SEC Info - Omnipoint Corp/DE - IPO: ‘424B1’ on 7/1/96

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Omnipoint Corp/DE – IPO: ‘424B1’ on 7/1/96

As of: Monday, 7/1/96 · Accession #: 928385-96-859 · File #: 333-03739

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 7/01/96  Omnipoint Corp/DE                 424B1                  1:353K                                   Donnelley R R & S… 09/FA

Initial Public Offering (IPO): Prospectus — Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Definitive Materials                                  93    590K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Accounting for Stock-Based Compensation Additional Information Allen & Company Incorporated Business Capitalization Certain Relationships and Related Transactions Collaborative Development Agreement Common Stock Competition Delaware Law and Certain Charter Provisions Description of Capital Stock Dilution Employee Stock Purchase Plan Employment Agreements Ericsson Relationship Executive Bonus Plan Experts Glossary of Terms Index to Consolidated Financial Statements James N. Perry, Jr Legal Matters Liquidity and Capital Resources Loans to Certain Officers Management Management's Discussion and Analysis of Financial Condition and Results of Operations Manufacturing License Agreement Marketing Strategy New York MTA License obligation Northern Telecom Relationship Notes to Consolidated Financial Statements Offering, The Omnipoint's PCS Markets Omnipoint System Advantages Overview Patents and Other Intellectual Property Rights PCS Licensing Pioneer's Preference Program Preferred Stock Price Range of Common Stock and Dividend Policy Principal and Selling Stockholders Prospectus Summary Radio Frequency Emission Concerns; Medical Device Interference Registration Rights of Certain Holders Regulatory Environment Related Party Transactions Report of Independent Accountants Research and development Risk Factors Selected Consolidated Financial Data Service Business Shares Eligible for Future Sale Stock Option Plan Strategic Relationships Technology Business The Offering Total Underwriting Use of Proceeds Warrants
1	1st Page - Filing Submission
"	Common Stock
2	Prospectus Summary
4	The Offering
6	Risk Factors
8	Competition
"	Service Business
9	Technology Business
14	Radio Frequency Emission Concerns; Medical Device Interference
"	Dilution
15	Shares Eligible for Future Sale
16	Use of Proceeds
"	Price Range of Common Stock and Dividend Policy
18	Capitalization
19	Selected Consolidated Financial Data
20	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Overview
22	Liquidity and Capital Resources
25	Business
29	Marketing Strategy
30	Omnipoint's PCS Markets
36	Omnipoint System Advantages
38	Strategic Relationships
"	Northern Telecom Relationship
39	Ericsson Relationship
40	Regulatory Environment
"	PCS Licensing
41	Pioneer's Preference Program
43	Patents and Other Intellectual Property Rights
44	Management
45	James N. Perry, Jr
48	Employment Agreements
49	Executive Bonus Plan
"	Stock Option Plan
50	Employee Stock Purchase Plan
52	Certain Relationships and Related Transactions
"	Related Party Transactions
"	Loans to Certain Officers
53	Principal and Selling Stockholders
58	Description of Capital Stock
"	Preferred Stock
"	Warrants
59	Registration Rights of Certain Holders
"	Delaware Law and Certain Charter Provisions
62	Underwriting
63	Legal Matters
"	Experts
"	Additional Information
64	Glossary of Terms
68	Index to Consolidated Financial Statements
69	Report of Independent Accountants
72	Total
74	Notes to Consolidated Financial Statements
78	Research and development
"	Accounting for Stock-Based Compensation
85	Manufacturing License Agreement
"	Collaborative Development Agreement
89	New York MTA License obligation
93	Allen & Company Incorporated

424B1 1st Page of 93 TOC ↑Top Previous Next ↓Bottom Just 1st
Filed Pursuant to Rule 424(b)(1)
Registration No. 333-03739
PROSPECTUS
JUNE 27, 1996

6,000,000 SHARES

[LOGO OF OMNIPOINT CORPORATION APPEARS HERE]

COMMON STOCK

Of the 6,000,000 shares of Common Stock, par value $.01 (the "Common
Stock"), offered hereby (the "Shares"), 4,500,000 shares are being sold by the
Company and 1,500,000 shares are being sold by the Selling Stockholders. See
"Principal and Selling Stockholders." The Company will not receive any part of
the proceeds from the sale of shares by the Selling Stockholders.

The Common Stock is traded on the Nasdaq National Market under the symbol
"OMPT." On June 27, 1996, the last reported sale price of the Common Stock was
$26 per share.

SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

-------------------------------------------------------------------------------

[Download Table]

PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
--------------------------------------------------------------------------------

Per Share................. $26.00 $1.23 $24.77 $24.77
Total(3).................. $156,000,000 $7,380,000 $111,465,000 $37,155,000
--------------------------------------------------------------------------------

(1) See "Underwriting" for indemnification arrangements with the Underwriters.
(2) Before deducting expenses estimated at $700,000, which will be paid by the
Company.
(3) Certain Selling Stockholders have granted the Underwriters a 30-day option
to purchase up to 900,000 additional shares at the Price to the Public
less Underwriting Discounts and Commissions, solely to cover over-
allotments, if any. If such option is exercised in full, the total Price
to the Public, Underwriting Discounts and Commissions, Proceeds to the
Company and Proceeds to the Selling Stockholders will be $179,400,000,
$8,487,000, $111,465,000 and $59,448,000, respectively. See "Principal and
Selling Stockholders" and "Underwriting."

The Shares are being offered by the several Underwriters when, as and if
delivered to and accepted by the Underwriters and subject to various prior
conditions, including their right to reject orders in whole or in part. It is
expected that delivery of share certificates will be made in New York, New
York, on or about July 3, 1996.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
ALLEN & COMPANY
INCORPORATED
GOLDMAN, SACHS & CO.
MONTGOMERY SECURITIES
SALOMON BROTHERS INC

424B1 2nd Page of 93 TOC 1st Previous Next ↓Bottom Just 2nd
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Prospectus. As used herein, the terms "Company" and
"Omnipoint," unless otherwise indicated, refer to Omnipoint Corporation and its
subsidiaries, and the term population equivalents ("POPs") means the Paul Kagan
Associates 1995 PCS Atlas & Databook estimate of the 1995 population of a
particular Major Trading Area ("MTA") or Basic Trading Area ("BTA") or the
total U.S. Certain other terms used in this Prospectus are defined in the
Glossary of Terms. Unless otherwise indicated, the information in this
Prospectus assumes no exercise of the Underwriters' option to purchase up to
900,000 additional shares of Common Stock from certain Selling Stockholders to
cover over-allotments, if any. See "Underwriting."

THE COMPANY

Omnipoint is a leader in commercializing personal communications services
("PCS"). Omnipoint intends to provide wireless communications services in areas
covering approximately 40.3 million POPs, of which 97.1% are located in a
continguous area in the northeast region of the U.S. Omnipoint will be the
fifth largest PCS licensee in the U.S., based on POPs. The Company holds a
license for the New York MTA, the largest MTA in the U.S., with approximately
27.0 million POPs, and bid successfully in the recently completed
Entrepreneurs' Band auction for additional PCS licenses for 18 BTAs with
approximately 13.4 million POPs, including the Philadelphia, Atlantic City,
Buffalo and Rochester BTAs. The Company will pay an average of $21.24 per POP
over a period of five to 10 years for its 40.3 million POPs. In addition, the
Company develops technology and equipment for PCS. The Company's proprietary
technology is suitable for a variety of digital wireless applications including
mobile network systems and wireless local loop ("WLL"). Omnipoint's technology
will be integrated with wireless Global System for Mobile Communications
("GSM") networks and local telephone switching platforms.

Omnipoint has spent several years developing and refining its core technology
based on spread spectrum since the Company's incorporation in 1987. From
inception to 1992, the Company developed several working prototypes for various
wireless voice, data and digitized compressed video transmission projects. The
Company's success in developing its technology for the first digital PCS system
at 1.9 GHz during 1991 and 1992 was instrumental in the Federal Communications
Commission ("FCC") awarding the Company one of three Pioneer's Preferences in
1993. As a result of the Pioneer's Preference, the FCC issued to the Company in
December 1994 a 30 MHz license to provide PCS services for the New York MTA
(the "New York MTA License"). See "Business--Regulatory Environment--Pioneer's
Preference Program."

Omnipoint's strategy for its service business is to become a leading provider
of wireless services in its markets. The Company believes that it will be the
first to offer commercial PCS service in the New York City area beginning in
the fourth quarter of 1996. The Company will continue to build out the New York
MTA network and plans to build and operate PCS networks in the areas covered by
its BTA licenses, focusing initially on the most densely populated portions of
these areas and on major commuting corridors. The Company believes that
existing cellular systems in the most densely populated areas, particularly
within the New York City metropolitan area, provide inadequate capacity and
that service during peak hours for current cellular users and the anticipated
growth in wireless demand will add to this problem. The Company intends to use
a combination of Omnipoint's proprietary technology system (the "Omnipoint
System") and GSM to provide superior wireless services to its customers. The
Company plans to offer a variety of services to its customers, including voice
and data transmission, call forwarding, call waiting and paging capability. See
"Business--Service Business--Marketing Strategy."

424B1 3rd Page of 93 TOC 1st Previous Next ↓Bottom Just 3rd
licenses for BTAs, consisting of 30 MHz of spectrum (the "Entrepreneurs'
Band"), the Company bid successfully for licenses for 18 BTAs with
approximately 13.4 million POPs. The Company has made an initial payment of
approximately $25.5 million or 5% of the $509.1 million in net bids for these
licenses, will pay approximately $25.5 million upon the issuance of the
licenses, will pay interest only until 2003 and will pay the principal balance
of approximately $458.2 million and remaining interest in the period 2003 to
2006. The Company anticipates that these licenses will be issued by the end of
August 1996, unless delayed by FCC proceedings or litigation. The Company may
also participate in the auctions of D, E and F Block PCS licenses, each
consisting of 10 MHz of spectrum. See "Business--Regulatory Environment."

Omnipoint's strategy for its technology development and equipment business is
to establish the Omnipoint System as a leading PCS standard. The Joint
Technical Committee on Wireless Access has designated the Omnipoint System as
IS-661. The Omnipoint System is one of four competing common air interface
("CAI") standards that have been selected by PCS license holders in the U.S. to
serve the mobile PCS market. The Omnipoint System is designed to provide
enhanced voice quality, higher speed data transmission rates and increased
capacity and service reliability relative to analog systems and other digital
wireless systems. Additionally, the Omnipoint System is designed to have lower
infrastructure costs than traditional cellular and other PCS systems. See
"Business--Technology Business--Omnipoint System Advantages."

The Omnipoint System is also particularly well suited for fixed WLL
applications. Initially, the Company plans to focus its domestic WLL activities
on providing wireless competitive access provider ("CAP") services in the New
York MTA and other targeted cities to businesses in small- and medium-sized
locations, whose capacity requirements do not justify the expense of
alternative bypass technologies, such as leased line, fiber or microwave
technologies. In addition, the Company intends to access international markets
through sales of equipment (i) to service providers for WLL applications as an
alternative to expanding fixed wireline services in countries where telephone
services have not been well developed, and (ii) as an upgrade to GSM networks
in the 98 countries where GSM has been deployed or selected for deployment.

The Company has established strategic relationships with Northern Telecom
Inc. ("Northern Telecom"), Ericsson, Inc. ("Ericsson") and Hansol Paper Co.,
Ltd. and its telecom affiliates ("Hansol"). A substantial portion of
Omnipoint's equipment purchases for the buildout of the New York MTA network is
being financed by Northern Telecom under a $382.5 million vendor financing
facility. Northern Telecom and Omnipoint are integrating the Omnipoint System
with Northern Telecom's GSM digital switch, with the first integrated system to
be deployed in the New York MTA. The Company and Ericsson have agreements
involving (i) the purchase and sale of Ericsson-manufactured infrastructure
equipment and handsets for the Company's PCS networks, subject to completion of
vendor financing agreements for which the parties have entered into a non-
binding commitment letter regarding purchases of equipment for the New York MTA
network, and (ii) a licensing and acquisition arrangement relating to the
Omnipoint System. The Company and Orbitel Mobile Communications Limited
("Orbitel"), a wholly-owned subsidiary of Ericsson, have entered into a non-
binding memorandum of understanding involving Orbitel's development and
manufacture of single mode IS-661 and dual mode IS-661/PCS 1900 handsets. The
Company has entered into a strategic alliance with Hansol under which it
licensed Hansol to manufacture handsets. The two companies also agreed to
cooperate on promoting the Omnipoint System in the Republic of Korea and other
parts of Asia. In addition, each of Pacific Bell Mobile Services, Inc.
("PacBell"), BellSouth Personal Communications, Inc. ("BellSouth"), Western
Wireless Corporation ("Western Wireless"), InterCel, Inc. ("InterCel"),
American Personal Communications, Inc. ("APC") and American Portable Telecom,
Inc. ("APT") has signed a separate non-binding memorandum of understanding with
the Company to provide subscribers with roaming capabilities and to trial
Omnipoint's equipment in the areas where each has PCS licenses. These
arrangements will together cover approximately 150 million POPs, or 57% of the
U.S. population. The Company expects that roaming will be expanded to areas
covering approximately 200 million POPs, or approximately 76% of the U.S.
population, based on the results of the Entrepreneurs' Band auction and the
announced intentions of the successful bidders therein. The Company is in
discussions with other equipment vendors and service providers regarding
additional strategic relationships.

424B1 4th Page of 93 TOC 1st Previous Next ↓Bottom Just 4th
THE OFFERING

[Download Table]

Common Stock Offered
By the Company................................. 4,500,000 shares
By the Selling Stockholders.................... 1,500,000 shares
----------------
Total...................................... 6,000,000 shares
Common Stock to be outstanding after the offering. 50,269,718 shares(1)
Use of proceeds................................... The net proceeds to the
Company from the offering
are estimated to be
approximately $110.8
million. The net proceeds
are expected to be used
principally for the second
required principal payment
and subsequent interest
payments for the
Entrepreneurs' Band
licenses, for working
capital and capital
expenditures related to the
Entrepreneurs' Band
networks and for the New
York MTA operations. The
balance of the net
proceeds, together with the
Company's existing funds,
will be used for payments
for the New York MTA
License and for PCS
licenses, if any, purchased
by the Company in other FCC
auctions or from third
parties and for working
capital for the Omnipoint
technology and equipment
division and general
corporate purposes.
Nasdaq National Market symbol..................... OMPT

--------
(1) Excludes 4,178,845 shares of Common Stock issuable upon exercise of stock
options and 2,831,667 shares of Common Stock issuable upon exercise of
warrants which were outstanding on June 15, 1996.

424B1 5th Page of 93 TOC 1st Previous Next ↓Bottom Just 5th
SUMMARY CONSOLIDATED FINANCIAL DATA

The information below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and Notes thereto included elsewhere in
this Prospectus.

[Download Table]

THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- ----------------
1993 1994 1995 1995 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues........................ $ 1,618 $ 3,000 $ -- $ -- $ --
Operating expenses:
Research and development....... 4,593 7,018 14,345 2,317 4,759
Sales, general and
administrative................ 2,974 6,290 12,619 1,785 5,172
Depreciation and amortization.. 246 1,125 11,038 2,690 3,501
------- -------- ------- ------- -------
Total operating expenses...... 7,813 14,433 38,002 6,792 13,432
------- -------- ------- ------- -------
Loss from operations............ (6,195) (11,433) (38,002) (6,792) (13,432)
Net loss........................ (6,227) (9,330) (37,770) (14,724) (15,903)
Pro forma net loss per common
share(1)....................... $ (0.96)
Pro forma weighted average
number of common shares
outstanding(1)................. 39,529
Net loss per common share....... $ (0.47) $ (0.39)
Weighted average common shares
outstanding.................... 31,345 40,469

[Download Table]

AS OF AS OF MARCH 31, 1996
-----------------------
DECEMBER 31, 1995 ACTUAL AS ADJUSTED(2)
(IN THOUSANDS)

BALANCE SHEET DATA:
Working capital (deficit)....... $ (13,689) $109,605 $220,370
New York MTA License............ 338,402 336,230 336,230
Total assets.................... 474,990 543,905 654,670
New York MTA License obligation. 347,518 347,518 347,518
Other long-term debt............ 36,070 39,133 39,133
Total stockholders' equity
(deficit) ...................... (30,548) 132,726 243,491

--------
(1) Gives effect to the conversion of all outstanding shares of preferred
stock, par value $.01 per share (the "Preferred Stock"), and accrued
dividends thereon into 10,605,591 shares of Common Stock and conversion of
the convertible subordinated notes in the aggregate principal amount of
$25.0 million (the "Convertible Subordinated Notes") into 1,562,500 shares
of Common Stock at the closing of the Company's initial public offering on
January 31, 1996 (the "IPO").
(2) Gives effect to the sale of 4,500,000 shares of Common Stock to be sold by
the Company in the offering. See "Capitalization."

In addition to the historical information contained herein, this Prospectus
contains forward-looking statements which involve risks and uncertainties. The
Company's actual results may differ significantly from those discussed herein.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" as well as those discussed
elsewhere in this Prospectus.

424B1 6th Page of 93 TOC 1st Previous Next ↓Bottom Just 6th
RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating an investment in the
Shares.

LIMITED OPERATING HISTORY; PAST AND CURRENT LOSSES; UNCERTAINTY OF FUTURE
OPERATING RESULTS

The Company was founded in 1987 and has incurred cumulative net losses from
inception through March 31, 1996 of approximately $75.4 million and expects
such losses to continue for several years. The continuation of losses will
depend in part on the timing and amount of revenues generated from the
operation of the Company's networks and sales of Omnipoint System equipment,
as well as other factors. These losses resulted primarily from expenditures
associated with research and development of the Company's products and
equipment and from expenditures associated with the Company's pursuit of the
Pioneer's Preference from the FCC. See "Business--Regulatory Environment--
Pioneer's Preference Program." The Company continues to develop its products
and equipment while focusing on marketing activities and the buildout of the
networks in its markets. To date, the Company has sold PCS equipment only for
trials, and the Company does not expect to have significant PCS equipment
revenue before 1998.

The Company believes that its future operating results over both the short
and long term will be subject to annual and quarterly fluctuations due to
several factors, some of which are outside the control of the Company. These
factors include the cost of buildout of the networks (including any
unanticipated costs associated therewith), fluctuating market demand for the
Company's equipment and services, establishment of a market for PCS, pricing,
competitive services, the timing of significant orders for its equipment,
delays in the introduction of the Company's equipment, competitive equipment
introductions, changes in the regulatory environment, the cost and
availability of equipment components and general economic conditions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

EMERGING MARKET FOR PCS SERVICE

The Company's success in the implementation and operation of its networks is
subject to certain factors beyond the Company's control. These factors
include, without limitation, changes in the general and local economic
conditions, availability of equipment, changes in communications service rates
charged by others, changes in the supply and demand for PCS and the commercial
viability of PCS systems as a result of competition from wireline and wireless
operators in the same geographic region, changes in the federal and state
regulatory schemes affecting the operation of PCS systems (including the
enactment of new statutes and the promulgation of changes in the
interpretation or enforcement of existing or new rules and regulations) and
changes in technology that have the potential of rendering obsolete the
Omnipoint/GSM system planned for deployment. In addition, the extent of the
potential demand for PCS in the Company's markets cannot be estimated with any
degree of certainty. There can be no assurance that one or more of these
factors will not have an adverse effect on the Company's financial condition
and results of operations.

BUILDOUT OF THE NEW YORK MTA NETWORK

The Company is currently in the acquisition and buildout phases of the New
York MTA network. The Company anticipates that it will take several years to
substantially complete the Company's targeted buildout over the geographic
area of the New York MTA. The New York MTA License is subject to a requirement
that the Company construct network facilities that offer coverage to at least
one-third of the population in the New York MTA within five years of the grant
of the New York MTA License, by December 1999 (the "Five-Year Buildout
Requirement"), and to at least two-thirds of the population within 10 years,
by December 2004 (the "10-Year Buildout Requirement"). Should the Company fail
to meet these coverage requirements, the New York MTA License may be subject
to forfeiture. See "Business--Regulatory Environment--Conditions on License."
The buildout of the network is subject to successful completion of network
design, site and facility acquisitions, purchase and installation of network
equipment, network testing and satisfactory accommodation of

424B1 7th Page of 93 TOC 1st Previous Next ↓Bottom Just 7th
microwave users currently using the Company's spectrum. Delays in any of these
areas might have a material and adverse effect on the Company's ability to
complete the buildout in a timely manner.

The successful implementation of the New York MTA network will depend to a
significant degree upon the Company's ability to lease or acquire sites for
the location of its base station equipment. Although the Company has begun the
selection of sites and has acquired the rights to use sites in the New York
MTA, there can be no assurance that the Company will be able to deploy its
equipment in a sufficient number of sites to implement the initial commercial
service. The site selection process will require the continued successful
negotiation of use agreements for or acquisitions of numerous additional
sites, and may require the Company to obtain zoning variances or other
governmental or local regulatory approvals, which are beyond the Company's
control. Delays in the site selection process, including delays in
negotiations with property owners, as well as construction delays and other
factors, could adversely affect the timing of the commencement of commercial
service over the New York MTA's network currently anticipated to begin in late
1996. See "Business--Service Business--Overview."

As the New York MTA network is currently in the acquisition and buildout
phases, the capital cost of completing the project could vary materially from
the Company's current estimates. If adequate funds are not available from its
existing capital resources, including the financing provided by Northern
Telecom and Ericsson, the Company may be required to curtail its service
operations or to obtain additional funds on terms less favorable than those
contained in the Company's current arrangements.

In addition, the implementation of the New York MTA buildout plan is subject
to the availability from suppliers of the infrastructure equipment and
subscriber equipment the Company plans to use. Only two networks meeting the
requirements and standards and spectrum specifications for PCS are currently
providing commercial service in the U.S., although similar systems have been
deployed in Europe and Asia. Accordingly, there are risks associated with the
completion of development, timely manufacture and successful implementation of
newly developed complex telecommunications equipment in the buildout of the
network. The Company has entered into agreements with Northern Telecom and
Ericsson for infrastructure equipment and with Ericsson for subscriber
equipment. While the Company has signed a non-binding memorandum of
understanding with Ericsson to develop dual mode phones that allow users to
access both GSM networks and Omnipoint System networks, there can be no
assurance that such phones will be successfully developed and manufactured or
that the Company will obtain such phones at competitive prices. The Company
plans to enter into additional agreements for the supply of subscriber
equipment. To the extent the Company does not enter into agreements with
others it will be dependent on these suppliers for its equipment needs. See
"Business--Service Business" and "--Strategic Relationships."

To secure a sufficient amount of unencumbered spectrum to operate its PCS
system efficiently, the Company is negotiating with incumbent microwave
operators to relocate their operations. There can be no assurance that the
Company will be successful in reaching timely agreements with the existing
microwave licensees or that such agreements will be on terms favorable to the
Company. Delay in the relocation of such licensees may adversely affect the
Company's ability to commence timely commercial operations in the New York
MTA. See "Business--Regulatory Environment--PCS Licensing."

BUILDOUT OF THE ENTREPRENEURS' BAND BTA NETWORKS

The Entrepreneurs' Band BTA licenses are subject to buildout requirements
substantially equivalent to the Five-Year Buildout Requirement and 10-Year
Buildout Requirement. The buildout of each of the Entrepreneurs' Band BTA
networks involves risks of delay and unanticipated costs similar to those
described above for the New York MTA. The Company expects to commence the
engineering and design phases and the selection and acquisition of sites for
these networks by the time the licenses are issued. The Company's agreements
with Ericsson regarding the supply of infrastructure equipment and subscriber
equipment for the New York MTA network contemplate parallel agreements for
these BTA networks. The Company has received non-binding commitment letters
from both Northern Telecom and Ericsson regarding the provision of vendor
financing for equipment purchases for these networks. However, there can be no
assurance that such agreements for the supply of infrastructure and subscriber
equipment or the financing thereof will be consummated.

424B1 8th Page of 93 TOC 1st Previous Next ↓Bottom Just 8th
MARKET ACCEPTANCE OF THE OMNIPOINT SYSTEM

When the FCC first licensed cellular systems in the U.S., it mandated all
technical aspects of system operation and protocol to ensure nationwide
compatibility between all cellular carriers. In sharp contrast, the FCC has
avoided mandating the technology protocols for PCS operations, leaving each
licensee free to select among competing technologies that have sufficient
technological differences to preclude their interoperability without dual mode
operation. The Company has chosen its own technology in conjunction with GSM
for deployment in its PCS markets in a manner which will allow roaming with
other GSM-based networks. However, there are technological and market risks
associated with the deployment of this integrated Omnipoint/GSM system,
including lack of previous commercial scale operation, the selection by the
PCS industry of a universal competing and incompatible technology and the
ability of the Company to offer roaming service.

Commercial Operations

A risk associated with the deployment of the integrated system is that the
Company's IS-661 technology has not been implemented on a commercial scale in
an operational PCS system. The successful implementation and operation of such
a system will be a complex process requiring coordination of a number of
factors, including the successful interface between infrastructure and
subscriber equipment and the public wireline network. There can be no
assurance that unforeseen complications will not arise in the scale-up and
operation of commercial IS-661-based PCS systems and subscriber equipment that
could materially delay or limit the commercial use of the IS-661 technology or
render it unable to perform at the quality, capacity and cost levels required
for success.

To the extent that the rest of the PCS industry agrees in the future upon a
universal competing technology that is not compatible with the Omnipoint/GSM
system, the Company's financial condition and results of operations would be
adversely affected and the Omnipoint System would only be useful for fixed
wireless local loop applications or in markets deploying compatible
technologies. In addition, the Company's ability to market the Omnipoint
System as an augmentation to GSM systems outside the U.S. may require the
approval of various GSM standards bodies and such approval may not be
available on a timely basis.

Limited Roaming

A further risk associated with the Company's selection of the integrated
Omnipoint/GSM system is the ability of the Company to offer PCS roaming
service to its customers and obtain PCS roaming service from other markets. In
order for the Company's subscribers to roam in other wireless markets (and
vice-versa), at least one PCS licensee in the other market must utilize either
an Omnipoint or GSM protocol, or the subscribers must use a dual frequency
phone that would permit the subscriber to use the cellular system existing in
the other market. The Company has been advised that such dual frequency phones
are not expected to be available until late 1997 at the earliest, and then
only in limited quantities. The fact that the Company's early PCS subscribers
will not be able to roam into regions not served by either Omnipoint or GSM
systems, unless the subscribers use dual frequency phones that would permit
them to use the existing cellular wireless system, may adversely affect the
Company's ability to establish a PCS customer base and to successfully compete
in the PCS business with those PCS operators offering greater roaming
capabilities. Based on the technology preferences indicated by the A and B
Block license holders and the successful bidders in the Entrepreneurs' Band
auction, GSM will be deployed by license holders with licences covering
approximately 76% of the total population of the U.S. Although there can be no
assurance, this percentage could increase when additional successful bidders
in the Entrepreneurs' Band auction and the D, E and F Block auctions have
selected their technology. The Company and certain other PCS license holders
are currently exploring alternatives to ensure that the GSM protocol will be
available in all markets. There can be no assurance that the Company or others
will be successful in this endeavor. The Company's reduced ability to compete
for PCS customers may have a material adverse effect on its financial
condition and results of operations. See "Business--Service Business" and "--
Strategic Relationships."

