1) VoiceStream also owns a 10 MHz E Block license for the BTA.
- Cook Inlet/VoiceStream GSM II PCS, LLC
Cook Inlet/VoiceStream GSM II PCS, LLC was formed in anticipation of the
Omnipoint reorganization. We will hold a 49.9% membership interest in Cook
Inlet/VoiceStream GSM II PCS, LLC. Pursuant to the purchase agreement by and
between Cook Inlet/VoiceStream GSM II PCS, LLC and Omnipoint, Cook
Inlet/VoiceStream GSM II PCS, LLC 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(1)............................................... 99,000 F 10 MHz
Detroit(1).............................................. 5,020,000 F 10 MHz
Flint(1)................................................ 513,000 F 10 MHz
Grand Rapids(1)......................................... 1,043,000 F 10 MHz
Jackson(1).............................................. 204,000 F 10 MHz
Lansing(1).............................................. 519,000 F 10 MHz
Toledo(1)............................................... 777,000 F 10 MHz
----------
8,414,000
</TABLE>
228
<PAGE> 236
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
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
MIAMI-FT. LAUDERDALE
Miami-Ft. Lauderdale(1)................................. 3,743,000 F 10 MHz
W. Palm Beach-Boca Raton................................ 1,078,000 F 10 MHz
----------
4,821,000
WASHINGTON-BALTIMORE
Baltimore............................................... 2,533,000 F 10 MHz
----------
ATLANTA
Albany-Tilton........................................... 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
PUERTO RICO-USVI
San Juan................................................ 2,170,000 F 10 MHz
BIRMINGHAM
Birmingham.............................................. 1,304,000 F 10 MHz
Gatsden................................................. 184,000 F 10 MHz
Decatur................................................. 143,000 F 10 MHz
Huntsville.............................................. 511,000 F 10 MHz
----------
2,142,000
SAN ANTONIO
San Antonio............................................. 1,805,000 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
RICHMOND-NORFOLK
Norfolk-Virginia Beach-
Newport News............................................ 1,763,000 F 10 MHz
NASHVILLE
Nashville............................................... 1,665,000 F 10 MHz
BOSTON-PROVIDENCE
Presque Isle(1)......................................... 75,000 F 10 MHz
Providence-Pawtucket-New Bedford-Fall River(1).......... 1,502,000 F 10 MHz
----------
1,577,000
</TABLE>
229
<PAGE> 237
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ---------- ----- ------
<S> <C> <C> <C>
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
INDIANAPOLIS
Anderson................................................ 181,000 F 10 MHz
Muncie.................................................. 180,000 F 10 MHz
Richmond................................................ 104,000 F 10 MHz
Columbia(1)............................................. 154,000 F 10 MHz
Terre Haute(1).......................................... 246,000 F 10 MHz
Vincennes-Washington(1)................................. 94,000 F 10 MHz
----------
959,000
DES MOINES-QUAD CITIES
Des Moines.............................................. 775,000 F 10 MHz
WICHITA
Wichita................................................. 652,000 F 10 MHz
DENVER
Colorado Springs, CO.................................... 513,000 F 10 MHz
DALLAS-FT. WORTH
Waco.................................................... 293,000 F 10 MHz
CHARLOTTE-GREENSBORO-GREENVILLE-RALEIGH
Goldsboro-Kinston....................................... 237,000 F 10 MHz
CINCINNATI-DAYTON
Williamson-Pikeville.................................... 185,000 F 10 MHz
PORTLAND
Coos Bay-North Bend..................................... 84,000 F 10 MHz
LOS ANGELES-SAN DIEGO, CA
Los Angeles, CA......................................... 15,939,000 F 10 MHz
Santa Barbara-Santa Maria, CA........................... 394,000 F 10 MHz
----------
16,333,000
SAN FRANCISCO-OAKLAND-SAN JOSE, CA
Reno, NV................................................ 560,000 F 10 MHz
WASHINGTON, DC-BALTIMORE, MD
Washington, DC.......................................... 4,516,000 F 10 MHz
TAMPA-ST. PETERSBURG-ORLANDO, FL
Sarasota-Bradenton, FL.................................. 571,000 F 10 MHz
----------
COOK INLET/VOICESTREAM GSM II TOTAL....................... 65,083,000
==========
</TABLE>
230
<PAGE> 238
- -------------------------
(1) Omnipoint also owns licenses for these BTAs.
- Cook Inlet/VoiceStream GSM III PCS, LLC
Cook Inlet/VoiceStream GSM III was formed in anticipation of the Omnipoint
reorganization. We will hold a 49.9% membership interest in Cook
Inlet/VoiceStream GSM III. Pursuant to the purchase agreement dated as of June
23, 1999, by and between Cook Inlet/VoiceStream GSM III and Omnipoint, Cook
Inlet/VoiceStream GSM 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>
DETROIT
Adrian(1)................................................. 99,000 C 15 MHz
Alpena.................................................... 67,000 C 30 MHz
Battle Creek(1)........................................... 239,000 C 15 MHz
Detroit(1)................................................ 5,020,000 C 30 MHz
Flint(1).................................................. 513,000 C 30 MHz
Grand Rapids(1)........................................... 1,043,000 C 15 MHz
Jackson(1)................................................ 204,000 C 15 MHz
Kalamazoo................................................. 371,000 C 30 MHz
Muskegon(1)............................................... 221,000 C 15 MHz
Sault Ste. Marie.......................................... 56,000 C 30 MHz
-------------
7,833,000
ST. LOUIS
Mt. Vernon-Centralla(1)................................... 122,000 C 30 MHz
St. Louis(1).............................................. 2,822,000 C 30 MHz
-------------
2,944,000
BUFFALO-ROCHESTER
Buffalo-Niagara Falls..................................... 1,200,000 C 30 MHz
Rochester(1).............................................. 1,143,000 C 30 MHz
-------------
2,343,000
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
PHILADELPHIA
Harrisburg................................................ 687,000 C 30 MHz
Lancaster................................................. 456,000 C 30 MHz
York-Hanover.............................................. 464,000 C 30 MHz
-------------
1,607,000
CHICAGO
Elkhart(1)................................................ 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>
231
<PAGE> 239
<TABLE>
<CAPTION>
MTA/BTA LICENSE AREA POPULATION BLOCK MHZ
-------------------- ------------- ----- ------
<S> <C> <C> <C>
BOSTON-PROVIDENCE
Bangor(1)................................................. 321,000 C 15 MHz
Lebanon-Claremont......................................... 175,000 C 30 MHz
Pittsfield(1)............................................. 134,000 C 30 MHz
Springfield-Holyoke(1).................................... 659,000 C 30 MHz
-------------
1,289,000
INDIANAPOLIS
Kokomo-Logansport(1)...................................... 185,000 C 15 MHz
WICHITA
Salina(1)................................................. 143,000 C 30 MHz
-------------
COOK INLET/VOICESTREAM GSM III TOTAL........................ 19,658,000
=============
</TABLE>
- ---------------
(1) Omnipoint also owns licenses for these BTAs.
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 Services, L.P.
Iowa Wireless Services, L.P. 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 BTA 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.
232
<PAGE> 240
- STPCS, LLC
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
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
---------
D&E/OMNIPOINT WIRELESS TOTAL...................... 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
---------
NPI-OMNIPOINT WIRELESS TOTAL...................... 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
233
<PAGE> 241
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 is a Minnesota limited liability company formed in
November 1996. We will hold a 30% interest in Wireless Alliance. The company
launched service in 1998.
<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
---------
WIRELESS ALLIANCE TOTAL........................... 1,155,000
=========
</TABLE>
- -------------------------
(1) Aerial contributed to Wireless Alliance 20 MHz of the 30 MHz of the above
BTAs within the Minneapolis MTA license in exchange for its ownership
interest in Wireless Alliance.
- 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, voice mail and numeric paging, as well as
custom calling features such as call-waiting, conference calling and call
forwarding.
- Messaging and Wireless Data Transmission. Our systems will continue to
allow for two-way messaging to and from all 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.
234
<PAGE> 242
- 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 either
on other GSM-based PCS systems operated by current licensees or by using
dual-made handsets that can be used on existing cellular systems.
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. Through our "Get More" proposition, we
will emphasize 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 that would benefit
from integrated voice messaging, wireless data transmission, and enhanced
features and services. Our advertising is supported by a celebrity
spokesperson -- Jamie Lee Curtis.
- 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 systems, 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. Customer service is a significant element of our
operating philosophy. We are committed to attracting and retaining
subscribers by providing consistently superior
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customer service. We will continue to maintain a highly sophisticated
monitoring and control system with a well-trained staff of customer
service personnel and technical 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 help manage 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.
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 Mobile Phones, Inc. We will deploy network
equipment primarily from Ericsson, Nortel Networks Inc., Nokia
Telecommunications, Inc. 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, specialized mobile radio dispatch
system operators have constructed digital mobile communications systems on
existing specialized mobile radio 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, many of which
offer no or low cost roaming and toll calls. 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 Cellular Communications, Inc., AT&T
Wireless Services, Inc., Bell Atlantic, GTE Mobilnet, Nextel Communications,
Inc., Sprint Corp. (PCS Group), and US West Wireless LLC. We also compete with
paging, dispatch and conventional mobile telephone companies, resellers and
landline telephone service providers in our PCS markets. Potential users of
wireless systems may, however, 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
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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.
The FCC generally requires cellular and PCS licensees to provide service to
"resellers." A reseller provides wireless service to customers but does not hold
an FCC license and generally does not 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 systems. With respect to PCS licensees, the resale obligations
terminate five years after the last group of initial licenses of currently
allotted PCS spectrum is awarded.
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.
In 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 Cook
Inlet/VoiceStream GSM II. In late 1997, the FCC also auctioned 10 MHz of
spectrum for specialized mobile radio service, another potential competitor with
PCS and cellular 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, the FCC auctioned 25 MHz
of spectrum for the General Wireless Communications Service, plus additional
spectrum in the 220 MHz band. We cannot foresee how technological progress or
economic incentives will affect competition from these new services. 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 November 30, 1999, Omnipoint had 69 United States patents, 10 foreign
patents, 65 United States and 85 foreign pending patent applications, 16 United
States and 111 foreign trademarks, and 25 United States and 77 pending foreign
trademark applications. As of December 31, 1999, Aerial had one pending
application for a patent, eight trademarks in the United States, two trademarks
in the European Community, one trademark in Canada, and five 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/VoiceStream PV/SS PCS, L.P., the 38% limited partner of Iowa
Wireless, the 18% member of STPCS LLC, and a 49.9% ownership interest in Cook
Inlet/VoiceStream PCS LLC. In three markets, VoiceStream and Cook
Inlet/VoiceStream PV/SS PCS, L.P. each own a license for 10 MHz of PCS spectrum
that are the subject of agreements allowing each of VoiceStream and Cook
Inlet/VoiceStream PCS to operate on the PCS systems built by VoiceStream in
those markets. Wholly-owned subsidiaries of Omnipoint are the 50%
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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 Cook
Inlet/VoiceStream GSM II and Cook Inlet/VoiceStream GSM 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.
FINANCING PLAN
We believe that access to capital and financial flexibility are necessary
to successfully implement our strategy and to complete the reorganization.
In November 1999, VoiceStream and VoiceStream Holdings jointly issued $1.1
billion aggregate principal amount of 10 3/8% Senior Notes due 2009 and $720
million aggregate principal amount of 11 7/8% Senior Discount Notes due 2009 for
aggregate net proceeds of $1.46 billion.
VoiceStream used $400 million of the proceeds from the Senior Notes and
Senior Discount Notes to repay $400 million of Senior Debentures and an
additional $265 million to repay outstanding borrowings under the revolver
portion of its existing credit facility.
After completion of the reorganizations, VoiceStream Holdings expects to
receive or have available an aggregate of $6.2 billion in new funding from the
following sources: $3.0 billion under the new credit facility for which
VoiceStream has received commitments from a group of lenders; $1.7 billion of
new equity from Hutchison and Sonera, of which $380 million has been invested;
and $1.46 billion of net proceeds from the Senior Notes and Senior Discount
Notes, of which $400 million have been used to repay the Senior Debentures and
$265 million have been used to repay the revolver portion of the credit
facility.
These funds for which VoiceStream has received commitments will enable
VoiceStream Holdings to repay approximately $2.5 billion in outstanding
indebtedness of VoiceStream, Omnipoint and Aerial, including, as of September
30, 1999:
- $500 million of outstanding indebtedness under the term portion of the
existing credit facility of VoiceStream;
- $23 million in institutional notes and $1.5 billion in loans payable
under financing agreements of Omnipoint; and
- $520 million in notes and vendor debt of Aerial.
In addition to the repayments described above, VoiceStream Holdings intends to
use the balance of such funds to complete planned construction of its PCS
networks, to launch operations in new markets, to fund operational requirements
of the joint ventures in which it holds interests, and to provide working
capital and fund anticipated operating losses.
ANTICIPATED NEW CREDIT FACILITY
VoiceStream and VoiceStream Holdings have entered into a commitment with a
consortium of lenders pursuant to which, upon completion of the Omnipoint
reorganization, such lenders have agreed, subject to satisfaction of conditions,
to enter into an anticipated new credit facility with a direct wholly-owned
subsidiary of VoiceStream Holdings and a subsidiary of Omnipoint. VoiceStream
Holdings will guarantee all of the obligations under such facility.
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Pursuant to the anticipated new credit facility, the lenders will make term
loans and revolving credit loans in an aggregate principal amount not to exceed
$3 billion outstanding. The anticipated new credit facility will be available to
refinance existing indebtedness of VoiceStream, Omnipoint and Aerial, to fund
capital expenditures, working capital and general corporate purposes, to finance
permitted investments and acquisitions and to pay all transaction fees. So long
as the Omnipoint 11 5/8% Senior Notes due 2006 and 2007, the Omnipoint 11 1/2%
Senior Notes due 2009 and the Omnipoint 14% Senior Notes due 2003 shall be
outstanding, the availability of proceeds of the anticipated new credit facility
to Omnipoint and its subsidiaries will be limited to (1) refinancing of existing
indebtedness of Omnipoint and its subsidiaries, (2) revolving credit or other
working capital indebtedness of Omnipoint and its subsidiaries in an aggregate
principal amount outstanding or available at any time not to exceed $100
million, and (3) fund capital expenditures and other acquisitions of
telecommunications assets by Omnipoint and its subsidiaries.
The revolving credit portion of the anticipated new credit facility will be
a $1.5 billion reducing revolving credit facility. The availability of the
revolving credit portion of the anticipated new credit facility will decline
over the period commencing three years after the closing date through the eighth
anniversary of the closing date in the following percentages: 10% in 2003, 15%
in 2004, 20% in 2005, 20% in 2006 and 35% in 2007. The term loan portions of the
anticipated new credit facility will be comprised of a $500 million tranche and
a $1 billion tranche. The $500 million tranche will be required to be amortized
in the following amounts during the period commencing three years after the
closing date through the ninth anniversary: $5 million in each of 2003 through
2008 and the outstanding balance on the ninth anniversary of the closing date.
The $1 billion tranche will be required to be amortized at the same rate that
the availability under the revolving credit portion of the anticipated new
credit facility reduces with a final maturity on the eighth anniversary of the
closing date.
Borrowings under the Tranche A term loan will bear interest, at the
borrower's option, at an annual rate of interest equal to either (1) the greater
of (a) the prime rate, or (b) the Federal Funds rate plus 1/2%, or (2) a
Eurodollar rate, in each instance plus an applicable margin to be agreed upon
with the lenders. Such applicable margin will range to a maximum of 1.50%, in
the case of loans based on the prime rate or Federal Funds rate, and to a
maximum of 2.75%, in the case of loans based on a Eurodollar rate, in each case
based upon certain factors including the ratio of total indebtedness to
operating cash flow, as defined in the anticipated new credit facility, of the
borrower.
The Tranche B term loan under the anticipated new credit facility will bear
interest, at the Borrower's option, at an annual rate of interest equal to
either (1) the greater of (a) the prime rate, or (b) the Federal Funds rate plus
1/2%, or (2) a Eurodollar rate, plus an applicable margin. Such applicable
margin will be a fixed percentage of 2.25%, in the case of loans based on the
prime rate or Federal Funds rate, and 3.50% in the case of loans based on a
Eurodollar rate.
The anticipated new credit facility will contain affirmative and negative
covenants of the Borrower, including financial covenants, and will provide for
various events of default. The anticipated new credit facility will permit the
incurrence of additional indebtedness of up to $1.5 billion, which indebtedness
would be secured by the same collateral as the indebtedness under the
anticipated new credit facility. The repayment of the loans will be secured by,
among other things, the grant of a security interest in the capital stock and
assets of the borrower and certain of its subsidiaries.
This summary of the anticipated new credit facility is based upon the
commitment letter for the anticipated new credit facility and is subject to any
changes to the terms of the anticipated new credit facility that are agreed to
by the parties prior to the execution of the definitive documentation for the
anticipated new credit facility.