COMPETITION

Service Business

PCS is a new technology and service and, as a result, the level and timing
of development of a customer base for PCS applications, on which the Company's
future revenues depend significantly, is uncertain. In

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development of the PCS market, the Company and other PCS licensees will be
competing with the more established cellular industry, as well as other
wireless communications technologies, existing and future, with similar
applications. Many of the Company's PCS and cellular telephone competitors,
including joint ventures involving some of the nation's largest regional and
long distance telephone carriers, have substantially greater access to capital
than the Company, substantially greater technical, marketing, sales and
distribution resources than those of the Company and significantly greater
experience than the Company in providing wireless services.

The success of the Company's PCS service business will depend upon its
ability to compete, especially with respect to features, such as data and
voice transmission, call waiting, call forwarding and paging capability,
pricing, availability and reliability of its service, with two cellular
operators, two other existing PCS licensees and one or more winners of future
PCS spectrum auctions and potential future wireless communications providers.
The Bell Atlantic Corporation ("Bell Atlantic")/NYNEX Corporation ("NYNEX")
consortium and AT&T Corp.'s wireless services operations, including McCaw
Cellular Communications, Inc. ("AT&T Wireless"), currently provide cellular
services in the New York MSA and surrounding areas. Sprint Telecommunications
Venture, operating as Sprint Spectrum ("Sprint Spectrum"), holds the B Block
New York MTA license, and NextWave Telecom, Inc. ("NextWave") is the
successful bidder in the C Block auction for the New York BTA PCS license. A
variety of companies, including AT&T Wireless and Sprint Spectrum, provide
cellular service or have PCS licenses in the various Entrepreneurs' Band BTAs.

The Company also faces competition from other communications technologies
such as SMR, ESMR and paging services. ESMR is a "cellular-like"
communications service supplied by converting analog SMR services into an
integrated, digital transmission system providing for call hand-off, frequency
reuse and wide call delivery networks. The FCC has licensed current SMR
operators to construct ESMR systems on existing SMR frequencies in many major
metropolitan areas in the U.S. See "Business--Service Business--Competition."
In the future, PCS will also compete more directly with traditional landline
telephone service providers and with cable operators who expand into the
offering of traditional communications services over their cable systems and
may face competition from other technologies including mobile satellite
systems.

Technology Business

Competition in the communications equipment industry is intense. The
industry consists primarily of major domestic and international companies
which have financial, technical, marketing, sales, manufacturing, distribution
and other resources substantially greater than those of the Company.

In the cellular, PCS and WLL markets, the Company competes against analog
and various digital technologies, the most prominent of which are either TDMA-
based or CDMA-based systems. In addition, a number of private and publicly
held telecommunications companies, including Northern Telecom and Ericsson,
are developing digital telecommunications systems and products implementing
competing digital wireless technologies. There can be no assurance that the
Company's competitors will not devote significantly greater financial,
technical, marketing and other resources to aggressively market competitive
communications systems or develop and adopt competitive digital cellular
technologies, and that such efforts will not materially adversely affect the
Company's financial condition and results of operations in the future. See
"Business--Technology Business--Competition."

RELIANCE ON NORTHERN TELECOM AND ERICSSON RELATIONSHIPS

The Company substantially relies upon its relationship with Northern
Telecom. The Company has entered into a series of OEM and equipment supply
agreements, a collaborative development agreement and a vendor financing
agreement with Northern Telecom. The Company has agreed to purchase from
Northern Telecom $250.0 million of equipment and services over the next five
years. The Company relies substantially on the vendor financing arrangement
through which Northern Telecom provides a $382.5 million credit facility (the
"NT Credit Facility") for the buildout of the New York MTA network, including
for the purchase of equipment. The NT Credit Facility is secured by a pledge
of the Company's stock in Omnipoint Communications, Inc. ("OCI"), which is a
95.58% owned subsidiary of the Company, and substantially all of OCI's assets.
Under

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the terms of the NT Credit Facility, OCI is subject to certain financial and
operational covenants including restrictions on the payment of dividends,
restrictions on additional indebtedness and financial maintenance obligations.
Although the Company is currently in compliance with such covenants, there can
be no assurance that the Company will be able to continue to comply with such
covenants in the future. A portion of the outstanding balance of the NT Credit
Facility is due June 30, 1997, with the remaining principal balance under the
facility due in installments beginning March 31, 2000. The final payment of
principal and interest is due December 31, 2004. The termination of the OEM
and supply agreements or the NT Credit Facility would have a material and
adverse affect on the Company's financial condition and results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources" and "Business--Strategic
Relationships--Northern Telecom Relationship."

The Company also substantially relies on its relationship with Ericsson. The
Company has entered into agreements to sell IS-661 base stations to Ericsson
and to license to Ericsson Omnipoint's technology relevant to integrating such
base stations into networks. The Company has also entered into agreements for
Ericsson to supply, subject to completion of vendor financing agreements, GSM
and IS-661 infrastructure equipment and to supply GSM handsets for the
Company's markets. The parties have entered into a non-binding commitment
letter regarding up to $127.5 million in vendor financing for the New York MTA
network. The Company and Orbitel have entered into a non-binding memorandum of
understanding for Orbitel to develop and manufacture single mode IS-661 and
dual mode IS-661/PCS 1900 handsets. Ericsson has agreed to support this
effort. There can be no assurance that the Company will consummate definitive
agreements with Ericsson with respect to the vendor financing and Orbitel with
respect to the handsets in a timely manner or at all. See "Business--Strategic
Relationships--Ericsson Relationship."

The Company has had limited revenues and has been dependent on a limited
number of customers for its revenues in the last three fiscal years. In 1994,
the Company received all of its revenue, $3.0 million, from Northern Telecom,
representing a non-refundable license fee received upon entering into a non-
exclusive OEM agreement. Under the terms of the agreement, Northern Telecom
may pay up to an aggregate of $12.0 million in license and OEM fees under
certain circumstances. In April 1996, the Company and Ericsson entered into an
agreement for the sale of IS-661 base stations to Ericsson and to license
Omnipoint's relevant technology as described above. If either agreement were
terminated, the lack of revenues from sales to Northern Telecom or Ericsson
would have a material adverse effect upon the Company's financial condition
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING

The Company will require future capital for principal and interest payments
for the Company's licenses and for the buildout of the Company's networks. In
addition, the Company expects to require substantial additional capital beyond
the proceeds of the offering to continue the development, production, sales
and marketing of Omnipoint System equipment. The amount of such required
capital will depend on many factors, including buildout costs, the market
acceptance of Omnipoint System equipment, the resources required to launch the
sale of its equipment and attain a competitive position in the marketplace,
the extent to which the Company invests in new technology and improvements to
its existing RF technology and the response of competitors to Omnipoint System
equipment and the Company's services. In addition to the funds provided by the
offering, the IPO, the NT Credit Facility, the proposed Ericsson vendor
financing and various private debt placements, the Company will need to raise
additional funds through private financings, including strategic partnerships,
or public financings. No assurance can be given that additional financing will
be available or that, if available, such funding can be obtained on terms
favorable to the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

RAPID TECHNOLOGICAL CHANGE; MANUFACTURING OF IS-661 EQUIPMENT

The wireless PCS products industry is embryonic and is experiencing very
rapid technological change. To remain competitive, the Company's technology
business must develop or gain access to new technologies in

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order to increase product performance and functionality, continue to reduce
product size and increase cost-effectiveness. Given the emerging nature of the
wireless PCS industry, there can be no assurance that the Company's products
or technology will not be rendered obsolete by alternative technologies. The
development of new wireless PCS products is highly complex and the Company
could experience delays in developing and introducing its equipment.

Additional software and hardware development must be completed by the
Company before its subscriber and infrastructure products will be available
for commercial sale. The Company is investing substantial funds to complete
these development efforts, including significant proceeds from the offering.
There can be no assurance that the Company will be able to complete these
development efforts within the time frames required to enable it to establish
customers for its commercial equipment business. In addition, the Company may
spend substantially more on such software and hardware development than
currently anticipated. The Company has limited manufacturing capability and
has no experience in large scale manufacturing. The Company plans to
subcontract and/or license to others the manufacturing of commercial volumes
of its equipment. There can be no assurance that the Company will be able to
manage the manufacture of commercial quantities of its products by
subcontractors or licensees at commercially acceptable costs in a timely
manner to meet industry requirements. Any delays or difficulties could have a
material adverse effect on the Company's financial condition and results of
operations. If the Company is unable to provide IS-661 subscriber and
infrastructure equipment at commercially acceptable costs, the Company's
competitive position and ability to achieve a profitable return on its
technology business will be materially impaired. See "Business--Technology
Business."

ENTREPRENEURS' BAND AUCTION RISK

The Company, through its subsidiary, Omnipoint PCS Entrepreneurs, Inc.
("OPCSE"), participated in the Entrepreneurs' Band auction that ended on May
6, 1996. As of the completion of the auction, the Company successfully bid for
PCS licenses in 18 BTAs, including Philadelphia, Atlantic City, Buffalo and
Rochester covering an aggregate of approximately 13.4 million POPs. The total
purchase price for these licenses, after discounts, is approximately $509.1
million, or an average of $38.13 per POP. The Company has made a first payment
of five percent, or approximately $25.5 million, and has filed its long-form
applications for these licenses. At the time the licenses are awarded, the
Company will pay an additional five percent, or approximately $25.5 million.
The remaining 90%, or approximately $458.2 million, will be due over the
seventh through the tenth year of the license and will bear interest until
paid at the 10-year Treasury Bill rate on the date the licenses are awarded.
Unsuccessful bidders have indicated generally that there may be litigation
regarding the auction and the awards of these licenses and no assurance can be
given that the final awards of the licenses will not be delayed or subject to
post-award litigation that may delay the finality of the licenses. In
addition, there can be no assurance that the funds necessary to make payments
in the seventh through the tenth years of these licenses will be available
from the operations of the Company or, if not, if they will be available from
third parties on favorable terms or at all. See "Business--Service Business--
Omnipoint's PCS Markets."

GOVERNMENT REGULATION

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 regulatory agencies. State agencies having jurisdiction over the
Company's license areas have generally not sought to regulate PCS to date.
There can be no assurance that either the FCC or such state agencies will not
adopt regulations or take other actions that would adversely affect the
business of the Company. In addition, FCC licenses to provide cellular and PCS
services are subject to renewal and revocation. The New York MTA License will
expire in December 2004 and the Entrepreneurs' Band PCS licenses, assuming
they are issued in 1996, will expire in 2006. There may be competition for the
Company's PCS licenses upon their expiration, and there can be no assurance
that the licenses will be renewed.

On March 8, 1996, the FCC adopted an order establishing the interest rate
and timing of principal and interest payments for the New York MTA License,
which contains the following terms and conditions: (i) a five-year payment
period with interest accruing at 7.75% from the order adoption date with the
first payment due

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on the 30th day following such date and subsequent payments due on the last
day of each calendar quarter, (ii) interest only payments for the first two
years and (iii) principal and interest payments for the remaining three years.
The Company made the first interest payment of $2.2 million on April 5, 1996,
and a second payment of $4.5 million on April 30, 1996, representing interest
from April 8 through June 30, 1996.

The New York MTA License is subject to three specific conditions. The first
condition is the Five-Year Buildout Requirement and the 10-Year Buildout
Requirement; the second condition is that the license may not be assigned nor
may control of the licensee be transferred until the earlier of three years
after the date the license was awarded or the date when the Five-Year Buildout
Requirement is satisfied; and the third condition is that the network deployed
"substantially uses" the design and technology upon which the Pioneer's
Preference award was based, which is included in the Omnipoint System, until
the Five-Year Buildout Requirement is satisfied. The FCC has never defined the
phrase "substantially uses." In January 1996, Wireless Communications Council,
a trade association with only one disclosed member, who is a proponent of IS-
95 CDMA technology, filed a petition with the FCC seeking clarification of the
phrase. There can be no assurance as to how the FCC will construe such phrase
and, accordingly, there can be no assurance that the Company's plan for
deployment in the New York MTA will be deemed to satisfy the condition. The
Company believes that its network design and buildout plans and its financing
plans will satisfy the conditions on the New York MTA License, however, the
conditions have not been defined clearly. Thus, there is risk that subsequent
FCC action or unanticipated delays or difficulties in deployment of parts of
the Company's planned Omnipoint/GSM system may result in the Company not
satisfying one or more such conditions or needing to expend resources in
connection with FCC proceedings regarding such issues. The Company estimates
that it will require between $100 million and $150 million in capital
expenditures to meet the Five-Year Buildout Requirement for the New York MTA.
Although not subject to the "substantial use" condition, the Entrepreneurs'
Band licenses are subject to similar buildout requirements and additional
transfer restrictions. The Company estimates that it will require between $50
million and $75 million to meet the similar buildout requirements for the
Entrepreneurs' Band licenses.

Under existing law, no more than 20% of the capital stock of the licensees,
OCI and OPCSE, and, except in extraordinary circumstances, no more than 25% of
Omnipoint's capital stock, may be owned, directly or indirectly, or voted by
non-U.S. citizens or their representatives, by a foreign government or its
representatives or by a foreign corporation. In addition, no officer and no
more than 25% of the directors of Omnipoint and none of the licensees'
officers or directors may be non-U.S. citizens. If the foreign ownership or
control limits of Omnipoint or of the licensees are exceeded, the FCC could
revoke the Company's licenses if the FCC found the public interest would be
served by such revocation, although the Company could seek a waiver from the
FCC of the foreign ownership restrictions or take other actions to bring the
Company within the foreign ownership and control limits. The restrictions on
foreign ownership could also adversely affect the ability of the Company to
attract additional equity financing from entities that are, or are owned by,
non-U.S. persons. See "Business--Regulatory Environment."

Finally, the PCS industry is subject to continually evolving regulation.
There are a number of issues on which various parties have or may in the
future suggest regulation. These include the effect of cellular and digital
wireless telephony on hearing aids, electromagnetic interference and cancer,
as well as interference between types of wireless systems. As new regulations
are promulgated on these subjects or other subjects, the Company may be
required to modify its business plans or operations in order to comply with
any such regulations. There can be no assurance that the Company will be able
to do so in a cost effective manner, if at all. See "--Radio Frequency
Emission Concerns; Medical Device Interference."

DEPENDENCE UPON KEY EMPLOYEES; RECENT MANAGEMENT ADDITIONS

The Company is highly dependent upon the technical and management skills of
its key employees, especially Douglas G. Smith, Chairman and CEO, and George
F. Schmitt, President of OCI and Executive Vice President of the Company. The
Company has an employment agreement with Mr. Schmitt but not with Mr. Smith.
The loss of the services of any key employee could adversely affect the
Company's financial condition

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and results of operations. There can be no assurance that the Company will be
successful in retaining its key employees or that it can attract or retain
additional skilled personnel. See "Management." The Company maintains key man
life insurance on the lives of Messrs. Smith and Schmitt.

The Company's expected growth may cause a significant strain on its
management, operational and financial resources. The Company's ability to
manage its growth effectively will require it to continue to implement and
improve its operational and financial systems. The Company's success also
depends in large part on a limited number of key technical, marketing and
sales employees and on the Company's ability to continue to attract and retain
additional highly talented personnel. Competition for qualified personnel in
the PCS equipment and service industries is intense. These demands would
require the addition of new management personnel and the development of
additional expertise by existing management. The failure of the Company's
management team to effectively manage growth could have a materially adverse
impact on the Company's financial condition and results of operations. In this
regard, Mr. Schmitt and Bradley E. Sparks, Chief Financial Officer of the
Company, joined the Company during 1995. See "Management."

UNCERTAINTY OF PROTECTION OF PATENTS AND PROPRIETARY RIGHTS

The Company's technology business relies on a combination of patents,
trademarks and non-disclosure and developments agreements in order to
establish and protect its proprietary rights. The Company has filed and
intends to continue to file applications as appropriate for patents covering
its technology and products. There can be no assurance that additional patents
will issue, that the existing patents and such additional patents allowed will
be sufficiently broad to protect the Company's technology or that the
confidentiality agreements and other methods on which the Company relies to
protect its trade secrets and proprietary information will be adequate. The
Company's 14 issued patents will expire between May 2008 and March 2016. In
addition, there can be no assurance that any patents issued to the Company
will not be challenged, invalidated or circumvented, or that the rights
granted thereunder will provide proprietary protection to the Company.
Litigation to defend and enforce the Company's intellectual property rights
could result in substantial costs and diversion of resources and could have a
materially adverse effect on the Company's financial condition and results of
operations regardless of the final outcome of such litigation. Despite the
Company's efforts to safeguard and maintain its proprietary rights, there can
be no assurance that the Company will be successful in doing so or that the
Company's competitors will not independently develop or patent technologies
that are substantially equivalent or superior to the Company's technologies.

If existing or future patents containing broad claims are upheld by the
courts, the holders of such patents might be in a position to require
companies to obtain licenses. There can be no assurances that licenses which
might be required for the Company's products would be available on reasonable
terms, if at all. To the extent that licenses are unavailable, or not
available on acceptable terms, no assurance can be made that the failure to
obtain a license would not adversely affect the Company. See "Business--
Patents and Other Intellectual Property Rights."

VOLATILITY OF STOCK PRICE

Between January 1996 when the Common Stock became publicly traded and the
date hereof, the closing sales price has ranged from a low of $20 1/2 per
share to a high of $32 1/2 per share. The market price of the Common Stock may
be volatile due to, among other things, technological innovations affecting
the PCS industry, the relatively small size of the Company's stockholder base,
the shares being registered pursuant to this registration statement, the
limited trading history of the Common Stock, quarterly variations in operating
results, announcements of technological innovations or new products by the
Company or its competitors, changes in financial estimates by securities
analysts and other events or factors. In addition, the stock market has
experienced volatility that has particularly affected the market prices of
equity securities of many high technology companies and has often been
unrelated to the operating performance of such companies. These broad market
fluctuations may adversely affect the market price of the Common Stock. See
"Price Range of Common Stock and Dividend Policy" and "Underwriting."

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RADIO FREQUENCY EMISSION CONCERNS; MEDICAL DEVICE INTERFERENCE

Media reports have suggested that certain RF emissions from wireless
handsets may be linked to various health concerns, including cancer, and may
interfere with various electronic medical devices, including hearing aids and
pacemakers. Concerns over RF emissions may have the effect of discouraging the
use of wireless handsets, which could have an adverse effect on the Company's
business. The FCC has pending a rulemaking proceeding to update the guidelines
and methods it uses for evaluating RF emissions from radio equipment,
including wireless handsets. While the proposal would impose more restrictive
standards on RF emissions from lower power devices such as wireless handsets,
it is believed that all wireless handsets currently marketed and to be used by
the Company's subscribers, already comply with the new proposed standards.

Certain interest groups have requested that the FCC investigate claims that
the GSM technology poses health concerns and causes interference with hearing
aids and other medical devices. The Center for the Study of Electromagnetic
Compatability at the University of Oklahoma, which was founded in 1994 with
funds from the wireless industry, is studying this issue and is expected to
issue its findings in 1996. In addition, the Personal Communications Industry
Association ("PCIA") announced in July 1995 that it was undertaking an
industry-wide study to gather information on possible PCS interference with
medical devices for all PCS standards. There can be no assurance that the
findings of such studies or any governmental regulations that may result
therefrom will not have an adverse effect on the Company's business (including
its use of GSM technology). See "Business--Governmental Regulation."

DILUTION

Investors participating in the offering will incur immediate, substantial
dilution. To the extent outstanding options and warrants to purchase the
Common Stock are exercised, there will be further dilution. See "Dilution."

DIVIDEND POLICY; RESTRICTIONS ON PAYMENT OF DIVIDENDS

The Company has never declared or paid any cash dividends on its Common
Stock and does not anticipate paying cash dividends in the foreseeable future.
In addition, the Company's Note and Warrant Purchase Agreement, dated November
22, 1995 (the "Senior Note Agreement"), pursuant to which the Company issued
$25.0 million in senior notes (the "Senior Notes") prohibits the Company from
paying dividends while the Senior Notes are outstanding. See "Price Range of
Common Stock and Dividend Policy."

EFFECT OF CERTAIN CHARTER PROVISIONS

The Company's Board of Directors has the authority to issue up to 5.0
million shares of preferred stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the stockholders. The rights of
the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any preferred stock that may be issued in the
future. The issuance of preferred stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company. The Company has no
current plans to issue shares of preferred stock. Further, certain provisions
of the Company's Certificate of Incorporation and Bylaws and of Delaware law
could delay or make more difficult a merger, tender offer or proxy contest
involving the Company. The Company is subject to the anti-takeover provisions
of Section 203 of the Delaware General Corporation Law. In general, the
statute prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. See "Description of Capital Stock--Preferred Stock" and "--
Delaware Law and Certain Charter Provisions."

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SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock, or the perception
that such sales could occur, could adversely affect prevailing market prices
for the Common Stock and the Company's ability to raise capital. Upon
completion of the offering, the Company will have outstanding 50,269,718
shares of Common Stock, assuming no exercise of outstanding options and
warrants. Of the Common Stock outstanding upon completion of the offering, the
6,000,000 shares of Common Stock sold in the offering as well as the 8,050,000
shares issued in the IPO will be freely tradeable without restriction or
further registration under the Securities Act of 1933, as amended (the "1933
Act"), except for any shares held by "affiliates" of the Company or persons
who have been affiliates within the preceding three months. Approximately
4,045,943 shares issued or issuable upon exercise of options outstanding under
the Company's 1990 Stock Option Plan as of June 15, 1996, which have been
registered on Form S-8 under the 1933 Act, will also be freely tradeable.
Approximately 2,204,057 shares are available for grants under the Company's
1990 Stock Option Plan, which upon exercise, will be freely tradeable.

The Company also has a significant number of shares of Common Stock
outstanding that have not been registered under the 1933 Act. Of these shares,
approximately 1,500,000 shares are eligible for sale under Rule 144, Rule
144(k), or Rule 701 or otherwise and, unless held by an affiliate, are freely
tradeable. An additional 2,844,350 shares will be eligible for sale on July
25, 1996. Approximately 31,895,000 of the shares that will be eligible for
sale under Rule 144, Rule 144(k) or Rule 701 are subject to 120-day lock-up
agreements with the Underwriters. Other shares of Common Stock will become
eligible for sale under Rule 144 or Rule 701 at varying times. The Securities
and Exchange Commission (the "Commission") has recently proposed amendments to
Rule 144 and Rule 144(k) that would shorten by one year the applicable holding
periods and could result in resales of restricted securities sooner than would
be the case under Rule 144 and Rule 144(k) as currently in effect. See "Shares
Eligible for Future Sale." The Company is unable to estimate the number of
shares which may be sold under Rule 144 or Rule 701 or pursuant to
registration rights since this will depend upon the market price of the Common
Stock, the individual circumstances of the sellers and other factors.

The holders of 13,332,516 shares of Common Stock and warrants to purchase
2,831,667 shares of Common Stock have the right to require the Company to
register under the 1933 Act the sale of such shares of Common Stock, beginning
July 25, 1996 with respect to 2,812,500 of such shares and October 25, 1996
with respect to approximately 13,351,683 of such shares. Such holders and the
holders of 9,215,436 shares of Common Stock have the right to require the
Company to include their shares in a registered offering of securities by the
Company for its own account. Of these shares, approximately 1,215,000 shares
are being sold by certain Selling Stockholders in the offering. In addition,
the Company intends to file registration statements on Form S-8 under the 1933
Act for issuances of shares under the Company's 1996 Employee Stock Purchase
Plan. See "Description of Capital Stock--Registration Rights of Certain
Holders," "Management--Stock Option Plan" and "Shares Eligible for Future
Sale."

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USE OF PROCEEDS

The net proceeds to the Company from the sale of the 4,500,000 shares of
Common Stock offered by the Company are estimated to be $110.8 million, after
deducting underwriting discounts and commissions and estimated offering
expenses. The Company expects to use a portion of the net proceeds of the
offering principally for the second required principal payment and subsequent
interest payments for the Entrepreneurs' Band licenses, for working capital
and capital expenditures related to the Entrepreneurs' Band networks and for
the New York MTA operations.

The balance of the net proceeds, together with the Company's existing funds,
will be used for payments for the New York MTA License and for PCS licenses,
if any, purchased by the Company in other FCC auctions or from third parties
and for working capital for the Omnipoint technology and equipment division
and general corporate purposes. Pending such uses, the net proceeds of the
offering will be invested in investment grade, interest-bearing securities.
The Company expects that it will require further investment for the foregoing
activities beyond the funds provided by the offering.

The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders in the offering. See "Principal and Selling
Stockholders."

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock has been traded on the Nasdaq National Market
under the symbol "OMPT" since January 26, 1996. The following table sets
forth, for the periods indicated, the range of high and low closing sales
prices for the Common Stock as reported on the Nasdaq National Market.

[Download Table]

HIGH LOW
1996

First Quarter (from January 26, 1996)..................... $27 3/8 $20 1/2
Second Quarter (through June 27, 1996).................... 32 1/2 26

On June 27, 1996, the last reported sale price of the Common Stock was $26
per share. At June 15, 1996, the Company had approximately 260 stockholders of
record.

The Company has never paid or declared any cash dividends on its Common
Stock and does not expect to pay cash dividends in the foreseeable future.
Further, the Senior Note Agreement prohibits the Company from paying dividends
while the Senior Notes are outstanding. The NT Credit Facility contains a
restriction on OCI's ability to declare and pay dividends. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

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DILUTION

The net tangible book value (deficit) of the Company as of March 31, 1996,
was ($215.8) million, or ($4.80) per share of Common Stock. Net tangible book
value (deficit) per share is equal to the Company's total tangible assets less
total liabilities divided by the total number of shares of Common Stock
outstanding. After giving effect to the sale of the 4,500,000 shares of Common
Stock offered by the Company hereby, and after deducting underwriting
discounts and commissions and estimated offering expenses, the net tangible
book value (deficit) of the Company as of March 31, 1996, would have been
$(105.1) million, or $(2.12) per share. This represents an immediate increase
in pro forma net tangible book value of $2.68 per share to existing
stockholders and an immediate dilution of $28.12 per share to new investors
purchasing shares in the offering. The following table illustrates this per
share dilution.

[Download Table]

Public offering price per share.............................. $26.00
Net tangible book value (deficit) per share as of March 31,
1996...................................................... (4.80)
Increase in net tangible book value per share attributable
to the offering........................................... 2.68
-----
Net tangible book value (deficit) per share after the
offering.................................................... (2.12)
------
Dilution of net tangible book value per share to new
investors.................................................... $28.12
======

The following table summarizes, as of March 31, 1996, the number of shares
of Common Stock purchased from the Company, the total consideration paid and
the average price paid per share by existing stockholders, and by new
investors.

[Download Table]

AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
------------------ -------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE

Existing stockholders........ 45,009,039 90.9% $212,221,000 64.5% $ 4.72
New investors ............... 4,500,000 9.1 117,000,000 35.5 26.00
---------- ----- ------------ ----- ------
Total........................ 49,509,039 100.0% $329,221,000 100.0% $ 6.65
========== ===== ============ ===== ======

Sales of shares of Common Stock by the Selling Stockholders in the offering
will reduce the number of shares held by existing stockholders to 43,509,039
shares, or 87.9% of the total number of shares of Common Stock outstanding
after the offering, and will increase the number of shares held by new
investors to 6,000,000 shares or 12.1% of the total number of shares of Common
Stock outstanding after the offering. See "Principal and Selling
Stockholders."

As of March 31, 1996, there were options and warrants outstanding to
purchase a total of 7,737,721 shares of Common Stock at a weighted average
exercise price of $3.16 per share. To the extent outstanding options and
warrants are exercised, there will be further dilution to new investors. See
"Management--Stock Option Plan," "Certain Relationships and Related
Transactions--Related Party Transactions," "Description of Capital Stock--
Warrants" and Note 11 of Notes to Consolidated Financial Statements.

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CAPITALIZATION

The following table sets forth the actual and as adjusted capitalization of
the Company as of March 31, 1996. This table should be read in conjunction
with the Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Prospectus.

[Download Table]

AS OF MARCH 31, 1996
------------------------
ACTUAL AS ADJUSTED(1)
(IN THOUSANDS)

Cash.............................................. $127,222 $237,987
======== ========
Long-term debt:
New York MTA License obligation.................. $347,518 $347,518
NT Credit Facility .............................. 22,019 22,019
Senior Notes..................................... 17,022 17,022
Other long-term debt............................. 92 92
-------- --------
Total long-term debt............................ 386,651 386,651
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares
authorized, no shares issued and outstanding.... -- --
Common stock, $.01 par value, 75,000,000 shares
authorized, 45,009,039 shares issued and
outstanding and 49,509,039 shares issued and
outstanding as adjusted (2)..................... 450 495
Additional paid-in capital....................... 209,200 319,920
Notes receivable................................. (1,171) (1,171)
Unearned compensation............................ (352) (352)
Accumulated deficit.............................. (75,401) (75,401)
-------- --------
Total stockholders' equity (deficit)............ 132,726 243,491
-------- --------
Total capitalization.......................... $519,377 $630,142
======== ========

--------
(1) Gives effect to the sale of 4,500,000 shares of Common Stock in the
offering.
(2) Excludes 7,737,721 shares of Common Stock reserved for issuance upon
exercise of outstanding options and warrants, of which options and
warrants to purchase 5,856,872 shares were exercisable as of March 31,
1996.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus. The selected
consolidated financial data as of December 31, 1994 and 1995, and for each of
the three years in the period ended December 31, 1995, have been derived from
the Company's Consolidated Financial Statements included elsewhere in this
Prospectus which have been audited by Coopers & Lybrand L.L.P., independent
accountants, whose report thereon is also included in this Prospectus. The
selected consolidated financial data as of December 31, 1991, 1992 and 1993
and for each of the years ended December 31, 1991 and 1992 have been derived
from audited financial statements of the Company not included in this
Prospectus. The selected consolidated financial data for the three months
ended March 31, 1995 and 1996 have been derived from the unaudited
Consolidated Financial Statements of the Company, which in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information set forth therein.
The results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the full year or for any
future period.

[Enlarge/Download Table]

THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS
DATA:
Revenue................ $ 2,075 $ 3,399 $ 1,618 $ 3,000 $ -- $ -- $ --
Operating expenses:
Research and
development........... 1,826 3,700 4,593 7,018 14,345 2,317 4,759
Sales, general and
administrative........ 2,054 2,475 2,974 6,290 12,619 1,785 5,172
Depreciation and
amortization.......... 38 101 246 1,125 11,038 2,690 3,501
------- ------- ------- ------- -------- -------- --------
Total operating
expenses............. 3,918 6,276 7,813 14,433 38,002 6,792 13,432
------- ------- ------- ------- -------- -------- --------
Loss from operations... (1,843) (2,877) (6,195) (11,433) (38,002) (6,792) (13,432)
Interest income
(expense), net........ 61 82 (32) (1,156) 232 (7,932) (2,471)
Miscellaneous income... -- -- -- 65 -- -- --
Gain on sale of
subsidiary stock...... -- -- -- 3,194 -- -- --
------- ------- ------- ------- -------- -------- --------
Net loss............... $(1,782) $(2,795) $(6,227) $(9,330) $(37,770) $(14,724) $(15,903)
======= ======= ======= ======= ======== ======== ========
Pro forma net loss per
common share(1)....... $ (0.96)
Pro forma weighted
average number of
common shares
outstanding(1)........ 39,529
Net loss per common
share................. $ (0.47) $ (0.39)
Weighted average common
shares outstanding.... 31,345 40,469

[Enlarge/Download Table]

AS OF DECEMBER 31, AS OF MARCH 31, 1996
----------------------------------------- ------------------------
1991 1992 1993 1994 1995 ACTUAL AS ADJUSTED(2)
(IN THOUSANDS)

BALANCE SHEET DATA:
Working capital
(deficit) ............ $4,339 $1,340 $ 9,055 $ 3,094 $(13,689) $ 109,605 $220,370
New York MTA License... -- -- -- 347,090 338,402 336,230 336,230
Total assets........... 4,991 2,540 14,465 360,946 474,990 543,905 654,670
New York MTA License
obligation............ -- -- -- 347,518 347,518 347,518 347,518
Other long-term debt... -- -- -- 1,688 36,070 39,133 39,133
Preferred Stock........ 1,500 1,500 15,902 15,902 44,127 -- --
Total stockholders'
equity (deficit)...... 2,813 101 (6,031) (7,416) (30,548) 132,726 243,491

--------
(1) Gives effect to the conversion of all outstanding shares of Preferred
Stock and accrued dividends thereon into 10,605,591 shares of Common Stock
and the conversion of the Convertible Subordinated Notes into 1,562,500
shares of Common Stock at the closing of the IPO on January 31, 1996.
(2) Gives effect to the sale of 4,500,000 shares of Common Stock in the
offering. See "Capitalization."

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations and other parts of this Prospectus contain forward-looking
statements which involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in "Risk Factors."

OVERVIEW

The Company was incorporated in Delaware in June 1987 to design, develop,
manufacture and market wireless digital communications products. From
inception to 1991, the Company focused primarily on developing its core
technology. The Company used its core technology to generate revenues from the
production of prototype equipment pursuant to agreements with companies in the
communications industry. In 1992, the principal focus of the Company shifted
from performing such activities to the development of its PCS business.

Since 1992, the Company has generated limited revenues primarily from
license fees, research and development services and prototype equipment sales
related to its proprietary technology. As the principal focus of the Company
has been the development of its PCS business, there has been minimal contract
and license fee activity. The Company expects to continue this focus and
anticipates that revenues in 1996 will be minimal. The Company believes that
period-to-period revenue comparisons are not necessarily meaningful as an
indication of future performance. In the future, the Company expects to derive
additional revenues from the sale of its equipment and the provision of PCS
service in the Company's markets.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995

Research and development expenses increased by 108.7%, or approximately $2.5
million, to $4.8 million for the three months ended March 31, 1996 compared to
$2.3 million for the three months ended March 31, 1995. The increase was due
primarily to an increase of $1.0 million in the purchase of research and
development components and an increase of $1.2 million in payroll and related
payroll taxes, employee benefits and employee recruiting costs associated with
the Company's continued growth and its development of the IS-661 technology.
The Company expects that research and development expenses will continue to
increase significantly during the remainder of 1996 as compared to 1995.

Sales, general and administrative expenses increased by 188.9%, or
approximately $3.4 million, to $5.2 million for the three months ended March
31, 1996 compared to $1.8 million for the three months ended March 31, 1995.
Of this increase, $947,000 was due to payroll related expenses associated with
increases in headcount resulting from the expansion of the Company's
operations. The remaining increase consists primarily of increases of $750,000
in consulting service fees, $283,000 in rent expenses and utilities, $261,000
in legal fees, $216,000 in trade shows and other business development
expenses, $143,000 in equipment rentals and $100,000 in insurance expense. The
Company expects that such expenses will continue to increase significantly
during 1996, as the Company continues to expand its operations.

Depreciation and amortization increased by 30.0%, or approximately $811,000
to $3.5 million for the three months ended March 31, 1996 compared to $2.7
million for the three months ended March 31, 1995. The increase in the 1996
period was due to a general increase in depreciation related to the Company's
research and development equipment.

Interest income increased approximately $1.3 million to $1.4 million for the
three months ended March 31, 1996 compared to $50,000 for the three months
ended March 31, 1995. The increase was due to the increase in earnings on
interest bearing cash and cash equivalents. The increase in cash and cash
equivalents resulted from the issuance of $25.0 million in senior notes in
November 1995, $25.0 million in convertible notes in November and December
1995 and $119.8 million in Common Stock related to the IPO.

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Interest expense decreased by 51.3% or approximately $4.1 million, to $3.9
million for the three months ended March 31, 1996 as compared to $8.0 million
for the three months ended March 31, 1995. The interest expense for the three
months ended March 31, 1995 included $7.7 million of accrued estimated
interest expense related to the New York MTA License. On March 8, 1996, the
FCC adopted an order setting the interest rate for such License at 7.75% per
annum accruing from March 8, 1996. As a result, the Company reversed $33.5
million of accrued interest related to the New York MTA License during
December 1995. Had this adjustment been retroactively recorded in the three
months ended March 31, 1995, the net loss and loss per share would have been
$7.1 million and $0.23, respectively.

Net loss increased approximately $1.2 million to $15.9 million for the three
months ended March 31, 1996 compared to $14.7 million for the three months
ended March 31, 1995. This increase was due primarily to a general increase in
operating expenses, partially offset by a decrease of $5.5 million in net
interest expense.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

There were no revenues during the year ended December 31, 1995 as compared
to $3.0 million for the year ended December 31, 1994, consisting of a license
fee from Northern Telecom.

Research and development expenses increased by 104.3%, or approximately $7.3
million, to $14.3 million for the year ended December 31, 1995 compared to
$7.0 million for the year ended December 31, 1994. The increase was due
primarily to an increase of $3.1 million in the purchase of research and
development components and an increase of $3.3 million in payroll and related
payroll taxes and employee benefits associated with the Company's continued
growth and its development of the IS-661 technology.

Sales, general and administrative expenses increased by 100.0%, or
approximately $6.3 million, to $12.6 million for the year ended December 31,
1995 compared to $6.3 million for the year ended December 31, 1994. Of this
increase, $2.5 million was due to increases in management headcount resulting
from the expansion of the Company's operations. The remaining increase
consists primarily of increases of $1.1 million in legal fees, $300,000 in
accounting fees, $402,000 in rent expense and utilities, $664,000 in
consulting service fees and $530,000 in travel expenses.

Depreciation and amortization increased approximately $9.9 million to $11.0
million for the year ended December 31, 1995 compared to $1.1 million for the
year ended December 31, 1994. The increase in the 1995 period was due
primarily to 12 months of the amortization of the New York MTA License, which
is being amortized using the straight-line method over a period of 40 years.

Net interest income was $232,000 for the year ended December 31, 1995
compared to $1.2 million of net interest expense for the year ended December
31, 1994. The net interest expense for the year ended December 31, 1994
included $1.5 million of interest expense related to the New York MTA License.

Net loss increased approximately $28.5 million to $37.8 million for the year
ended December 31, 1995 compared to $9.3 million for the year ended December
31, 1994. This increase was due primarily to an increase of $8.7 million in
amortization associated with the New York MTA License and a general increase
in operating expenses.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

Revenues increased by 87.5%, or approximately $1.4 million, to $3.0 million
in 1994 from $1.6 million in 1993. Northern Telecom accounted for 100% of the
Company's revenues in 1994, which represented a nonrefundable license fee
received upon entering into an OEM agreement. Three customers accounted for
90.2% of the revenues in 1993. The 1993 revenues were derived from contracts
related to research and development, prototype equipment sales and related
services in the field of wireless digital communications.

Research and development expenses increased by 52.2%, or approximately $2.4
million, to $7.0 million in 1994 from $4.6 million in 1993. These expenses
consisted primarily of payroll and related payroll taxes and employee benefits
of employees engaged in ongoing research, design and development activities
and the Company's continued growth and developing and testing of prototypes.
The increases in 1994 were primarily

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due to an increase of $1.6 million in payroll and related payroll taxes and
employee benefits, specifically in the digital and software engineering
departments, and an increase of $474,000 in the purchases of research and
development components.

Sales, general and administrative expenses increased by 110.0%, or
approximately $3.3 million, to $6.3 million in 1994 from $3.0 million in 1993.
These expenses consisted primarily of salaries and related payroll taxes and
employee benefits for management, finance and accounting, legal and other
professional services. The increase in 1994 is due to an increase of $800,000
in legal costs, primarily in connection with the New York MTA License, an
increase of $480,000 in office related expenses including utilities, office
supplies, postage and rent, an increase of $822,000 in payroll and related
payroll taxes and employee benefits and an increase of $276,000 in sales and
marketing costs due to increases in headcount combined with higher involvement
and attendance at tradeshows.

Depreciation and amortization increased by 357.7%, or approximately
$880,000, to $1.1 million in 1994 from $246,000 in 1993. The increase in 1994
was due primarily to amortization of the New York MTA License of $428,000.

Interest income (expense), net includes $1.5 million of interest expense in
1994 related to the New York MTA License, which was partially offset by
interest income of $360,000.

Net loss increased by 50.0%, or approximately $3.1 million, to $9.3 million
in 1994 from $6.2 million in 1993. The increase in net loss in 1994 was
primarily due to the $1.5 million of interest expense associated with the New
York MTA License and $428,000 of amortization of the New York MTA License. The
net loss was partially offset by $3.2 million of gain on the sale of stock of
its subsidiary during 1994.

LIQUIDITY AND CAPITAL RESOURCES

Since its formation, the Company has financed its operations and met its
capital requirements primarily through the IPO, three Preferred Stock
offerings, borrowings under a bridge loan, sale of stock of its subsidiary,
vendor financing and, to a lesser extent, equipment lease arrangements. These
financing activities provided net cash of $4.7 million in 1991, $17.4 million
in 1993, $116.0 million in 1995 and $120.4 million for the three months ended
March 31, 1996. The Company received gross proceeds of $50.0 million through
the sale of the Senior Notes, the Convertible Subordinated Notes and
associated warrants in November and December 1995. The Convertible
Subordinated Notes were subsequently converted upon the closing of the IPO
into 1,562,500 shares of Common Stock.

Operating activities used net cash of $5.0 million in 1993, $7.9 million in
1994, $19.7 million in 1995 and $9.6 million for the three months ended March
31, 1996. These increases resulted from the Company's increased activity and
corresponding growth to support product development and to commence the
buildout of the New York MTA network. Investing activities used net cash of
$480,000 in 1993, provided net cash of $720,000 in 1994, used net cash of
$44.0 million in 1995, and used net cash of $3.3 million for the three months
ended March 31, 1996, which consisted of capital expenditures for office
equipment, computers and related equipment used in engineering and
manufacturing, purchase of New York MTA infrastructure related products and
the $40.0 million FCC deposit for the Entrepreneurs' Band auction made during
December 1995.

As of March 31, 1996, the Company had working capital of approximately
$109.6 million. In January 1996, working capital increased by $135.4 million
from a deficit of $13.7 million at December 31, 1995 to $121.7 million upon
receipt of $118.4 million of proceeds, net of expenses, from the issuance of
8,050,000 shares of Common Stock in the IPO, the reduction of current
liabilities of $36.5 million and $16.3 million related to the repayment of
debt outstanding pursuant to a certain credit agreement, and the conversion of
$25.0 million of Convertible Subordinated Notes upon the IPO, respectively.
This increase in working capital was partially offset by the cash used to
repay a short-term credit agreement debt.

In 1993, the Company, through its subsidiary, OCI, was awarded a final
Pioneer's Preference for the New York MTA License that required no license
fee. Subsequent legislation mandated a methodology for charging for such
License and required that the FCC adopt an order setting forth the terms of
the principal and interest payments for such License. In accordance with terms
defined in that legislation, the Company is obligated to pay

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a license fee of $347.5 million to the FCC for the New York MTA License. On
March 8, 1996, the FCC adopted such an order, the terms and conditions of
which are as follows: (i) a five-year payment period with interest accruing at
7.75% from the order adoption date with the first payment due on the 30th day
following such date and subsequent quarterly payments due on April 30, July
31, October 31 and January 31, (ii) interest only payments for the first two
years and (iii) principal and interest payments for the remaining three years.
The Company made the first interest payment of $2.2 million on April 5, 1996
and a second payment of $4.5 million on April 30, 1996, representing interest
from April 8 through June 30, 1996.

The Company has an agreement to purchase $250.0 million of equipment and
services over the next five years from Northern Telecom. The Company has
purchased approximately $19.3 million of equipment and services under such
agreement. The Company has a $382.5 million credit facility with Northern
Telecom to finance future purchases and installations of telecommunications
equipment, engineering services, certain related construction costs, third-
party equipment and other expenses. The Company also has an OEM agreement to
sell certain equipment, hardware and software to Northern Telecom at its
normal selling prices, which will result in licensing fees and revenues.

The NT Credit Facility is secured by a pledge of all capital stock of OCI
owned by a wholly-owned subsidiary of the Company (which constitutes a 95.58%
ownership interest) and substantially all of OCI's assets.
A portion of the NT Credit Facility, which may be used for working capital
purposes including interest payments on the principal of such facility,
matures on June 30, 1997. Any amounts repaid can be subsequently borrowed for
the other purposes allowed under the NT Credit Facility. The principal amount
of the other portions of the NT Credit Facility are payable in installments
beginning in 2000, with the final payment due on December 31, 2004. Interest
on the NT Credit Facility is payable quarterly.

Under the terms of the NT Credit Facility, OCI is subject to certain
financial and operational covenants including restrictions on OCI's ability to
pay dividends, restrictions on indebtedness and certain financial maintenance
requirements. Additionally, the NT Credit Facility provides that, among other
events, the failure of OCI to pay when due amounts owing the FCC shall
constitute an event of default. As of March 31, 1996, OCI had a balance
(principal and accrued interest) of approximately $22.0 million outstanding
under this facility.

Subsequent to March 31, 1996, the Company initiated five additional draws on
the NT Credit Facility. On April 1, 1996, and May 10, 1996, the Company drew
down $8.9 million and $2.4 million, respectively, of the NT Credit Facility
for the purchase of network infrastructure equipment. An additional $4.8
million was drawn down on April 19, 1996 to fund the purchase of construction
and consulting services related to the buildout of the New York MTA Network.
The Company also drew down $2.5 million and $4.0 million on April 4, 1996 and
June 17, 1996, respectively, for general operating purposes.

On November 22, 1995, the Company sold variable interest rate Senior Notes
in the aggregate amount of $25.0 million, together with warrants to purchase
625,000 shares of Common Stock at an exercise price of $.004 per share. The
Senior Notes mature in five years and may be prepaid at any time. The Senior
Notes contain a sinking fund obligation whereby the Company is required to pay
$5.0 million of the outstanding principal balance of the Senior Notes on the
third and fourth anniversaries of their date of issuance. The sinking fund
provision expires should the Company issue $200 million of equity after
November 22, 1995 and before the third or fourth anniversary of the date of
issuance of the Senior Notes. The note purchase agreement contains certain
covenants and restrictions on the Company, including a restriction on the
payment of cash dividends and the requirement that any indebtedness of the
Company be pari passu or subordinate to the Senior Notes.

On November 29, 1995, the Company sold Convertible Subordinated Notes in the
aggregate amount of $15.0 million, together with warrants to purchase 375,000
shares of Common Stock at an exercise price of $.004 per share. On December
18, 1995, the Company sold Convertible Subordinated Notes in the aggregate
amount of $10.0 million to Hansol, together with warrants to purchase 250,000
shares of Common Stock at an exercise price of $.004 per share. The
Convertible Subordinated Notes were converted upon the closing of the IPO into
1,562,500 shares of Common Stock.

On January 31, 1996, the Company completed its IPO of 8,050,000 shares of
Common Stock resulting in proceeds, net of related expenses, of approximately
$118.4 million. In connection with the IPO, the Preferred

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Stock was converted into 10,605,591 shares of Common Stock and the Convertible
Subordinated Notes were converted into 1,562,500 shares of Common Stock. The
Company used a portion of the net proceeds to pay down the outstanding balance
of $36.5 million due pursuant to a credit agreement.

On April 8, 1996, Ericsson issued a non-binding commitment letter proposing
to provide financing to the Company up to a maximum aggregate principal amount
of $127.5 million for the purposes of financing the purchase of equipment and
services from Ericsson for the New York MTA market. A portion of the proposed
facility, which may be used for interest payments accruing under such
facility, matures on June 30, 1997. The principal amount on other portions of
the proposed facility would be payable in installments beginning in 2000, with
the final payment due on December 31, 2004. Amounts borrowed and repaid would
not be available for reborrowing. Interest on the proposed facility would be
payable quarterly.

As proposed, the Ericsson facility would be secured by substantially all of
the assets of OCI, including a pledge of all capital stock of OCI owned by a
wholly-owned subsidiary of the Company (which constitutes a 95.58% ownership
interest). All collateral would be held by a collateral agent and would be
shared on a pari passu basis with Northern Telecom.

The proposed facility would also contain negative, affirmative and financial
covenants and events of defaults which are customarily found in such
financings, including covenants and events of defaults similar to the NT
Credit Facility.

The Company bid successfully for Entrepreneurs' Band licenses with an
aggregate license fee of approximately $509.1 million (net of the 25% small
business discount). The Company has made a first payment of five percent, or
approximately $25.5 million utilizing the $40 million deposit with the FCC;
the remaining $14.5 million of such deposit has been refunded to the Company
for general working capital purposes, and is preparing its long-form
application for these licenses. At the time the licenses are awarded, the
Company will pay an additional five percent, or approximately $25.5 million
from its cash and cash equivalents on hand. The Company will pay interest only
until 2003 and will pay the balance of $458.2 million and remaining interest
in the period 2003 to 2006. This obligation will bear interest until paid at
the 10-year Treasury Bill rate on the date the licenses are awarded. The
Company anticipates that these licenses will be issued by the end of August
1996, unless delayed by FCC proceedings or litigation. The Entrepreneurs' Band
BTA licenses and any other licenses the Company purchases in the future will
be accounted for in accordance with the recently agreed upon industry
practices. Accordingly, interest incurred for such licenses will be
capitalized during the buildout phase and amortization of such license costs
will begin with the commencement of service to customers.

The Company believes that access to capital and financial flexibility are
necessary to successfully implement its strategy. The Company is offering
4,500,000 shares of Common Stock in the offering for estimated net proceeds to
the Company of $110.8 million. The Company believes these proceeds, in
combination with the NT Credit Facility and proposed Ericsson credit facility,
will be sufficient to fund operating losses, capital expenditures and working
capital necessary for the initial buildout of the Company's PCS networks. To
the extent that the buildout of these networks is faster than expected, the
costs are greater than anticipated or the Company takes advantage of other
opportunities, including those that may arise through future FCC auctions, the
Company may require additional funding to implement its business strategy. See
"Use of Proceeds."

The Company's future capital requirements will depend upon many factors,
including the successful development of new products, the extent and timing of
acceptance of the Company's equipment in the market, requirements to maintain
adequate manufacturing facilities, the progress of the Company's research and
development efforts, expansion of the Company's marketing and sales efforts,
the Company's results of operations and the status of competitive products.
The Company estimates that it will require between $100 million to $150
million to build out its New York MTA network at a sufficient level to meet
the Five-Year Buildout Requirement imposed on the Company as a license holder.
The Company estimates that it will require between $50 million to $75 million
to meet similar buildout requirements for the Entrepreneurs' Band networks.
The Company believes that cash and cash equivalents on hand, the net proceeds
of the offering, anticipated revenues, vendor financing and additional
strategic partnerships will be adequate to fund its operations for the next 12
months. There can be no assurance, however, that the Company will not require
additional financing prior to such date to fund its operations. The Company
believes that it will require substantial amounts of additional capital over
the next several years and anticipates that this capital will be derived from
a mix of public offerings and private placements of debt or equity securities
or both.

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BUSINESS

OVERVIEW

Omnipoint is a leader in commercializing personal communications services
("PCS"). Omnipoint intends to provide wireless communication services in areas
covering approximately 40.3 million POPs, of which 97.1% are located in a
contiguous area in the northeast region of the U.S. Omnipoint will be the
fifth largest PCS licensee in the U.S., based on POPs. The Company holds a
license for the New York MTA, the largest MTA in the U.S., with approximately
27.0 million POPs, and bid successfully in the recently completed
Entrepreneurs' Band auction for additional PCS licenses for 18 BTAs with
approximately 13.4 million POPs, including the Philadelphia, Atlantic City,
Buffalo and Rochester BTAs. The Company will pay an average of $21.24 per POP
over a period of five to 10 years for its 40.3 million POPs. In addition, the
Company develops technology and equipment for PCS. The Company's proprietary
technology is suitable for a variety of digital wireless applications
including mobile network systems and WLL. Omnipoint's technology will be
integrated with wireless GSM networks and local telephone switching platforms.

Omnipoint has spent several years developing and refining its core
technology based on spread spectrum since the Company's incorporation in 1987.
From inception to 1992, the Company developed several working prototypes for
various wireless voice, data and digitized compressed video transmission
projects. The Company's success in developing its technology for the first
digital PCS system at 1.9 GHz during 1991 and 1992 was instrumental in the FCC
awarding the Company one of three Pioneer's Preferences in 1993. As a result
of the Pioneer's Preference, the FCC issued to the Company in December 1994
the New York MTA License.

Omnipoint's strategy for its service business is to become a leading
provider of wireless services in its markets. The Company believes that it
will be the first to offer commercial PCS services in the New York City area
beginning in the fourth quarter of 1996. The Company will continue to build
out the New York MTA network and plans to build and operate PCS networks in
the areas covered by its BTA licenses, focusing initially on the most densely
populated portions of these areas and on major commuting corridors. The
Company believes that existing cellular systems in the most densely populated
areas, particularly within the New York City metropolitan area, provide
inadequate capacity and that service during peak hours for current cellular
users and the anticipated growth in wireless demand will add to this problem.
The Company intends to use a combination of the Omnipoint System and GSM to
provide superior wireless services to its customers. The Company plans to
offer a variety of services to its customers, including voice and data
transmission, call forwarding, call waiting and paging capability.

The Company will pay $347.5 million for the New York MTA License. The
Company is required to pay only interest on the total amount due until March
8, 1998, and to pay the principal balance and remaining interest during the
period March 1998 to March 2001. In the recently completed auction by the FCC
of the Entrepreneurs' Band licenses, the Company bid successfully for licenses
for 18 BTAs with approximately 13.4 million POPs. The Company has made an
initial payment of $25.5 million or 5% of the $509.1 million in net bids for
these licenses, will pay approximately $25.5 million upon the issuance of the
licenses, will pay interest only until 2003 and will pay the principal balance
of approximately $458.2 million and remaining interest in the period 2003 to
2006. The Company anticipates that these licenses will be issued by the end of
August 1996,

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unless delayed by FCC proceedings or litigation. The Company may also
participate in the auctions of D, E and F Block PCS licenses, each consisting
of 10 MHz of spectrum. See "Business--Regulatory Environment."

Omnipoint's strategy for its technology development and equipment business
is to establish the Omnipoint System as a leading PCS standard. The Joint
Technical Committee on Wireless Access has designated the Omnipoint System as
IS-661. The Omnipoint System is one of four competing CAI standards that have
been selected by PCS license holders in the U.S. to serve the mobile PCS
market. The Omnipoint System is designed to provide enhanced voice quality,
higher speed data transmission rates and increased capacity and service
reliability relative to analog systems and other digital wireless systems.
Additionally, the Omnipoint System is designed to have lower infrastructure
costs than traditional cellular and other PCS systems.

The Omnipoint System is also particularly well suited for fixed WLL
applications. Initially, the Company plans to focus its domestic WLL
activities on providing wireless CAP services in the New York MTA and other
targeted cities to businesses in small- and medium-sized business locations,
whose capacity requirements do not justify the expense of alternative bypass
technologies, such as leased line, fiber or microwave technologies. In
addition, the Company intends to access international markets through sales of
equipment (i) to service providers for WLL applications as an alternative to
expanding fixed wireline services in countries where telephone services have
not been well developed, and (ii) as an upgrade to GSM networks in the 98
countries where GSM has been deployed or selected for deployment.