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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 specialized
mobile radio services regulated as Commercial Mobile Radio Service, referred to
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 cellular geographic service area, referred to as the
CGSA, and/or specialized mobile radio 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/VoiceStream 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 Oklahoma City MTA, resulting in Western Wireless and VoiceStream
exceeding the FCC's spectrum cap restrictions which were in effect prior to the
September 22, 1999 order, prior to the spin-off of VoiceStream. Western Wireless
had filed a waiver request with the FCC which is pending, and Western Wireless
and VoiceStream have been allowed to delay compliance with the restriction until
the FCC rules on the waiver request. In the event that spectrum cap restrictions
are not eliminated as part of the FCC's biennial review of regulation in the
fourth quarter of 2000, or the temporary waiver is not granted, then sometime
before or about September 1, 2000, either VoiceStream Holdings or Western
Wireless will be obligated to divest sufficient portions of their markets in the
Oklahoma City MTA 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
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the spectrum cap to be exceeded in the following BTAs in the case of the
Omnipoint reorganization: Detroit and Flint, Michigan, St. Louis, Rolla, Poplar
Bluff and Cape Girardeau-Sikeston, Missouri, Salina, Kansas and Mt. Vernon,
Illinois. Spectrum cap compliance issues also arise in a number of MTAs and BTAs
described below in the case of the Aerial reorganization depending in part upon
FCC action on a joint request for declaratory ruling on spectrum cap compliance
by VoiceStream, VoiceStream Holdings, Aerial and TDS filed with the FCC on
December 1, 1999. Regardless of the outcome of the request for declaratory
ruling, after the Aerial reorganization, VoiceStream Wireless Holdings and
Western Wireless will exceed the spectrum cap in the Minneapolis and the
Oklahoma City MTAs and in the following BTAs: Manhattan-Junction City and
Pittsburgh-Parsons, Kansas; Bemidji, Wilmar Marshall and Worthington Minnesota;
Bismark, Fargo and Grand Forks, North Dakota; Huron, Mitchell, Sioux Falls,
Watertown and Aberdeen, South Dakota. If the FCC rules that the licenses of TDS'
subsidiary U.S. Cellular are attributable to VoiceStream Wireless Holdings and
Western Wireless by virtue of TDS' ownership in or right to appoint a director
to VoiceStream Wireless Holdings, then VoiceStream Wireless Holdings will have
to divest sufficient portions of its spectrum in the following BTAs to comply
with the FCC's rules: Oklahoma City, Oklahoma; Marshalltown, Mason City and
Burlington, Iowa; Clinton, Iowa-Sterling, Illinois; and Abilene, Texas. In
addition, in the event of an unfavorable FCC declaratory ruling, there will be a
de minimus spectrum overlap problem (10.74%) caused by attribution of U.S.
Cellular's spectrum holdings in the Kansas City, Kansas MTA, which VoiceStream
Wireless Holdings will have to cure. Temporary waivers of the spectrum cap have
been sought by VoiceStream, Omnipoint and Aerial in the context of their FCC
applications for approval of the reorganizations. 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 licenses of
U.S. Cellular Corporation, a subsidiary of TDS, attributable to VoiceStream
Holdings and causing overlap problems which otherwise might be avoided.
VoiceStream Holdings has sought 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, which may require VoiceStream
Holdings to divest operations in the Oklahoma City and Des Moines, Iowa MTAs.
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.
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Cellular and PCS systems are subject to certain Federal Aviation
Administration regulations with respect to 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.
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 a
transition plan to relocate such microwave operators to other spectrum blocks
and 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 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
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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.
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 World Trade Organization
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-World Trade Organization members. Applicants
from World Trade Organization 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 World Trade Organization Agreement also obligates signatories to open
their domestic telecommunications markets to foreign investment and foreign
corporations. The World Trade Organization 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 World Trade Organization 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 each 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
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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 codified 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 "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 but 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 private business exchanges 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
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<PAGE> 252
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
- 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 the requirement that incumbent local exchange carriers recover
their contributions from access charges and 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.
In October 1999, Congress enacted the Department of Defense Appropriations
Act for FY2000, which requires the FCC to accelerate its auction of 36 MHz of
spectrum in the 746 - 764 and 776 - 794 MHz bands for commercial use so that all
auction proceeds have been deposited by
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<PAGE> 253
September 30, 2000. This spectrum became available as a result of the FCC's
decision to generally reclaim, for other use, the spectrum previously allocated
for television broadcast UHF channels 60 - 69. On November 9, 1999, the FCC
submitted a report to Congress outlining the timetable by which it intends to
conduct the auction of this spectrum.
After it completes the rulemaking proceeding that commenced on June 3, 1999
to establish the rules for the auction and the use of this spectrum, the FCC
anticipates a deadline of March 24, 2000 for the filing of "short-form"
applications by interested bidders. In the rulemaking, the FCC tentatively
concluded that this spectrum should be made available for flexible commercial
use under Part 27 of the Rules. Under current plans, the auction will commence
on April 25 and terminate on June 7, 2000. Depending on whether the applications
of winning bidders are opposed and the timeliness of the bidders' payments for
their authorizations, the FCC plans to issue the licenses between August 8 and
September 29, 2000.
The use of this spectrum by the licensees selected in the auction may be
affected by the presence of incumbent broadcasters on some of the channels
through at least December 31, 2006. The frequencies that will be the subject of
the auction were previously allocated for television broadcast stations
operating on UHF channels 60 - 62 and 65 - 67. The FCC decided to reallocate
this spectrum in the context of its conversion of the nation's broadcasters from
analog to digital operation, a process that is currently scheduled to be
completed on December 31, 2006.
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 November 15, 1999, VoiceStream employed a total of 2,979 people in
the following areas:
<TABLE>
<CAPTION>
NUMBER OF
CATEGORY EMPLOYEES
-------- ---------
<S> <C>
Sales and marketing......................................... 876
Engineering................................................. 441
General and administrative, including customer service...... 1,662
</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 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 November 15, 1999, Omnipoint employed a total of 2,205 people in the
following areas:
<TABLE>
<CAPTION>
NUMBER OF
CATEGORY EMPLOYEES
-------- ---------
<S> <C>
Sales and marketing......................................... 591
Engineering................................................. 406
General and administrative, including customer service...... 1,208
</TABLE>
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As of November 15, 1999, Aerial employed a total of 2,029 people in the
following areas:
<TABLE>
<CAPTION>
NUMBER OF
CATEGORY EMPLOYEES
-------- ---------
<S> <C>
Sales and marketing......................................... 805
Engineering................................................. 289
General and administrative, including customer service...... 935
</TABLE>
PROPERTIES
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
Bellingham, Washington Fort Lauderdale, Tampa, Florida
Florida
</TABLE>
We, along with our subsidiaries and affiliates, also lease and own
locations for inventory storage, microwave, cell site and switching equipment,
sales and administrative offices, and retail stores.
LEGAL PROCEEDINGS
Except as referenced in the next two sentences there are no 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 of
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 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,
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<PAGE> 255
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................... 43 Executive Vice President -- Finance,
Strategy and Development
Alan R. Bender....................... 45 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 K.N. 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. Woo Chow(2)............... 46 Director
Frank J. Sixt(2)..................... 48 Director
Kaj-Erik Relander(1)................. 37 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.
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-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
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<PAGE> 256
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.
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.
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<PAGE> 257
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. Mr. Fields is currently a director of LivePerson, Inc. and the
Telecommunications Development Fund.
Canning K.N. 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 Limited and Cheung Kong Infrastructure Holdings Limited, and Director
of Cheung Kong (Holdings) Limited. Mr. Fok is also a director of Partner
Communications Company, 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.
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.
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<PAGE> 258
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 M.F. 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 Limited and an Executive
Director of Cheung Kong Infrastructure Holdings Limited.
Frank J. Sixt has been an Executive Director of Hutchison since 1991 and
Group Finance Director since 1998 of Hutchison. He is also a Director of Cheung
Kong (Holdings) Limited, Orange plc and Hongkong Electric Holdings Limited and
an Executive Director of Cheung Kong Infrastructure Holdings Limited.
Kaj-Erik Relander has been the Executive Vice President, International
Operations, and the Chief Financial Officer of Sonera Corporation since 1999
and, effective January 1, 2000, he will be the head of Sonera's new Mobile and
Media Division. Since joining Sonera in 1994, Mr. Relander has also served as
Sonera's Group Business Controller and as Director, Finance and Business
Development.
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> 259
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 1999 and 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 on May 3, 1999, 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.
See "Employment Agreements."
<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)........... 1999 295,000 (4) 939 630,000 464,593(5)
Chairman and Chief 1998 193,542 400,000 954 521,250 367,974(5)
Executive Officer
Robert R. Stapleton.......... 1999 232,210 (4) 140,876 315,000 234,796(5)
President and Director 1998 165,667 200,000 124,407 260,625 186,487(5)
Douglas G. Smith............. 1999 299,616 1,800,000(6) 300,000 n/a 33,630(7)
Vice Chairman and 1998 262,115 122,618(8) n/a n/a 31,820(7)
Director
Donald Guthrie(3)............ 1999 212,865 (4) 56,350 315,000 234,796(5)
Vice Chairman and 1998 165,667 150,000 57,263 260,625 186,487(5)
Director
Cregg B. Baumbaugh........... 1999 169,064 (4) 75,134 210,000 158,197(5)
Executive Vice 1998 145,321 110,000 66,350 173,750 125,992(5)
President -- Finance,
Strategy and Development
Alan R. Bender(3)............ 1999 169,060 (4) 37,567 210,000 158,197(5)
Executive Vice 1998 145,321 110,000 38,175 173,750 125,992(5)
President, General Counsel,
and Secretary
</TABLE>
- -------------------------
(1) The 1998 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 under the Western Wireless restricted stock plan
until predetermined performance goals are met, including achieving
predetermined levels of subscribers and achieving predetermined levels of
cash flow. No restricted stock grants have been made under the VoiceStream
restricted stock plan. By their terms, none of the restricted stock grants
will vest within three years in the absence of the performance goals having
been met. Dividends will be
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<PAGE> 260
paid on shares of the restricted stock to the extent paid on any other
shares of stock of the same class.
(3) Mr. Stanton, and until May 3, 2002 Messrs. Guthrie and Bender, will divide
their time and responsibilities between VoiceStream, VoiceStream Holdings
and Western Wireless, and their compensation will be shared appropriately.
(4) The bonuses for 1999 have not yet been determined.
(5) 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.
(6) Of this amount, $1,500,000 represents a one-time incentive bonus which was
related to the signing of the Omnipoint reorganization agreement. The
remaining $300,000 was paid as the base target bonus for 1999 pursuant to
his employment agreement. The full amount of his bonus for 1999 has not yet
been determined.
(7) Includes amounts reimbursed in connection with a travel allowance,
supplemental benefit program and premiums on life insurance.
(8) This amount reflects the bonus earned in 1998 based upon achievement of
corporate and individual performance objectives in 1998.
GRANTS OF STOCK OPTIONS
As part of the spin-off, each of Messrs. Stanton, Guthrie and Bender and
the VoiceStream directors, excluding Messrs. Fok and Snook, received a number of
options to purchase VoiceStream common stock, based upon the number of options
to purchase Western Wireless common stock held by each individual prior to the
spin-off.
Those who held vested options to purchase Western Wireless common stock
received an equal number of vested options to purchase VoiceStream common stock
which are governed by the VoiceStream 1999 Management Incentive Stock Option
Plan (See "-- Stock Option Plan"). The following table summarizes VoiceStream
options granted as a result of the conversion of Western Wireless options
granted during 1999 to each of the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------- ------------ ----------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John W. Stanton........... 939 0.9% $ 11.32 December 31, 2009 $ 6,685 $ 16,941
Robert R. Stapleton....... 140,876 14.2% $ 11.32 December 31, 2009 $1,003,263 $2,542,465
Douglas G. Smith.......... 300,000 11.2% $ 16.00 June 21, 2009 $3,018,694 $7,649,964
Donald Guthrie............ 56,350 5.6% $ 11.32 December 31, 2009 $ 401,302 $1,016,979
Cregg B. Baumbaugh........ 75,134 7.6% $ 11.32 December 31, 2009 $ 535,075 $1,355,984
Alan R. Bender............ 37,567 3.8% $ 11.32 December 31, 2009 $ 267,537 $ 677,992
</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 except for the options granted to Mr. Smith. The
options granted to Mr. Smith have a term of ten years from the date of grant
and become exercisable 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.
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<PAGE> 261
(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 SEC and
do not reflect VoiceStream's estimate of future stock price performance.
Upon completion of the first to occur of the reorganizations, the options
referred to in the above table for current VoiceStream officers and directors
will become options to purchase an equal number of shares of VoiceStream
Holdings, on the same terms and at the same exercise price.
AGGREGATED OPTION VALUES
The following table summarizes on an aggregated basis the number and value
of VoiceStream options granted to the Named Executive Officers. Neither
VoiceStream nor Omnipoint has any outstanding stock appreciation rights
("SARs").
AGGREGATE OPTION EXERCISES AND OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
SHARES OPTIONS AT DECEMBER 31,
ACQUIRED VALUE DECEMBER 31, 1999(#)(1) 1999($)(1)(2)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Stanton......... (3) (3) 250 1,643 $ 33,266 $ 216,679
Robert R. Stapleton..... 100,000 $9,312,606 509,731 281,751 $70,030,338 $37,266,885
Douglas G. Smith........ 0 0 0 300,000 0 $33,392,640
Donald Guthrie.......... 0 0 221,354 112,700 $30,545,270 $14,906,701
Cregg R. Baumbaugh...... 66,500 $3,791,713 170,731 150,267 $23,243,243 $19,875,645
Alan R. Bender.......... 71,500 $4,244,887 141,243 75,134 $19,234,510 $ 9,937,890
</TABLE>
- -------------------------
(1) Except for the options granted to Mr. Stanton the VoiceStream options were
granted on May 21, 1999, as a result of the conversion of Western Wireless
options that were granted on or prior to January 1, 1999. Mr. Stanton was
granted options as a director on December 31, 1999.
(2) Dollar values were calculated by determining the difference between the
exercise price and $142.31, which was the last sale price for VoiceStream's
common stock as reported on the Nasdaq Stock Market on December 31, 1999.
(3) During 1999, Theresa E. Gillespie, a Senior Executive Officer of Western
Wireless and the wife of John Stanton, exercised 172,362 options for a value
of $15,552,768.
DIRECTOR COMPENSATION
Following the completion of the first to occur of the reorganizations, the
VoiceStream Holdings board will consider appropriate compensation arrangements
for each director who is not also an employee of VoiceStream Holdings or any of
its subsidiaries. All directors also will be reimbursed for reasonable travel
and other out-of-pocket expenses incurred by them in attending board or
committee meetings.
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
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<PAGE> 262
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 defined 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 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
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<PAGE> 263
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. Upon completion of the first to occur of the reorganizations,
VoiceStream Holdings will assume the obligations of VoiceStream under these
employment agreements.
Mr. Smith is party to an employment agreement with Omnipoint. This
agreement will be assumed by VoiceStream Holdings upon completion of the
Omnipoint reorganization. Mr. Smith's employment agreement currently provides
for an annual base salary of $300,000, and a target bonus of $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 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 Internal
Revenue 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
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<PAGE> 264
date of the 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 approximately 11,354,000 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, but will not be limited to, 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 Securities Exchange Act of
1934 each member of the board who participates in administration must be a
"disinterested person" 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 up
to a total 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:
- six 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> 265
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 VoiceStream Holdings common stock under
the purchase plan in excess of either (i) $10,200 in any calendar year, or (ii)
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 VoiceStream Holdings 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 first to
occur of the reorganizations, unless terminated sooner by the VoiceStream
Holdings board.
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, but are not limited to,
authority to determine the employees to be granted rights under the plan, to
determine the size, type, and applicable terms and conditions of grants to be
made to such
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<PAGE> 266
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 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 as of December 31, 1999
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) each share of Omnipoint common stock
will be exchanged for $8.00 in cash and 0.825 of a share of VoiceStream Holdings
common stock; (3) all outstanding options to acquire VoiceStream common stock
will convert to VoiceStream Holdings options; (4) all outstanding options and
warrants to acquire Omnipoint common stock will convert to options or warrants
to acquire VoiceStream Holdings common stock or warrants, with appropriate
adjustments in the number of shares and the exercise price to reflect the
Omnipoint reorganization exchange rate to be received by Omnipoint stockholders
upon completion of the Omnipoint reorganization; (5) the closing price of
VoiceStream common stock on the day immediately preceding the completion of the
Omnipoint reorganization is $112.69, which may or may not be the actual closing
price; and (6) in the $957 million Hutchison investment, Hutchison PCS (USA)
acquired 11,172,000 shares of VoiceStream Holdings common stock and 6,330 shares
of VoiceStream Holdings 2.5% Convertible Junior Preferred Stock. 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 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;
(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; and (5) in the $957
million Hutchison investment, Hutchison PCS (USA) acquired 11,172,000 shares of
VoiceStream Holdings common stock and 6,330 shares of VoiceStream Holdings 2.5%
Convertible Junior Preferred 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
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investment power or (2) which such person or entity has the right to acquire at
any time within 60 days.
<TABLE>
<CAPTION>
OMNIPOINT(1) AERIAL(1) BOTH(1)
--------------------------- --------------------------- ---------------------------
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)............... 55,899,252 28.96% 22,899,252 15.41% 55,899,252 22.82%
The Goldman Sachs Group, L.P.
and related investors(3)(4)(5)
85 Broad Street, 19th Floor
New York, NY 10004............ 9,799,748 5.73 9,799,748 6.60 9,799,748 4.40
Telephone and Data Systems,
Inc.(3)(6)
30 N. LaSalle Street, Suite
4000
Chicago, IL 60602............. -- -- 35,570,494 23.94 35,570,494 15.94
Sonera Corporation(3)(7)
Fin-00051-Tele
Sturenkatu 16, Helsinki
Finland....................... 8,771,930 5.12 10,203,844 6.87 18,975,774 8.50
John W. Stanton and Theresa E.