The Company has established strategic relationships with Northern Telecom,
Ericsson and Hansol. A substantial portion of Omnipoint's equipment purchases
for the buildout of the New York MTA network is being financed by Northern
Telecom under the $382.5 million NT Credit Facility. Northern Telecom and
Omnipoint are integrating the Omnipoint System with Northern Telecom's GSM
digital switch, with the first integrated system to be deployed in the New
York MTA. The Company and Ericsson have agreements involving (i) the purchase
and sale of Ericsson-manufactured infrastructure equipment and handsets for
the Company's PCS networks, subject to completion of vendor financing
agreements for which the parties have entered into a non-binding commitment
letter regarding purchases of equipment for the New York MTA network, and (ii)
a licensing and acquisition arrangement relating to the Omnipoint System. The
Company and Orbitel have entered into a non-binding memorandum of
understanding involving Orbitel's development and manufacture of single mode
IS-661 and dual mode IS-661/PCS 1900 handsets. The Company has entered into a
strategic alliance with Hansol under which it licensed Hansol to manufacture
handsets. The two companies also agreed to cooperate on promoting the
Omnipoint System in the Republic of Korea and other parts of Asia. In
addition, each of PacBell, BellSouth, Western Wireless, InterCel, APC and APT
has signed a separate non-binding memorandum of understanding with the Company
to provide subscribers with roaming capabilities and to trial Omnipoint's
equipment in the areas where each has PCS licenses. These arrangements will
together cover approximately 150 million POPs, or 57% of the U.S. population.
The Company expects that roaming will be expanded to areas covering
approximately 200 million POPs, or approximately 76% of the U.S. population,
based on the results of the Entrepreneurs' Band auction and the announced
intentions of the successful holders therein. The Company is in discussions
with other equipment vendors and service providers regarding additional
strategic relationships.

Omnipoint Corporation consists of a technology division and several
subsidiaries. Omnipoint PCS, Inc. ("OPI"), a wholly owned subsidiary of the
Company, has as its sole asset a 95.58% ownership interest in OCI. OCI is the
holder of the New York MTA License and will operate the service business in
the New York MTA. OPCS Corp., a wholly owned subsidiary of Omnipoint
Corporation, has as its sole asset 100% of the stock of OPCSE. Through OPCSE,
the Company bid successfully for 18 BTA licenses in the Entrepreneurs' Band
auction.

The Company was incorporated in 1987 in the State of Delaware. Its principal
executive offices are at 2000 North 14th Street, Arlington, Virginia 22201,
and its telephone number is (703) 522-7778.

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STRATEGY

Omnipoint's strategy is to become a leading provider of wireless services
and products by deploying and operating PCS networks in the northeast region
of the U.S., providing wireless CAP services, expanding its PCS service area
through participation in future FCC PCS auctions, establishing the Omnipoint
System as a leading PCS standard and capitalizing on opportunities in
developing international markets for wireless applications.

Leading Service Provider in the Northeast

The Company plans to be a leading provider of wireless services in its
markets. The licenses to be held by the Company cover 40.3 million POPs, 97.1%
of which are in a contiguous area in the northeast region of the U.S. The
Company intends initially to offer service in the New York City metropolitan
area and its major commuting corridors and then expand service throughout the
MTA. The Company also plans to build and operate PCS networks in the areas
covered by its licenses for which it bid successfully in the Entrepreneurs'
Band auction, focusing initially on the most densely populated portions of
these areas and major commuting corridors. The Company is building a pilot
system in Manhattan using the Omnipoint System. The Company plans to build all
of its networks integrating Omnipoint's IS-661 technology with a GSM system in
order to provide mobile and fixed telephone services, to provide roaming
capability with other GSM based networks and to facilitate rapid market entry.
The Company will concentrate its marketing efforts on cellular users who the
Company believes have experienced inadequate service and on the expanding
market of new users.

Wireless CAP Services

Omnipoint plans to introduce wireless CAP services to businesses in small-
and medium-sized locations whose capacity requirements do not justify the
expense of alternative bypass technologies, such as leased line, fiber or
microwave technologies. Omnipoint's wireless CAP services would allow
customers to bypass the local telephone exchange to complete calls with
wireline quality at discounts to prices such customers pay to the local
telephone exchange. The Company's wireless CAP services will operate through
radio units installed by the Company on customers' premises which will
communicate wirelessly with the Company's base stations.

Future FCC PCS Auctions

Omnipoint plans to participate in the FCC's auctions for D, E and F Block
PCS licenses in order to expand its service area beyond the New York MTA and
the Entrepreneurs' Band BTAs where it has been the successful bidder for
licenses.

Leading PCS Standard

The Company intends to establish the Omnipoint System as a leading PCS
standard through sales to other PCS service providers. The Company has an
agreement with Northern Telecom for the two companies to market an integrated
Omnipoint/GSM system throughout North America to prospective license holders
and to existing PCS license holders who deploy PCS 1900 systems. The Company
has entered into a non-binding memorandum of understanding with Orbitel for
Orbitel to develop and manufacture single mode IS-661 and dual mode IS-661/PCS
1900 phones and an agreement with Ericsson to sell Omnipoint base stations for
a variety of applications. The Company intends to enter similar arrangements
with other manufacturers from time to time.

International Markets

The Company is also developing international markets for its equipment for
WLL telephone service, for mobile networks and as an enhancement to GSM, which
has been deployed or chosen for deployment in 98 countries. Many developing
countries have a very limited wireline telephone infrastructure, and the cost
and time required to expand or upgrade a traditional telephone infrastructure
is often prohibitive. The Company will offer the Omnipoint System in such
countries on a cost-efficient, easily deployable basis to provide basic
telephone service wirelessly. The Company is also marketing the Omnipoint
System for mobile wireless networks and intends to sell its CAI access
equipment to augment GSM networks.

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INDUSTRY BACKGROUND

Since 1983, the demand for wireless telecommunications services has grown
dramatically as cellular, paging and other emerging wireless communications
services have become widely available and increasingly affordable. This growth
in wireless services has been driven by technological advances and changes in
both telecommunications regulations and consumer preferences.

Mobile cellular telephone service has been one of the fastest growing market
segments within the telecommunications industry. According to the Cellular
Telecommunications Industry Association, the number of cellular users in the
U.S. grew from 340,000 at the end of 1985 to over 33.8 million at December
1995, and at a compounded annual rate of 45.3% over the three year period
ending December 1995. According to industry estimates, there are now
approximately 85.0 million cellular users worldwide. Most industry analysts
forecast that U.S. penetration rates for mobile wireless service will reach
between 40% and 50% of the population by 2005.

Although analog cellular is the most widely deployed wireless service
available today, it has several limitations, including inconsistent service
quality, lack of privacy, limited capacity and, currently, the inability to
transfer data without a modem. Most current cellular services transmit voice
and data signals over analog-based systems, which use one continuous
electronic signal that varies in amplitude or frequency over a single radio
channel. Digital systems, on the other hand, convert voice or data signals
into a stream of digits and typically use voice compression and other
techniques to allow a single radio channel to carry multiple simultaneous
signal transmissions. Digital technologies are expected to offer new services,
improved system flexibility, greater efficiency and increased capacity.

PCS is a second generation comprehensive wireless communications service
that offers services generally comparable to or exceeding existing digital
cellular services. PCS systems in the U.S. are expected to operate under one
of four principal digital signal transmission technologies, or standards, that
have been proposed by various operators and vendors for use in PCS systems:
the Omnipoint System, GSM (known as PCS 1900 in the U.S.), CDMA or TDMA. See
"--Technology Business" and "--Strategic Relationships." GSM and TDMA are both
"time division-based" standards but are incompatible with each other and with
CDMA. The Omnipoint System is compatible with GSM and is being integrated with
GSM for deployment in the Company's markets. See "--Technology Business--
Competition."

GSM is the leading digital wireless technology in the world, with
approximately 175 networks being built or operating in 98 countries, including
all of western Europe. According to industry estimates, GSM networks serve
over 15 million subscribers worldwide as of May 1996, and are adding
approximately one million subscribers per month. APC introduced the first GSM
network in the U.S. in the Baltimore/Washington D.C. MTA in November 1995 and,
according to APC reports, as of May 15, 1996, the network served approximately
80,000 subscribers. In early 1996, a GSM system was also introduced in Hawaii.
Ten PCS licensees have announced their intention to use the GSM protocol in
the construction of PCS networks covering approximately 200 million POPs,
representing approximately 76% of the total population of the U.S. An
important benefit associated with GSM technology is its use of an open system
architecture that will allow operators to purchase network equipment from a
variety of vendors that share standard interfaces for operation. This open
architecture provides significant flexibility by the operator in vendor cost
leveraging, and provisioning of features, products and services.

SERVICE BUSINESS

Overview

The Company's service business will provide mobile and fixed communications
service in its markets. The Company's wireless service is intended to provide
private, secure and enhanced voice, high-speed data, paging services and
imaging capabilities for both the office environment and outdoor mobile
coverage. The Company plans to provide a service with enhanced features
including voice mail, call forwarding and call waiting. The Company is
building a pilot system in Manhattan comprised of a limited number of
Omnipoint base stations which will be installed in the first half of 1996. The
Company plans to build all of its networks integrating Omnipoint's IS-661
technology with the GSM system. Additionally, the Company intends to introduce
the first wireless CAP service in the New York City metropolitan area.

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Since securing the Pioneer's Preference award, the Company has been actively
designing and planning its network system to be built in the New York MTA and
has begun to install equipment for its initial service area. During the next
24 months, the Company plans to continue to install equipment and establish
marketing and distribution channels in its markets. The Company believes it
will be the first to offer commercial PCS services in the New York City area
beginning in the fourth quarter of 1996. The Company will continue to build
out the New York MTA network and plans to build and operate PCS networks in
the areas covered by its BTA licenses, focusing initially on the most densely
populated portions of these areas and major commuting corridors.

One of the Company's objectives is to reduce the risk of cell site related
delays during the buildout of its networks. The Company is locating sites for
its base stations and antennas where zoning approvals and other necessary
permits are not needed or are likely to be obtained more easily than for
traditional cellular equipment. Where high antenna sites are required, the
Company intends to facilitate the buildout through the use of existing towers
and structures occupied by telecommunications service providers, utility
companies and others. Although the Company has begun the selection of sites
and has acquired the rights to use sites in the New York MTA, there can be no
assurance that the Company will be able to deploy its equipment in a
sufficient number of sites to implement its initial commercial service. The
site selection process will require the continued successful negotiation of
use agreements for or acquisitions of numerous additional sites and may
require the Company to obtain zoning variances or other governmental or local
regulatory approvals. The Company is currently designing and planning its
Entrepreneurs' Band networks and intends to use a similar cell site
acquisition approach.

The Company's buildout schedule may be revised as a result of changing
circumstances. The Company's ability to proceed with the buildout of its
networks is subject to continued site acquisitions or leases, the availability
of equipment and financing and the receipt of local governmental approvals
where required.

Marketing Strategy

The Company's marketing objective is to stimulate demand for PCS voice and
data service and attract subscribers by providing superior service and
reliability at attractive prices. Omnipoint intends to generate demand by
introducing a better alternative to cellular service. The Company intends to
concentrate its PCS marketing efforts on the following key customer segments:
(i) large, communications-intensive corporate accounts, currently using or
considering cellular or private radio systems, that would value the improved
quality and security and would benefit from the Company's enhanced products
and services; (ii) high-mobility customers using or considering cellular
telephones who would benefit from fewer dropped or blocked calls; and (iii)
low-mobility customers attracted to PCS as a more convenient alternative to
their landline telephones, particularly those who have multiple telephone
lines to their home or business and who have a need for high speed data
transmission.

In marketing its service, the Company intends to offer competitively priced
service that emphasizes voice clarity, reliability and a low probability of
blocked calls. The Company intends to include certain enhanced features
including call waiting, call forwarding, voice mail and paging as part of its
product offerings. The Company also will promote the improved call security
resulting from the use of digital technology which should encourage users to
make confidential professional and personal calls that they might otherwise
make only on landline telephones. In addition, the convenience of a single
telephone number for mobile, home and office use available to the customer
throughout the Omnipoint service area and the use of menu-driven subscriber
functions should enhance the convenience and usage of the Company's services.

The Company's strategy is to pursue multiple distribution channels through
which to market its services, generally on a non-exclusive basis, including a
direct sales force, retail stores and third party distributors or agents. In
addition to these traditional distribution channels, the Company is evaluating
and experimenting with other, less traditional methods of marketing the
Company's services such as telemarketing and direct mail.

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Omnipoint's PCS Markets

The Company has, or is the successful bidder for, PCS licenses to provide
wireless communications services in areas covering approximately 40.3 million
POPs. The Company's licenses include the New York MTA, which includes 20 BTAs
with approximately 27.0 million POPs, and 18 BTAs with approximately 13.4
million POPs and including the Philadelphia, Atlantic City, Buffalo and
Rochester BTAs. Thirty-five of the Company's 38 BTAs, which contain 97.1% of
its POPs, are contiguous in the northeast region of the U.S. The Company's
other three BTAs border BTAs in which other licensees intend to deploy GSM
networks. The Company's markets cover large areas with attractive demographic
characteristics including growing populations, high population densities,
favorable commuting patterns, high household incomes and favorable business
climates. The following table sets forth all of the Company's BTAs and their
respective POPs.

[Download Table]

1995 POPS

New York MTA:
New York, NY..................................................... 18,447,000
Hartford, CT..................................................... 1,117,000
Albany-Schenectady, NY........................................... 1,063,000
New Haven-Waterbury-Meriden, CT.................................. 975,000
Syracuse, NY..................................................... 812,000
Allentown-Bethlehem-Easton, PA................................... 725,000
Scranton-Wilkes Barre-Hazleton, PA............................... 684,000
Poughkeepsie-Kingston, NY........................................ 442,000
Burlington, VT................................................... 389,000
Binghamton, NY................................................... 360,000
New London-Norwich, CT........................................... 352,000
Elmira-Corning-Hornell, NY....................................... 320,000
Utica-Rome, NY................................................... 317,000
Watertown, NY.................................................... 311,000
Plattsburgh, NY.................................................. 126,000
Glens Falls, NY.................................................. 125,000
Stroudsburgh, PA................................................. 113,000
Oneonta, NY...................................................... 111,000
Rutland-Bennington, VT........................................... 100,000
Ithaca, NY....................................................... 98,000
----------
Subtotal........................................................ 26,987,000
Other:
Philadelphia, PA-Wilmington, DE-Trenton, NJ...................... 6,065,000
Buffalo-Niagara Falls, NY........................................ 1,236,000
Rochester, NY.................................................... 1,154,000
Harrisburg, PA................................................... 688,000
Springfield-Holyoke, MA.......................................... 683,000
Wichita, KS...................................................... 630,000
York-Hanover, PA................................................. 449,000
Amarillo, TX..................................................... 381,000
Reading, PA...................................................... 355,000
Atlantic City, NJ................................................ 339,000
Dover, DE........................................................ 276,000
Sunbury-Shamokin, PA............................................. 192,000
Lebanon-Claremont, NH............................................ 170,000
Williamsport, PA................................................. 166,000
Pine Bluff, AR................................................... 153,000
Pottsville-Frackville, PA........................................ 151,000
Pittsfield, MA................................................... 135,000
State College, PA................................................ 130,000
----------
Subtotal........................................................ 13,353,000
----------
Total.......................................................... 40,340,000
==========

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The New York MTA is an attractive wireless market due to its size, density
and demographics. In addition, the New York MTA is the country's largest
telecommunications market and has a disproportionately high share of all voice
and data traffic relative to its population, particularly with respect to
international calls placed to or from the U.S. New York is the largest MTA in
the U.S., with approximately 27.0 million POPs or approximately 10.2% of the
U.S. population, and is comprised of 20 BTAs, including New York, NY (which
includes northern New Jersey), Hartford, CT, Albany, NY, New Haven, CT and
Syracuse, NY. The New York MTA has a high share of households with annual
incomes of over $50,000, with 41.8% versus a nationwide average of 31.0%.

The two cellular systems operating in the New York area are capacity
constrained over the most densely populated traffic areas during peak hours.
Based on direct testing as well as information from a number of sources, the
Company believes that a significant number of the call attempts during peak
hours in certain areas of Manhattan fail to gain access to the cellular
networks due to capacity constraints in the networks. In addition, a large
percentage of calls that initially connect are dropped because of hand-off
failures between base stations due to the same capacity issues. The Company
believes that inherent capacity limits of existing cellular architectures will
allow new PCS entrants in New York to attract a large share of high-end
wireless users. Moreover, due to nationwide churn rates of the existing
installed cellular subscriber base of approximately 25% per year, the Company
believes the market shares of new PCS competitors are likely to rise
significantly over time.

In the recently completed Entrepreneurs' Band auction the Company bid
successfully for licenses for 18 BTAs with approximately 13.4 million POPs.
The Entrepreneurs' Band auction afforded the Company the opportunity to expand
its planned PCS services to additional markets. Fifteen of the Company's 18
Entrepreneurs' Band Markets are contiguous to the New York MTA which should
provide the Company with operating efficiencies. In addition, the Company
believes these markets have favorable demographics, including the percentage
of households with annual incomes over $50,000. Philadelphia, Atlantic City,
Buffalo and Rochester are the principal BTAs for which the Company
successfully bid. Because of the Company's success in the Entrepreneurs' Band
auction at assembling contiguous BTAs, the Company was able to acquire
licenses covering 95.1% of the POPs in the Philadelphia MTA and 84.8% of the
POPs in the Buffalo MTA.

Competition

The success of Omnipoint's PCS service business will depend upon its ability
to compete with the two cellular operators, two other PCS licensees and
potential future wireless communications providers. The Bell Atlantic/NYNEX
consortium and AT&T Wireless currently provide cellular services in the New
York Metropolitan Statistical Area (MSA) and surrounding areas. Sprint
Spectrum was the winner of the B Block New York MTA PCS license. NextWave was
the successful bidder in the Entrepreneurs' Band auction for the New York BTA
PCS license. Each of the five operators (including the Company) will be
eligible to own one of the three 10 MHz PCS licenses still to be auctioned.
See "Regulatory Environment--PCS Licensing." No competing operator has
announced an intention to use PCS 1900 in the New York BTA. The Company's
Entrepreneurs' Band networks will face similar PCS and cellular competition
including competition in certain BTAs from AT&T Wireless, Sprint Spectrum,
Cellular One, COMCAST and Metrophone, among others. The Company believes that
ESMR, originally considered a PCS competitor, will have a limited competitive
impact because technical limitations have caused the ESMR operators to target
only vertical market niches such as dispatch services.

Wireless Competitive Access Provider Service

Omnipoint plans to introduce wireless CAP services to business in small- and
medium-sized locations allowing customers to bypass the local telephone
exchange to complete certain calls at lower prices than such customers
currently pay. The wireless CAP services will operate through radio units
installed by the Company on customers' premises which will communicate
wirelessly with the Company's base stations. The Company plans to initially
target business locations for which alternative bypass facilities are not as
economical.

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The Telecommunications Act of 1996 (the "Telecom Act"), enacted on February
8, 1996, has created new opportunities for fixed WLL applications.
Historically, regulations have prohibited the regulated telephone monopolies
from competing in switched local exchange markets. In the past 12 months, many
states, including New York and Connecticut, began permitting local loop
competition by operators other than the local exchange carrier. Other states,
such as New Jersey, have initiated proceedings to do the same.

The Company believes that as a result of the Telecom Act the existing
monopoly LECs will provide reasonable reciprocal termination charges.
Previously, local telephone companies generally charged wireless carriers for
calls initiated on the wireless network and terminated on the local telephone
company's network, while wireless carriers could not charge local telephone
companies for calls initiated on the local telephone company's network and
transported to and terminated on the wireless network. Several industry groups
have advocated solutions to address these issues and, in some of the Company's
key markets, the monopoly LECs have already implemented specific local
changes. For example, as a result of recent court settlements and
announcements made by NYNEX, management believes that the Company, as well as
other wireless carriers, can now obtain "co-carrier status" to provide
wireless telephone service at least within the NYNEX service area. Co-carrier
status would put Omnipoint's wireless CAP service on the same access cost
basis as the local telephone companies with respect to calls that are
originated and terminated with the customer. Providers with co-carrier status
do not pay any access charges to the local telephone company as long as the
telecommunications traffic between the co-carrier's customers and the local
telephone company is roughly equivalent with respect to the direction of the
traffic. Thus, with co-carrier status, the Company would incur actual access
charges if it terminates less traffic received from the local telephone
company than the local telephone company terminates from the Company.

Roaming Arrangements

The Company has signed memoranda of understanding with a number of different
U.S. GSM-based PCS providers, including PacBell, BellSouth, Western Wireless,
InterCel, APC and APT, to provide subscribers with roaming capability in the
markets where these parties will operate PCS services. The memoranda of
understanding are not binding unless incorporated in definitive agreements.
While roaming across the companies' GSM-based networks, subscribers will be
able to place and receive calls and maintain their customized profiles and
features without specific customer prior request. Additionally, the Company
and these GSM-based PCS providers will conduct joint tests of the Omnipoint
System and have agreed to work together on PCS infrastructure and handset
standards and to establish complementary marketing programs. The memoranda of
understanding also contemplate adding other PCS operators to the roaming
consortium. Based on the technology preferences indicated by the A and B Block
license holders and the successful bidders in the Entrepreneurs' Band auction,
GSM will be deployed by license holders with licenses covering approximately
200 million POPs, representing approximately 76% of the total population of
the U.S. This percentage could increase when additional successful bidders in
the Entrepreneurs' Band auction and the D, E and F Block auctions have
selected their technology. The Company and certain other PCS license holders
are currently exploring alternatives to ensure that the GSM protocol will be
available in all markets. In addition, the Company has entered into
discussions with several GSM-based PCS providers in Europe, Asia and the
Middle East to provide Omnipoint subscribers with roaming capabilities in the
areas where those parties provide PCS services. There can be no assurance that
the Company will enter into any definitive roaming agreements on favorable
terms, if at all.

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TECHNOLOGY BUSINESS

Overview

Manufacturers of PCS equipment compete in a high-growth, cost-competitive
market in which they must offer a compact, cost-effective solution providing
fully functional PCS--full coverage, vehicular high-speed mobility, wireline
quality voice, data, multimedia, digitized compressed video, images and
broadcast data--at capital costs per subscriber that are significantly lower
than conventional cellular technologies. Due to evolving industry standards
and the rapid introduction of new services, the success of PCS equipment
manufacturers will also depend on their ability to bring new products to
market quickly.

Customer acceptance and usage rates will drive PCS equipment revenues. Based
on projections by EMCI, Inc., cumulative PCS equipment sales for
infrastructure and handsets in the U.S. are anticipated to reach approximately
$25.4 billion by the end of 2000. The international market for WLL equipment
is estimated by Herschel Shosteck Associates, LTD. to reach $86.0 billion by
the end of 2000.

The Omnipoint System, officially designated as IS-661 by the Joint Technical
Committee on Wireless Access, is a proprietary CAI system using spread
spectrum, a technology originally developed for military applications. The
Omnipoint System is one of four competing CAI standards that have been
selected by PCS license holders to serve the mobile PCS market. The Company
designed its technology so that its infrastructure costs will be lower than
those of other PCS and cellular technologies. Furthermore, because of the
Omnipoint System's design features, voice quality, data rates, low cost, small
cell size and high capacity, the Omnipoint System will be particularly well
suited for WLL services. The Omnipoint System will offer the ability to
deliver both wireline voice quality and the enhanced services being sought by
customers.

The Company designs and tests its equipment and software at its engineering
facilities in Colorado Springs, Colorado. Manufacturing and assembly will be
subcontracted to third parties whenever possible. Currently, the Company and
Northern Telecom are integrating Omnipoint's RF access system and equipment
which provides communication between handsets and base stations, primarily
radio and digital cards for base stations, with Northern Telecom's switches.
This integrated system will be used in the New York MTA and marketed to other
domestic and international operators.

The Company has operated trial networks during the past three years in
Colorado Springs, New York City and northern New Jersey. Through these trials,
as well as independent system tests, the Company has verified the central
features of the Omnipoint System, including its miniaturized base stations,
vehicular speed mobility, wireline quality voice transmission, mobile directed
hand-off and data transmission capabilities.

The Company believes that its proprietary technology will provide a number
of advantages over cellular and other PCS technologies, including:

. Lower infrastructure costs resulting in reductions in per minute costs
and facilitating competition with wireline telephone systems for certain
market segments.

. Compatibility with GSM and central office switch infrastructures.

. Wireline quality voice and enhanced data, multimedia and digitized
compressed video and imaging capabilities.

The Company's technology is flexible enough to be deployed in both large,
developed, metropolitan centers and less developed, rural areas, both
domestically and internationally. The Company believes that the technical
characteristics and low cost of the Omnipoint System allow for the widespread
deployment of telecommunications services while avoiding the high cost of
wire-based infrastructure, making the Omnipoint technology particularly well
suited for many countries which are currently upgrading or developing their
telecommunications infrastructure. The Company has entered discussions with
telecommunications services providers from several countries including
Argentina, India, Mexico and South Korea.

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Omnipoint System Architecture

The Omnipoint System is the result of technology developed by the Company,
particularly in the areas of protocol design and spread spectrum. The
Company's research and field testing of the Omnipoint System have provided an
understanding of the technical and business challenges facing PCS providers.
As a result, the Company has designed a system that it believes overcomes
several of the architectural weaknesses of existing wireless networks.

The Omnipoint System architecture utilizes the benefits of CDMA, TDMA and
FDMA technologies for multiple-user access to PCS networks, without incurring
many of the problems inherent in these techniques as used in traditional
wireless systems. Omnipoint's unique approach combines the major advantages of
these technologies in a hybrid solution that should provide significant price
and performance advantages over systems that rely upon only one technology for
separating users and cells. In particular, the cost of radio infrastructure
hardware should be significantly reduced. Omnipoint's use of wide band spread
spectrum will minimize the effects of interference and allow for the use of a
high data transmission rate. Instead of implementing spread spectrum for
classic CDMA reasons, i.e., to separate simultaneous users within a cell by
using different codes, the Omnipoint System uses spread spectrum to reduce the
cost of enhancing capacity using TDMA within a cell, while using CDMA between
cells that use the same frequencies.

The Omnipoint System has an expected cell radius ranging from seven miles to
a few hundred feet. The Base Station in each cell is connected by microwave,
fiber optic cable or telephone wires to the BSC. The BSC in turn connects to
the PCSS which uses adjunct computers to control the operation of the wireless
telephone system for its entire service area. The BSC and PCSS (i) control the
transfer of calls from cell to cell as a subscriber's handset travels, (ii)
manage call delivery to handsets, (iii) allocate calls among the cells within
the Omnipoint System, (iv) connect calls to local landline telephone systems
or to a long distance telephone carrier, and (v) provide most of the features
such as call waiting and three way calling.

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The following diagram illustrates the Omnipoint System as deployed in a
complete network environment:

[A diagram illustrating the Omnipoint System as deployed in a complete network
environment appears here.]

[Download Table]

COMPONENTS DESCRIPTION

Base Station (BS) Base station radio equipment located at a
"cell site" will support up to 32 full duplex
voice channels per 3.75 MHz of RF bandwidth
or up to 16 voice channels per 1.875 MHz. The
base station connects to the BSC or directly
to the network using standard
telecommunications interfaces. A cell's
radius can range from seven miles to as
little as a few hundred feet depending on the
nature of the area being served (urban,
suburban or rural).
Base Station Controller (BSC) The BSC receives inputs from multiple base
stations, performs inter-base station hand-
offs, converts and formats channel and
signaling information for presentation to the
network, manages visiting subscribers, and
provides multiple network interfaces and
basic administrative features.
Home Location Register (HLR) A home location register records subscriber
and usage information.
Visitor Location Register (VLR) The location register typically located at
the BSC or BS other than the HLR used by the
mobility switching center to direct the
handling of calls to or from an active
visiting subscriber.
PCS Switching System (PCSS) The PCSS provides connection and advanced
switching of traffic to and from BSCs and
provides interconnection to the PSTN and
long-distance carrier networks.
Mobility Control Point (MCP) The MCP coordinates and executes hand-offs
between switches and will be incorporated
into the GSM mobility control function.
Fixed or Mobile Subscriber Units The subscriber units can scan to any of the
over 56 RF channel center frequencies within
the 1850-1990 MHz band at any base station in
roughly 500 microseconds.
OA&M Position Operations, Administration and Maintenance
position is the human component of the
operational support system which incorporates
a plan designed to preserve network
integrity, monitor, test, administer and
manage traffic and billing information.
Operational Support System The operational support system supports the
OA&M position and covers diagnostics,
maintenance, internal messaging, preventive
maintenance and billing. Centralized
databases and switching control centers
permit real-time trouble detection and
analysis.

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Omnipoint System Advantages

The Company designed the Omnipoint System to be used for either fixed or
mobile PCS applications. The key differentiating features of the Omnipoint
System, as evidenced by the Company's field testing, are:

.Lower Infrastructure Costs

Lower Deployment Costs. The Company designed the Omnipoint System to
-----------------------
provide both fully functional, fully mobile PCS as well as fixed WLL
services at per subscriber capital costs substantially below those of
cellular and other wireless systems that could be used for either
application. The Company believes that it can deploy the radio access
portion of the Omnipoint System, which accounts for 75% to 85% of the
costs of typical cellular systems, for approximately $300 per subscriber
based on typical cellular usage rates. These infrastructure costs can be
achieved at subscriber penetration levels as low as two to three percent
in most major cities. The Company estimates that initial capital costs
for cellular technology-based systems are as much as $800 to $1,000 per
subscriber at similar penetration levels. The Company expects that
wholesale, unsubsidized Omnipoint System handset prices will start at
approximately $350 to $450 per unit and decline with increased volumes.

Lower Incremental Capital Costs. Omnipoint expects that a PCS provider
--------------------------------
deploying the Omnipoint System will experience marginal capital
expenditures, excluding incremental switching costs, that will reach less
than $150 per subscriber based on typical cellular usage rates. Omnipoint
believes it will achieve these cost savings as a result of its hybrid
solution. The cost of FDMA-only and CDMA-only systems increases on a
linear basis because (i) channels are expensive and are built and priced
on a per channel basis, (ii) the equipment is large and requires
extensive cell site planning, building permits, site acquisition and
preparation and zoning approval, and (iii) each cell must be able to
independently handle localized peak loads, although such peak loads can
occur for less than one hour per day. In contrast, because each Omnipoint
base station needs only one set of core electronics for up to 32
simultaneous users, the implicit cost per voice channel declines as the
number of voice channels used simultaneously increases (up to the
capacity limit of each base station). The primary benefit of this
capability is reduced expenditures on a per-call basis. Even when new
cell sites are required, the lower cost of individual Omnipoint cell
sites causes the marginal cost per new subscriber to remain low relative
to traditional cellular or currently deployed PCS technologies.

Rapid Deployment. The compact size of the Omnipoint base station, as
-----------------
small as 13.5" x 14.5" x 29", will ease zoning and installation concerns
and reduce their associated costs. The Omnipoint System can provide
additional capacity wherever it is needed while maintaining economic
advantages. These base stations can support up to 32 voice channels which
typically would be provided by larger, bulkier cellular equipment. With
these traditional cellular systems, increasing the number of cell sites
requires relocation of current cells and the acquisition of additional
large sites. Omnipoint base stations and antennas are easily attached to
existing telephone poles, light poles or other available structures.
Omnipoint's cell sites on an installed basis are targeted to be less than
30% of the cost, on a per channel basis, of the cell sites of systems
that use traditional cellular or currently deployed PCS technologies.

.Improved Performance Characteristics

Increased System Capacity. With all wireless technologies, the minimum
--------------------------
cell radius determines the maximum number of cells per area and thus a
wireless system's geographic capacity. For example, the capacity of
existing cellular systems is ultimately constrained by its minimum cell
radii, which is typically approximately one half mile to one quarter mile
depending on the environment. The Omnipoint System can be deployed for
cells with 14 mile diameters (for rural and highway coverage) as well as
much smaller cells for traffic "hot spots" with a range, for example, of
250 feet (a much shorter range than the capability of other mobile
systems). The Omnipoint System can thus provide more localized capacity
than other mobile systems, in some cases as much as 100 times more
capacity per geographic area.

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Wireline-Quality Voice. The Omnipoint System can support wireline quality
-----------------------
voice service which is currently unavailable from existing mobile
systems. This quality is particularly important for both PCS and WLL
applications.

High-Speed Data Services. The Omnipoint System is designed to offer
-------------------------
superior data transmission characteristics and support transmission of
multimedia images and digitized compressed video. The Omnipoint System
design is capable of wirelessly supporting ISDN rates provided that the
network transmission protocol supports these rates. In contrast, most
other existing mobile systems generally are architecturally limited to
less than 19.2 Kbps data transmission capabilities and are ill-suited for
wireless office applications.

.Compatibility with Existing Infrastructure

Compatibility and Flexibility With Existing Network Architectures. The
------------------------------------------------------------------
Omnipoint System architecture provides compatibility and flexibility in
telecommunications network design. It can be integrated into either GSM
networks, AIN networks or LEC central office switching networks.
Omnipoint is initially integrating its base stations with GSM systems,
which enhances the Company's ability to sell its equipment in the 98
countries where GSM has been deployed or selected for deployment. The
Omnipoint System can be integrated with a variety of existing
interconnection networks, including those of the LEC, CATV and other
wireless systems. Additionally, private systems can be designed using the
equivalent of a base station controller, whereas smaller systems could
connect a PBX or Centrex directly to a base station using standard analog
lines.

Software Architecture. The Omnipoint System is designed around a software
----------------------
architecture that provides the flexibility to interconnect to a number of
different network infrastructures. Moreover, end users and service
operators can develop their own applications to take advantage of the
Omnipoint System's flexible protocol.

Given the advantages of the Omnipoint System and its ability to interface
with different network standards, PCS service operators may choose to deploy
networks that combine systems based on the Company's technology with those
from other manufacturers. The Company also intends to license its technology
to manufacturers of competing systems. There can be no assurance, however,
that the Company will be successful in selling the Omnipoint System to PCS
service operators or to license its technology.

Competition

Competition in the wireless telecommunications equipment industry is
intense. The industry consists of major domestic and international companies,
including those companies currently providing equipment to cellular providers,
most of which have substantially greater financial, technical, marketing,
sales, manufacturing, distribution and other resources than those of the
Company. The Company will compete with these other companies primarily by
selling equipment that provides enhanced features at a lower cost. Given the
rapid advances in the wireless telecommunications industry, there can be no
assurances that new technologies will not evolve that will compete with the
Company's products.

In addition to the Company's technology standard, three competing technology
standards have emerged in the mobile PCS industry.

PCS 1900 is a modified version of the European RF technology used to access
the standard GSM network for digital 900 MHz cellular telephones. PCS 1900 is
a TDMA-based technology supported by Ericsson, Motorola, NOKIA Mobile Phones
and Northern Telecom. Seven U.S. service operators with A and B Block licenses
covering approximately 150.0 million POPs have committed to this technology,
and it is widely believed to be a leading contender for further deployment,
particularly for operators without U.S. cellular properties. Based on the
technology preferences indicated by the A and B Block license holders and the
successful bidders in the Entrepreneurs' Band auction, GSM will be deployed by
license holders with licenses covering approximately 200 million POPs,
representing approximately 76% of the total population of the U.S. This
percentage could increase when additional successful bidders in the
Entrepreneurs' Band auction and the D, E

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and F Block auctions have selected their technology preferences. APC
introduced the first commercial PCS system in the U.S. in the
Baltimore/Washington, D.C. MTA in November 1995 using PCS 1900 equipment.
Because Omnipoint is integrating its system with GSM, Omnipoint System
equipment can be combined with PCS 1900 equipment in a single network.
Accordingly, operators that select PCS 1900 represent additional potential
customers for Omnipoint System equipment.

IS-95 CDMA is the CDMA standard proposed as an upgrade for existing analog
cellular service to digital service. Qualcomm is the primary proponent of IS-
95 CDMA for PCS service. IS-95 has also received support from Motorola, AT&T
Wireless and Northern Telecom. IS-95's service supporters include Sprint
Spectrum and Bell Atlantic, NYNEX, US West and AirTouch Communications Inc.,
through their consortium, PCS PrimeCo, L.P., which have announced their
intention to deploy a modified version of this technology at 1.9 GHz. However,
no PCS networks utilizing CDMA technology at 1.9 GHz are in commercial service
in the U.S.

IS-54 TDMA is the TDMA standard that several cellular carriers are
implementing as they upgrade to digital service. Primary network suppliers are
Lucent Technologies, Inc., Ericsson and Hughes. AT&T Wireless, SBC
Communications, Inc. ("SBC") and Bell Telephone Co. of Canada are the primary
800 MHz service supporters. AT&T Wireless and SBC have declared that they will
deploy systems based on IS-54 at 1.9 GHz, defined as IS-136 TDMA. IS-54 TDMA,
like PCS 1900, faces no major technological hurdles in upbanding to 1.9 GHz
PCS. Upbanded IS-54 TDMA equipment is expected to become generally available
in 1996.

STRATEGIC RELATIONSHIPS

Northern Telecom Relationship

In 1994, the Company entered into a non-exclusive agreement to integrate its
technology with Northern Telecom's established network architectures. Pursuant
to the agreement, the parties will integrate the Omnipoint System with
Northern Telecom's digital GSM and Advanced Intelligent Network ("AIN")
central office switches. Omnipoint will deploy the Omnipoint/GSM integrated
system in the New York MTA and has also agreed to jointly market integrated
systems throughout North America.

The integrated system will offer wireless voice services including mobile
coverage at prices which the Company believes will be competitive with the
cellular operators and other PCS operators. The system will initially use a
GSM interface between Omnipoint's RF access technology and the digital
switches. Use of an available network interface such as GSM should ensure the
timely deployment of PCS systems utilizing Omnipoint's technology. Omnipoint
and Northern Telecom also plan to integrate Omnipoint's technology with
Northern Telecom's AIN Class 5 switches, which today are primarily sold to
Regional Bell Operating Companies for their central office switching.

Northern Telecom and the Company have signed a series of equipment OEM and
supply agreements, as well as the NT Credit Facility. Northern Telecom will
make varying payments as it purchases core electronics (primarily radio and
digital cards for base stations) and software from the Company. Northern
Telecom has made an initial $3.0 million license payment (part of up to $12.0
million in licensing and OEM fees to be paid to the Company under certain
circumstances) and may make additional royalty payments based upon shipments
of Omnipoint products. Northern Telecom will then sell Omnipoint/Northern
Telecom integrated systems to PCS operators, including the Company. A
substantial portion of the Company's purchases to build out the New York
network will be financed by Northern Telecom under the NT Credit Facility.
Northern Telecom has executed a non-binding commitment letter to extend the NT
Credit Facility from $382.5 million to $612.0 million on substantially the
same terms. Such extension is subject to approval by the Board of Directors of
Northern Telecom. If a definitive agreement is reached, the Company expects to
use these funds in the New York MTA or other markets which the Company
acquired in the Entrepreneurs' Band auction.

The initial pilot network is scheduled to be delivered and installed in
Manhattan in the first half of 1996. Omnipoint and Northern Telecom have
announced that their integrated systems will be introduced commercially for
sale to other PCS operators in 1998.

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Ericsson Relationship

On April 16, 1996, Ericsson and the Company and their respective affiliates
entered into a series of definitive agreements including: (i) a licensing and
OEM agreement relating to the Omnipoint System; (ii) a GSM handset supply
agreement; and (iii) subject to completion of vendor financing agreements, a
supply agreement for infrastructure equipment to be deployed as part of the
Company's networks. Each of these agreements has a term of five years
commencing on the date on which it was executed. In addition, Ericsson and the
Company have entered into a non-binding commitment letter regarding vendor
financing for the New York MTA network.

Under the non-exclusive licensing and OEM agreement, Ericsson will purchase
from the Company base stations for resale worldwide as part of Ericsson
wireless systems in the 1850-1990 MHz frequency band. For the rights granted
under the licensing and OEM agreement, Ericsson will pay license fees and
royalties, including an initial $4.5 million license fee.

Under the agreement for the sale of Ericsson infrastructure equipment, the
Company and its affiliates, subject to certain conditions, have committed to
purchasing up to $250.0 million of a mix of IS-661 and PCS 1900 infrastructure
equipment, with a portion of such commitment being dependent on the licenses
that affiliates of the Company acquire through the Entrepreneurs' Band
auction. The Company will also purchase GSM handsets from Ericsson in
accordance with the terms of the GSM handset supply agreement.

The non-binding commitment letter sets forth the terms governing Ericsson's
commitment to provide $127.5 million of vendor financing for the New York MTA
network to OCI for (i) amounts owed to Ericsson under the infrastructure
supply agreement, and (ii) amounts owed to Ericsson under the handset
agreement, so long as these latter amounts do not exceed 50% of the amounts
owed to Ericsson for infrastructure equipment.

Also in April 1996, the Company and Orbitel entered into a non-binding
memorandum of understanding regarding the development and manufacture of
single mode IS-661 and dual mode IS-661/PCS 1900 handsets. Under this
memorandum of understanding, Orbitel will develop, manufacture and provide
dual mode IS-661/PCS 1900 handsets in accordance with a mutually-agreed upon
timetable commencing at the time OCI shall agree to a minimum purchase
commitment to be determined after the parties have ascertained the resources
necessary for the development and manufacture of such handsets.

The definitive agreements contemplate other cooperation between the parties,
including assistance on IS-661 integration with the GSM interface and related
systems, cooperation on new applications for the Omnipoint System, including
data services, developmental efforts relating to handsets, technical trials of
IS-661 technology and the establishment of GSM standards. In addition, the
memorandum of understanding between the Company and Ericsson signed in
November 1995 contemplates an option for Ericsson to purchase up to 9.9% of a
subsidiary created by Omnipoint to pursue the Company's technology and
equipment business.

Hansol Relationship

On December 12, 1995, the Company granted a non-exclusive license to Hansol
to manufacture Omnipoint System handsets and entered into a strategic alliance
with Hansol for the promotion of the Omnipoint System in the Republic of Korea
and other parts of Asia. The agreement provides that, subject to certain
preconditions such as competitive pricing, quality and availability, Omnipoint
will purchase Hansol manufactured handsets for sale to subscribers in areas
covered by the Company's Entrepreneurs' Band markets. Hansol has the right to
designate management representatives and may have engineers and other
personnel working with Omnipoint to develop the Company's networks.

Roaming Arrangements

The Company has signed memoranda of understanding with GSM-based PCS
providers PacBell, BellSouth, Western Wireless, InterCel, APC and APT, to
provide subscribers with roaming capability in the markets where these parties
will operate PCS services. The memoranda of understanding are not binding
unless incorporated in

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definitive agreements. Additionally, the Company and these GSM-based PCS
providers will conduct joint tests of Omnipoint's technology and plan to work
together to establish PCS infrastructure and handset standards and conduct
joint marketing efforts. Based on the technology preferences indicated by the
A and B Block license holders and the successful bidders in the Entrepreneurs'
Band auction, GSM will be deployed by license holders with licenses covering
approximately 76% of the total population of the U.S. This percentage could
increase when additional successful bidders in the Entrepreneurs' Band auction
and the D, E and F Block auctions have selected their technology. The Company
and certain other PCS license holders are currently exploring alternatives to
ensure that the GSM protocol will be available in all U.S. markets. There can
be no assurance that the Company or others will be successful in this
endeavor. In addition, the Company has entered into discussions with several
GSM-based PCS providers in Europe, Asia and the Middle East to provide
Omnipoint subscribers with roaming capabilities in the areas where those
parties provide PCS services.

REGULATORY ENVIRONMENT

The FCC regulates the licensing, construction, operation and acquisition of
wireless telecommunications systems in the U.S. pursuant to the Communications
Act of 1934, as amended, and the rules, regulations and policies promulgated
by the FCC thereunder (the "Communications Act"). Under the Communications
Act, the FCC is authorized to allocate, grant and deny licenses for PCS
frequencies, establish regulations governing the interconnection of PCS
systems with wireline and other wireless carriers, grant or deny license
renewals and applications for transfer of control or assignment of PCS
licenses, and impose fines and forfeitures for any violations of FCC
regulations.

PCS Licensing

The FCC established PCS service areas in the U.S. based upon Rand McNally's
market definition of 51 MTAs comprised of 493 smaller BTAs. In June 1994, the
FCC finalized the allocations of the 1.85 to 1.99 GHz bands for broadband PCS
services. The Commission distinguished the licenses along four dimensions,
including (i) the amount of RF spectrum - 30 MHz versus 10 MHz, (ii) the size
of geographic area - MTA versus BTA, (iii) the eligibility to own the license
and participate in the specific auction for each type of license, and (iv) the
timing of the auctions regarding each of the above categories.

The FCC decided that two 30 MHz licenses, designated as Blocks A and B,
would be allocated geographically to MTAs (these include the Block A licenses
granted to the Pioneers in their respective MTAs). The 30 MHz MTA auction
ended in March 1995, and the FCC granted those licenses in June 1995. Four
licenses designated as Blocks C, D, E and F were allocated as BTAs. The C and
F Block licenses were allocated 30 MHz and 10 MHz of spectrum, respectively,
and reserved for "Entrepreneurs." Eligibility to bid for and hold licenses in
the Entrepreneurs' Band is limited to entities that, together with their
affiliates and certain investors, have gross revenues of less than $125
million in each of the last two years and total assets of less than $500
million. Eligible bidders in the Entrepreneurs' Band are given certain bidding
credits and successful bidders are given favorable installment payment terms.
The D and E Blocks are each 10 MHz and will be available for all auction
participants. The Entrepreneurs' Band auction for the Block C licenses has
been recently completed. Blocks D, E and F have not yet been auctioned. There
is pending at the FCC a rulemaking proceeding seeking public comment on the
procedure to be followed in auctioning Blocks D, E and F. The remaining 20 MHz
of the 140 MHz of PCS spectrum available was allocated for unlicensed PCS
applications such as wireless PBX adjuncts, LANs and home cordless phones. All
PCS licenses will be granted for a 10-year period, at the end of which they
must be renewed. Licenses may be revoked at any time for cause.

The Company's New York MTA and Entrepreneurs' Band networks will operate in
the spectrum now partially occupied by private and common carrier fixed
microwave users. Many of these microwave incumbents provide services that may
interfere with or receive interference from the operation of PCS networks and,
as a result, will have to be negotiated with or relocated. In an effort to
balance the competing interests of existing microwave users and newly
authorized PCS licensees, the FCC has adopted a transition plan to relocate
such microwave operators to other spectrum blocks. In the event the Company
displaces a microwave incumbent, the

424B1 41st Page of 93 TOC 1st Previous Next ↓Bottom Just 41st
Company must pay the microwave incumbent's relocation expenses and take
actions necessary to put the microwave incumbent's new facility into
operation. The Company expects to implement a frequency plan that will
minimize to the extent possible the number of existing microwave users that
need to be relocated.

Pioneer's Preference Program

Omnipoint is one of only three recipients of a broadband PCS Pioneer's
Preference license. Under the terms of the FCC's Pioneer's Preference program
and pursuant to an FCC order, Omnipoint was awarded a preference to apply for
a license not subject to competing applications to provide service in the New
York MTA. The Company received the New York MTA License consisting of 30 MHz
of PCS spectrum (1850 to 1865 MHz and 1930 to 1945 MHz) in December 1994. The
final terms of the Pioneer's Preference awards are contained in the GATT
legislation. All of the litigation related to the GATT legislation have been
dismissed and all appeal rights have expired.

Pursuant to the terms of the GATT legislation, each of the Pioneers is
required to pay for its license a sum equal to 85% of the product of (i) the
average per POP price paid in the auctions for the licenses in the top 20 MTAs
based on population, not including the three MTAs in which only one 30 MHz
license was to be auctioned due to the Pioneers' Preferences (i.e., the
average is based on the per POP prices for 40 licenses), times (ii) the number
of 1990 POPs in each of the Pioneer's MTAs. Based on the final round of the A
and B Block auctions, the Company will pay $347.5 million or $12.88 per POP
for the New York MTA License.

The GATT legislation prohibits the FCC from reconsidering its December 1993
Report and Order granting final preference awards to the three Pioneers. The
legislation also mandates that the decision is not subject to further
administrative or judicial review. GATT also provides that the FCC establish
by order the interest rate and the timing of principal and interest payments.
On March 8, 1996, the FCC adopted such an order, the terms and conditions of
which are as follows: (i) a five-year payment period with interest accruing at
7.75% from the order adoption date with the first payments due on April 8 and
April 30, 1996 and subsequent quarterly payments due on April 30, July 31,
October 31 and January 31, (ii) interest only payments for the first two
years, and (iii) principal and interest payments for the remaining three
years. The Company made the first interest payment of $2.2 million on April 5,
1996, and the second payment of $4.5 million on April 30, 1996.

Conditions on Licenses

The FCC has placed certain conditions on the Company's New York MTA License,
some of which will also apply to the Company's Entrepreneurs' Band licenses.
The conditions include the requirement that the Company construct network
facilities that offer coverage to at least one-third of the population in the
particular MTA or BTA service area within five years of the grant of the
license (the "Five-Year Buildout Requirement") and to at least two-thirds of
the population within 10 years (the "10-Year Buildout Requirement"),
assignment and change of control restrictions and substantial use
requirements. Violations of any of these conditions could result in license
revocations, forfeitures or fines.

The New York MTA License is and the Company's Entrepreneurs' Band licenses
will be subject to the Five-Year Buildout Requirement and the 10-Year Buildout
Requirement. In the case of the New York MTA License, the Five-Year Buildout
Requirement must be met by December 1999 and the 10-year Buildout Requirement
by December 2004. The Company believes it can achieve these requirements as
well as the buildout requirements that will apply to its Entrepreneurs' Band
licenses. Licensees that fail to meet their respective coverage requirements
may be subject to forfeiture of the license.

The Pioneer's Preference PCS licenses contain a provision prohibiting an
assignment of the license or a transfer of control of the licensee until the
earlier of three years after the license grant (i.e., not before December
1997) or the date on which the Company has provided coverage for one-third of
the license area's population. In addition, the Communications Act requires
the FCC's prior approval of the assignment or transfer of control of a PCS
license. 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 to file associated contracts for sale, option
agreements, management agreements or other documents disclosing the total
consideration that the applicant

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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 prior FCC approval.

The Entrepreneurs' Band licensees will be prohibited from voluntarily
assigning or transferring control of their licenses for three years after
grant date and for the two year period thereafter may assign or transfer
control of their licenses only to other entities that satisfy the financial
criteria established for the Entrepreneurs' Band. In addition, licensees must
maintain their Entrepreneurs' Band eligibility for five years from the date of
initial license grant. In that regard, however, increased gross revenues,
increased total assets from non-attributable equity investments, debt
financing, and revenue from operations, business development or expanded
service are not considered by the FCC. The FCC has announced that it may
conduct audits to insure compliance with all license conditions.

The New York MTA License contains a condition that requires the Company to
construct a PCS system that "substantially uses" the design and technology
upon which the Pioneer's Preference award was based. The condition expires
upon the system providing coverage for one-third of the population of the MTA.
The FCC has never specifically defined the phrase "substantial use." In
January 1996, Wireless Communications Council ("WCC"), a trade association
with only one disclosed member, who is a proponent of IS-95 CDMA technology,
filed a petition with the FCC seeking clarification of the phrase. The FCC has
never indicated whether it will consider the WCC petition. While there can be
no assurance as to whether or how the FCC will construe such phrase, the
Company believes, on the basis of prior FCC pronouncements, that its present
plan to use the Omnipoint/GSM System to build out the New York MTA network
will satisfy the "substantial use" condition. The Entrepreneurs' Band licenses
will not contain a similar condition.

Citizenship Requirements

Under the Communications Act, non-U.S. citizens or their representatives,
foreign governments, or corporations otherwise subject to domination or
control by non-U.S. citizens may not own more than 20% of a common carrier
licensee directly, or, if the FCC finds it consistent with the public
interest, more than 25% of the parent of a common carrier licensee. Non-U.S.
citizens may not serve as officers of a common carrier licensee or as members
of a common carrier licensee's board of directors, although up to one-fourth
of the board of directors of a common carrier licensee's parent may be non-
U.S. citizens.

Failure to comply with these requirements may result in the FCC issuing an
order to the entity requiring divestiture of alien ownership to bring the
entity into compliance with the Communications Act. In addition, fines, a
denial of renewal or revocation of the license are possible. The Company has
no knowledge of any present foreign ownership in violation of the
Communications Act.

Telecommunications Act of 1996

The Telecom Act is the first comprehensive legislation changing
telecommunications regulation in over 60 years. In general, its goal is to
remove the statutory and court-ordered barriers that historically prohibited
new entrants into many segments of the telecommunications industry. The
Telecom Act enables LECs, long distance carriers, cable companies,
broadcasters and others to compete directly. For example, prior to passage of
the Telecom Act, the Bell Operating Companies (the "BOCs"), largely as a
result of regulation, had developed the only pervasive local exchange in their
operating areas (the "local loop"), but were restricted by federal law from
providing long distance service. Conversely, many state laws prohibited long
distance carriers and other telecommunications companies from competing with
the BOCs and other large LECs in the local loop. The Telecom Act attempts to
create opportunities for competition within the local loop, while allowing
monopoly LECs eventually to enter the long distance market. It requires the
BOCs and other LECs to permit competitors to interconnect with their local
loop networks. The passage of the Telecom Act will affect the business of the
Company because of the likely creation of more opportunities to compete in
both the local exchange and long distance markets for the same or similar
types of services that the Company plans to offer as well as the specific
treatment of commercial mobile radio service operators such as the Company.
However, the Company cannot predict the exact nature and extent of this
competition. The Telecom Act directs the FCC to adopt rules implementing
interconnection within six months of passage. The FCC has announced its
intention to conduct a number of rulemaking proceedings which it expects to
complete by the third quarter of 1996.

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PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS

As of March 31, 1996, Omnipoint has received 14 patents on its technology,
has two patent applications which have been allowed, and has 51 U.S. and 59
foreign patent applications pending. The issued patents will expire between
May 2008 and November 2013. The Company will continue to file patent
applications as engineering developments occur. The policy of the Company is
to apply for patents or other appropriate or statutory protection when it
develops valuable new or improved technology. The Company believes, however,
that the successful development of its technology generally depends more upon
the experience, technical know-how and creative ability of its personnel
rather than on ownership of patents.