Gillespie(3)(4)(8)
3650 131st Ave. SE
Bellevue, WA 98006............ 6,055,880 3.54 6,061,932 4.08 6,061,932 2.72
Douglas G. Smith(3)(9)
3 Metrocenter, Suite 400
Bethesda, MD 20814............ 4,596,780 2.69 -- -- 4,596,780 2.06
Richard L. Fields(3)(10)
711 Fifth Avenue
New York, New York 10022...... 2,504,560 1.46 -- -- 2,504,560 1.12
James N. Perry, Jr.(3)(11)
Three First National Plaza
Suite 1330
Chicago, IL 60602............. 2,690,119 1.57 -- -- 2,690,119 1.20
Cregg B. Baumbaugh(4)........... 271,159 * 271,159 * 271,159 *
Alan R. Bender(4)............... 228,114 * 228,114 * 228,114 *
James J. Ross(3)(12)............ 1,466,971 * -- -- 1,466,971 *
Robert R. Stapleton(4).......... 649,926 * 649,926 * 649,926 *
Donald Guthrie(4)............... 403,492 * 403,492 * 403,492 *
Mitchell R. Cohen(4)............ 24,404 * 24,404 * 24,404 *
Daniel J. Evans(4).............. 4,219 * 4,219 * 4,219 *
Jonathan M. Nelson(4)........... 224,761 * 224,761 * 224,761 *
Terence M. O'Toole(4)(13)....... 9,799,748 5.72 9,799,748 6.60 9,799,748 4.40
Canning Fok(2)(4)(14)........... 55,899,486 28.96 22,899,486 15.41 55,899,486 22.82
Hans R. Snook(2)(4)(14)(15)..... 55,899,486 28.96 22,902,216 15.42 55,902,216 22.82
Susan M.F.W. Chow(2)(14)........ 55,899,252 28.96 22,899,252 15.41 55,899,252 22.82
Frank J. Sixt(2)(14)............ 55,899,252 28.96 22,899,252 15.41 55,899,252 22.82
Kaj-Erik Relander(16)........... 8,771,930 5.12 10,203,844 6.87 18,975,744 8.50
All VoiceStream Holdings
executive officers and
directors as a group
(22 persons)(4)(17)........... 93,980,620 47.98% 51,163,120 34.12% 104,193,480 42.04%
</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> 268
(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 December 31,
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 Hellman & Friedman
Partners II, L.P.; options granted to Mr. Nelson are held for the benefit
of Providence Media Partners L.P.; and options granted to Mr. O'Toole are
held for the benefit of The Goldman Sachs Group, L.P.
(5) Based on (a) 8,986,738 shares of VoiceStream common stock held of record by
GS Capital, (b) 470,401 shares of VoiceStream common stock held of record
by Stone Street Fund 1992 L.P., (c) 273,069 shares of VoiceStream common
stock held of record by Bridge Street Fund, and (d) 68,821 shares of
VoiceStream common stock held of record by the The Goldman Sachs Group,
L.P. Each of GS Capital, Stone Street and Bridge Street Fund 1992, L.P. is
an investment limited partnership, the general partner, the managing
general partner or the managing partner of which is an affiliate of The
Goldman Sachs Group, L.P. The Goldman Sachs Group, L.P. disclaims
beneficial ownership of shares held by such investment partnerships to the
extent partnership interests in such partnerships are held by persons other
than The Goldman Sachs Group, L.P. and its affiliates.
(6) Includes shares of VoiceStream Holdings common stock issuable in exchange
for Aerial common stock acquired in connection with the $420 million TDS
debt replacement.
(7) Includes shares of (a) VoiceStream Holdings common stock issuable in
exchange for Aerial common stock acquired in the $230 million Sonera
investment and Aerial common stock to be received upon exchange of common
stock of an Aerial subsidiary and (b) VoiceStream Holdings common stock to
be acquired in the $500 million Sonera investment in VoiceStream Holdings.
(8) Mr. Stanton and Ms. Gillespie are husband and wife. Their pro forma
beneficial ownership takes into account (a) 1,686,069 shares of VoiceStream
common stock held of record by PN Cellular, Inc., which is substantially
owned and controlled by Mr. Stanton and Ms. Gillespie, (b) 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, (c) 2,871,803 shares of VoiceStream common stock held by Mr.
Stanton and Ms. Gillespie, as tenants in common, (d) 164,437 shares of
VoiceStream common stock held of record by The Stanton Family Trust; (e)
45,000 shares and 13,333 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 and (f) 13,300 shares of
Aerial common stock held by Mr. Stanton and Ms. Gillespie as tenants in
common. 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.
(9) Takes into account 26,169 shares of Omnipoint common stock owned by Mr.
Smith's minor children, 3,126,969 shares of Omnipoint common stock held by
Avance Capital, a sole proprietorship, and 428,564 shares held in a grantor
trust. Mr. Smith does not exercise voting or investment power over, and
disclaims beneficial ownership of, the shares held in the grantor trust. Of
the total shares held in Mr. Smith's name and in the name of Avance,
479,000 are held in a blind trust. While Mr. Smith is the beneficial owner
of these shares, he exercises no control over these shares. The blind trust
is free to sell, exchange, hedge, or otherwise dispose
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<PAGE> 269
of these shares at any time. Mr. Smith has voting and investment power with
respect to the other shares.
(10) Takes into account 2,131,336 shares of Omnipoint common stock owned by
Allen & Co., Inc., including 504,000 shares issuable upon exercise of
outstanding Omnipoint warrants held by Allen & Co. and 110,880 shares of
Omnipoint common stock issuable upon exercise of outstanding Omnipoint
warrants held by Mr. Fields. Mr. Fields is a Managing Director of Allen &
Co. Of such amounts, Mr. Fields does not exercise voting or investment
power over, and disclaims beneficial ownership of the 2,131,336 shares
owned by Allen & Co.
(11) Takes into account 2,648,149 shares of Omnipoint common stock owned by
Madison Dearborn Capital Partners, L.P. including 205,333 shares of
Omnipoint common stock issuable upon exercise of outstanding Omnipoint
warrants held of record by Madison Dearborn Capital Partners, L.P. and
25,513 shares of Omnipoint common stock held in trust for Mr. Perry's
children. Mr. Perry is a member of the L.P. Committee. which manages
Madison Dearborn Capital Partners, L.P. Mr. Perry may therefore be deemed
to share investment control with respect to the shares of Omnipoint common
stock owned by Madison Dearborn Capital Partners, L.P. and may therefore be
deemed to have beneficial ownership of shares of Omnipoint common stock
owned by Madison Dearborn Capital Partners, L.P.
(12) Takes into account 748,854 shares of Omnipoint common stock issuable upon
exercise of outstanding Omnipoint options held by Mr. Ross and 240,817
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 and Sixt and Ms. Chow
may each be deemed to be the owner of the 22,899,252 shares of VoiceStream
common stock owned by Hutchison Whampoa, as Mr. Fok is the Group Managing
Director of Hutchison, Mr. Snook is the Group Managing Director of an
affiliate of Hutchison and a Director of a separate affiliate of Hutchison
and each of Ms. Chow and Mr. Sixt are executive directors of Hutchison
Whampoa. Each of Mr. Fok, Mr. Snook, Ms. Chow and Mr. Sixt 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 Kaj-Erik Relander, the director to be
designated by Sonora, 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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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 first to occur of the reorganizations, the authorized
capital stock of VoiceStream Holdings will consist of 1,000,000,000 shares of
common stock, par value $0.001 per share, and 100,000,000 shares of preferred
stock, par value $0.001. There is no VoiceStream Holdings preferred stock
outstanding. Following the closing of the Omnipoint reorganization, assuming
that Hutchison PCS(USA) does not convert its shares of VoiceStream Holdings 2.5%
Convertible Junior Preferred Stock into VoiceStream Holdings common stock, there
will be approximately 162,271,000 shares of VoiceStream Holdings common stock
outstanding, with approximately 550 holders of record, and 6,330 shares of
VoiceStream 2.5% Convertible Holdings Junior Preferred Stock by Hutchison.
Following the closing of the Aerial reorganization, there will be an addition of
approximately 51,815,000 shares of VoiceStream Holdings common stock
outstanding. If only the Aerial reorganization is completed, there will be
approximately 148,104,000 shares of VoiceStream Holdings common stock
outstanding.
Based on the number of options outstanding on December 31, 1999, at the
completion of the Omnipoint reorganization, VoiceStream Holdings will have
issued options to acquire approximately 11 million shares of its common stock in
exchange for options issued by VoiceStream and Omnipoint for VoiceStream and
Omnipoint common stock, respectively. There are no other rights outstanding to
acquire VoiceStream Holdings' capital stock. Based on the number of options
outstanding on December 31, 1999, at the completion of the Aerial
reorganization, VoiceStream Holdings will have issued options to acquire
approximately 354,000 shares of its common stock in exchange for options issued
by Aerial for Aerial common 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
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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.
PREFERRED STOCK
VoiceStream Holdings' amended and restated certificate of incorporation
authorizes it to issue 100,000,000 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, it is assumed that
VoiceStream Holdings will designate 6,330 shares of preferred stock as
VoiceStream Holdings 2.5% Convertible Junior Preferred Stock, all of which will
be sold at $100,000 per share to Hutchison PCS (USA) as part of the Hutchison
investments. The VoiceStream Holdings 2.5% Convertible Junior Preferred Stock
will have no par value, will be convertible to VoiceStream Holdings common stock
based upon the liquidation preference 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 2.5% Convertible Junior Preferred Stock 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 2.5% Convertible Junior Preferred Stock.
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 Washington Business Corporation Act, and instead
will be defined and governed by the Delaware General Corporation Law. 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' amended and restated 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
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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 Delaware General
Corporation Law and the Washington Business Corporation Act, and between the
VoiceStream articles of incorporation and bylaws and the VoiceStream Holdings
amended and restated certificate of incorporation and bylaws as amended from
time to time. The following identifies the material differences between the
rights of stockholders of VoiceStream and VoiceStream Holdings.
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In the following table DGCL means Delaware General Corporation Law and WBCA
means Washington Business Corporation Act.
<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 greater proportion is shares, and the par value of its stock,
specified in the certificate of the latter two only if there is one
incorporation or by other provisions of class of stock. With respect to other
the DGCL. VoiceStream Holdings' amended changes to the articles of
and restated certificate of incorporation, the board of directors
incorporation does not specify a must recommend amendments to the
greater proportion, except that holders stockholders, unless the board of
of not less than 66 2/3% of the total directors determines that because of a
number of shares of capital stock of conflict of interest or other special
the corporation outstanding and circumstances it should make no
entitled to vote on any particular recommendation and communicates the
matter, must approve an amendment if basis for its determination to the
the amendment provides that: stockholders with the amendment. In
addition, a majority of all the votes
- stockholders shall have preemptive entitled to be cast by any voting group
rights to acquire additional shares; entitled to vote on the change must
approve the change unless another
- stockholders shall have cumulative proportion is specified in the articles
voting rights; of incorporation, by the board of
directors as a condition to its
- VoiceStream Holdings cannot redeem recommendation or by provisions of the
shares when the holding of such WBCA. The VoiceStream articles do not
shares may result in the loss of any specify another proportion, except that
license or franchise from a holders of not less than two-thirds of
governmental agency to conduct any the "Total Voting Power," as defined in
portion of VoiceStream's Holdings the VoiceStream articles, must approve
business; or an amendment if the amendment provides
that:
- less than two-thirds vote is enough
to approve any amendment listed in - stockholders shall have preemptive
bullets one through three. rights to acquire additional shares;
- stockholders shall have cumulative
voting rights;
- VoiceStream cannot redeem shares when
the holding of
</TABLE>
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<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
such shares may result in the 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 any corporation's board of directors prior
time within the three years prior to the date of the acquisition.
Significant business
</TABLE>
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<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
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 did not have a class of voting shares
stockholder, except proportionately registered with
as a stockholder, directly or
indirectly, of any loans,
</TABLE>
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<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
advances, guarantees, pledges, or the SEC on the effective date of that
other financial benefits provided by amendment.
or 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 or
consolidations, (2) sales or
</TABLE>
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<PAGE> 277
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
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 would not have been
an
</TABLE>
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<PAGE> 278
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
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' amended and
restated 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; and specified permitted amendments;
</TABLE>
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<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
- 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.
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 not be enjoined, set
</TABLE>
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<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
interest if either: aside or give rise 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 she would otherwise assets of the corporation, and
receive in the transaction. Such amendments to the corporation's
appraisal rights are not available: articles of incorporation that
materially and adversely affect
- with respect to the sale, lease or stockholder rights.
exchange of all or substantially all
of the assets of a corporation;
- with respect to a merger or
consolidation by a corporation the
</TABLE>
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<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
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 in property
statutory surplus or, if there is no to its stockholders upon the
surplus, out of net profits for the authorization of its board of directors
fiscal year in which the dividend is unless, after giving effect to such
declared and/or for the preceding 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
</TABLE>
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<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
represented by the issued and - the corporation's total assets would
outstanding stock of all classes having be less than the sum of its total
a preference upon the distribution of liabilities plus, unless the articles
assets. In addition, Delaware law of incorporation permit otherwise,
generally provides that a corporation the amount that would be needed, if
may redeem or repurchase its shares the corporation were to be dissolved
only if such redemption or repurchase at the time of the distribution, to
would not impair the capital of the satisfy the preferential rights upon
corporation. To date, VoiceStream dissolution of stockholders whose
Holdings has not paid cash dividends on preferential rights are superior to
its capital stock. 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
amended and restated certificate of involve intentional misconduct by a
incorporation eliminates the liability director, a knowing violation of law by
of directors to the fullest extent a director, for unlawful distributions,
permissible under Delaware law. Under or for any transaction from which the
Delaware law, however, VoiceStream director will personally receive a
Holdings is not allowed to eliminate or benefit in money, property, or services
limit director 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;
- 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 adopted or ratified by stockholders,
</TABLE>
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<PAGE> 283
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
threatened to be made party to any or a resolution adopted or ratified,
threatened, pending, or completed before or after the event, by the
proceeding unless such person acted in stockholders, a corporation has the
good faith and in a manner such person power to indemnify a director or
reasonably believed to be in or not officer made a party to a proceeding,
opposed to the best interests of the or advance or reimburse expenses
corporation, and, with respect to any incurred in a proceeding, under any
criminal proceedings, had no reasonable circumstances, except that no such
cause to believe that his or her indemnification shall be allowed on
conduct was unlawful. The DGCL also account of:
establishes 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
corporation for reasonable expenses indemnification for payments in
incurred therein, including attorneys' settlement of actions brought against
fees. VoiceStream Holdings' amended and the director or officer in the name
restated certificate of incorporation of the corporation, commonly referred
provides that VoiceStream Holdings will to as a derivative action. Such
indemnify its directors and officers to limitation of liability, described
the fullest extent not prohibited by above, also may not limit a
law. director's liability for violation
of, or otherwise relieve VoiceStream
</TABLE>
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<PAGE> 284
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------------------
VOICESTREAM HOLDINGS VOICESTREAM
COMMON STOCK COMMON STOCK
--------------------------------------- ---------------------------------------
<S> <C> <C>
In addition, VoiceStream Holdings has or its directors from the necessity
entered into agreements indemnifying of complying with, federal or state
its officers and directors and certain securities laws, or affect the
other persons consistent with Delaware availability of non-monetary remedies
law. such as injunctive relief or
rescission.
</TABLE>
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<PAGE> 285
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 following identifies the material
differences between the rights of stockholders of VoiceStream Holdings, on the
one hand, and Omnipoint and Aerial, on the other hand.
<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 1,000,000,000 shares of 200,000,000 shares of common Common Shares, $1.00 par value;
common stock, par value $0.001 stock, par value $0.01 per 60,000,000 Series A Common
per share; and 100,000,000 share, 10,000,000 shares of Shares, $1.00 par value;
shares of preferred stock, par preferred stock, par value 60,000,000 Series B Common
value $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 amended and restated amended and restated of incorporation provides that
certificate of incorporation certificate of incorporation an increase or decrease in the
increasing or decreasing the increasing or decreasing the number of Aerial Common Shares
capital stock must be approved capital stock must be approved and Aerial Series B Common
by a majority of the by a majority of the Shares may be approved by the
outstanding common 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.
</TABLE>
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<PAGE> 286
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
The Aerial Series A Common
Shares vote in the 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 number Aerial restated certificate of
of shares of capital stock of incorporation if the amendment
the corporation outstanding and would increase or decrease the
entitled to vote on any par value or alter the powers,
particular matter, must approve preferences or special rights
an amendment if the amendment of such class so as to affect
provides that: them adversely.
</TABLE>
279
<PAGE> 287
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
- stockholders shall have
preemptive rights to 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
dividends. paid to the holders of Aerial
</TABLE>
280
<PAGE> 288
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
time and to such extent as it Common Shares and
deems advisable, in accordance proportionately to holders of
with the DGCL. 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
amended and restated restated certificate of holders of Aerial Common Shares
certificate of incorporation incorporation does not include and Aerial Series A Common
does not include provisions provisions relating to Shares, and Aerial Series B
relating to dividends of dividends of subsidiary stock. Common Shares, if any are
subsidiary stock. outstanding, shares of
</TABLE>
281
<PAGE> 289
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
subsidiary capital stock
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
amended and restated restated certificate of of incorporation permits shares
certificate of incorporation incorporation does not include of Aerial capital stock,
provides that outstanding provisions relating to the including Aerial Common Shares,
shares of capital stock of the redemption of shares to protect Aerial Series A Common
corporation shall be licenses.