The status of patents involves complex legal and factual questions and the
breadth of claims allowed is uncertain. Accordingly, there can be no assurance
that patent applications filed by the Company will result in patents being
issued or that its patents, and any patents that may be issued to it in the
future, will afford protection against competitors with similar technology;
nor can there be any assurance that patents issued to the Company will not be
infringed upon or designed around by others or that others will not obtain
patents that the Company would need to license or design around. If existing
or future patents containing broad claims are upheld by the courts, the
holders of such patents might be in a position to require companies to obtain
licenses. There can be no assurances that licenses that might be required for
the Company's products would be available on reasonable terms, if at all. To
the extent that licenses are unavailable, or are not available on acceptable
terms, no assurance can be made that the failure to obtain a license would not
adversely impact the Company.

In addition to seeking patent protection, the Company relies on trade
secrets to protect its proprietary rights. The Company attempts to protect its
trade secrets and other proprietary information through agreements with
customers and suppliers, non-disclosure and non-competition agreements with
employees and consultants and other security measures. Although the Company
intends to protect its rights vigorously, there can be no assurance that these
measures will be successful.

FACILITIES

The Company's principal administrative offices are located in leased space
in Arlington, Virginia and its sales, marketing, support, research and
development personnel occupy two facilities in Colorado Springs, Colorado. The
largest facility is located in approximately 51,384 square feet of subleased
space (increasing to approximately 68,512 square feet in August 1996). Another
facility is located in approximately 35,000 square feet of leased space
(increasing to approximately 54,850 square feet in October 1996). The Virginia
lease and the Colorado sublease and lease are pursuant to agreements which
expire in February 1998, August 1997 and September 2000, respectively. The
Company recently leased a 20,000 square foot facility in Fort Worth, Texas,
which expires March 31, 1999.

In November 1995, the Company acquired a building with approximately 24,000
square feet in Wayne, New Jersey to house OCI's network control center. OCI
leases a 12,000 square foot facility in Mountain Lakes, New Jersey, on a
short-term basis. The Company also has acquired the rights to more than 5,000
sites in the New York MTA as possible locations for cell sites.

EMPLOYEES

As of March 31, 1996, the Company had a total of 234 employees, including
175 in engineering, 12 in sales, marketing and product management and 47 in
administration and finance. The Company's future success will depend in
significant part on the continued service of its key technical, sales and
senior management personnel. Competition for such personnel is intense and
there can be no assurance that the Company can retain its key managerial,
sales and technical employees, or that it can attract, assimilate or retain
other highly qualified technical, sales and managerial personnel in the
future. None of the Company's employees is represented by a labor union. The
Company has not experienced any work stoppages and considers its relations
with its employees to be good.

LITIGATION

The Company is not currently aware of any pending or threatened litigation
that could have a material adverse effect on the Company's financial
condition, results of operations or cash flows.

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MANAGEMENT

OFFICERS AND DIRECTORS

The table below sets forth the names, ages and titles of the officers and
directors of the Company.

[Download Table]

NAME AGE POSITION

Douglas G. Smith............. 42 President, Chief Executive Officer,
Chairman of the Board and Director
George F. Schmitt............ 52 President of Omnipoint Communications Inc.,
Executive Vice President and Director of
Omnipoint Corporation
Bradley E. Sparks............ 49 Chief Financial Officer
Randall R. Meals............. 39 Chief Operating Officer of Omnipoint
Technology Division
Evelyn R. Goldfine........... 49 Chief Administrative Officer and Director
Robert C. Dixon.............. 64 Chief Scientist
Harry Plonskier.............. 43 Vice President, Finance of Omnipoint
Communications Inc.
Arthur A. Pumo............... 56 Vice President, Human Resources of
Omnipoint Corporation
Richard L. Fields(2)......... 40 Director
Paul J. Finnegan(1).......... 43 Director
Arjun Gupta(2)............... 35 Director
James N. Perry, Jr.(2)....... 35 Director
James J. Ross(1)............. 58 Director and Vice Chairman of the Board
Edwin M. Martin, Jr.......... 54 Secretary

--------
(1) Member, Audit Committee
(2) Member, Compensation Committee

Douglas G. Smith founded the Company in June 1987 and has continuously
served as 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). He received his M.B.A. from
the Harvard Business School, an M.A. from Oxford University and his B.A. from
Georgetown University.

George F. Schmitt has served as President of Omnipoint Communications Inc.
and Executive Vice President of the Company since October 1, 1995. From
November 1994 to September 1995, Mr. Schmitt was President and Chief Executive
Officer of PCS PrimeCo, a PCS partnership formed by AirTouch Communications,
Bell Atlantic, NYNEX and US West. From November 1993 to November 1994, Mr.
Schmitt was Executive Vice President, International Operations of AirTouch
Communications. From January 1990 to March 1994 he served as Vice President of
Pacific Telesis Group, a predecessor to AirTouch and was given the
responsibility of building and operating the first digital cellular system in
the world, the D2 GSM network in Germany in 1990. Prior to January 1990, Mr.
Schmitt held various senior management positions with Pacific Telesis Group
and Pacific Bell. Mr. Schmitt is a member of the Board of Directors of
Objective Systems Integrators, Inc. Mr. Schmitt received his MSM degree from
the Stanford University School of Business and a B.A. from St. Mary's College
of California.

Bradley E. Sparks became the Chief Financial Officer of Omnipoint
Corporation upon joining the Company in April 1995. Prior to that time, he was
employed by MCI Communications Corporation, an international
telecommunications company where, from 1993 to 1995, he held the position of
Vice President and Controller and, from 1988 to 1993, served as Vice President
and Treasurer. Prior to MCI, he worked for Ryder System,

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Inc. for over twelve years in various financial management positions. Mr.
Sparks holds a B.S. degree from the U.S. Military Academy at West Point and a
M.S. degree in Management from the Alfred P. Sloan School of Management at
MIT. He is also a certified public accountant.

Randall R. Meals was named Chief Operating Officer for the Technology
Division in December 1994. Prior to joining the Company, from 1991, he was the
General Manager of Hewlett Packard's Information Networks Division and managed
a 600-person division addressing communications, networking, systems I/O and
peripherals for Hewlett Packard's computer systems business. Prior to joining
Hewlett Packard in 1991, Mr. Meals spent 14 years with ATT/NCR Corp. where he
held a number of positions. Mr. Meals received a B.S. degree from Iowa State
University, an M.S. degree from Kansas State University and an M.B.A. from
Wichita State University.

Evelyn R. Goldfine is a private venture investor who joined the Company as
Director of Administration in 1990, became a Director in late 1991 and become
Chief Administrative Officer in 1994. She is a certified public accountant and
holds a B.A. degree from the City University of New York and an accounting
degree from Bentley College.

Robert C. Dixon joined the Company as its Chief Scientist in July 1989. Mr.
Dixon has held various senior positions with many of the country's largest
defense contractors and technology companies since 1958, including Senior
Research Engineer for Northrop Corporation and Chief Scientist for Hughes
Aircraft. Mr. Dixon has also served as a consultant in the area of spread
spectrum technology.

Harry Plonskier became Vice President, Finance of OCI in July 1994. From
April 1992 to June 1994, he was Vice President of Dyson Kissner Corporation.
From 1986 to 1992 Mr. Plonskier served as Chief Financial Officer of Cellular
One of New York (the McCaw/LIN cellular system) and prior to that, he served
as Controller. Mr. Plonskier holds an M.B.A. and a B.A. degree from the
University of Michigan.

Arthur A. Pumo has served as Vice President, Human Resources of the Company
since September 1995. From January 1993 through April 1995, he served as Vice
President of Human Resources for Legent Corporation. From May through December
1992, he was the Manager, National Benefits Center for IBM Corp. From March
1990 through April 1992, Mr. Pumo was the Human Resource Director, North
Carolina Area, for IBM.

Richard L. Fields has served as Director of the Company since September
1991. Since February 1994, Mr. Fields has been a Managing Director and
Executive Vice President of Allen & Company Incorporated ("Allen"), and prior
to such time he was a Vice President of Allen.

Paul J. Finnegan, a Director of the Company since August 1993, has been Vice
President of Madison Dearborn Partners, Inc., the general partner of the
general partner of Madison Dearborn Capital Partners, L.P, since January 1993.
Previously, he served in various positions at First Capital Corporation of
Chicago and its affiliates. Mr. Finnegan currently serves as a director of The
Skyline Fund.

Arjun Gupta has served as a Director of the Company since August 1995. Since
August 1994, Mr. Gupta has been a Vice President of Chatterjee Management
Company. From November 1993 to July 1994, Mr. Gupta was a private consultant.
Prior to that, from June 1993 he was with Kleiner Perkins Caufield & Byers and
from October 1989 through June 1993, Mr. Gupta was with McKinsey & Company.
Mr. Gupta received an M.B.A. from the Stanford University School of Business
in 1989.

James N. Perry, Jr. has been a Director of the Company since August 1993. In
January 1993, he became Vice President of Madison Dearborn Partners, Inc., the
general partner of the general partner of Madison Dearborn Capital Partners,
L.P. Previously, Mr. Perry served in various positions at First Capital
Corporation of Chicago and its affiliates. Mr. Perry currently serves as a
director of Clearnet Communications, Inc.

James J. Ross, Vice-Chairman and Director of the Company since 1989, 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 for more than five
years prior to such time, he was a partner at such firm.

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Edwin M. Martin, Jr. has served as Secretary of the Company since 1987.
Since 1993, Mr. Martin has been a partner of the law firm of Piper & Marbury
L.L.P., which has provided legal services to the Company and which the Company
has retained to provide legal services in fiscal year 1996. Mr. Martin was
formerly a partner in the law firms of Pepper, Hamilton & Scheetz and Hale and
Dorr.

The Company currently has authorized eight directors. Each director holds
office until the next annual meeting of stockholders or until his successor is
duly elected and qualified. The officers serve at the discretion of the Board.

DIRECTORS' COMPENSATION AND OTHER ARRANGEMENTS

Directors of the Company to date have received no compensation for their
services in such capacity, but are reimbursed for out-of-pocket travel
expenses in connection with company-related business. James J. Ross has an
oral consulting agreement with the Company, pursuant to which he is paid
$52,000 on an annual basis. Mr. Ross provides consulting services involving
business development and investor and government relations. The consulting
agreement is terminable at will by the Company.

EXECUTIVE COMPENSATION

The following table sets forth certain annual compensation information for
the Company's Chief Executive Officer and each of the other executive officers
of the Company whose annual salary exceeded $100,000 as of December 31, 1995
(collectively, the "Named Officers").

SUMMARY COMPENSATION TABLE

[Enlarge/Download Table]

ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------ ---------------------------
NAME AND OTHER ANNUAL RESTRICTED OPTIONS
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) STOCK AWARDS (# OF SHARES)

Douglas G. Smith(3)..... 1995 $175,625 $100,350 $28,928 -- --
President and Chief 1994 110,000 115,000 (4) 15,996 -- --
Executive Officer 1993 110,000 56,000 (5) 19,258 -- --

Evelyn Goldfine......... 1995 100,625 20,000 28,615 (6) -- 25,420 (7)
Chief Administrative 1994 84,000 16,800 21,353 -- 420
Officer 1993 62,900 14,000 6,976 -- --

Randall R. Meals........ 1995 175,000 66,250 (8) 57,680 (9) -- 125,000 (11)
Chief Operating 1994 12,676 0 263 $ 0 (10) 125,000 (12)
Officer, 1993 -- -- -- -- --
Omnipoint Technology
Division
Harry Plonskier......... 1995 127,312 25,925 13,986 -- 37,759 (11)
Vice President, Finance 1994 62,500 12,500 16,904 -- 37,759( 12)
OCI 1993 -- -- -- -- --

Bradley E. Sparks....... 1995 100,938 28,500 5,298 0 (13) 100,000
Chief Financial Officer 1994 -- -- -- -- --
1993 -- -- -- -- --

--------
(1) The Company's executive officers are eligible for annual cash bonuses.
Such bonuses are generally based upon achievement of corporate and
individual performance objectives determined by the Compensation
Committee; however, certain bonuses are specified in employment
agreements.
(2) Includes amounts reimbursed in connection with a supplemental benefit
program, premiums on life insurance and office and car allowances. With
respect to Messrs. Smith and Meals, also includes relocation expenses.
(3) "Other Annual Compensation" includes office allowance for all years and
relocation expenses for 1993.

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(4) Represents several bonuses earned in 1994 based on performance goals and
paid in July 1995.
(5) Represents several bonuses earned in 1993 based on performance goals and
paid in July 1995.
(6) Includes a $22,000 reimbursement for non-recurring expenses.
(7) Includes options to purchase 420 shares originally granted in 1994 which
were repriced during 1995.
(8) Includes $54,250 for forgiveness of a loan in accordance with Mr. Meals'
employment agreement. See "Certain Transactions--Loans to Certain
Officers."
(9) Includes $53,315 for relocation expenses in accordance with Mr. Meals'
employment agreement.
(10) Represents 25,000 shares of Common Stock at a value of $10.00 per share
on the date of the restricted stock grant, net of $10.00 per share paid
by the Named Officer. Such shares vest in equal annual installments over
five years, beginning December 1995. The aggregate value of such shares
at December 31, 1995, based on a fair market value of $14.00 per share,
net of consideration, was $100,000. See "Certain Transactions--Loans to
Certain Officers."
(11) Represents the repricing in 1995 of options which were originally granted
in 1994, all of which vest over five years.
(12) Represents options which were subsequently cancelled in connection with
their repricing in 1995.
(13) Represents 12,500 shares of Common Stock at a value of $6.00 per share on
the date of the restricted stock grant, net of $6.00 per share paid by
the Named Officer. Such shares vest in equal annual installments over
five years, beginning April 1996. The aggregate value of such shares at
December 31, 1995, based on a fair market value of $14.00 per share, net
of consideration, was $100,000. See "Certain Transactions--Loans to
Certain Officers."

The following table contains further information concerning the stock option
grants made to each of the Named Officers during the fiscal year ended
December 31, 1995.

[Enlarge/Download Table]

OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL
------------------------------------------------- REALIZABLE VALUE AT
% OF TOTAL ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM(4)
OPTIONS IN FISCAL PRICE -------------------
NAME GRANTED(1) YEAR(2) ($/SH)(3) EXPIRATION DATE 5% 10%

Douglas G. Smith........ -- -- -- -- -- --
Evelyn Goldfine......... 25,420 1.38% $6.00 8/1/04 - 12/31/04 $ 95,919 $ 243,078
Randall R. Meals........ 125,000 6.78 6.00 1/5/05 471,671 1,195,307
Harry Plonskier......... 37,759 2.05 6.00 8/5/04 - 12/31/04 142,479 361,069
Bradley E. Sparks....... 100,000 5.42 6.00 4/17/05 - 5/17/05 377,337 956,245

--------
(1) Stock options vest over five years, 20% in the first year and monthly
thereafter on a pro rata basis, provided that such officer remains
continuously employed by the Company.
(2) Based on 1,844,888 options granted in fiscal 1995, including repriced
options to purchase 380,750 shares.
(3) All stock options were granted with exercise prices equal to the fair
market value, as determined by the Board of Directors, on the grant date.
Following the Company's financing in June 1995, the Board of Directors
repriced the stock options at $6.00 to reflect the adjusted fair market
value of the Common Stock.
(4) These amounts are based on compounded annual rates of stock price
appreciation of five and ten percent over the 10-year term of the options,
are mandated by rules of the Securities and Exchange Commission and are
not indicative of expected stock performance. Actual gains, if any, on
stock option exercises are dependent on future performance of the Common
Stock, overall market conditions, as well as the option holders' continued
employment throughout the vesting period. The amounts reflected in this
table may not necessarily be achieved or may be exceeded. The indicated
amounts are net of the option exercise price but before taxes that may be
payable upon exercise.

424B1 48th Page of 93 TOC 1st Previous Next ↓Bottom Just 48th
The following table sets forth certain information regarding options to
purchase Common Stock held as of December 31, 1995 by each of the Named
Officers. None of such Named Officers exercised any options during the year
ended December 31, 1995.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

[Enlarge/Download Table]

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END(1)
---------------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE

Douglas G. Smith........ -- -- -- --
Evelyn Goldfine......... 235,745 25,330 $3,300,430 $ 354,620
Randall R. Meals........ 25,000 100,000 350,000 1,400,000
Harry Plonskier......... 17,248 20,511 241,472 287,154
Bradley E. Sparks....... 0 100,000 0 1,400,000

--------
(1) Calculated on the basis of $14.00 per share, the fair market value of the
Common Stock at December 31, 1995, as determined by the Company's Board of
Directors, less the exercise price payable for such shares, multiplied by
the number of shares underlying the option.

EMPLOYMENT AGREEMENTS

The Company and OCI entered into an employment agreement with Mr. Schmitt
effective October 1, 1995, which provides for an annual salary of $175,000,
which is guaranteed by the Company, in addition to certain other benefits.
Pursuant to the agreement, Mr. Schmitt serves as President of OCI and
Executive Vice President of the Company. Mr. Schmitt is eligible for an annual
bonus of up to $50,000 or such greater amount as determined by the
Compensation Committee; provided that the bonus for 1995 is pro rated from
October 1, 1995. In the event the agreement is terminated without cause by the
Company or upon the occurrence of certain events, for a period of up to two
years following termination, Mr. Schmitt is entitled to receive severance
compensation in the amount of the base salary, bonus compensation and medical
benefits for the most recent 12-month period which would otherwise be payable
to Mr. Schmitt. Mr. Schmitt's employment agreement also provides for
forgiveness of the principal and interest payments due under a note from Mr.
Schmitt to the Company for the purchase of 125,000 shares of Common Stock. See
"Certain Relationships and Related Transactions--Loans to Certain Officers."
Mr. Schmitt's shares are subject to a five year repurchase option by the
Company that declines by 20% per year (a "Five Year Repurchase Option"). Mr.
Schmitt's employment agreement provides that during the employment period and
for two years thereafter, Mr. Schmitt will not engage in the business of
providing wireless personal communication services anywhere in the territory
covering the New York MTA or other geographic regions covered by licenses for
which Mr. Schmitt has managerial responsibility.

The Company granted to Mr. Schmitt an option to purchase 437,500 shares at a
purchase price of $6.00 per share; an option to purchase 250,000 shares at a
purchase price of $16.00 per share; an option to purchase 250,000 shares at a
purchase price of $20.00 per share and an option to purchase 125,000 shares at
a purchase price of $24.00 per share. All options vest in annual installments
over a five year period except the 125,000 share option which vests as to
12,500 shares on the first anniversary of the grant, 25,000 shares on each of
the next four anniversaries and 12,500 shares on the sixth anniversary.

On April 17, 1995, Mr. Sparks entered into an employment agreement with the
Company, pursuant to which Mr. Sparks serves as Vice President, Finance and
Chief Financial Officer of the Company. The agreement provides for an initial
annual base salary of $142,500, in addition to certain other benefits. Mr.
Sparks participates in the Executive Bonus Plan whereby he is eligible for
annual bonus payments in an amount up to 20% of his base salary, at the
discretion of the Chief Executive Officer and the Board of Directors. See "--
Executive Bonus Plan." Upon termination of the agreement by the Company
without cause, Mr. Sparks is entitled to receive the compensation and benefits
which would otherwise be payable to Mr. Sparks for a maximum of six months

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following such termination. Mr. Sparks' employment agreement provides for
annual forgiveness of the principal and interest payments due under a note
from Mr. Sparks to the Company for the purchase of 12,500 shares of Common
Stock. See "Certain Relationships and Related Transactions--Loans to Certain
Officers." Mr. Sparks' shares are subject to a Five Year Repurchase Option.
The Company granted Mr. Sparks an option to purchase 100,000 shares at a
purchase price of $6.00 per share, vesting over a five year period.

In December 1994, Mr. Meals entered into an employment agreement with the
Company pursuant to which Mr. Meals serves as Chief Operating Officer of the
Company's Technology Division, and provides for a base salary of $175,000 per
year in addition to certain other benefits. Mr. Meals participates in the
Executive Bonus Plan whereby he is eligible to receive annual bonus payments
in an amount up to 20% of his base salary, at the discretion of the Board of
Directors. See "--Executive Bonus Plan." Mr. Meals' employment agreement
provides for a annual forgiveness of the principal and interest payments due
under a note from Mr. Meals to the Company for the purchase of 25,000 shares
of Common Stock. See "Certain Relationships and Related Transactions--Loans to
Certain Officers." Mr. Meals' shares are subject to a Five Year Repurchase
Option. The Company granted to Mr. Meals an option to purchase 125,000 shares
at a purchase price of $6.00 per share, vesting over a five year period.

Mr. Plonskier entered into an employment agreement with OCI effective July
5, 1994, to serve as Vice President, Finance with an annual base salary of
$125,000 per year, in addition to certain other benefits. The agreement
further provides that Mr. Plonskier participates in the Executive Bonus Plan
whereby he is eligible for an annual bonus in an amount up to 20% of his base
salary, at the discretion of the Compensation Committee of the Board of
Directors. During 1994, the Company granted Mr. Plonskier options to purchase
37,762 shares at a purchase price of $6.00 per share, vesting over a five year
period.

Each of Mr. Meals', Mr. Sparks', Mr. Plonskier's and Mr. Schmitt's
employment agreements provides that the agreement may be terminated by the
employee upon 30 days prior written notice, or by the Company upon seven days
(30 days in the case of Mr. Plonskier) prior written notice. Additionally,
each agreement (other than Mr. Schmitt's) contains a general noncompete
provision applicable during the employment period and for one year thereafter
(180 days in the case of Mr. Schmitt in addition to the two year non-compete
described above), which prohibits the employee from directly or indirectly
engaging in the business of the Company (OCI in the case of Mr. Plonskier),
and from soliciting the employees, clients or customers of the Company (OCI in
the case of Mr. Plonskier). Mr. Schmitt's agreement provides in addition to
the two year non-compete described above, a 180 day general non-compete. Such
noncompetition provision is not violated by the employee's ownership of less
than 1% of the outstanding stock of a publicly held corporation.

Certain key employees of the Company are required to sign agreements which
prohibit the employee from directly or indirectly competing with the business
of the Company while employed by the Company and generally for a period of one
year thereafter. All employees have executed agreements which prohibit the
disclosure of confidential or proprietary information of the Company.

EXECUTIVE BONUS PLAN

Senior managers of the Company are eligible to receive an annual cash bonus
award from a bonus pool amount generally not exceeding 20% of the combined
annual base compensation of the senior managers. Each eligible manager is
measured against individually established goals and objectives that will
determine the award.

STOCK OPTION PLAN

The Company's 1990 Stock Option Plan (the "Option Plan") authorizes the
issuance of 6,250,000 shares of Common Stock pursuant to stock option grants.
At June 15, 1996, 689,286 shares had been issued under the Option Plan,
options for 3,356,657 shares were outstanding and 2,204,057 shares remained
available for future grant. There are also outstanding options for 822,188
shares issued outside of the Option Plan, but which contain terms similar to
the agreements issued under the Option Plan. 80,312 shares have been issued
pursuant to options granted outside of the Option Plan.

424B1 50th Page of 93 TOC 1st Previous Next ↓Bottom Just 50th
The Option Plan provides for grants of options to employees, consultants and
directors of the Company. Each stock option granted under the Option Plan is
evidenced by a written stock option agreement between the Company and the
optionee. The Option Plan provides for the granting of "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and non-statutory options. The Option Plan is
administered by the Board of Directors which has sole discretion and
authority, consistent with the provisions of the Option Plan, and has the
right, among other things, to determine which eligible participants will
receive options, the time when options will be granted, the terms of options
granted and the number of shares that will be subject to options granted under
the Option Plan. The Board may also appoint a committee to administer the
Option Plan and, subject to applicable law, to exercise all of the powers of
the Board under the Option Plan.

The exercise price of stock options must be not less than the fair market
value of the Common Stock on the date the option is granted (110% of the fair
market value with respect to optionees who own stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company
("10% Owners")). The Board of Directors has the authority to determine the
time or times at which options granted under the Option Plan become
exercisable; provided that options must expire no later than ten years from
the date of grant (five years with respect to 10% Owners). Options are non-
assignable and non-transferable, other than upon death, by will or the laws of
descent and distribution, and generally may be exercised only while the
optionee is either employed by, or rendering service to, the Company or within
three months thereafter (12 months in the event of death or disability). The
Board may accelerate the date of exercise of any option or waive any condition
or restriction pertaining to such option at any time. Unless terminated sooner
by the Board, the Option Plan will terminate on April 31, 2000, or the date on
which all shares available for issuance shall have been issued pursuant to the
exercise or cancellation of options granted under the Option Plan.

EMPLOYEE STOCK PURCHASE PLAN

The Company's stockholders approved the 1996 Employee Stock Purchase Plan
(the "Purchase Plan") at the annual meeting of stockholders held on May 30,
1996. The Purchase Plan authorizes the issuance of 200,000 shares of Common
Stock through payroll deductions to employees of the Company and its
participating subsidiaries. The Purchase Plan is intended to qualify as an
employee stock purchase plan under Section 423 of the Code. The Company
intends to file a registration statement on Form S-8 to register the issuances
of shares under the Purchase Plan prior to the commencement of the initial
offering period on July 1, 1996.

Employees of the Company and participating subsidiaries, who are regularly
scheduled to work 20 or more hours per week and who have been employed as such
for at least three months and do not own, or have the right to acquire, 5% or
more of the voting stock of the Company, will be eligible to participate in
the Purchase Plan. Approximately 175 employees would be eligible to
participate. The Purchase Plan will be administered by the Board of Directors
of the Company or by a committee appointed by the Board of Directors. The
Board or the Committee will be able to make rules and computations, and take
any other appropriate actions to administer the Purchase Plan.

Except for the initial offering, which will consist of a six-month period
from July 1, 1996 through December 31, 1996, each offering under the Purchase
Plan will be for the 12-month calendar year (the "Offering Period"). Each
Offering Period other than the initial Offering Period will consist of two
six-month purchase periods commencing on the first business day on or after
January 1 or July 1 of each year (each, a "Purchase Period"). Eligible
employees may elect to enroll in the Purchase Plan as of the first day of any
Purchase Period. Eligible employees will be re-enrolled automatically for each
new Purchase Period; provided, however, employees will be able to cancel their
enrollment at any time, in accordance with the Purchase Plan rules. Employee
contributions to the Purchase Plan will be made through payroll deductions.
Participating employees may contribute from 1% to 10% (in whole percentages)
of compensation through payroll deductions. Participating employees will be
able to decrease or discontinue the contribution percentage once during any
Purchase Period by submitting a new payroll deduction authorization form, and
will not be able to increase the contribution percentage during an Purchase
Period. On the last business day of each Purchase Period (the

424B1 51st Page of 93 TOC 1st Previous Next ↓Bottom Just 51st
"Exercise Date"), the employee's payroll deductions will be used to purchase
shares of the Company's Common Stock for the employee. The price of the shares
purchased will be the lower of (i) 85% of the stock's closing price on the
commencement date of the Offering Period or (ii) 85% of the stock's closing
price on the Exercise Date. The maximum aggregate purchases which an employee
will be able to make in a single calendar year is $25,000, based on the fair
market value of such Common Stock determined at the commencement date of the
Offering Period. Participation in the Purchase Plan terminates when a
participating employee's employment with the Company or its subsidiaries
ceases for any reason, the employee withdraws, or the Purchase Plan is
terminated or amended such that the employee is no longer eligible to
participate.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Company's Board was formed in October
1995, and the members of the Compensation Committee are Messrs. Perry, Fields
and Gupta. None of the members was at any time during the fiscal year ended
December 31, 1995, or at any other time, an officer or employee of the
Company. No member of the Compensation Committee of the Company serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of the Company's Board
of Directors or Compensation Committee.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

The Company's Certificate of Incorporation provides that to the fullest
extent permitted by Delaware law a director of the Company shall not be liable
to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director. Under current Delaware law, liability of a
director may not be limited (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) in respect of certain unlawful dividend payments or stock
redemptions or repurchases, and (iv) for any transaction from which the
director derives an improper personal benefit. The effect of this provision of
the Company's Certificate of Incorporation is to limit or eliminate the rights
of the Company and its stockholders (through stockholders' derivative suits on
behalf of the Company) to recover monetary damages against a director for
breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior) except in those
circumstances described in clauses (i) through (iv) above. This provision does
not limit or eliminate the rights of the Company or any stockholder to seek
nonmonetary relief such as an injunction or rescission in the event of a
breach of a director's duty of care. In addition, the Company's Certificate of
Incorporation and Bylaws provide that the Company shall indemnify its
directors, officers, employees and agents to the fullest extent permitted by
Delaware law.

The Company's Bylaws provide that the Company shall indemnify its officers
and directors to the fullest extent permitted by Delaware law, including in
circumstances in which indemnification is otherwise discretionary under
Delaware law. The Company intends to obtain officer and director liability
insurance with respect to liabilities arising out of certain matters,
including matters arising under the 1933 Act.

At present, there is no pending litigation or proceeding involving any
officer or director, employee or agent of the Company where indemnification
will be required or permitted. The Company is not aware of any threatened
litigation or proceeding which may result in a claim for such indemnification.

424B1 52nd Page of 93 TOC 1st Previous Next ↓Bottom Just 52nd
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATED PARTY TRANSACTIONS

In January 1995, the Company entered into a $10 million line of credit
facility with Madison Dearborn Capital Partners, L.P. ("MDCP"). In connection
with the facility, in March 1995, the Company issued to MDCP a warrant for the
purchase of 50,000 shares of Common Stock at an exercise price of $.004 per
share, and a warrant for the purchase of 179,167 shares of Common Stock at an
exercise price of $6.00 per share. In March and April 1995, the Company issued
to MDCP an aggregate of 151,714 shares of Series B Preferred Stock as accrued
dividends on its Series B Preferred Stock. The Series B Preferred Stock and
certain accrued dividends were converted into an aggregate of 4,273,082 shares
of Common Stock upon the closing of the Company's initial public offering and
accrued dividends of $236,892 through such date were paid in cash.

In mid-1995, the Company sold an aggregate of 1,866,338 shares of Series C
Convertible Preferred Stock ("Series C Preferred Stock") at a price of $15.00
per share, for an aggregate consideration of approximately $28 million, to
certain investors, including MDCP, Allen & Company Incorporated ("Allen"),
Quantum Industrial Partners LDC ("Quantum") and S-C Phoenix Holdings, L.L.C.
("S-C Phoenix"). MDCP paid for its Series C Preferred Stock by exchanging the
outstanding balance of the line of credit facility. The Company paid to Allen
a fee of $600,000 for services provided by Allen to the Company in connection
with this financing. Each of the holders of Series C Preferred Stock received
a transaction fee equal to two percent of its investment, for an aggregate
transaction fee of approximately $560,000. Subsequent to the transaction, Mr.
Gupta was elected to the Board of Directors as a representative of Quantum and
S-C Phoenix. The Series C Preferred Stock was converted into an aggregate of
4,665,842 shares of Common Stock upon the closing of the Company's initial
public offering and accrued dividends of $1,299,326 through such date were
paid in cash.

LOANS TO CERTAIN OFFICERS

Each of Mr. Meals and Mr. Sparks executed a five year promissory note for
the benefit of the Company in the original principal amount of $250,000 and
$75,000, respectively, plus interest on the unpaid principal balance from time
to time outstanding at the rate of 8.5% per year. Mr. Meals and Mr. Sparks
executed such promissory notes on December 5, 1994, and April 17, 1995,
respectively, as consideration for the purchase of Common Stock. Principal
payments under each of the notes are to be made in five equal annual
installments, together with interest accrued on such principal amount in
arrears. Mr. Meals' and Mr. Sparks' employment agreements each provide for
forgiveness of the principal and interest payments due under the notes,
provided that such person has been continuously employed by the Company at the
time such payments are due. Each note is immediately due and payable upon
default or the termination of employment with the Company. Additionally, on
September 19, 1995, Mr. Meals executed a three year promissory note for the
benefit of the Company in the original principal amount of $87,100, plus
interest on the unpaid principal balance from time to time outstanding at the
rate of 8.5% per year, on similar terms and conditions including the special
forgiveness provision. The note is related to relocation expenses. See
"Management--Employment Agreements."

Mr. Schmitt executed a five year balloon promissory note for the benefit of
the Company on October 1, 1995 in the original principal amount of $750,000,
plus interest on the unpaid principal balance from time to time outstanding at
the rate of 8% per year, as consideration for the purchase of 125,000 shares
of Common Stock at $6.00 per share. The principal and interest payment due
under the note may be forgiven pursuant to Mr. Schmitt's employment agreement,
provided that he has been continuously employed by the Company at the time
such payment is due. The note is immediately due and payable upon default or
the termination of Mr. Schmitt's employment with the Company. See
"Management--Employment Agreements."

424B1 53rd Page of 93 TOC 1st Previous Next ↓Bottom Just 53rd
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth as of June 15, 1996 and as adjusted to give
effect to the offering, the number of shares of Common Stock and the percentage
of the outstanding shares of such class that are beneficially owned by (i) each
person that is the beneficial owner of more than 5% of the outstanding shares
of Common Stock, (ii) each of the directors and the Named Officers of the
Company, (iii) each Selling Stockholder, and (iv) all current executive
officers and directors as a group.

[Download Table]

BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) NUMBER AFTER OFFERING(1)(2)
---------------------- OF SHARES ----------------------
NUMBER OF BEING NUMBER OF
SHARES PERCENT OFFERED SHARES PERCENT

MANAGEMENT AND PRINCIPAL
STOCKHOLDERS
Avance Capital (3)...... 9,500,000 20.76% 255,000 9,245,000 18.39%
Madison Dearborn Capital
Partners, L.P. (4)..... 6,958,338 15.13 461,709 6,496,629 12.86
Allen & Company
Incorporated (5)....... 4,167,960 8.79 273,219 3,894,741 7.50
Richard Fields (6)...... 4,167,960 8.79 273,219 3,894,741 7.50
Paul J. Finnegan (7).... 6,958,338 15.13 461,709 6,496,629 12.86
Evelyn R. Goldfine
(8)(16)................ 377,182 * 9,050 368,132 *
Arjun Gupta (9)......... 1,666,667 3.64 110,588 1,556,079 3.10
Randall R. Meals
(10)(16)............... 50,300 * -- 50,300 *
James N. Perry, Jr.
(11)................... 6,958,338 15.13 461,709 6,496,629 12.86
Harry Plonskier
(12)(16)............... 28,248 * -- 28,248 *
James J. Ross (13)...... 1,789,780 3.85 41,213 1,748,567 3.42
George F. Schmitt (16).. 130,000 * -- 130,000 *
Douglas G. Smith
(14)(16)............... 11,875,000 25.95 255,000 11,620,000 23.12
Bradley E. Sparks
(15)(16)............... 42,895 * -- 42,895 *
All Executive Officers
and Directors as a
Group
(11 persons)(17)....... 27,083,761 55.49 1,150,779 25,952,982 48.64
OTHER SELLING
STOCKHOLDERS
Simona Riklis Ackerman.. 23,147 * 1,536 21,611 *
Advisors Trust.......... 12,500 * 829 11,671 *
A.G. Edwards & Sons as
Custodian for Andrew
Peskoe................. 16,667 * 1,106 15,561 *
American High Income
Trust.................. 312,500 * 20,735 291,765 *
Ann Appleman............ 25,000 * 1,658 23,342 *
Nathan Appleman Rev.
Trust.................. 125,000 * 8,294 116,706 *
Argentum Capital
Partners, L.P. ........ 116,667 * 7,741 108,926 *
Jocelyn Barandiaran..... 8,335 * 553 7,782 *
Walter Barandiaran...... 8,335 * 553 7,782 *
Stephen A. Bassock...... 297,147 * 19,717 277,430 *
Steven Bercu............ 13,890 * 921 12,969 *
Alan Berkowitz.......... 13,890 * 921 12,969 *
David Berkowitz......... 13,890 * 921 12,969 *
Leonard Berkowitz....... 138,890 * 9,216 129,674 *
Shirley Bernstein....... 100,000 * 6,635 93,365 *
Bond Fund of America
(18)................... 312,500 * 20,735 291,765 *
George T. Boyer......... 97,500 * 6,469 91,031 *
Jennifer Levin Carter... 8,753 * 581 8,172 *
Collegiate School....... 3,000 * 3,000 0 *
Community Funds, Inc.... 18,810 * 18,810 0 *
Robert C. Dixon......... 566,440 1.24 30,000 536,440 1.07
John Drury.............. 16,666 * 1,106 15,560 *
Coleman and June Ellen.. 6,250 * 415 5,835 *

424B1 54th Page of 93 TOC 1st Previous Next ↓Bottom Just 54th
[Download Table]

BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) NUMBER AFTER OFFERING(1)(2)
-----------------------OF SHARES -----------------------
NUMBER OF BEING NUMBER OF
SHARES PERCENT OFFERED SHARES PERCENT

Environmental Private
Equity Fund II, L.P.... 166,667 * 11,059 155,608 *
Harve A. Ferrill Trust.. 25,000 * 1,658 23,342 *
Benjamin Fishman........ 1,334 * 88 1,246 *
Roy Furman.............. 280,125 * 18,587 261,538 *
Kenneth G. Futter....... 138,890 * 7,500 131,390 *
Jeffrey Golenbock....... 16,667 * 1,106 15,561 *
Alfred and Sandra Green. 6,250 * 415 5,835 *
David Levin............. 8,753 * 581 8,172 *
Elisabeth and John Levin
Fund................... 4,199 * 4,199 0 *
Henry Levin............. 8,754 * 581 8,173 *
Jessica Levin........... 8,753 * 581 8,172 *
John Levin.............. 79,788 * 1,374 78,414 *
Leslie Levine........... 4,167 * 276 3,891 *
John L. Loeb............ 281,380 * 4,843 276,537 *
Magdalena Mazer......... 13,887 * 921 12,966 *
Robert Mazer............ 13,887 * 921 12,966 *
Robert Menschel......... 97,500 * 6,469 91,031 *
Arthur Paturick......... 323,397 * 21,458 301,939 *
Catherine Ricks
Piwowarski............. 7,050 * 468 6,582 *
Arnold and Sandra
Raynor................. 3,334 * 221 3,113 *
Daniel Raynor........... 5,000 * 331 4,669 *
Jay E. and Deborah Ricks
Charitable Trust....... 20,000 * 8,893 11,107 *
Sheila Robbins.......... 135,890 * 6,216 129,674 *
Jonathan Rose........... 415,015 * 23,803 391,212 *
Rosetree Group.......... 419,015 * 27,803 391,212 *
Jon Rotenstreich........ 84,060 * 5,578 78,482 *
Henry J. Siegel Trust
U/A/D 8/21/86 Jerome A.
Siegel TTEE............ 138,890 * 9,216 129,674 *
The Pisces Fund......... 83,335 * 5,530 77,805 *
Susan Unterberg......... 72,222 * 4,792 67,430 *
Victoria Transport
Corp................... 69,445 * 4,608 64,837 *
Yale University......... 3,000 * 3,000 0 *
Paul Yovovich........... 9,375 * 622 8,753 *
Uzi Zucker.............. 46,295 * 3,071 43,224 *
Allen Value Partners
L.P. .................. 260,997 * 17,318 243,679 *
Allen Value Limited..... 30,670 * 2,035 28,635 *
Eran Ashany............. 3,750 * 248 3,502 *
Robert H. Cosgriff...... 3,750 * 248 3,502 *
John Josephson.......... 3,125 * 207 2,918 *
Donald R. Keough........ 37,500 * 2,489 35,011 *
Dara Khosrowshahi....... 1,875 * 124 1,751 *
Werbel McMillin &
Carnelutti Profit
Sharing Trust FBO
William F. Leimkuhler.. 2,500 * 166 2,334 *
Robert A. Mackie........ 2,500 * 166 2,334 *
John A. Schneider....... 25,000 * 1,658 23,342 *
Enrique F. Senior....... 37,500 * 2,489 35,011 *
Robin Gimbel Senior..... 15,625 * 1,036 14,589 *
Senior Family Trust..... 9,375 * 622 8,753 *
Stanley S. Shuman....... 31,250 * 2,074 29,176 *

424B1 55th Page of 93 TOC 1st Previous Next ↓Bottom Just 55th
[Download Table]

Lauren Tyler............ 625 * 41 584 *
William vanden Heuvel... 2,500 * 166 2,334 *
Werbel McMillin &
Carnelutti Profit
Sharing Trust FBO
Robert H. Werbel....... 5,000 * 331 4,669 *
Quantum Industrial
Partners LDC........... 833,335 1.82 55,294 778,041 1.55
S-C Phoenix Holdings
LLC.................... 833,332 1.82 55,294 778,038 1.55

--------
* Less than one percent.
(1) Applicable percentage of ownership as of June 15, 1996, is based upon
45,769,718 shares of Common Stock outstanding. Applicable percentage of
ownership after the offering is based upon 50,269,718 shares of Common
Stock outstanding. Shares of Common Stock subject to outstanding options
or warrants which are exercisable within 60 days of June 15, 1996, are
deemed outstanding for computing the percentage ownership of the persons
holding such options but are not deemed outstanding for the percentage
ownership of any other person.
(2) Assumes no exercise of the Underwriters' over-allotment option. In the
event such option is exercised in full, the following stockholders will
sell the number of shares of Common Stock following their names and will
beneficially own the number and percentage ownership of Common Stock
after the offering:

[Download Table]

BENEFICIAL OWNERSHIP
AFTER OFFERING
----------------------
SHARES TO NUMBER OF
BE SOLD SHARES PERCENT

Avance Capital............................ 126,000 9,119,000 18.14%
Madison Dearborn Capital Partners, L.P.... 306,473 6,190,156 12.26
Allen & Company Incorporated+............. 181,363 3,713,378 7.15
Evelyn R. Goldfine........................ 6,007 362,118 *
James J. Ross............................. 29,347 1,719,220 3.36
Simona Riklis Ackerman.................... 1,019 20,592 *
Advisors Trust............................ 551 11,120 *
A.G. Edwards Custodian for Andrew Peskoe.. 734 14,827 *
American High Income Trust................ 13,764 278,001 *
Ann Appleman.............................. 1,101 22,241 *
Nathan Appleman Rev. Trust................ 5,505 111,201 *
Argentum Capital Partners................. 5,138 103,788 *
Jocelyn Barandiaran....................... 368 7,414 *
Walter Barandiaran........................ 368 7,414 *
Stephen A. Bassock........................ 5,283 272,147 *
Steven Bercu.............................. 612 12,357 *
Alan Berkowitz............................ 612 12,357 *
David Berkowitz........................... 612 12,357 *
Leonard Berkowitz......................... 6,117 123,557 *
Shirley Bernstein......................... 4,404 88,961 *
Bond Fund of America...................... 13,764 278,001 *
George T. Boyer........................... 4,294 86,737 *
Jennifer Levin Carter..................... 385 7,787 *
John Drury................................ 734 14,826 *
Coleman and June Ellen.................... 275 5,560 *
Environmental Private Equity Fund II,
L.P...................................... 7,341 148,267 *
Harve A. Ferrill Trust.................... 1,101 22,241 *
Benjamin Fishman.......................... 59 1,187 *
Roy Furman................................ 11,413 250,125 *
Jeffrey Golenbock......................... 734 14,827 *
Alfred and Sandra Green................... 275 5,560 *
David Levin............................... 385 7,787 *

424B1 56th Page of 93 TOC 1st Previous Next ↓Bottom Just 56th
[Download Table]

BENEFICIAL OWNERSHIP
AFTER OFFERING
---------------------
SHARES TO NUMBER OF
BE SOLD SHARES PERCENT

Henry Levin................................. 385 7,788 *
Jessica Levin............................... 385 7,787 *
John Levin.................................. 3,699 74,715 *
Leslie Levine............................... 183 3,708 *
John L. Loeb................................ 13,045 263,492 *
Magdalena Mazer............................. 467 12,499 *
Robert Mazer................................ 467 12,499 *
Robert Menschel............................. 4,293 86,738 *
Arthur Paturick............................. 3,542 298,397 *
Catherine Ricks Piwowarski.................. 311 6,271 *
Arnold and Sandra Raynor.................... 147 2,966 *
Daniel Raynor............................... 221 4,448 *
Jay E. and Deborah Ricks Charitable Trust... 5,903 5,204 *
Shelia Robbins.............................. 2,674 127,000 *
Jonathan Rose............................... 14,098 377,114 *
Rosetree Group.............................. 18,455 372,757 *
Jon Rotenstreich............................ 3,702 74,780 *
Henry J. Siegel............................. 6,117 123,557 *
The Pisces Fund............................. 3,670 74,135 *
Susan Unterberg............................. 3,181 64,249 *
Victoria Transport Corp..................... 3,059 61,778 *
Paul Yovovich............................... 413 8,340 *
Uzi Zucker.................................. 2,039 41,185 *
Allen Value Partners L.P. .................. 11,496 232,183 *
Allen Value Limited......................... 1,350 27,285 *
Eran Ashany................................. 165 3,337 *
Robert H. Cosgriff.......................... 165 3,337 *
John Josephson.............................. 138 2,780 *
Donald R. Keough............................ 1,652 33,359 *
Dara Khosrowshahi........................... 83 1,668 *
Werbel McMillin & Carnelutti Profit Sharing
Trust FBO William F. Leimkuhler............ 110 2,224 *
Robert A. Mackie............................ 110 2,224 *
John A. Schneider........................... 1,101 22,241 *
Enrique F. Senior........................... 1,652 33,359 *
Robin Gimbel Senior......................... 689 13,900 *
Senior Family Trust......................... 413 8,340 *
Stanley S. Shuman........................... 1,376 27,800 *
Lauren Tyler................................ 28 556 *
William vanden Heuvel....................... 110 2,224 *
Werbel McMillin & Carnelutti Profit Sharing
Trust FBO Robert H. Werbel................. 221 4,448 *
Quantum Industrial Partners LDC............. 36,703 741,338 1.48
S-C Phoenix Holdings LLC.................... 36,703 741,335 1.48

--------
* Less than one percent.
+ Includes 11,496 shares to be sold by Allen Value Partners L.P.,
1,350 shares to be sold by Allen Value Limited and 8,013 shares to
be sold by certain officers of Allen and related persons listed
individually in the table.
(3) Avance Capital is a proprietorship. Mr. Smith has voting and investment
power with respect to these shares. Its address is 8300 Boone Blvd.,
Suite 500, Vienna, VA 22180.
(4) Includes 229,167 shares of Common Stock issuable upon exercise of
outstanding warrants. All of such shares are held of record by Madison
Dearborn Capital Partners, L.P. ("MDCP"). MDCP is a limited partnership.
Madison Dearborn Partners, L.P. ("MDP") is the general partner of MDCP.
Investment and voting control over securities owned by MDCP is shared by
a committee of the limited partners of MDP (the "L.P. Committee"). The
address of MDCP is Three First National Plaza, Suite 1330, Chicago, IL
60602.

424B1 57th Page of 93 TOC 1st Previous Next ↓Bottom Just 57th
(5) Includes 1,665,000 of Common Stock issuable upon exercise of outstanding
warrants. Allen disclaims beneficial ownership of 973,760 shares and
364,398 shares issuable upon exercise of warrants which are beneficially
owned by certain officers of Allen and related persons. Shares being
offered include those held directly and listed below in the amount of
17,318 shares to be sold by Allen Value Partners L.P., 2,035 shares to be
sold by Allen Value Limited, and 12,065 shares to be sold by certain
officers of Allen and related persons listed individually in the table.
Allen's address is 711 Fifth Avenue, New York, NY 10022.
(6) Represents 4,167,960 shares owned by Allen (including shares issuable
upon exercise of outstanding warrants) held by certain officers of Allen
and related parties. Mr. Fields is a Managing Director of Allen. Of such
amounts, Mr. Fields does not exercise voting or investment power over,
and disclaims beneficial ownership of, the 2,279,043 shares and 1,387,250
shares issuable upon exercise of outstanding warrants which are held by
Allen and other officers and related persons.
(7) All of such shares are held of record by MDCP. Mr. Finnegan is a member
of the L.P. Committee. Mr. Finnegan may therefore be deemed to share
investment and voting control with respect to the shares of Common Stock
owned by MDCP and may therefore be deemed to have beneficial ownership of
shares of Common Stock owned by MDCP. Mr. Finnegan expressly disclaims
beneficial ownership of such shares of Common Stock. The business address
of Mr. Finnegan is c/o MDP Inc., Three First National Plaza, Suite 1330,
Chicago, IL 60602.
(8) Includes 240,793 shares of Common Stock issuable upon exercise of
outstanding options and 88,025 shares held in a family limited
partnership; Ms. Goldfine is a general partner in such partnership and
shares voting and investment power with regard to 88,025 shares so held.
(9) Represents 1,666,667 shares held by Quantum Industrial Partners LDC and
S-C Phoenix Holdings, L.L.C., associated with Chatterjee Management
Company. Mr. Gupta is a Vice President of Chatterjee Management Company.
Subject to certain conditions, Mr. Gupta may have an economic interest in
16,667 of these shares and disclaims beneficial ownership to all
1,666,667 shares over which he does not exercise voting or investment
power.
(10) Includes 25,000 shares of Common Stock issuable upon exercise of
outstanding options and 300 shares owned by his minor children.
(11) All of such shares are held of record by MDCP. Mr. Perry is a member of
the L.P. Committee. Mr. Perry may therefore be deemed to share investment
and voting control with respect to the shares of Common Stock owned by
MDCP and may therefore be deemed to have beneficial ownership of shares
of Common Stock owned by MDCP. Mr. Perry expressly disclaims beneficial
ownership of such shares of Common Stock. The business address of Mr.
Perry is c/o MDP Inc., Three First National Plaza, Suite 1330, Chicago,
Illinois 60602.
(12) Includes 24,748 shares of Common Stock issuable upon exercise of
outstanding options.
(13) Includes 840,375 shares of Common Stock issuable upon exercise of
outstanding options held by Mr. Ross and 286,100 shares owned by Mr.
Ross' children. With respect to shares owned by his children, Mr. Ross
shares voting and investment power with regard to 143,050 shares and has
sole voting and investment power with respect to 143,050 shares. As a
result, Mr. Ross may be deemed to be the beneficial owner of such shares.
Mr. Ross' address is c/o Becker Ross Stone DeStefano & Klein, 317 Madison
Avenue, New York, NY 10017.
(14) Includes 31,720 shares owned by Mr. Smith's minor children, 9,500,000
shares held by Avance Capital, a sole proprietorship which is selling
350,000 shares in the offering, and 1,180,569 shares held in a trust. Mr.
Smith does not exercise voting or investment power over, and disclaims
beneficial ownership of, the shares held in the trust. Mr. Smith has
voting and investment power with respect to the other shares.
(15) Includes 400 shares held as custodian for Mr. Sparks' minor child and
24,995 shares of Common Stock issuable upon exercise of outstanding
options.
(16) The address of each of Mr. Smith, Ms. Goldfine, Mr. Meals, Mr. Plonskier,
Mr. Sparks and Mr. Schmitt is c/o the Company, 2000 N. 14th Street,
Arlington, VA 22201.
(17) Includes 3,050,078 shares issuable upon exercise of outstanding options
and warrants.
(18) Includes 312,500 shares issuable upon exercise of outstanding warrants.

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DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 75,000,000 shares of
Common Stock, $.01 par value per share, and 5,000,000 shares of Preferred
Stock, $.01 par value per share.

COMMON STOCK

At June 15, 1996, there were 45,769,718 shares of Common Stock outstanding
and held of record by approximately 260 stockholders. Each holder of Common
Stock is entitled to one vote for each share held. Following the conversion of
the Preferred Stock to Common Stock, the holders of Common Stock, voting as a
single class, will be entitled to elect all of the directors of the Company.
Matters submitted to stockholder approval generally require a majority vote.

Holders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. See "Dividend Policy." In the event of a liquidation, dissolution or
winding up of the Company, holders of Common Stock would be entitled to share
in the Company's assets remaining after the payment of liabilities and the
satisfaction of any liquidation preference granted the holders of any
outstanding shares of Preferred Stock. Holders of Common Stock have no
preemptive or other subscription rights. The shares of Common Stock are not
convertible into any other security. The outstanding shares of Common Stock
are, and the shares being offered hereby will be, upon issuance and sale,
fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors has the authority to issue up to 5,000,000 shares of
preferred stock, without any further action by the stockholders, in one or
more series, to establish from time to time the number of shares to be
included in each series, and to fix the designations, powers, preferences and
rights of the shares of each series and the qualifications, limitations or
restrictions thereof. Although the ability of the Board of Directors to
designate and issue preferred stock provides desirable flexibility, including
the ability to engage in future public offerings to raise additional capital,
issuance of preferred stock may have adverse effects on the holders of Common
Stock including restrictions on dividends on the Common Stock if dividends on
the preferred stock have not been paid; dilution of voting power of the Common
Stock to the extent the preferred stock has voting rights; or deferral of
participation in the Company's assets upon liquidation until satisfaction of
any liquidation preference granted to holders of the preferred stock. In
addition, issuance of preferred stock could make it more difficult for a third
party to acquire a majority of the outstanding voting stock and accordingly
may be used as an "anti-takeover" device. The Board of Directors, however,
currently does not contemplate the issuance of any preferred stock and is not
aware of any pending transactions that would be affected by such issuance.

WARRANTS

In connection with the Series A Preferred Stock financing, the Company
issued to Allen a warrant to purchase 750,000 shares of Common Stock at prices
ranging from $1.00 to $1.20 per share, which expires on August 2, 1996, unless
extended by Allen for a period of five years pursuant to the terms of a letter
agreement, and a warrant to purchase 915,000 shares of Common Stock at $0.008
per share, which expires on August 2, 2001.

In March 1995, the Company issued to MDCP a warrant to purchase 50,000
shares of Common Stock at an exercise price of $0.004 per share and a warrant
to purchase 179,167 shares of Common Stock at an exercise price of $6.00 per
share. Each warrant expires on March 10, 2002. The warrant with an exercise
price of $6.00 contains weighted average anti-dilution protection in the event
the Company issued shares of Common Stock at prices less than $6.00 per share.

In November and December 1995 in connection with the issuance of the Senior
Notes and the Convertible Subordinated Notes, the Company issued warrants to
purchase an aggregate of 1,250,000 shares of Common

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Stock at an exercise price of $0.004 per share. Each warrant expires five
years from its date of issuance. The warrants contain anti-dilution protection
for stock splits, stock dividends and recapitalizations. In April 1996, a
warrant holder exercised in full a warrant to purchase 312,500 shares of
Common Stock. Immediately prior to the closing of the offering, certain
warrant holders will exercise warrrants to purchase approximately 20,735
shares of Common Stock to be sold in the offering.