</TABLE>
282
<PAGE> 290
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
subject to redemption by the Shares, and Aerial Series B
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 amended certificate of incorporation. the Aerial restated certificate
and restated certificate of of incorporation. Under the
incorporation. 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 provisions relating election of such directors
</TABLE>
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<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------
VOICESTREAM HOLDINGS OMNIPOINT AERIAL
COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C>
the shares then entitled to to the removal of directors. only for cause.
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>
284
<PAGE> 292
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 Rudnick & Wolfe LLP,
respectively, with respect to the tax treatment of the Omnipoint reorganization.
See "The Omnipoint Reorganization Agreement -- Conditions to the Completion of
the Omnipoint Reorganization" and "The Omnipoint Reorganization -- Material
United States 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
Completion of the Aerial Reorganization" and "The Aerial Reorganization --
Material United States Federal 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
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.
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, which are 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 giving said reports.
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.
285
<PAGE> 293
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/A for the Quarter Ended September 30, 1999........ January 18, 2000
Form 10-Q for the Quarter Ended September 30, 1999.......... November 12, 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.................................................... October 18, 1999
Form 8-K.................................................... October 26, 1999
Form 8-K.................................................... November 9, 1999
</TABLE>
<TABLE>
<CAPTION>
OMNIPOINT SEC FILINGS (FILE NO. 1-14419) DATE FILED
---------------------------------------- ------------------
<S> <C>
Form 10-K/A for the Year Ended December 31, 1998............ January 18, 2000
Form 10-K for the Year Ended December 31, 1998.............. April 6, 1999
1999 Proxy Statement........................................ April 27, 1999
Form 10-Q/A for the Quarter Ended September 30, 1999........ January 18, 2000
Form 10-Q for the Quarter Ended September 30, 1999.......... November 15, 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>
286
<PAGE> 294
<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/A for the Quarter Ended September 30, 1999........ January 18, 2000
Form 10-Q for the Quarter Ended September 30, 1999.......... November 12, 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>
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
(425) 653-4600
Omnipoint Corporation
Attn: Investor Relations
Three Bethesda Metro Center, Suite 400
Bethesda, Maryland 20814
(301) 951-2500
Aerial Communications, Inc.
Attn: Investor Relations
8410 W. Bryn Mawr Avenue
Suite 1100
Chicago, Illinois 60631
(773) 399-4200
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 January 25, 2000. 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.
287
<PAGE> 295
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
A-i
<PAGE> 296
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>
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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>
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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>
Exhibit A-1 Form of Purchase Agreement between Omnipoint and the Cook
Entity
Exhibit A-2 Form of Purchase Agreement between Omnipoint and the Cook
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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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.
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"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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<PAGE> 359
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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EXECUTION COPY
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (this
"Amendment"), dated as of December 30, 1999, is 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"). All capitalized
terms used herein without definition have the meanings ascribed to them in the
Reorganization Agreement referred to below.
WHEREAS, VoiceStream, Holding Company and Omnipoint entered into an
Agreement and Plan of Reorganization, dated as of June 23, 1999 (the
"Reorganization Agreement"); and
WHEREAS, the parties wish to amend the Reorganization Agreement on the
terms provided herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. All references to "Omnipoint Preferred Stock" in the Reorganization
Agreement shall be replaced with "Omnipoint 7% Preferred Stock".
2. The following definition shall be added to Section 1.1 of the
Reorganization Agreement after the definition of "Delaware Law":
"East/West Conversion Ratio" shall have the meaning ascribed to the term
Conversion Ratio in the Agreement and Plan of Merger, dated as of
October 22, 1999, by and between Omnipoint and East/West Communications,
Inc., a Delaware corporation."
3. The following definition shall be added to Section 1.1 of the
Reorganization Agreement after the definition of "Omnipoint Non-Voting
Convertible Preferred Stock":
"Omnipoint Series E Preferred Stock" means Omnipoint's Series E
Preferred Stock, par value $0.01 per share."
4. The definition of "Piper Marbury" contained in Section 1.1 of the
Reorganization Agreement shall be replaced in its entirety by the following:
"Piper Marbury" means Piper Marbury Rudnick & Wolfe, L.L.P.
5. The following paragraph shall be added as paragraph (f) to Section 3.6
of the Reorganization Agreement:
"(f) Omnipoint Series E Preferred Stock. From and after the Effective
Time, each share of Omnipoint Series E Preferred Stock, which shall be
outstanding as of the Effective Time, shall be converted into the right
to receive (A) .825 shares of Holding Company Common Stock plus $8.00 in
cash, multiplied by (B) the East/West Conversion Ratio."
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6. The following section shall be added as Section 2.5A of the
Reorganization Agreement:
"2.5A The Certificate of Merger to be filed in respect of the Omnipoint
Merger shall contain such provisions as may be mutually agreeable to
VoiceStream and Omnipoint to give effect to the following:
(a) Each share of Omnipoint 7% Preferred Stock shall be given one
vote for each share of Omnipoint Common Stock into which such share of
Omnipoint 7% Preferred Stock is convertible with respect to any and all
matters presented to the stockholders of Omnipoint for their action or
consideration. The holders of Omnipoint 7% Preferred Stock shall vote
together as a single class with the holders of shares of the Omnipoint
Common Stock and any other class of stock entitled to vote on such
matters and not as a separate class.
(b) Each share of Omnipoint Non-Voting Convertible Preferred Stock
shall be given seven-tenths of one vote (which votes may be cumulated
with all other votes of Omnipoint Non-Voting Convertible Preferred Stock
to form whole votes) for each share of Omnipoint Common Stock into which
such share of Omnipoint Non-Voting Convertible Preferred Stock is
convertible with respect to any and all matters presented to the
stockholders of Omnipoint for their action or consideration, and shall
vote together as a single class with the holders of shares of the
Omnipoint Common Stock and any other class of stock entitled to vote on
such matters and not as a separate class."
7. The words "a majority" in the first sentence of Section 5.26 of the
Reorganization Agreement shall be replaced by the words "two-thirds".
8. The first sentence of Section 9.3(b) of the Reorganization Agreement is
amended to be replaced in its entirety as follows:
"Omnipoint shall have received the opinion of Piper Marbury, based upon
reasonable requested representation letters dated the Closing Date, to
the effect that (i) the receipt of Holding Company 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 (ii) no gain or
loss will be recognized for federal income tax purposes by Omnipoint in
connection with the Omnipoint Merger."
9. The last sentence of the description of the anticipated transaction
between Siemens Information and Communication Networks, Inc. in Section 6.1.A.1
of the Omnipoint Disclosure Schedule is replaced in its entirety by the
following sentence:
"Total consideration for the stock disposition is to be approximately
$45 million, of which approximately $5 million will be used to buy out
the outstanding options to purchase the stock of Omnipoint Technology
Holdings, Inc. and for bonuses to employees of that entity's
subsidiaries."
10. Other than as set forth above, no other provisions of the
Reorganization Agreement are amended by this Amendment. The Reorganization
Agreement, including the amendments set forth above, will continue in full force
and effect on and after the date hereof.
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IN WITNESS WHEREOF, the parties have executed and entered into this
Amendment as of the date first set forth above.
VOICESTREAM WIRELESS CORPORATION
By: /s/ Donald Guthrie
------------------------------------
Name: Donald Guthrie
Title: Vice 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
A-63
<PAGE> 363
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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<PAGE> 364
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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<PAGE> 365
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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<PAGE> 366
[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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<PAGE> 370
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<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
and Directors............................................... D-4
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>
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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
Statement................................................... D-31
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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Article VII -- Conditions Precedent........................................... D-41
Section 7.1 Conditions to Each Party's Obligation to Effect the
Reorganization.............................................. D-41
Section 7.2 Conditions to Obligation of the Company to Effect the
Reorganization.............................................. D-42
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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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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<PAGE> 379
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.
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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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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.)
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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> 436
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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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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<PAGE> 438
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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<PAGE> 441
ANNEX H
AMENDED AND 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 Amended and Restated Certificate of Incorporation restates and
integrates and further amends the Restated Certificate of Incorporation and
all previous Amendments thereto of this corporation by revising such
documents in their entirety. The Restated 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 Authorized Shares. The total number of shares of stock that the
corporation shall have authority to issue is One Billion One Hundred Million
(1,100,000,000), which shall consist of One Billion (1,000,000,000) shares of
Common Stock, $0.001 par value per share ("Common Stock"),
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<PAGE> 442
and One Hundred Million (100,000,000) shares of Preferred Stock, $0.001 par
value per share ("Preferred Stock");
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. On all matters upon which stockholders 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.
(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 Amended and 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 Amended and 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
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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.
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.
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 Amended and 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.
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ARTICLE IX.
REDEMPTION
9.1 Redemption. Notwithstanding any other provision of this Amended and
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 IX 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;
(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
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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.
(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 IX (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 Amended and 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 number of shares of
capital stock of the corporation outstanding and entitled to vote on any
particular matter. 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
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by the affirmative vote of the holders of not less than 66 2/3% of the total
number of shares of capital stock of the corporation outstanding and entitled to
vote on any particular matter.
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 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 Amended and 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 Amended and 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
State of Delaware.
IN WITNESS WHEREOF, Alan R. Bender, Executive Vice President of VOICESTREAM
WIRELESS HOLDING CORPORATION has signed this Amended and Restated Certificate of
Incorporation on January 18, 2000.
VOICESTREAM WIRELESS HOLDING
CORPORATION
/s/ ALAN R. BENDER
--------------------------------------
Alan R. Bender,
Executive Vice President
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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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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the Delaware General Corporation Law, a corporation may not
indemnify any director, officer, employee or agent made or threatened to be made
party to any threatened, pending, or completed proceeding unless such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal proceedings, had no reasonable cause to believe that his or her conduct
was unlawful. The Delaware General Corporation Law also establishes several
mandatory rules for indemnification.
In the case of a proceeding by or in the right of the corporation to
procure a judgment in its favor (e.g., a stockholder derivative suit), a
corporation may indemnify an officer, director, employee or agent if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation; provided, however, that no
person adjudged to be liable to the corporation may be indemnified unless, and
only to the extent that, the Delaware Court of Chancery or the court in which
such action or suit was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court deems proper. A director, officer, employee, or agent who is
successful, on the merits or otherwise, in defense of any proceeding subject to
the Delaware General Corporation Law's indemnification provisions must be
indemnified by the corporation for reasonable expenses incurred therein,
including attorneys' fees.
VoiceStream Holdings' bylaws provide for mandatory indemnification of
VoiceStream Holdings' officers and directors and certain other persons to the
fullest extent permissible under Delaware law. In addition, VoiceStream Holdings
intends to enter into an indemnification agreement with each of its executive
officers and directors. 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.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
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2.1 Agreement and Plan of Reorganization by and among VoiceStream Wireless Holding Corporation, Omnipoint
Corporation and VoiceStream Wireless Corporation, dated June 23, 1999 (included as Annex A to the joint
proxy statement-prospectus)..........................................................................
2.1.1 First Amendment to Agreement and Plan of Reorganization by and among VoiceStream Wireless Holding
Corporation, Omnipoint Corporation and VoiceStream Wireless Corporation, dated as of December 30, 1999
(included as Annex A to the joint proxy statement-prospectus)......................................
2.2 Agreement and Plan of Reorganization dated September 17, 1999 among VoiceStream Wireless
Corporation, VoiceStream Wireless Holding Corporation, VoiceStream Subsidiary III Corporation,
Aerial Communications, Inc. and Telephone and Data Systems, Inc.
(included as Annex D to the joint proxy statement--prospectus).......................................
3.1 Amended and Restated Certificate of Incorporation (included as Annex H to the joint
proxy statement-prospectus)..........................................................................
3.2(1) Bylaws of VoiceStream Wireless Holding Corporation...................................................
5.1 Opinion of Preston Gates & Ellis LLP.................................................................
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8.1 Opinion of Jones, Day, Reavis & Pogue as to certain tax matters.........................
8.2 Opinion of Piper Marbury Rudnick & Wolfe LLP as to certain tax matters..................
8.3 Opinion of Sidley & Austin as to certain tax matters....................................
10.1(2) Agreement and Plan of Distribution between Western Wireless Corporation and VoiceStream Wireless
Corporation, dated April 9, 1999.
10.2(3) Waiver Agreement by and among Western Wireless Corporation, Western PCS Corporation and certain
of Western Wireless Corporation's shareholders, dated November 30, 1994.
10.3(3) Western PCS Corporation Series A Preferred Stock Purchase Agreement among Western Wireless
Corporation, Western PCS Corporation and the Purchasers listed therein, dated April 10, 1995.
10.4(3) PCS 1900 Project and Supply Agreement between Western PCS Corporation and Northern Telecom
Inc., dated June 30, 1995.
10.5(4) Amendment No. 1 to PCS 1900 Supply Agreement between Western PCS Corporation and Northern
Telecom Inc., dated July 25, 1996.
10.6(4) Amendment No. 2 to PCS 1900 Supply Agreement between Western PCS Corporation and Northern
Telecom Inc., dated July 25, 1996.
10.7(5) Amendment No. 3 to PCS Supply Agreement between Western PCS Corporation and Northern
Telecom Inc., dated October 14, 1996.
10.8(6) Amendment Number 4 to PCS 1900 Project and Supply Agreement by and between Western PCS
Corporation and Northern Telecom Inc., dated March 26, 1998.
10.9(7) Amendment Number 5 to PCS 1900 Project and Supply Agreement between VoiceStream Wireless
Corporation and Northern Telecom Inc., dated September 17, 1998.
10.10(8) Amendment No. 6 to PCS 1900 Project and Supply Agreement by and between VoiceStream Wireless
Corporation and Northern Telecom Inc.
10.11(9) Amendment No. 7 to PCS 10--Project and Supply Agreement by and between VoiceStream Wireless
Corporation and Northern Telecom Inc., dated May 14, 1999.
10.12(3) PCS Block "C" Organization and Financing Agreement by and among Western PCS BTA I Corporation,
Western Wireless Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook Inlet
Telecommunications, Inc., SSPCS Corporation and Providence Media Partners L.P., dated as of
November 5, 1995.
10.13(3) Limited Partnership Agreement by and between Cook Inlet PV/SS PCS Partners, L.P. and Western PCS BTA I
Corporation, dated as of November 5, 1995.
10.14(3) First Amendment to Block "C" Organization and Financing Agreement and Cook Inlet Western Wireless PV/SS
PCS, L.P. Limited Partnership Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook Inlet Telecommunications, Inc., SSPCS Corporation
and Providence Media Partners L.P., dated as of April 8, 1996.
10.15(4) Second Amendment to Block "C" Organization and Financing Agreement and Cook Inlet Western Wireless PV/SS
PCS, L.P. Limited Partnership Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook Inlet Telecommunications, Inc., SSPCS Corporation
and Providence Media Partners L.P., dated as of June 27, 1996.
10.16(4) Third Amendment to Block "C" Organization and Financing Agreement and Cook Inlet Western Wireless PV/SS
PCS, L.P. Limited Partnership Agreement and First Amendment to Technical Services Agreement by and among
Western PCS BTA I Corporation, Western Wireless Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook
Inlet Telecommunications, Inc., SSPCS Corporation, Providence Media Partners L.P. and Cook Inlet Western
Wireless PV/SS PCS, L.P., dated July 30, 1996.
10.17(3) Asset Purchase Agreement between Western PCS III License Corporation as Buyer and GTE Mobilnet Incorporated
as Seller, dated January 16, 1996.
10.18(3) Waiver Agreement by and among Western Wireless Corporation, Western PCS Corporation and certain of Western
Wireless Corporation's shareholders, dated February 15, 1996.
10.19(10) Software License Maintenance and Subscriber Billing Services Agreement, dated June 1997.
10.20(10) First Amendment to Software License, Maintenance and Subscriber Billing Services Agreement dated December
1997, between CSC Intelicom, Inc., and Western Wireless Corporation.
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10.21(11) Iowa Wireless Services, L.P. Limited Partnership Agreement, dated as of September 30, 1997, by and between
INS Wireless, Inc., as General Partner, and Western PCS I Iowa Corporation, as Limited Partnership.
10.22(11) Agreement to Form Limited Partnership dated September 30, 1997, by and among Western PCS Iowa Corporation,
a Delaware corporation, INS Wireless, Inc., an Iowa corporation, Western PCS I Corporation, a Delaware
corporation, and Iowa Network Services, Inc., an Iowa corporation.
10.23(11) Purchase Agreement by and among Western PCS Corporation, Western Wireless Corporation, Hutchison
Telecommunications Limited and Hutchison Telecommunications PCS (USA) Limited dated October 14, 1997.
10.24(10) Letter Agreement dated December 16, 1997, between Western Wireless Corporation and Intelicom Services, Inc.
to provide products and services pursuant to the Software License Maintenance and Subscriber Billing
Services Agreements and First Amendment thereto.
10.25(11) Services Agreement by and between Western Wireless Corporation and Western PCS Corporation.
10.26(11) Shareholders Agreement by and among Western Wireless Corporation, Hutchison Telecommunications PCS (USA)
Limited and Western PCS Corporation, dated February 17, 1998.
10.27(2) Tax Sharing Agreement by and between Western Wireless Corporation and Western PCS Corporation, dated
February 17, 1998. (Contained as an exhibit to the Agreement and Plan of Distribution)
10.28(2) First Amendment to Tax Sharing Agreement by and between Western Wireless Corporation and VoiceStream
Wireless Corporation, dated May 3, 1999.
10.29(6) Supply Contract by and between Western PCS Corporation and Nokia Telecommunications Inc., dated March 9,
1998.
10.30(6) Purchase and Sale Agreement by and between Nokia Mobile Phones, Inc. and Western PCS Corporation, dated
March 9, 1998.
10.31(6) Loan Agreement by and among Western PCS Holding Corporation, TD Securities (USA) Inc., NationsBanc
Montgomery Securities LLC, Barclays Capital, J.P. Morgan Securities Inc., Chase Securities Inc., and
Toronto Dominion (Texas), Inc., dated June 26, 1998.
10.32(7) First Amendment to Loan Agreement by and among Western PCS Holding Corporation, TD Securities (USA) Inc.,
Nationsbanc Montgomery Securities LLC, Barclays Capital, J.P. Morgan Securities Inc., Chase Securities
Inc., and Toronto Dominion (Texas), Inc., dated November 25, 1998.
10.33(12) Second Amendment to Loan Agreement by and among Western PCS Holding Corporation, TD Securities (USA) Inc.,
Nationsbanc Montgomery Securities LLC, Barclays Capital, J.P. Morgan Securities Inc., Chase Securities
Inc., and Toronto Dominion (Texas), Inc., dated April 26, 1999.
10.33.1(13) Third Amendment to Loan Agreement by and among VoiceStream PCS Holding LLC, as successor-in-interest to
Western PCS Holding Corporation, TD Securities (USA) Inc., Nationsbanc Montgomery Securities LLC, Barclays
Capital, J.P. Morgan Securities Inc., Chase Securities Inc., and Toronto Dominian (Texas), Inc., dated
October 29, 1999.
10.34(3) First Amendment to Stockholders Agreement between Western PCS Corporation and Northern Telecom Inc., dated
June 30, 1998.
10.35(7) Exchange Rights and Grant Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, Cook Inlet Telecommunications, Inc. and VoiceStream Wireless Corporation, dated December 17,
1998.
10.36(7) Exchange Rights and Grant Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, SSPCS Corporation and VoiceStream Wireless Corporation, dated January 19, 1999.
10.37(2) Cook Inlet/VoiceStream PCS LLC Limited Liability Company Agreement by and between Cook Inlet GSM Company
and Western PCS BTA I Corporation, dated February 11, 1999.
10.38(2) Voting Agreement by and among VoiceStream Wireless Corporation, Hellman & Friedman Capital Partners II,
L.P., H&F Orchard Partners, L.P., H&F International Partners, L.P., John W. Stanton, Theresa E. Gillespie,
PN Cellular, Inc., Stanton Family Trust, Stanton Communications Corporation, GS Capital Partners, L.P., The
Goldman Sachs Group, L.P., Bridge Street Fund 1992, L.P., Stone Street Fund 1992, L.P., Providence Media
Partners L.P., Hutchison Telecommunications Holdings and Hutchison Telecommunications PCS (USA) Limited
(USA) Limited, dated May 3, 1999.
10.39(2) Registration Rights Agreement by and among VoiceStream Wireless Corporation, Hellman & Friedman Capital
Partners II, L.P., H&F Orchard Partners, L.P., H&F International Partners, L.P., John W. Stanton, Theresa
E. Gillespie, PN Cellular, Inc., Stanton Family Trust, Stanton Communications Corporation, GS Capital
Partners, L.P., The Goldman Sachs Group, L.P., Bridge Street Fund 1992, L.P., Stone Street Fund 1992, L.P.,
and Providence Media Partners L.P., dated May 3, 1999.
10.40(2) Shareholders Agreement by and among VoiceStream Wireless Corporation, Western Wireless Corporation,
Hutchison Telecommunications Holdings (USA) Limited and Hutchison Telecommunications PCS (USA) Limited,
dated May 3, 1999.
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10.41(2) First Amendment to Shareholders Agreement by and among VoiceStream Wireless Corporation, Western Wireless
Corporation, Hutchison Telecommunications Holdings (USA) Limited and Hutchison Telecommunications PCS (USA)
Limited dated.
10.42(2) Roaming Agreement by and between Western Wireless Corporation and VoiceStream Wireless Corporation, dated
May 3, 1999.
10.43(8) Purchase Agreement by and between VoiceStream Wireless Corporation and Nortel Networks Inc., dated May 14,
1999, relating to 12% Series A Senior Debentures due 2011.
10.44(8) Debenture Exchange and Registration Rights Agreement by and between VoiceStream Wireless Corporation and
Nortel Networks Inc., dated May 14, 1999, relating to 12% Series A Senior Debentures due 2011.
10.45(8) Indenture by and between VoiceStream Wireless Corporation and Harris Trust Company, dated May 14, 1999,
relating to 12% Series A Senior Debentures due 2011 and 12% Senior Debentures due 2011.
10.46(14) Purchase Agreement, dated as of June 23, 1999, between Omnipoint Corporation and Cook Inlet/VS GSM II PCS,
LLC.
10.47(14) Purchase Agreement, dated as of June 23, 1999, between Omnipoint Corporation and Cook Inlet/VS GSM III PCS,
LLC.
10.48(14) Stock Subscription Agreement, dated as of June 23, 1999, by and among VoiceStream Wireless Corporation,
Hutchison Telecommunications Limited and Hutchison Telecommunications PCS (USA) Limited.
10.49(14) Voting Agreement, dated as of June 23, 1999, by and among Omnipoint Corporation, VoiceStream Wireless
Corporation, the stockholders of Omnipoint and the stockholders of VoiceStream.
10.50(14) Securities Purchase Agreement, dated as of June 23, 1999, by and among VoiceStream Wireless Corporation,
Hutchison Communications PCS (USA) Limited and Omnipoint Corporation.
10.51(3) Employment Agreement by and between Robert R. Stapleton and Western Wireless Corporation, dated March 12,
1996.
10.52(3) Employment Agreement by and between Cregg B. Baumbaugh and Western Wireless Corporation, dated March 12,
1996.
10.53(15) Employment Agreement by and between Timothy Wong and Western Wireless Corporation, dated February 10, 1998.
10.54(15) Employment Agreement by and between Robert Dotson and Western Wireless Corporation, dated February 10, 1998.
10.55(2) Assignment and Assumption Agreement by and between Western Wireless Corporation and VoiceStream Wireless
Corporation with respect to the Employment Agreement of Robert R. Stapleton, dated May 3, 1999.
10.56(2) Assignment and Assumption Agreement by and between Western Wireless Corporation and VoiceStream Wireless
Corporation with respect to the Employment Agreement of Cregg B. Baumbaugh, dated May 3, 1999.
10.57(2) Assignment and Assumption Agreement by and between Western Wireless Corporation and VoiceStream Wireless
Corporation with respect to the Employment Agreement of Timothy Wong, dated May 3, 1999.
10.58(2) Assignment and Assumption Agreement by and between Western Wireless Corporation and VoiceStream Wireless
Corporation with respect to the Employment Agreement of Robert Dotson, dated May 3, 1999.
10.59(16) Employment Agreement, dated as of January 1, 1999, by and between Omnipoint and Douglas G. Smith.
10.60(17) Employment Agreement, effective October 1, 1995, by and between Omnipoint, Omnipoint Communications Inc. and
George F. Schmitt.
10.61(17) Promissory Note, dated October 1, 1995, by George F. Schmitt.
10.62(17) Stock Restriction Agreement, dated October 1, 1995, by and between Omnipoint and George F. Schmitt.
10.63(13) First Amendment to Stock Restriction Agreement, dated as of June 21, 1999, by and between Omnipoint
Communications, Inc. and George F. Schmitt.
10.64(18) Employment Agreement, dated November 3, 1996, by and between Omnipoint and Kjell S. Andersson.
10.65(18) Amendment to Employment Agreement dated as of February 24, 1997, between Omnipoint and Kjell S. Andersson.
10.66(18) Promissory Note, dated February 24, 1997, by Kjell S. Andersson.
</TABLE>
<PAGE> 461
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
10.67(18) Stock Restriction Agreement, dated February 24, 1997, by and between Omnipoint and Kjell S. Andersson.
10.68(16) Employment Agreement, dated as of April 23, 1999, by and between Omnipoint and Harry Plonskier.
10.69(17) Amended and Restated Registration Rights Agreement, dated June 29, 1995, by and among Omnipoint and the
parties named therein.
10.70(17) OEM Supply Agreement for Omnipoint PCS (Personal Communication Systems) Products, dated September 22, 1994,
by and between Omnipoint and Northern Telecom Inc.
10.71(17) Manufacturing License and Escrow Agreement for Personal Communication Service Products, dated February 28,
1995, by and between Omnipoint and Northern Telecom Inc.
10.72(17) Collaborative Development Agreement, dated March 1, 1995, by and between Omnipoint and Northern Telecom Inc.
10.73(17) Supply Agreement, dated September 22, 1994, by and between Omnipoint Communications Inc. and Northern
Telecom Inc.
10.74(17) Amendment No. 1 to Supply Agreement dated July 21, 1995, by and between Omnipoint Communications Inc. and
Northern Telecom Inc.
10.75(17) Letter Agreement, dated January 24, 1996, by and between Omnipoint and Ericsson Inc.
10.76(19) Acquisition Agreement for Ericsson CMS 40 Personal Communications Systems (PCS) Infrastructure Equipment,
dated as of April 16, 1996, by and between Ericsson Inc. and Omnipoint Communications.
10.77(19) Acquisition Supply and License Agreement for Omnipoint Personal Communications Systems (PCS) Infrastructure
Equipment, dated as of April 16, 1996, by and between Ericsson Inc. and Omnipoint.
10.78(19) Agreement for Purchase and Sale of Ericsson Inc. Masko Terminal Units, dated as of April 16, 1996, by and
between Ericsson, Inc. and Omnipoint Communications Inc.
10.79(20) Loan Agreement by and among PCS Philadelphia Holdings, Inc., Ericsson Inc. and certain other lenders named
therein, dated July 25, 1997.
10.80(20) Loan Agreement by and among Omnipoint Midwest Holdings, LLC, Northern Telecom Inc. and certain other
lenders named therein, dated January 30, 1998.
10.81(20) Loan Agreement by and among Omnipoint Corporation, Omnipoint Communications Inc., DLJ Capital Funding Inc.
and certain other lenders named therein, dated February 17, 1998.
10.82(20) Note Purchase Agreement by and among Omnipoint Corporation, Omnipoint Communications Inc., IBJ Schroder
Bank & Trust Company and certain other purchasers named therein, dated February 17, 1998.
10.83(21) Purchase Agreement by and among Omnipoint Corporation, Donaldson, Lufkin & Jenrette Securities Corporation,
BancAmerica Robertson Stephens, Bear, Stearns & Co., Inc. and Smith Barney Inc., dated May 1, 1998.
10.84(21) Deposit Agreement by and among Omnipoint Corporation, Marine Midland Bank, and the Holders from time to time
of the Depositary Shares, dated May 6, 1998.
10.85(21) Deposit Account Agreement by and between Omnipoint Corporation and The First National Bank of Maryland,
dated May 6, 1998.
10.86(22) Loan Agreement, dated June 25, 1998, by and between Omnipoint MB Holdings, L.L.C. and Bank of America
National Trust and Savings Association.
10.87(22) Amended and Restated Loan Agreement, dated June 25, 1998, by and between Omnipoint MB Holdings, L.L.C. and
Ericsson Inc.
10.88(23) Capital Contribution Agreement dated, September 18, 1998, by and between Omnipoint Corporation and D&E
Communications, Inc.
10.89(24) Note Purchase Agreement by and among Omnipoint Corporation, IBJ Schroder Bank & Trust Company, as paying
agent, and certain initial purchasers named therein, dated December 21, 1998.
</TABLE>
<PAGE> 462
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
10.90(1) Securities Purchase Agreement by and among VoiceStream Wireless Corporation, Hutchison Telecommunications
PCS (USA) Limited and Omnipoint Corporation, dated as of June 23, 1999
10.91(25) PCS Infrastructure Supply Contract, dated as of March 1, 1996, between Aerial and Nokia Telecommunications,
Inc.
10.92(26) Tax Settlement Agreement dated March 12, 1999, by and between Aerial, Aerial Operating Company, Inc. and
Telephone and Data Systems, Inc.
10.93(27) Stockholder Agreement dated as of September 17, 1999, by and between Telephone and Data Systems, Inc. and
stockholders of Aerial Communications, Inc., and VoiceStream Wireless Corporation, and VoiceStream Wireless
Holding Corporation.
10.94(27) Indemnity Agreement, dated as of September 17, 1999, among VoiceStream Wireless Corporation, VoiceStream
Wireless Holding Corporation, Aerial Communications, Inc., Aerial Operating Company, Inc., and Telephone
and Data Systems, Inc.
10.95(27) Debt/Equity Replacement Agreement dated as of September 17, 1999, made by and among Telephone and Data
Systems, Inc., Aerial Communications, Inc., Aerial Operating Company, Inc., VoiceStream Wireless
Corporation, and VoiceStream Wireless Holding Corporation.
10.96(27) Parent Stockholder Agreement dated as of September 17, 1999, by and among Aerial Communications, Inc.,
Telephone and Data Systems, Inc., VoiceStream Wireless Corporation, VoiceStream Wireless Holding
Corporation and the individuals and entities set forth on Schedule I thereto.
10.96.1(16) Consent and Amendment dated as of November 12, 1999, by and among Aerial Communications, Inc., Telephone and
Data Systems, Inc., VoiceStream Wireless Corporation, VoiceStream Wireless Holding Corporation, and Hellman
& Friedman Capital Partners II, H&F Orchard Partners, L.P., H&F International Partners, L.P., John W.
Stanton, Theresa Gillespie, PN Cellular, 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., Hutchison Telecommunications Holdings (USA) Limited, and
Hutchison Telecommunications PCS (USA) Limited.
10.97(27) Settlement Agreement and Release, entered into as of September 17, 1999 by and among Sonera
Ltd., Sonera Corporation U.S., Telephone and Data Systems, Inc., Aerial Communications, Inc., and Aerial
Operating Company, Inc.
23.1 -- Consent of Preston Gates & Ellis LLP (included with Exhibit 5.1)
23.2 -- Consent of Arthur Andersen LLP (independent public accountants for VoiceStream Wireless Corporation)
23.3 -- Consent of PricewaterhouseCoopers LLP (independent public accountants for Omnipoint Corporation)
23.4 -- Consent of Arthur Andersen LLP (independent public accountants for Aerial Communications Inc.)
24.1(28) -- Power of Attorney
99.1 -- Form of VoiceStream Wireless Corporation Proxy card.
99.2 -- Form of Omnipoint Corporation Proxy card.
99.3 -- Form of Aerial Communications, Inc. Proxy card.
</TABLE>
----------
1 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Holding Corporation Registration Statement on Form S-4
(Commission File No. 333-89735), filed October 27, 1999.
2 Incorporated by reference to the exhibit filed with VoiceStream
Wireless Corporation Form 10/A, filed with the SEC on April 13, 1999.
3 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Registration Statement on Form S-1 (Commission
File No. 333-2432), filed with the SEC on March 15, 1996.
4 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Registration Statement on Form S-4 (Commission
File No. 333-14859), filed with the SEC on October 25, 1996.
5 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Annual Report on Form 10-K for the year ended
December 31, 1996 (Commission File No. 0-28160), filed with the SEC on
March 31, 1997.
6 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Form 10-Q/A for the quarter ended June 30, 1998
(Commission File No. 0-28160), filed with the SEC on August 17, 1998.
7 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Corporation Form 10 (Commission File No. 0-25441), filed
with the SEC on February 24, 1999.
8 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Corporation Form 8-K, filed with the SEC on May 27, 1999.
9 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Corporation Form 10-Q, filed with the SEC on August 9, 1999.
<PAGE> 463
10 Incorporated by reference to the exhibit filed with the Western Wireless
Corporation Annual Report on Form 10-K for the year ended December 31, 1997
(Commission File No. 0-28160), filed with the SEC on March 27, 1998.
11 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Form 10-Q for the quarter ended September 30, 1997
(Commission File No. 0-28160), filed with the SEC on November 6, 1997.
12 Incorporated by reference to the exhibit filed with the VoiceStream Form
10-Q for the quarter ended September 30, 1999 (Commission File No.
0-28160), filed with the SEC on November 12, 1999.
13 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Holding Corporation Registration Statement on Form S-4 (Commission
File No. 333-89735), filed December 29, 1999.
14 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Corporation form 8-K, filed with the SEC on July 7, 1999.
15 Incorporated by reference to the Western Wireless Corporation Form 10-Q for
the quarter ended March 31, 1998 (Commission File No. 0-28160), filed with
the SEC on May, 11, 1998.
16 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Holding Corporation Registration Statement on Form S-4 (Commission
File No. 333-89735), filed December 3, 1999.
17 Incorporated herein by reference to Omnipoint's Registration Statement on
Form S-1 (Commission File No. 33-98360).
18 Incorporated herein by reference to Omnipoint's Annual Report on Form 10-K
for the year ended December 31, 1996.
19 Incorporated herein by reference to Omnipoint's Current Report on form 8-K,
filed May 3, 1996. Portions of this Exhibit were omitted and filed
separately with the Secretary of the Commission pursuant to Omnipoint's
application requesting confidential treatment under Rule 24b-2 of the
Exchange Act of 1934, filed with the SEC on May 3, 1996.
20 Incorporated herein by reference to Omnipoint's Current Report on Form 8-K,
filed March 26, 1998. Portions of the Exhibit were omitted and filed
separately with the Secretary of the Commission pursuant to Omnipoint's
application requesting confidential treatment under Rule 24b-2 of the
Exchange Act of 1934, filed with the SEC on March 26, 1998.
21 Incorporated herein by reference to Omnipoint's Quarterly Report on
Form 10-Q, filed with the SEC on May 15, 1998.
22 Incorporated herein by reference to Omnipoint's Quarterly Report on Form
10-Q, filed August 14, 1998. Portions of this Exhibit were omitted and
filed separately with the Secretary of the Commission pursuant to
Omnipoint's application requesting confidential treatment under Rule 24b-2
of the Exchange Act of 1934.
23 Incorporated herein by reference to Omnipoint's Quarterly Report on Form
10-Q, filed with the SEC on November 17, 1998.
24 Incorporated herein by reference to Omnipoint's Current Report on Form 8-K,
filed with the SEC on December 29, 1998.
25 Incorporated by reference to Exhibit 10.13 to Aerial's Amendment No. 1 to
Form S-1 (Commission File No. 333-1514), filed with the SEC on March 29,
1996.
26 Incorporated by reference to Exhibit 10.22 to Aerial Annual Report on Form
10-K for the year ended December 31, 1998 (Commission File No. 0-28262),
filed with the SEC on March 31, 1996.
27 Incorporated herein by reference to the Telephone and Data Systems, Inc.
Form 8-K, filed with the SEC on September 17, 1999.
28 Contained on signature page filed with VoiceStream Wireless Holding
Corporation Registration Statement on Form S-4 (Commission File No.
333-89735), filed with the SEC on October 27, 1999.
(b) Financial Statement Schedule:
Schedules for VoiceStream Wireless Holding Corporation are omitted
because they are inapplicable as VoiceStream Wireless Holding
Corporation has not conducted any activities other than in connection
with its organization and the reorganizations. Relevant financial
information is contained in the unaudited pro forma condensed
combined financial statements and the notes thereto included in the
joint proxy statement-prospectus.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows: That prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The undersigned registrant undertakes that every prospectus (i) that is
filed pursuant to the immediately preceding paragraph, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE> 464
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Seattle,
State of Washington, on this 25th day of January, 2000.
VOICESTREAM WIRELESS HOLDING CORPORATION
By /s/ ALAN R. BENDER
-------------------------------------
Alan R. Bender
Executive Vice President
<PAGE> 465
INDEX TO EXHIBITS
<TABLE>
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EXHIBIT DESCRIPTION
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<S> <C>
2.1 Agreement and Plan of Reorganization by and among VoiceStream Wireless Holding Corporation, Omnipoint
Corporation and VoiceStream Wireless Corporation, dated June 23, 1999 (included as Annex A to the joint
proxy statement-prospectus).
2.1.1 First Amendment to Agreement and Plan of Reorganization by and among VoiceStream Wireless Holding
Corporation, Omnipoint Corporation and VoiceStream Wireless Corporation, dated as of December 30, 1999
(included as Annex A to the joint proxy statement-prospectus).
2.2 Agreement and Plan of Reorganization dated September 17, 1999 among VoiceStream Wireless
Corporation, VoiceStream Wireless Holding Corporation, VoiceStream Subsidiary III Corporation,
Aerial Communications, Inc. and Telephone and Data Systems, Inc.
(included as Annex D to the joint proxy statement--prospectus).
3.1 Amended and Restated Certificate of Incorporation (included as Annex H to the joint
proxy statement-prospectus).
3.2(1) Bylaws of VoiceStream Wireless Holding Corporation.
5.1 Opinion of Preston Gates & Ellis LLP.
8.1 Opinion of Jones, Day, Reavis & Pogue as to certain tax matters.
8.2 Opinion of Piper Marbury Rudnick & Wolfe LLP as to certain tax matters.
8.3 Opinion of Sidley & Austin as to certain tax matters.
10.1(2) Agreement and Plan of Distribution between Western Wireless Corporation and VoiceStream Wireless
Corporation, dated April 9, 1999.
10.2(3) Waiver Agreement by and among Western Wireless Corporation, Western PCS Corporation and certain
of Western Wireless Corporation's shareholders, dated November 30, 1994.
10.3(3) Western PCS Corporation Series A Preferred Stock Purchase Agreement among Western Wireless
Corporation, Western PCS Corporation and the Purchasers listed therein, dated April 10, 1995.
10.4(3) PCS 1900 Project and Supply Agreement between Western PCS Corporation and Northern Telecom
Inc., dated June 30, 1995.
10.5(4) Amendment No. 1 to PCS 1900 Supply Agreement between Western PCS Corporation and Northern
Telecom Inc., dated July 25, 1996.
10.6(4) Amendment No. 2 to PCS 1900 Supply Agreement between Western PCS Corporation and Northern
Telecom Inc., dated July 25, 1996.
10.7(5) Amendment No. 3 to PCS Supply Agreement between Western PCS Corporation and Northern
Telecom Inc., dated October 14, 1996.
10.8(6) Amendment Number 4 to PCS 1900 Project and Supply Agreement by and between Western PCS
Corporation and Northern Telecom Inc., dated March 26, 1998.
10.9(7) Amendment Number 5 to PCS 1900 Project and Supply Agreement between VoiceStream Wireless
Corporation and Northern Telecom Inc., dated September 17, 1998.
10.10(8) Amendment No. 6 to PCS 1900 Project and Supply Agreement by and between VoiceStream Wireless
Corporation and Northern Telecom Inc.
10.11(9) Amendment No. 7 to PCS 10--Project and Supply Agreement by and between VoiceStream Wireless
Corporation and Northern Telecom Inc., dated May 14, 1999.
10.12(3) PCS Block "C" Organization and Financing Agreement by and among Western PCS BTA I Corporation,
Western Wireless Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook Inlet
Telecommunications, Inc., SSPCS Corporation and Providence Media Partners L.P., dated as of
November 5, 1995.
10.13(3) Limited Partnership Agreement by and between Cook Inlet PV/SS PCS Partners, L.P. and Western PCS BTA I
Corporation, dated as of November 5, 1995.
10.14(3) First Amendment to Block "C" Organization and Financing Agreement and Cook Inlet Western Wireless PV/SS
PCS, L.P. Limited Partnership Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook Inlet Telecommunications, Inc., SSPCS Corporation
and Providence Media Partners L.P., dated as of April 8, 1996.
10.15(4) Second Amendment to Block "C" Organization and Financing Agreement and Cook Inlet Western Wireless PV/SS
PCS, L.P. Limited Partnership Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook Inlet Telecommunications, Inc., SSPCS Corporation
and Providence Media Partners L.P., dated as of June 27, 1996.
10.16(4) Third Amendment to Block "C" Organization and Financing Agreement and Cook Inlet Western Wireless PV/SS
PCS, L.P. Limited Partnership Agreement and First Amendment to Technical Services Agreement by and among
Western PCS BTA I Corporation, Western Wireless Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook
Inlet Telecommunications, Inc., SSPCS Corporation, Providence Media Partners L.P. and Cook Inlet Western
Wireless PV/SS PCS, L.P., dated July 30, 1996.
10.17(3) Asset Purchase Agreement between Western PCS III License Corporation as Buyer and GTE Mobilnet Incorporated
as Seller, dated January 16, 1996.
10.18(3) Waiver Agreement by and among Western Wireless Corporation, Western PCS Corporation and certain of Western
Wireless Corporation's shareholders, dated February 15, 1996.
10.19(10) Software License Maintenance and Subscriber Billing Services Agreement, dated June 1997.
10.20(10) First Amendment to Software License, Maintenance and Subscriber Billing Services Agreement dated December
1997, between CSC Intelicom, Inc., and Western Wireless Corporation.
</TABLE>
<PAGE> 466
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EXHIBIT DESCRIPTION
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<S> <C>
10.21(11) Iowa Wireless Services, L.P. Limited Partnership Agreement, dated as of September 30, 1997, by and between
INS Wireless, Inc., as General Partner, and Western PCS I Iowa Corporation, as Limited Partnership.
10.22(11) Agreement to Form Limited Partnership dated September 30, 1997, by and among Western PCS Iowa Corporation,
a Delaware corporation, INS Wireless, Inc., an Iowa corporation, Western PCS I Corporation, a Delaware
corporation, and Iowa Network Services, Inc., an Iowa corporation.
10.23(11) Purchase Agreement by and among Western PCS Corporation, Western Wireless Corporation, Hutchison
Telecommunications Limited and Hutchison Telecommunications PCS (USA) Limited dated October 14, 1997.
10.24(10) Letter Agreement dated December 16, 1997, between Western Wireless Corporation and Intelicom Services, Inc.
to provide products and services pursuant to the Software License Maintenance and Subscriber Billing
Services Agreements and First Amendment thereto.
10.25(11) Services Agreement by and between Western Wireless Corporation and Western PCS Corporation.
10.26(11) Shareholders Agreement by and among Western Wireless Corporation, Hutchison Telecommunications PCS (USA)
Limited and Western PCS Corporation, dated February 17, 1998.
10.27(2) Tax Sharing Agreement by and between Western Wireless Corporation and Western PCS Corporation, dated
February 17, 1998. (Contained as an exhibit to the Agreement and Plan of Distribution)
10.28(2) First Amendment to Tax Sharing Agreement by and between Western Wireless Corporation and VoiceStream
Wireless Corporation, dated May 3, 1999.
10.29(6) Supply Contract by and between Western PCS Corporation and Nokia Telecommunications Inc., dated March 9,
1998.
10.30(6) Purchase and Sale Agreement by and between Nokia Mobile Phones, Inc. and Western PCS Corporation, dated
March 9, 1998.
10.31(6) Loan Agreement by and among Western PCS Holding Corporation, TD Securities (USA) Inc., NationsBanc
Montgomery Securities LLC, Barclays Capital, J.P. Morgan Securities Inc., Chase Securities Inc., and
Toronto Dominion (Texas), Inc., dated June 26, 1998.
10.32(7) First Amendment to Loan Agreement by and among Western PCS Holding Corporation, TD Securities (USA) Inc.,
Nationsbanc Montgomery Securities LLC, Barclays Capital, J.P. Morgan Securities Inc., Chase Securities
Inc., and Toronto Dominion (Texas), Inc., dated November 25, 1998.
10.33(12) Second Amendment to Loan Agreement by and among Western PCS Holding Corporation, TD Securities (USA) Inc.,
Nationsbanc Montgomery Securities LLC, Barclays Capital, J.P. Morgan Securities Inc., Chase Securities
Inc., and Toronto Dominion (Texas), Inc., dated April 26, 1999.
10.33.1(13) Third Amendment to Loan Agreement by and among VoiceStream PCS Holding LLC, as successor-in-interest to
Western PCS Holding Corporation, TD Securities (USA) Inc., Nationsbanc Montgomery Securities LLC, Barclays
Capital, J.P. Morgan Securities Inc., Chase Securities Inc., and Toronto Dominian (Texas), Inc., dated
October 29, 1999.
10.34(3) First Amendment to Stockholders Agreement between Western PCS Corporation and Northern Telecom Inc., dated
June 30, 1998.
10.35(7) Exchange Rights and Grant Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, Cook Inlet Telecommunications, Inc. and VoiceStream Wireless Corporation, dated December 17,
1998.
10.36(7) Exchange Rights and Grant Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, SSPCS Corporation and VoiceStream Wireless Corporation, dated January 19, 1999.
10.37(2) Cook Inlet/VoiceStream PCS LLC Limited Liability Company Agreement by and between Cook Inlet GSM Company
and Western PCS BTA I Corporation, dated February 11, 1999.
10.38(2) Voting Agreement by and among VoiceStream Wireless Corporation, Hellman & Friedman Capital Partners II,
L.P., H&F Orchard Partners, L.P., H&F International Partners, L.P., John W. Stanton, Theresa E. Gillespie,
PN Cellular, Inc., Stanton Family Trust, Stanton Communications Corporation, GS Capital Partners, L.P., The
Goldman Sachs Group, L.P., Bridge Street Fund 1992, L.P., Stone Street Fund 1992, L.P., Providence Media
Partners L.P., Hutchison Telecommunications Holdings and Hutchison Telecommunications PCS (USA) Limited
(USA) Limited, dated May 3, 1999.
10.39(2) Registration Rights Agreement by and among VoiceStream Wireless Corporation, Hellman & Friedman Capital
Partners II, L.P., H&F Orchard Partners, L.P., H&F International Partners, L.P., John W. Stanton, Theresa
E. Gillespie, PN Cellular, Inc., Stanton Family Trust, Stanton Communications Corporation, GS Capital
Partners, L.P., The Goldman Sachs Group, L.P., Bridge Street Fund 1992, L.P., Stone Street Fund 1992, L.P.,
and Providence Media Partners L.P., dated May 3, 1999.
10.40(2) Shareholders Agreement by and among VoiceStream Wireless Corporation, Western Wireless Corporation,
Hutchison Telecommunications Holdings (USA) Limited and Hutchison Telecommunications PCS (USA) Limited,
dated May 3, 1999.
</TABLE>
<PAGE> 467
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
10.41(2) First Amendment to Shareholders Agreement by and among VoiceStream Wireless Corporation, Western Wireless
Corporation, Hutchison Telecommunications Holdings (USA) Limited and Hutchison Telecommunications PCS (USA)
Limited dated.
10.42(2) Roaming Agreement by and between Western Wireless Corporation and VoiceStream Wireless Corporation, dated
May 3, 1999.
10.43(8) Purchase Agreement by and between VoiceStream Wireless Corporation and Nortel Networks Inc., dated May 14,
1999, relating to 12% Series A Senior Debentures due 2011.
10.44(8) Debenture Exchange and Registration Rights Agreement by and between VoiceStream Wireless Corporation and
Nortel Networks Inc., dated May 14, 1999, relating to 12% Series A Senior Debentures due 2011.
10.45(8) Indenture by and between VoiceStream Wireless Corporation and Harris Trust Company, dated May 14, 1999,
relating to 12% Series A Senior Debentures due 2011 and 12% Senior Debentures due 2011.
10.46(14) Purchase Agreement, dated as of June 23, 1999, between Omnipoint Corporation and Cook Inlet/VS GSM II PCS,
LLC.
10.47(14) Purchase Agreement, dated as of June 23, 1999, between Omnipoint Corporation and Cook Inlet/VS GSM III PCS,
LLC.
10.48(14) Stock Subscription Agreement, dated as of June 23, 1999, by and among VoiceStream Wireless Corporation,
Hutchison Telecommunications Limited and Hutchison Telecommunications PCS (USA) Limited.
10.49(14) Voting Agreement, dated as of June 23, 1999, by and among Omnipoint Corporation, VoiceStream Wireless
Corporation, the stockholders of Omnipoint and the stockholders of VoiceStream.
10.50(14) Securities Purchase Agreement, dated as of June 23, 1999, by and among VoiceStream Wireless Corporation,
Hutchison Communications PCS (USA) Limited and Omnipoint Corporation.
10.51(3) Employment Agreement by and between Robert R. Stapleton and Western Wireless Corporation, dated March 12,
1996.
10.52(3) Employment Agreement by and between Cregg B. Baumbaugh and Western Wireless Corporation, dated March 12,
1996.
10.53(15) Employment Agreement by and between Timothy Wong and Western Wireless Corporation, dated February 10, 1998.
10.54(15) Employment Agreement by and between Robert Dotson and Western Wireless Corporation, dated February 10, 1998.
10.55(2) Assignment and Assumption Agreement by and between Western Wireless Corporation and VoiceStream Wireless
Corporation with respect to the Employment Agreement of Robert R. Stapleton, dated May 3, 1999.
10.56(2) Assignment and Assumption Agreement by and between Western Wireless Corporation and VoiceStream Wireless
Corporation with respect to the Employment Agreement of Cregg B. Baumbaugh, dated May 3, 1999.
10.57(2) Assignment and Assumption Agreement by and between Western Wireless Corporation and VoiceStream Wireless
Corporation with respect to the Employment Agreement of Timothy Wong, dated May 3, 1999.
10.58(2) Assignment and Assumption Agreement by and between Western Wireless Corporation and VoiceStream Wireless
Corporation with respect to the Employment Agreement of Robert Dotson, dated May 3, 1999.
10.59(16) Employment Agreement, dated as of January 1, 1999, by and between Omnipoint and Douglas G. Smith.
10.60(17) Employment Agreement, effective October 1, 1995, by and between Omnipoint, Omnipoint Communications Inc. and
George F. Schmitt.
10.61(17) Promissory Note, dated October 1, 1995, by George F. Schmitt.
10.62(17) Stock Restriction Agreement, dated October 1, 1995, by and between Omnipoint and George F. Schmitt.
10.63(13) First Amendment to Stock Restriction Agreement, dated as of June 21, 1999, by and between Omnipoint
Communications, Inc. and George F. Schmitt.
10.64(18) Employment Agreement, dated November 3, 1996, by and between Omnipoint and Kjell S. Andersson.
10.65(18) Amendment to Employment Agreement dated as of February 24, 1997, between Omnipoint and Kjell S. Andersson.
10.66(18) Promissory Note, dated February 24, 1997, by Kjell S. Andersson.
</TABLE>
<PAGE> 468
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
10.67(18) Stock Restriction Agreement, dated February 24, 1997, by and between Omnipoint and Kjell S. Andersson.
10.68(16) Employment Agreement, dated as of April 23, 1999, by and between Omnipoint and Harry Plonskier.
10.69(17) Amended and Restated Registration Rights Agreement, dated June 29, 1995, by and among Omnipoint and the
parties named therein.
10.70(17) OEM Supply Agreement for Omnipoint PCS (Personal Communication Systems) Products, dated September 22, 1994,
by and between Omnipoint and Northern Telecom Inc.
10.71(17) Manufacturing License and Escrow Agreement for Personal Communication Service Products, dated February 28,
1995, by and between Omnipoint and Northern Telecom Inc.
10.72(17) Collaborative Development Agreement, dated March 1, 1995, by and between Omnipoint and Northern Telecom Inc.
10.73(17) Supply Agreement, dated September 22, 1994, by and between Omnipoint Communications Inc. and Northern
Telecom Inc.
10.74(17) Amendment No. 1 to Supply Agreement dated July 21, 1995, by and between Omnipoint Communications Inc. and
Northern Telecom Inc.
10.75(17) Letter Agreement, dated January 24, 1996, by and between Omnipoint and Ericsson Inc.
10.76(19) Acquisition Agreement for Ericsson CMS 40 Personal Communications Systems (PCS) Infrastructure Equipment,
dated as of April 16, 1996, by and between Ericsson Inc. and Omnipoint Communications.
10.77(19) Acquisition Supply and License Agreement for Omnipoint Personal Communications Systems (PCS) Infrastructure
Equipment, dated as of April 16, 1996, by and between Ericsson Inc. and Omnipoint.
10.78(19) Agreement for Purchase and Sale of Ericsson Inc. Masko Terminal Units, dated as of April 16, 1996, by and
between Ericsson, Inc. and Omnipoint Communications Inc.
10.79(20) Loan Agreement by and among PCS Philadelphia Holdings, Inc., Ericsson Inc. and certain other lenders named
therein, dated July 25, 1997.
10.80(20) Loan Agreement by and among Omnipoint Midwest Holdings, LLC, Northern Telecom Inc. and certain other
lenders named therein, dated January 30, 1998.
10.81(20) Loan Agreement by and among Omnipoint Corporation, Omnipoint Communications Inc., DLJ Capital Funding Inc.
and certain other lenders named therein, dated February 17, 1998.
10.82(20) Note Purchase Agreement by and among Omnipoint Corporation, Omnipoint Communications Inc., IBJ Schroder
Bank & Trust Company and certain other purchasers named therein, dated February 17, 1998.
10.83(21) Purchase Agreement by and among Omnipoint Corporation, Donaldson, Lufkin & Jenrette Securities Corporation,
BancAmerica Robertson Stephens, Bear, Stearns & Co., Inc. and Smith Barney Inc., dated May 1, 1998.
10.84(21) Deposit Agreement by and among Omnipoint Corporation, Marine Midland Bank, and the Holders from time to time
of the Depositary Shares, dated May 6, 1998.
10.85(21) Deposit Account Agreement by and between Omnipoint Corporation and The First National Bank of Maryland,
dated May 6, 1998.
10.86(22) Loan Agreement, dated June 25, 1998, by and between Omnipoint MB Holdings, L.L.C. and Bank of America
National Trust and Savings Association.
10.87(22) Amended and Restated Loan Agreement, dated June 25, 1998, by and between Omnipoint MB Holdings, L.L.C. and
Ericsson Inc.
10.88(23) Capital Contribution Agreement dated, September 18, 1998, by and between Omnipoint Corporation and D&E
Communications, Inc.
10.89(24) Note Purchase Agreement by and among Omnipoint Corporation, IBJ Schroder Bank & Trust Company, as paying
agent, and certain initial purchasers named therein, dated December 21, 1998.
</TABLE>
<PAGE> 469
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
10.90(2) Securities Purchase Agreement by and among VoiceStream Wireless Corporation, Hutchison Telecommunications
PCS (USA) Limited and Omnipoint Corporation, dated as of June 23, 1999
10.91(24) PCS Infrastructure Supply Contract, dated as of March 1, 1996, between Aerial and Nokia Telecommunications,
Inc.
10.92(25) Tax Settlement Agreement dated March 12, 1999, by and between Aerial, Aerial Operating Company, Inc. and
Telephone and Data Systems, Inc.
10.93(26) Stockholder Agreement dated as of September 17, 1999, by and between Telephone and Data Systems, Inc. and
stockholders of Aerial Communications, Inc., and VoiceStream Wireless Corporation, and VoiceStream Wireless
Holding Corporation.
10.94(26) Indemnity Agreement, dated as of September 17, 1999, among VoiceStream Wireless Corporation, VoiceStream
Wireless Holding Corporation, Aerial Communications, Inc., Aerial Operating Company, Inc., and Telephone
and Data Systems, Inc.
10.95(26) Debt/Equity Replacement Agreement dated as of September 17, 1999, made by and among Telephone and Data
Systems, Inc., Aerial Communications, Inc., Aerial Operating Company, Inc., VoiceStream Wireless
Corporation, and VoiceStream Wireless Holding Corporation.
10.96(26) Parent Stockholder Agreement dated as of September 17, 1999, by and among Aerial Communications, Inc.,
Telephone and Data Systems, Inc., VoiceStream Wireless Corporation, VoiceStream Wireless Holding
Corporation and the individuals and entities set forth on Schedule I thereto.
10.96.1(1) Consent and Amendment dated as of November 12, 1999, by and among Aerial Communications, Inc., Telephone and
Data Systems, Inc., VoiceStream Wireless Corporation, VoiceStream Wireless Holding Corporation, and Hellman
& Friedman Capital Partners II, H&F Orchard Partners, L.P., H&F International Partners, L.P., John W.
Stanton, Theresa Gillespie, PN Cellular, 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., Hutchison Telecommunications Holdings (USA) Limited, and
Hutchison Telecommunications PCS (USA) Limited.
10.97(26) Settlement Agreement and Release, entered into as of September 17, 1999 by and among Sonera
Ltd., Sonera Corporation U.S., Telephone and Data Systems, Inc., Aerial Communications, Inc., and Aerial
Operating Company, Inc.
23.1 -- Consent of Preston Gates & Ellis LLP (included with Exhibit 5.1)
23.2 -- Consent of Arthur Andersen LLP (independent public accountants for VoiceStream Wireless Corporation)
23.3 -- Consent of PricewaterhouseCoopers LLP (independent public accountants for Omnipoint Corporation)
23.4 -- Consent of Arthur Andersen LLP (independent public accountants for Aerial Communications Inc.)
24.1(27) -- Power of Attorney
99.1 -- Form of VoiceStream Wireless Corporation Proxy card.
99.2 -- Form of Omnipoint Corporation Proxy card.
99.3 -- Form of Aerial Communications, Inc. Proxy card.
</TABLE>
----------
1 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Holding Corporation Registration Statement on Form S-4
(Commission File No. 333-89735), filed December 3, 1999.
2 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Holding Corporation Registration Statement on Form S-4
(Commission File No. 333-89735), filed October 27, 1999.
3 Incorporated by reference to the exhibit filed with VoiceStream
Wireless Corporation Form 10/A, filed with the SEC on April 13, 1999.
4 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Registration Statement on Form S-1 (Commission
File No. 333-2432), filed with the SEC on March 15, 1996.
5 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Registration Statement on Form S-4 (Commission
File No. 333-14859), filed with the SEC on October 25, 1996.
6 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Annual Report on Form 10-K for the year ended
December 31, 1996 (Commission File No. 0-28160), filed with the SEC on
March 31, 1997.
7 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Form 10-Q/A for the quarter ended June 30, 1998
(Commission File No. 0-28160), filed with the SEC on August 17, 1998.
8 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Corporation Form 10 (Commission File No. 0-25441), filed
with the SEC on February 24, 1999.
9 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Corporation Form 8-K, filed with the SEC on May 27, 1999.
10 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Corporation Form 10-Q, filed with the SEC on August 9, 1999.
<PAGE> 470
10 Incorporated by reference to the exhibit filed with the Western Wireless
Corporation Annual Report on Form 10-K for the year ended December 31, 1997
(Commission File No. 0-28160), filed with the SEC on March 27, 1998.
11 Incorporated by reference to the exhibit filed with the Western
Wireless Corporation Form 10-Q for the quarter ended September 30, 1997
(Commission File No. 0-28160), filed with the SEC on November 6, 1997.
12 Incorporated by reference to the exhibit filed with the VoiceStream Form
10-Q for the quarter ended September 30, 1999 (Commission File No.
0-28160), filed with the SEC on November 12, 1999.
13 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Holding Corporation Registration Statement on Form S-4 (Commission
File No. 333-89735), filed December 29, 1999.
14 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Corporation form 8-K, filed with the SEC on July 7, 1999.
15 Incorporated by reference to the Western Wireless Corporation Form 10-Q for
the quarter ended March 31, 1998 (Commission File No. 0-28160), filed with
the SEC on May, 11, 1998.
16 Incorporated by reference to the exhibit filed with the VoiceStream
Wireless Holding Corporation Registration Statement on Form S-4 (Commission
File No. 333-89735), filed December 3, 1999.
17 Incorporated herein by reference to Omnipoint's Registration Statement on
Form S-1 (Commission File No. 33-98360).
18 Incorporated herein by reference to Omnipoint's Annual Report on Form 10-K
for the year ended December 31, 1996.
19 Incorporated herein by reference to Omnipoint's Current Report on form 8-K,
filed May 3, 1996. Portions of this Exhibit were omitted and filed
separately with the Secretary of the Commission pursuant to Omnipoint's
application requesting confidential treatment under Rule 24b-2 of the
Exchange Act of 1934, filed with the SEC on May 3, 1996.
20 Incorporated herein by reference to Omnipoint's Current Report on Form 8-K,
filed March 26, 1998. Portions of the Exhibit were omitted and filed
separately with the Secretary of the Commission pursuant to Omnipoint's
application requesting confidential treatment under Rule 24b-2 of the
Exchange Act of 1934, filed with the SEC on March 26, 1998.
21 Incorporated herein by reference to Omnipoint's Quarterly Report on
Form 10-Q, filed with the SEC on May 15, 1998.
22 Incorporated herein by reference to Omnipoint's Quarterly Report on Form
10-Q, filed August 14, 1998. Portions of this Exhibit were omitted and
filed separately with the Secretary of the Commission pursuant to
Omnipoint's application requesting confidential treatment under Rule 24b-2
of the Exchange Act of 1934.
23 Incorporated herein by reference to Omnipoint's Quarterly Report on Form
10-Q, filed with the SEC on November 17, 1998.
24 Incorporated herein by reference to Omnipoint's Current Report on Form 8-K,
filed with the SEC on December 29, 1998.
25 Incorporated by reference to Exhibit 10.13 to Aerial's Amendment No. 1 to
Form S-1 (Commission File No. 333-1514), filed with the SEC on March 29,
1996.
26 Incorporated by reference to Exhibit 10.22 to Aerial Annual Report on Form
10-K for the year ended December 31, 1998 (Commission File No. 0-28262),
filed with the SEC on March 31, 1996.
27 Incorporated herein by reference to the Telephone and Data Systems, Inc.
Form 8-K, filed with the SEC on September 17, 1999.
28 Contained on signature page filed with VoiceStream Wireless Holding
Corporation Registration Statement on Form S-4 (Commission File No.
333-89735), filed with the SEC on October 27, 1999.
<PAGE> 1
EXHIBIT 5.1
Opinion and Consent of Counsel
January 24, 2000
VoiceStream Wireless Holdings Corporation
3650 131st Avenue S.E.
Bellevue, Washington 98006
Re: Registration Statement on Form S-4 of
VoiceStream Wireless Holdings Corporation
Ladies and Gentlemen:
We have acted as counsel to VoiceStream Wireless Holdings Corporation
(the "Company") in connection with the filing of the above-referenced
Registration Statement (the "Registration Statement") relating to the
registration of shares (the "Shares") of Common Stock, no par value per share,
of the Company that may be issued in exchange for shares of stock of VoiceStream
Wireless Corporation, Omnipoint Corporation and Aerial Communications, Inc. in
connection with certain transactions (the "Transactions") described in the
Registration Statement.
In connection therewith, we have reviewed the Company's Restated
Certificate of Incorporation, Amended and Restated Bylaws and minutes of
appropriate meetings, and we are familiar with the proceedings to date with
respect to the Transactions and the proposed issuance of the Shares and have
examined such records, documents and questions of law, and have satisfied
ourselves as to matters of fact, as we have considered relevant and necessary as
a basis for this opinion.
Based on the foregoing, it is our opinion that:
1. The Company is duly incorporated and validly existing under the laws of
the State of Delaware.
2. The Shares will be legally issued, fully paid and non-assessable under
the Delaware corporate law when certificates representing the Shares shall have
been duly executed, countersigned and registered and duly delivered in exchange
for the shares of stock of VoiceStream Wireless Corporation, Omnipoint
Corporation and Aerial Communications, Inc. in connection with the Transactions.
We do not find it necessary for the purposes of this opinion to cover, and
accordingly we express no opinion as to, the application of the securities or
blue sky laws of the various states to the sale of the Shares. We hereby consent
to the filing of this opinion as an exhibit to the Registration Statement and to
all references to our firm included in or made a part of the Registration
Statement.
Very truly yours,
PRESTON GATES & ELLIS LLP
BY /s/ G. Scott Greenburg
-------------------------
G. Scott Greenburg
<PAGE> 1
EXHIBIT 8.1
[Letterhead of Jones, Day, Reavis & Pogue]
January 24, 2000
VoiceStream Wireless Corporation
3650 131st Avenue, SE
Suite 400 Bellevue, WA 98006
Ladies and Gentlemen:
We have acted as tax counsel for VoiceStream Wireless
Corporation, a Washington corporation ("VoiceStream"), in connection with the
proposed merger (the "Merger") of VoiceStream Subsidiary I, a Washington
corporation ("Merger Sub"), all of whose outstanding stock is owned by
VoiceStream Wireless Holding Corporation, a Delaware corporation ("VoiceStream
Holding"), with and into VoiceStream pursuant to an Agreement and Plan of
Reorganization, dated as of June 23, 1999, and as amended as of December 30,
1999 (the "Omnipoint Merger Agreement"), by and among VoiceStream, VoiceStream
Holding, and Omnipoint Corporation, a Delaware corporation ("Omnipoint"), or
pursuant to an Agreement and Plan of Reorganization dated as of September 17,
1999 (the "Aerial Merger Agreement"), among VoiceStream, VoiceStream Holding,
VoiceStream Subsidiary III Corporation, a Delaware corporation, Aerial
Communications, Inc., a Delaware Corporation ("Aerial"), and Telephone and Data
Systems, Inc., a Delaware corporation, and as described in the registration
statement on Form S-4 (the "Registration Statement") which includes the Proxy
Statement/Prospectus of VoiceStream, Omnipoint, and Aerial, as filed with the
Securities and Exchange Commission (the "SEC") on January 24, 2000. In the
Merger, each share of VoiceStream common stock outstanding will be converted
into one share of common stock of VoiceStream Holding.
In that connection, you have requested our opinion concerning
certain federal income tax consequences of the Merger. For purposes of our
opinion, we have reviewed the Omnipoint Merger Agreement, the Aerial Merger
Agreement, the Registration Statement, and such other documents and corporate
records, and have considered such matters of law, as we have deemed necessary or
appropriate. In addition, we have assumed that (i) the Merger will be
consummated in the manner contemplated by the Registration Statement and in
accordance with the provisions of the Omnipoint Merger Agreement or the Aerial
Merger Agreement, (ii) the factual statements concerning the Merger and the
representations set forth in the Omnipoint Merger Agreement, the Aerial Merger
Agreement, and the Registration Statement are presently true, correct and
complete and will continue to be true, correct, and complete at all times up to
and including the closing date of the Merger
<PAGE> 2
VoiceStream Wireless Corporation
January 24, 2000
Page 2
provided for in the Omnipoint Merger Agreement and the Aerial Merger Agreement
(the "Closing Date"), and (iii) the factual representations made by VoiceStream
and VoiceStream Holding in their respective letters (the "Representation
Letters") to us dated the date hereof are presently true, correct, and complete
and will continue to be true, correct, and complete at all times up to and
including the Closing Date. If any of the foregoing assumptions is untrue for
any reason or if the Merger is consummated in a manner that is inconsistent with
the manner in which it is presently described in the Omnipoint Merger Agreement,
the Aerial Merger Agreement, or the Registration Statement, our opinion as
expressed below may be adversely affected and may not be relied upon.
Our opinion is based on the current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), current regulations and proposed
regulations thereunder, current published administrative rulings and procedures
of the Internal Revenue Service, and judicial decisions published to date, all
of which are subject to change at any time. You should note that future
legislative, judicial, or administrative actions, decisions, or interpretations,
which may be retroactive in effect, could materially affect our opinion.
Our opinion does not address tax consequences that may apply to
taxpayers that are subject to special treatment under the federal income tax
laws (for example to taxpayers that are banks, financial institutions,
broker-dealers, insurance companies, foreign persons, tax-exempt entities, or
taxpayers that acquired their VoiceStream common stock by exercising employee
stock options or otherwise as compensation or through a tax-qualified retirement
plan).
Based upon the foregoing, it is our opinion that:
1. the Merger will be treated for federal income tax purposes
as a "reorganization" within the meaning of section 368(a)
of the Code;
2. each of VoiceStream, VoiceStream Holding, and in the case
of a reorganization described in section 368(a)(2)(E) of
the Code, Merger Sub, will be treated for federal income
tax purposes as a party to the reorganization within the
meaning of section 368(b) of the Code; and
3. holders of VoiceStream common stock who exchange such
common stock for VoiceStream Holding common stock in the
Merger will not recognize gain or loss for United States
federal income tax purposes.
We express no opinion on any issue relating to the federal income
tax consequences of the Merger other than those set forth above. An opinion of
counsel is not binding on the Internal
<PAGE> 3
VoiceStream Wireless Corporation
January 24, 2000
Page 3
Revenue Service or the courts, and there can be no assurance that the Internal
Revenue Service or a court would not take a contrary position with respect to
the conclusions set forth above.
We are furnishing this opinion in connection with the filing of
the Registration Statement with the SEC, and this opinion is not to be used,
circulated, quoted or otherwise referred to for any other purpose without our
express written permission.
We consent to the filing of this opinion as Exhibit 8.1 to the
Registration Statement and to the reference to our firm name therein. In giving
this consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended,
or the rules or regulations of the SEC promulgated thereunder.
Very truly yours,
/s/ JONES, DAY, REAVIS & POGUE
------------------------------
<PAGE> 1
EXHIBIT 8.2
[Piper Marbury Rudnick & Wolfe Letterhead]
January 24, 2000
Omnipoint Corporation
3 Bethesda Metro Center, Suite 400
Bethesda, MD 20814
Sirs:
We have acted as counsel to Omnipoint Corporation ("Omnipoint") in
connection with the transactions (the "Transactions") contemplated by the
Agreement and Plan of Reorganization (the "Omnipoint Merger Agreement"), dated
as of June 23, 1999 and amended as of December 30, 1999, by and among Omnipoint,
VoiceStream Wireless Corporation ("VoiceStream") and VoiceStream Wireless
Holding Corporation ("Holdings"). Except where otherwise specified, all
capitalized terms used herein, unless otherwise specified, shall have the
meanings ascribed to them in the Omnipoint Merger Agreement.
In rendering our opinions, we have examined and relied upon the
accuracy and completeness of the facts, information, covenants and
representations contained in originals or copies, certified or otherwise
identified to our satisfaction, of such documents relating to the Transactions
as we have deemed necessary or appropriate as a basis for the opinions set forth
below, including the following (the "Transaction Documents"):
(i) the Omnipoint Merger Agreement;
(ii) the joint proxy statement/prospectus of even date herewith (the
"Joint Proxy Statement") pursuant to which shareholders of Omnipoint and
VoiceStream will be asked to approve the transactions contemplated by the
Omnipoint Merger Agreement;
(iii) the Stock Subscription Agreement, dated June 23, 1999, by and
among Holdings, Hutchison Telecommunications Limited and Hutchison
Telecommunications PCS (USA) Limited; and
(iv) the Securities Purchase Agreement, dated as of June 23, 1999, by
and among Omnipoint, VoiceStream and Hutchison Telecommunications PCS (USA)
Limited.
<PAGE> 2
We have also examined such documents relating to certain other
transactions to be undertaken by one or more of the parties to the Omnipoint
Merger Agreement as we have considered necessary or appropriate, including
(i) the Agreement and Plan of Reorganization, dated as of September 17, 1999,
among VoiceStream, Holdings, VoiceStream Subsidiary III Corporation, Aerial
Communications, Inc. ("Aerial") and Telephone and Data Systems, Inc. (the
"Aerial Merger Agreement"), and (ii) the Stock Subscription Agreement dated as
of September 17, 1999 (the "Sonera Stock Subscription Agreement"), between
Holdings and Sonera Ltd. ("Sonera").
We have assumed the genuineness of all signatures, the legal capacity
of all natural persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us
as certified or photostatic copies and the authenticity of the originals of such
documents. We have also assumed that the transactions contemplated by the
Transaction Documents and such other documents as we have examined will be
consummated in accordance with the terms of such documents and as described in
the Joint Proxy Statement.
In addition, we have assumed that (i) as of the Effective Time, we
will have received certificates executed by officers of Omnipoint, VoiceStream
and Holdings, and by certain shareholders of Omnipoint and VoiceStream, as to
certain facts (including certification as to their knowledge and intention)
relating to Omnipoint, VoiceStream, Holdings, and certain Omnipoint and
VoiceStream shareholders, and certain facts relating to the transactions
contemplated by the Transaction Documents, (ii) as of the effective time of the
merger of VoiceStream Subsidiary III Corporation into Aerial pursuant to the
Aerial Merger Agreement, we will have received certificates executed by officers
and by certain shareholders of Aerial, as to certain facts (including
certification as to their knowledge and intention) relating to Aerial and
certain Aerial shareholders, (iii) as of the closing of the transactions
contemplated by the Sonera Stock Subscription Agreement, we will have received a
certificate executed by Sonera, as to certain facts (including certification as
to its knowledge and intention) relating to Sonera and (iv) the Merger will
be consummated prior to or simultaneously with the Aerial Merger. Our opinions
are expressly conditioned on, among other things, the accuracy of such
assumptions and of the statements and representations contained in such
certificates.
Our opinions assume, among other things, the accuracy as of the date
hereof, and the accuracy as of the Effective Time, of such facts, information,
covenants, statements and representations, as well as the absence of any change
in the foregoing that are material to such opinions between the date hereof and
the Effective Time.
In rendering our opinions, we have considered the applicable provisions
of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations promulgated thereunder by the Treasury Department (the
"Regulations"), pertinent judicial authorities, rulings of the U.S. Internal
Revenue Service and such other authorities
<PAGE> 3
as we have considered relevant. It should be noted that the Code, the
Regulations, judicial decisions, administrative interpretations and such other
authorities are subject to change at any time and, in some circumstances, with
retroactive effect. A material change in any of the authorities upon which our
opinions are based could affect our conclusions stated herein. In addition,
there can be no assurance that the Internal Revenue Service would not take a
position contrary to that which is stated in this opinion letter.
Based upon and subject to the foregoing, we are of the opinion that
(1) The receipt of Holdings common stock by holders of Omnipoint common
stock pursuant to the Omnipoint Merger will be treated as tax-free to the
holders under Section 351 of the Code.
(2) No gain or loss will be recognized for federal income tax purposes
by Omnipoint in connection with the Omnipoint Merger.
Except as set forth above, we express no opinion to any party as to any
consequences of the Omnipoint Merger or any transactions related thereto. We are
furnishing this opinion to you solely in connection with the transactions
contemplated by the Omnipoint Merger Agreement, and it is not to be used, relied
upon, circulated, quoted or otherwise referred to by any other person for any
other purpose without our prior written consent. This opinion is expressed as of
the date hereof, and we disclaim any undertaking to advise you of any subsequent
changes of the matters stated, represented or assumed herein or any subsequent
changes in applicable law.
We hereby consent to the filing of this opinion as an exhibit to the
Joint Proxy Statement and to the reference therein to Piper Marbury Rudnick &
Wolfe LLP under the heading "Material United States Federal Income Tax
Consequences--Consequences of the Omnipoint Merger.
Very truly yours,
/s/ PIPER MARBURY RUDNICK & WOLFE LLP
-------------------------------------
<PAGE> 1
EXHIBIT 8.3
[Letterhead of Sidley & Austin]
January 24, 2000
Aerial Communications, Inc.
8410 West Bryn Mawr
Suite 1100
Chicago, IL 60631
Ladies and Gentlemen:
We have acted as counsel for Aerial Communications, Inc., a Delaware
corporation ("Aerial"), in connection with the proposed merger (the "Merger") of
VoiceStream Subsidiary III, a Delaware corporation ("Merger Sub"), all of whose
outstanding stock is owned by VoiceStream Wireless Holding Corporation, a
Delaware corporation ("VoiceStream Holding"), with and into Aerial pursuant to
an Agreement and Plan of Reorganization dated as of September 17, 1999 (the
"Aerial Merger Agreement"), among VoiceStream Wireless Corporation, a Washington
corporation ("VoiceStream"), VoiceStream Holding, Merger Sub, Aerial and
Telephone and Data Systems, Inc., a Delaware corporation, and as described in
the registration statement on Form S-4 (the "Registration Statement") which
includes the Proxy Statement/Prospectus of VoiceStream, Aerial and Omnipoint
Corporation, a Delaware corporation ("Omnipoint"), as filed with the Securities
and Exchange Commission (the "SEC") on January 24, 2000. Capitalized terms used
but not defined herein have the meanings ascribed to them in the Aerial Merger
Agreement.
As provided in the Aerial Merger Agreement, at the Effective Time, by
reason of the Merger: (i) each issued and outstanding Series A Common Share, par
value $1.00 per share, of Aerial (collectively "Aerial Series A Shares") and
each issued and outstanding Common Share, $1.00 par value per share, of Aerial
(collectively "Aerial Common Shares" and together with the Aerial Series A
Shares, the "Aerial Common Stock") (other than shares of Aerial Common Stock to
be canceled as described below) will be converted into (a) shares of validly
issued, fully paid and nonassessable shares of common stock, no par value, of
VoiceStream Holding ("VoiceStream Holding Common Stock"), with cash paid in lieu
of fractional shares of VoiceStream Holding Common Stock, and/or (b) with
respect to Aerial Common Stock held by Public Holders, the right to receive
$18.00 in cash (subject to adjustment in certain circumstances), and (ii) each
share of Aerial Common Stock that is owned by Aerial as treasury stock or by any
of its Subsidiaries and each share of Aerial Common Stock that is owned by
<PAGE> 2
VoiceStream Holding or by any of its Subsidiaries will be canceled and no
VoiceStream Holding Common Stock or other consideration will be delivered in
exchange therefor.
You have requested our opinion concerning certain federal income tax
consequences of the Merger. For purposes of our opinion, we have reviewed the
Aerial Merger Agreement, the Debt/Equity Replacement Agreement, the Registration
Statement and such other documents and corporate records, and have considered
such matters of law, as we have deemed necessary or appropriate. We have assumed
the authenticity of all documents submitted to us as originals, the genuineness
of all signatures, the legal capacity of all natural persons and the conformity
with original documents of all copies submitted to us for our examination. In
addition, we have assumed that (i) the Merger will be consummated in the manner
contemplated by the Registration Statement and in accordance with the provisions
of the Aerial Merger Agreement, (ii) the factual statements concerning the
Merger and the representations set forth in the Aerial Merger Agreement and the
Registration Statement are true, correct and complete and will continue to be
true, correct and complete at all times up to and including the Effective Time,
and (iii) the factual representations made to us by Aerial and VoiceStream
Holding in the Company Tax Certificate and the Parent Tax Certificate,
respectively, dated on the date hereof are true, correct and complete and will
continue to be true, correct and complete at all times up to and including the
Effective Time as if made at the Effective Time. If any of the foregoing
assumptions is untrue for any reason, our opinion as expressed below may be
adversely affected and may not be relied upon.
Our opinion is based on the current provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), current regulations and proposed
regulations thereunder, current published administrative rulings and procedures
of the Internal Revenue Service, and judicial decisions published to date, all
of which are subject to change at any time. You should note that future
legislative, judicial, or administrative actions, decisions, or interpretations,
which may be retroactive in effect, could materially affect our opinion. We
assume no obligation to update or supplement this letter to reflect any facts or
circumstances which may hereafter come to our attention with respect to the
opinion expressed herein, including any changes in applicable law which may
hereafter occur.
Our opinion does not address the tax consequences that may apply to
holders of Aerial Common Stock that are subject to special treatment under the
federal income tax laws (for example, holders that are banks, financial
institutions, broker-dealers, insurance companies, foreign persons or tax-exempt
entities, holders that acquired their Aerial Common Stock by exercising employee
stock options or otherwise as compensation or through a tax-qualified retirement
plan, or holders that have an excess loss account with respect to their Aerial
Common Stock). Our opinion assumes that holders of Aerial Common Stock will hold
such stock as a capital asset at the Effective Time and does not consider the
tax consequences to any such holders who also own stock of VoiceStream or
Omnipoint.
Based upon the foregoing, it is our opinion that, for federal income
tax purposes:
1. the Merger will constitute a reorganization within the meaning
of section 368(a) of the Code, to which Aerial, VoiceStream
Holding and Merger
2
<PAGE> 3
Sub will each be a party within the meaning of section 368(b) of
the Code; and
2. holders of Aerial Common Stock that do not elect to receive any
cash in the Merger will not recognize gain or loss solely as a
result of the conversion of shares of Aerial Common Stock into
shares of VoiceStream Holding Common Stock in the Merger,
except with respect to cash, if any, received in lieu of
fractional shares.
Except as expressly set forth above, we express no opinion on any
issue relating to the tax consequences of, or any other matters related to, the
Merger. An opinion of counsel is not binding on the Internal Revenue Service or
the courts, and there can be no assurance that the Internal Revenue Service or a
court would not take a contrary position with respect to the conclusions set
forth above.
We are furnishing this opinion in connection with the filing of the
Registration Statement with the SEC, and this opinion is not to be used,
circulated, quoted or otherwise referred to for any other purpose without our
express written permission.
We consent to the filing of this opinion as Exhibit 8.3 to the
Registration Statement and to the reference to our firm name therein. In giving
this consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended,
or the rules or regulations of the SEC promulgated thereunder.
Very truly yours,
/s/ SIDLEY & AUSTIN
-------------------
Sidley & Austin
3
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm), as it relates to VoiceStream Wireless
Corporation and Subsidiaries, included in or made a part of this registration
statement.
ARTHUR ANDERSEN LLP
Seattle, Washington
January 24, 2000
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on form S-4 of
VoiceStream Wireless Holding Corporation of our report dated March 31, 1999
relating to the financial statements of Omnipoint Corporation, which appear in
such Registration Statement. We also consent to the references to us under the
headings "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Boston, MA
January 24, 2000
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm), as it relates to Aerial Communications,
Inc. and Subsidiaries, included in or made a part of this registration
statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
January 24, 2000
<PAGE> 1
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 January 17, 2000, with all powers that the undersigned would
possess if present at the Special Meeting of Shareholders to be held on
Thursday, February 24, 2000, at 8:00 a.m., local time, at the offices of Preston
Gates & Ellis LLP, 701 Fifth Avenue, Suite 5000, Seattle, Washington, and at
any adjournment or adjournments thereof, upon the following matters:
(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
FOLD AND DETACH HERE
<PAGE> 2
Please mark
your votes as /x/
indicated in
this example.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Proposal to adopt, and approve the transactions contemplated by, the FOR AGAINST ABSTAIN
Agreement and Plan of Reorganization, dated as of June 23, 1999 and / / / / / /
amended as of December 30, 1999, by and among VoiceStream Wireless Corporation,
Omnipoint Corporation, and VoiceStream Wireless Holding Corporation whereby
VoiceStream Wireless Corporation and Omnipoint Corporation will each become a
wholly-owned subsidiary 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.
2. Proposal to adopt, and approve the transactions contemplated by, the FOR AGAINST ABSTAIN
Agreement and Plan of Reorganization, dated as of September 17, 1999, by and / / / / / /
among VoiceStream Wireless Corporation, Aerial Communications, Inc., VoiceStream
Wireless Holding Corporation and Telephone and Data systems, Inc., whereby
VoiceStream Wireless Corporation and Aerial Communications, Inc. will each become
a wholly-owned subsidiary of VoiceStream Wireless Holding Corporation. A copy of
the Agreement and Plan of Reorganization is attached as Annex D to the joint proxy
statement-prospectus for the Special Meeting.
3. In accordance with their discretion, upon all other matters that may properly FOR AGAINST ABSTAIN
come before the Special Meeting and any adjournment thereof. / / / / / /
</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 each of the
Agreements and Plans of Reorganization.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED PROXY RETURN
ENVELOPE.
Signature(s)___________________________________________ Dated:___________, 2000
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> 1
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 January 17, 2000, with all powers that the undersigned would
possess if present at the Special Meeting of Shareholders to be held on
Thursday, February 24, 2000, at 11:00 a.m., local time, at Piper Marbury Rudnick
& Wolfe LLP, 1200 Nineteenth Street, N.W., Washington, D.C. and at any
adjournment or adjournments thereof, upon the following matters:
(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
FOLD AND DETACH HERE
<PAGE> 2
Please mark
your votes as /X/
indicated in
this example.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Proposal to adopt, and approve the transactions contemplated by, the FOR AGAINST ABSTAIN
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.
2. In accordance with their discretion, upon all other matters that may properly FOR AGAINST ABSTAIN
come before the Special Meeting or any adjournment thereof. / / / / / /
</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.
Signature(s)___________________________________________ Dated:___________, 2000
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> 1
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 January 17, 2000, with all powers that the
undersigned would possess if present at the Special Meeting of Shareholders to
be held on Thursday, February 24, 2000, at 10:00 a.m., local time, at The Hotel
Allegro Chicago, 171 West Randolph Street, Chicago, Illinois, on the third floor
in the Goodman Theater B Room and at any adjournment or adjournments thereof,
upon the following matters:
PLEASE MARK, DATE, SIGN AND
RETURN THIS PROXY IN THE
ENCLOSED PROXY RETURN ENVELOPE.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE.)
<PAGE> 2
AERIAL COMMUNICATIONS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Proposal to adopt, and approve the transactions contemplated by, the FOR AGAINST ABSTAIN
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.
2. In accordance with their discretion, upon all other matters that may properly FOR AGAINST ABSTAIN
come before the Special Meeting and any adjournment thereof. / / / / / /
</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 HARRIS TRUST & SAVINGS BANK, P.O. BOX 1878, CHICAGO, IL 60690.
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 -
YOUR VOTE IS IMPORTANT
PLEASE MARK, DATE, SIGN AND
RETURN THIS PROXY IN THE
ENCLOSED PROXY RETURN ENVELOPE.