REGISTRATION RIGHTS OF CERTAIN HOLDERS

Holders of (i) an aggregate of 1,666,667 shares of Common Stock issued upon
the conversion of the Series A Preferred Stock, 1,665,000 shares issuable upon
exercise of outstanding warrants, and 62,500 shares of Common Stock held by
the holders of Series A Preferred Stock (the "Series A Registrable Shares");
(ii) 4,273,121 shares of Common Stock issued upon the conversion of the Series
B Preferred Stock, 229,167 shares issuable upon exercise of outstanding
warrants and 789,422 shares of Common Stock held by the holders of Series B
Preferred Stock (the "Series B Registrable Shares"); and (iii) 4,665,845
shares of Common Stock issued upon the conversion of the Series C Preferred
Stock (the "Series C Registrable Shares") are entitled to certain rights with
respect to the registration of such shares under the 1933 Act.

Under an agreement with the Company, the holders of shares of Common Stock
issued upon conversion of the Preferred Stock have certain registration
rights. Subject to certain limitations, holders have the right, upon request
of the holders of more than a majority in interest of the Series A Registrable
Shares, Series B Registrable Shares or Series C Registrable Shares outstanding
at any time, to require the Company to register under the 1933 Act the sale of
shares having an aggregate offering price of at least $2,500,000 (a "demand
registration"). The number of demand registrations is limited to two for each
group of Registrable Shares. In addition to the demand registration rights
described above and, subject to certain conditions and limitations, the
holders of Preferred Stock may require the Company to file an unlimited number
of registration statements on Form S-3 under the 1933 Act when such form is
available for use by the Company.

The institutional investors holding 312,500 shares of Common Stock and a
warrant to purchase an aggregate of 312,500 shares of Common Stock have the
right, upon request of the holders of at least 50% in interest of the
underlying Common Stock, to require the Company to register under the 1933 Act
the sale of shares of Common Stock having an aggregate offering price of at
least $5,000,000. The Company granted demand registration rights to such
holders pursuant to which such investors may require the Company to file one
registration statement on Form S-1 or S-2 under the 1933 Act and up to four
registration statements on Form S-3 when such form is available for use by the
Company. The institutional investors holding 1,562,500 shares of Common Stock
and holding warrants to purchase an aggregate of 625,000 shares of Common
Stock have similar registration rights.

Such holders also are entitled to include their shares of Common Stock in a
registered offering of securities by the Company for its own account, subject
to certain conditions and restrictions (a "piggy-back registration").
Additionally, the holders of 9,215,436 shares of Common Stock have piggy-back
registration rights. Certain holders of Common Stock, including holders of
shares issued upon conversion of Preferred Stock at the closing of the IPO,
and certain holders of warrants having piggy-back registration rights have
exercised their right to include a portion of their shares of Common Stock in
the offering contemplated hereby. See "Principal and Selling Stockholders."

DELAWARE LAW AND CERTAIN CHARTER PROVISIONS

Section 203 of the Delaware General Corporation Law, as amended ("Section
203"), provides that, subject to certain exceptions specified therein, an
"interested stockholder" of a Delaware corporation shall not engage in any
business combination, including mergers or consolidations or acquisitions of
additional shares of the corporation with the corporation for a three-year
period following the date at which the stockholder becomes an "interested
stockholder" unless (i) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an "interested stockholder," (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
"interested stockholder," the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the transaction commenced
(excluding certain shares), or (iii) on or subsequent to such date, the
business combination is approved by the board of directors of the corporation
and authorized at an annual or special meeting of stockholders by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which

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is not owned by the "interested stockholder." Except as otherwise specified in
Section 203, an "interested stockholder" is defined to include (x) any person
which is the owner of 15% or more of the outstanding voting stock of the
corporation, or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within three years immediately prior to the relevant date and (y) the
affiliates and associates of any such person. The Company's stockholders, by
adopting an amendment to its Certificate of Incorporation or Bylaws, may elect
not to be governed by Section 203, effective twelve months after adoption.
Neither the Certificate nor the Bylaws presently exclude the Company from the
restrictions imposed by Section 203.

The Company's Certificate of Incorporation provides that, upon the closing
of the offering, any action required or permitted to be taken by the
stockholders of the Company may be taken only at a duly called annual or
special meeting of the stockholders and does not provide for cumulative voting
in the election of directors. The Certificate of Incorporation and Bylaws
restrict the right of stockholders to change the size of the Board of
Directors and to fill vacancies on the Board of Directors. The Bylaws also
establish procedures, including advance notice procedures, with regard to the
nomination, other than by or at the direction of the Board of Directors, of
candidates for elections as directors or for stockholder proposals to be
submitted at stockholder meetings. The amendment of any of these provisions
would require approval by 66 2/3% of the outstanding Common Stock.

These and other provisions could have the effect of making it more difficult
for a third party to effect a change in the control of the Board of Directors
and therefore may discourage another person or entity from making a tender
offer for the Common Stock, including offers at a premium over the market of
the Common Stock, and might result in a delay in changes in control of
management. In addition, these provisions could have the effect of making it
more difficult for proposals favored by the stockholders to be presented for
stockholder consideration.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.

LISTING

The shares of Common Stock are traded on the Nasdaq National Market under
the symbol "OMPT."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 50,269,718 shares of
Common Stock outstanding. Of this amount, 6,000,000 shares offered hereby as
well as the 8,050,000 shares issued in the IPO will be freely tradeable
without restriction or further registration under the 1933 Act, except for any
shares held by affiliates of the Company or persons who have been affiliates
within the preceding three months. Approximately 4,045,943 shares issued or
issuable upon exercise of options outstanding under the Company's 1990 Stock
Option Plan will also be freely tradeable. The Company also has a significant
number of shares of Common Stock outstanding that have not been registered
under the 1933 Act. Of these shares, approximately 1,500,000 shares are
eligible for sale under Rule 144, Rule 144(k) or Rule 701 or, unless held by
affiliates, are freely tradeable. An additional 2,844,350 shares will be
eligible for sale on July 25, 1996. Approximately 31,895,000 of the shares
that will be eligible for sale under Rule 144, Rule 144(k) or Rule 701 are
subject to 120-day lockup agreements with the Underwriters.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least
two years is entitled to sell within any three-month period a number of shares
that does not exceed the greater of (i) 1% of the then outstanding shares of
the Common Stock (approximately 502,697 shares immediately after this
offering), or (ii) the average weekly trading volume during the four calendar
weeks preceding such sale, subject to the filing of Form 144 with respect to
such sale. A person (or persons whose shares are aggregated) who is not deemed
to have been an affiliate of the Company at any

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time during the 90 days immediately preceding the sale who has beneficially
owned his or her shares for at least three years is entitled to sell such
shares pursuant to Rule 144(k) without regard to the limitations described
above. Persons deemed to be affiliates must always sell pursuant to Rule 144,
even after the applicable holding periods have been satisfied. The Commission
has recently proposed amendments to Rule 144 and Rule 144(k) that would
shorten by one year the applicable holding periods and could result in resales
of restricted securities sooner than would be the case under Rule 144 and Rule
144(k) as currently in effect.

The Company is unable to estimate the number of shares that will be sold
under Rule 144, since this will depend on the market price for the Common
Stock, the personal circumstances of the sellers and other factors. Any future
sale of substantial amounts of Common Stock in the open market may adversely
affect the market price of the Common Stock offered hereby.

The Company, its directors, executive officers, certain stockholders with
registration rights and certain other stockholders have agreed pursuant to the
Underwriting Agreement and other agreements that they will not sell any Common
Stock without the prior consent of the representatives of the Underwriters for
a period of 120 days from the date of this Prospectus (the "120-day Lockup
Period"), except that the Company may, without such consent, grant certain
options to purchase stock pursuant to the Option Plan.

Any employee or consultant to the Company who purchased his or her shares
pursuant to a written compensatory plan or contract is entitled to rely on the
resale provisions of Rule 701, which permits nonaffiliates to sell their Rule
701 shares without having to comply with the public information, holding
period, volume limitation or notice provisions of Rule 144 and permits
affiliates to sell their Rule 701 shares without having to comply with the
Rule 144 holding period restrictions.

The Company has filed a registration statement on Form S-8 under the
Securities Act to register shares of Common Stock issued or reserved for
issuance under the Option Plan and intends to file a registration statement to
register 200,000 shares of Common Stock issuable under the Employee Stock
Purchase Plan, thus permitting the resale of such shares by nonaffiliates in
the public market without restriction under the 1933 Act. As of June 15, 1996,
689,286 shares have been issued under the Option Plan, options for 3,356,657
shares were outstanding and 2,204,057 shares remained available for future
issues. See "Management--Stock Option Plan" and "--Employee Stock Purchase
Plan."

After the offering, warrants that are exercisable for 2,810,932 shares of
Common Stock will remain outstanding. If any of these warrants is exercised by
payment of the applicable exercise price, the holding period for purposes of
Rule 144 will commence on the date of exercise as to the Common Stock then
issued. The holders of such warrants have registration rights with respect to
the underlying Common Stock. See "Description of Capital Stock--Registration
Rights of Certain Holders."

In addition, the holders of 22,936,061 shares (including options and
warrants exercisable into shares) of Common Stock are entitled to certain
rights with respect to registration of such shares under the 1933 Act.
Registration of such shares under the 1933 Act would result in such shares
becoming freely tradeable without restriction under the 1933 Act (except for
shares purchased by affiliates of the Company) immediately upon the
effectiveness of such registration. See "Description of Capital Stock--
Registration Rights of Certain Holders."

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UNDERWRITING

Subject to certain conditions contained in the Underwriting Agreement, a
syndicate of underwriters named below (the "Underwriters"), for whom
Donaldson, Lufkin & Jenrette Securities Corporation, Allen & Company
Incorporated, Goldman, Sachs & Co., Montgomery Securities and Salomon Brothers
Inc are acting as representatives (the "Representatives"), have severally
agreed to purchase from the Company and the Selling Stockholders an aggregate
of 6,000,000 shares of Common Stock. The number of shares of Common Stock that
each of the Underwriters has agreed to purchase is set forth opposite its name
below:

[Download Table]

NUMBER OF
UNDERWRITERS SHARES

Donaldson, Lufkin & Jenrette Securities Corporation................... 1,200,000
Allen & Company Incorporated.......................................... 1,200,000
Goldman, Sachs & Co. ................................................. 1,200,000
Montgomery Securities................................................. 1,200,000
Salomon Brothers Inc ................................................. 1,200,000
---------
Total............................................................... 6,000,000
=========

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase the shares of Common Stock offered hereby are subject
to approval of certain legal matters by their counsel and to certain other
conditions. If any of the shares of Common Stock are purchased by the
Underwriters pursuant to the Underwriting Agreement, the Underwriters are
obligated to purchase all such shares (other than those covered by the over-
allotment option described below).

The Company has been advised by the Underwriters that they propose to offer
the shares of Common Stock to the public initially at the price to the public
set forth on the cover page of this Prospectus and to certain dealers (who may
include the Underwriters) at such price, less a concession not in excess of
$0.73 per share. The Underwriters may allow, and such dealers may re-allow, a
concession not in excess of $0.10 per share to certain other dealers. After
the offering, the price to the public, the concession and the discount to
dealers may be changed by the Representatives.

Certain Selling Stockholders have granted to the Underwriters an option,
exercisable for 30 days from the date of this Prospectus, to purchase up to
900,000 additional shares of Common Stock at the price to the public less
underwriting discounts and commissions, solely to cover over-allotments. To
the extent that the Underwriters exercise such option, each of the
Underwriters will be committed, subject to certain conditions, to purchase a
number of option shares proportionate to such Underwriter's initial commitment
as indicated in the preceding table.

In the Underwriting Agreement, the Company, the Underwriters and the Selling
Stockholders have agreed to indemnify each other against certain liabilities,
including liabilities under the 1933 Act.

The Company, the Selling Stockholders, the executive officers and directors
of the Company and certain stockholders of the Company have each agreed that
they will not, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation, register the sale of, sell, offer to sell,
contract to sell, grant any option to purchase or otherwise dispose of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or in any manner transfer all or a portion of
the economic consequences associated with the ownership of Common Stock, for a
period of 120 days after the date of this Prospectus.

In June 1995, Allen received a commission of $600,000 from the Company for
investment banking services rendered in connection with the Series C
Convertible Preferred Stock Financing. In addition, Allen purchased 100,000
and 66,667 shares of Series C Convertible Preferred Stock for its own account
and for the accounts of two funds managed by Allen, respectively. In
connection with its purchase of Series C Preferred Stock, Allen, as well as
each other investor in the offering, received a transaction fee equal to two
percent of its investment, aggregating $30,000. See "Certain Relationships and
Related Transactions--Related Party Transactions."

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In November 1995, Salomon Brothers Inc received $1 million from the Company
for investment banking services rendered in connection with the sale of the
Senior Notes and $15 million aggregate principal amount of the Convertible
Subordinated Notes. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

In connection with the offering, certain Underwriters and selling group
members (and any of their affiliated purchasers) who are qualified registered
market makers on the Nasdaq National Market, may engage in passive market
transactions in the Common Stock on the Nasdaq National Market in accordance
with Rule 10b-6A under the Exchange Act during the two business day period
before commencement of offers or sales of the Common Stock in the offering.
The passive market making transactions must comply with the applicable volume
and price limits and be identified as such. In general, a passive market maker
may display its bid at a price not in excess of the highest independent bid
for the security, and, if all independent bids are lowered below the passive
market maker's bid, then such bid must be lowered when certain purchase limits
are exceeded.

LEGAL MATTERS

The validity of the shares of Common Stock being offered hereby and certain
other legal matters regarding the shares of Common Stock will be passed upon
for the Company by Piper & Marbury L.L.P., Washington, D.C., counsel to the
Company. Certain legal matters in connection with the offering will be passed
upon for the Underwriters by Gibson, Dunn & Crutcher LLP, New York, New York.

EXPERTS

The consolidated balance sheets of the Company as of December 31, 1994 and
1995 and the consolidated statements of operations, stockholders' equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 1995 included in this Prospectus and Registration Statement, have
been included on the reports of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
Regional Offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and at 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
at prescribed rates. The Company's Common Stock is quoted on the Nasdaq
National Market, and such reports, proxy statement and other information can
also be inspected at the offices of The Nasdaq Stock Market, 1735 K Street,
N.W., Washington, D.C. 20006.

The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to
the shares of Common Stock offered hereby. This Prospectus, which constitutes
a part of the Registration Statement, does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Any statements
contained herein concerning the provisions of any document filed as an Exhibit
to the Registration Statement or otherwise filed with the Commission are not
necessarily complete and, in each instance, reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference.

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GLOSSARY OF TERMS

"1.9 GHz"---Generally, the radio spectrum between 1850 MHz and 1990 MHz.

"10-Year Buildout Requirement"---The requirement that a holder of a 30 MHz
MTA license build out its network so that service is available to two-thirds
of the population in the MTA within 10 years of the date the license was
issued.

"AIN"---Advanced Intelligent Network.

"airtime charges"---Charges for use of the wireless communication system
based on minutes of use (above any included in a monthly subscription) that
are in addition to any charges for access to the PSTN or for long distance.

"alternative bypass facilities"---Other access mechanisms for connecting a
telephone customer to a network other than using the regulated LEC, including
fiber optics.

"ASIC"---Application-specific integrated circuit.

"bandwidth on-demand protocol"---A protocol that allows a user to access
variable data rates dependent on its requirements and available bandwidth at
the time of access.

"base station"---A fixed site with network equipment that is used for RF
communications with mobile stations, and is part of a cell, or a sector within
a cell, and is backhauled to an MTSO or other part of a cellular system.

"BOCs"--Bell Operating Companies.

"Broadband PCS"---High frequency, next generation of wireless services.

"BTA"---Basic Trading Area.

"CAI"---Common Air Interface. A standard radio and protocol definition that
helps ensure interoperability of mobile and portable radios across multiple
vendors' base stations and/or handsets.

"CAP"---Competitive Access Provider services. Carriers that offer local
transport facilities to other interconnecting carriers in competition with the
LEC.

"CATV"---Community access (cable) television.

"CDMA"---Code Division Multiple Access is a digital wireless transmission
technology for use in cellular telephone communications, PCS and other
wireless communications systems. CDMA is a spread spectrum technology in which
calls are assigned a pseudo random code to encode digital bit streams. The
coded signals are then transmitted over the air on a frequency between the end
user and a cell site, where they are processed by a base station. CDMA allows
more than one wireless user to simultaneously occupy a single radio frequency
band with reduced interference.

"cellular system"--- A telephone system based on a grid of "cells" deployed
at 800 MHz. Each cell contains transmitters, receivers and antennas, and is
connected to switching gear and control equipment.

"Centrex"---The switching system of a local telephone operator.

"channel"---A single path, either RF or voice, for transmitting electrical
signals.

"churn rate"---Expressed as a rate for a given measurement period, equal to
the number of subscriber units disconnected divided by the average number of
units of the entire installed base of customers.

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"CTIA"---The Cellular Telecommunications Industry Association, an industry
group in North America comprised primarily of cellular telephone service
companies and recently some PCS license holders.

"digital"---A method of storing, processing and transmitting information
through the use of distinct electronic or optical pulses that represent the
binary digits 0 and 1. Digital transmission/switching technologies employ a
sequence of discrete, distinct pulses to represent information, as opposed to
the continuously variable analog signal.

"digitized compressed imaging"---The compression of very large static
pictoral files in digitized form for transmission or storage.

"digitized compressed video"---The compression of video in digitized form
for transmission or storage, currently primarily for picturephone quality
video.

"digital protocols"---Methodologies which serve to manage the communication
for digital signal transmission. CDMA and TDMA are examples of high level
digital protocols.

"dual mode operation"---A wireless system which is capable of supporting
either different digital protocols or both digital and analog technologies,
including at different frequencies.

"dual mode phone"---A mobile or portable phone which is capable of dual mode
operation.

"Entrepreneurs' Band"---The C and F Block licenses, consisting of 30 MHz and
10 MHz of spectrum, respectively, to be auctioned by the FCC to bidders
consisting of smaller businesses.

"ESMR"---Enhanced Specialized Mobile Radio is a radio communications system
that employs digital technology with a multi-site configuration that permits
frequency reuse but used in the SMR frequencies, offering enhanced dispatch
services to traditional analog SMR users.

"FCC"---The Federal Communications Commission.

"FDMA"---Frequency Division Multiple Access involves communicating with
devices by means of a technique that allocates different frequencies to
different users.

"Five-Year Buildout Requirement"---The requirement that a holder of a 30 MHz
MTA license buildout its network so that service is available to one-third of
the population in the MTA within five years of the date the license was
issued.

"frequency"---The number of cycles per second, measured in hertz, of a
periodic oscillation or wave in radio propagation.

"frequency reuse"---A measure of relative efficiency in the use of
frequency.

"GSM"---Global System for Mobile Communications is a distributed networking
architecture designed for managing digital mobile telephone users which was
designed in Europe to provide pan European roaming.

"hand-off"---The act of transferring communication with a mobile unit from
one base station to another. A hand-off transfers a call from the current base
station to the new base station. A "soft" hand-off establishes communications
with a new cell before terminating communications with the old cell.

"infrastructure equipment" --- Fixed infrastructure equipment consisting of
base stations, base station controllers, antennas, switches, management
information systems and other equipment making up the backbone of the wireless
communication system that receives, transmits and processes signals from and
to subscriber equipment and/or between wireless systems and the public
switched telephone network.

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"IS"---Interim Standard.

"ISDN"---Integrated Services Digital Network.

"LANs"---Local Area Networks.

"LEC"---Local Exchange Carrier.

"mobile network systems"---Mobile systems such as cellular, PCS, SMR and
ESMR.

"mobile satellite systems"---Satellite systems designed for communications
in remote locations where terestrial wireless systems such as PCS are neither
feasible nor economical.

"MSA"---Metropolitan Statistical Area.

"MTA"---Major Trading Area.

"Network Equipment"---The fixed infrastructure consisting of base stations,
base station controllers, mobile switching centers and related information
processing control points that manages communications between the mobile unit
and the public switched telephone network.

"New York MTA License"---Omnipoint's 30 MHz A-Block license to provide 1.9
GHz PCS services for the New York MTA.

"PBX"---A Private Branch Exchange is a telephone system designed for use on
private premises such as offices.

"PCIA"---Personal Communications Industry Association is a North America
trade association whose members either have PCS or paging licenses.

"PCS"---Personal Communications Services.

"PCS-1900"---A 1.9 GHz upbanded version of the 900 MHz RF access protocol to
GSM, proposed for use in PCS systems in the U.S.

"PSTN"---Public Service Telephone Network.

"radio card"---A card contained in a base station that spreads, despreads
and modulates the radio signal and utilizes a technique to improve radio
performance.

"RF"---Radio frequency. Freqencies of the electromagnetic spectrum that are
associated with radio wave propagation.

"RF access system"---The portion of the wireless network which involves the
communication of the handset to the base station.

"RF bandwidth"---The amount of radio frequency spectrum assigned to a
channel or license that encompasses a relative range of frequencies that can
be passed through a transmission medium without distortion (normally with
respect to one channel). The greater the bandwidth, the greater the
information carrying capacity. Bandwidth is measured in hertz.

"roaming"---A service offered by mobile communications network operators
which allows a subscriber to use his/her handset while in the service area of
another carrier. Roaming requires an agreement between operators of different
individual markets to permit customers of either operator to access the
other's system.

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"SMR"---Specialized Mobile Radio is a public two-way analog radio
communications network, using simplex push-to-talk technology, whereby
typically services such as dispatch for taxis, delivery, service, and utility
repair services use mobile radios in vehicles and/or portable radios, and
typically operate on a repeater network that "repeats" an incoming
transmission on one channel onto an appropriate outgoing designated or
available channel.

"spread spectrum"---A technology originally developed for military
applications which spreads a signal over a wider spectrum than would be used
with narrow band radio signals.

"subscriber equipment"---Mobile or portable wireless telephone handsets.

"switching platform"---A platform that provides interconnection of the RF
access system to the PSTN and supports the network with databases and other
support services.

"TDMA"---Time Division Multiple Access is a digital wireless transmission
technology which converts analog voice signals into digital data and puts more
than one voice channel on a single RF channel by separating the users in time.

"vocoder"---A speech compression device which encodes voice signals to
reduce the amount of bandwidth required for a voice transmission.

"WLL"---Wireless Local Loop is a system that eliminates the need for a wire
(loop) connecting users to the public switched telephone network, which is
used in conventional wired telephone systems, by transmitting voice messages
over radio waves for the "last mile" connection between the location of the
customer's telephone and a base station connected to the network equipment.

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OMNIPOINT CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

[Download Table]

PAGE

Report of Independent Accountants........................................ F-2
Consolidated Balance Sheets at December 31, 1994 and 1995 and March 31,
1996 (unaudited)........................................................ F-3
Consolidated Statements of Operations for the years ended December 31,
1993, 1994 and 1995 and for the three months ended March 31, 1995 and
1996 (unaudited)........................................................ F-4
Consolidated Statements of Stockholders' Equity (Deficit) for the years
ended December 31, 1993, 1994 and 1995 and for the three months ended
March 31, 1995 and 1996 (unaudited)..................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1993, 1994 and 1995 and for the three months ended March 31, 1995 and
1996 (unaudited)........................................................ F-6
Notes to Consolidated Financial Statements............................... F-7

F-1

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of Omnipoint Corporation:

We have audited the accompanying consolidated balance sheets of Omnipoint
Corporation as of December 31, 1994 and 1995, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Omnipoint Corporation as of December 31, 1994 and 1995, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.

Coopers & Lybrand L.L.P.

Boston, Massachusetts
March 15, 1996

F-2

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OMNIPOINT CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

[Download Table]

DECEMBER 31, MARCH 31,
------------------ 1996
1994 1995 (UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents..................... $ 5,543 $ 57,784 $ 127,222
Prepaid expenses and other assets (Note 3).... 200 5,040 5,300
Inventory..................................... 605 1,310 1,611
-------- -------- ---------
Total current assets......................... 6,348 64,134 134,133
-------- -------- ---------
Fixed assets, net (Notes 4 and 10)............. 3,016 18,957 21,213
FCC deposit (Note 7)........................... -- 40,000 40,000
Other assets................................... -- 879 --
Licensing costs, net of accumulated
amortization of $428, $9,116 and $11,288 as of
December 31, 1994 and 1995, and March 31,
1996, respectively............................ 347,090 338,402 336,230
Deferred financing costs and other intangible
assets, net of accumulated amortization of
$87, $987 and $1,277 as of December 31, 1994
and 1995, and March 31, 1996, respectively.... 4,492 12,618 12,329
-------- -------- ---------
Total assets................................. $360,946 $474,990 $ 543,905
======== ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.............................. $ 896 $ 15,610 $ 15,193
Accrued expenses (Note 5)..................... 2,096 4,593 2,444
Accrued interest payable (Note 8)............. -- 388 2,445
Capital lease obligations--current portion
(Note 10).................................... 262 182 146
Credit agreement (Note 7)..................... -- 36,500 --
Convertible Subordinated Notes (Note 7)....... -- 16,250 --
Deferred revenue.............................. -- 4,300 4,300
-------- -------- ---------
Total current liabilities.................... 3,254 77,823 24,528
Capital lease obligations--long-term portion
(Note 10)..................................... 231 106 92
Accrued interest payable (Note 8).............. 1,457 -- --
Loan payable under financing agreement (Note
7)............................................ -- 19,479 22,019
Senior notes (Note 7).......................... -- 16,485 17,022
New York MTA license obligation (Note 8)....... 347,518 347,518 347,518
Commitments and contingencies (Notes 8, 9 and
10)
Redeemable convertible preferred stock, $.01
par value, 4,000,000 shares authorized at
December 31, 1994 and 5,750,000 shares
authorized at December 31, 1995 (Notes 6 and
7):
Series A; 666,667 shares issued and
outstanding at December 31, 1994 and 1995 (at
liquidation preference)...................... 1,500 1,500 --
Series B; cumulative preferred stock;
1,500,000 shares issued and outstanding at
December 31, 1994 and 1,651,714 shares issued
and outstanding at December 31, 1995
(liquidation preference of $16,268 and
$17,244 at December 31, 1994 and 1995,
respectively), net of issuance costs......... 14,402 15,919 --
Series C; cumulative preferred stock;
1,866,338 shares issued and outstanding at
December 31, 1995 (liquidation preference of
$29,106), net of issuance costs.............. -- 26,708 --
Stockholders' equity (deficit) (Notes 6, 7 and
11):
Common stock, par value $.01 per share;
authorized 75,000,000 shares, issued and
outstanding 24,428,424 shares at December 31,
1994, 24,658,618 shares at December 31, 1995
and 45,009,039 shares at March 31, 1996...... 244 247 450
Additional paid-in capital.................... 14,334 29,860 209,200
Accumulated deficit........................... (21,728) (59,498) (75,401)
Unearned compensation......................... (20) (23) (352)
Notes receivable (Note 2)..................... (246) (1,134) (1,171)
-------- -------- ---------
Total stockholders' equity (deficit)......... (7,416) (30,548) 132,726
-------- -------- ---------
Total liabilities and stockholders' equity
(deficit)................................... $360,946 $474,990 $ 543,905
======== ======== =========

The accompanying notes are an integral part of the consolidated financial
statements.

F-3

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OMNIPOINT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

[Download Table]

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- --------------------
1993 1994 1995 1995 1996
(UNAUDITED)

Revenues:
License fees (Note 9)....... $ -- $ 3,000 $ -- $ -- $ --
Contract revenue (Note 2)... 1,618 -- -- -- --
------- ------- -------- --------- ---------
Total revenues............. 1,618 3,000 -- -- --
Operating expenses:
Research and development.... 4,593 7,018 14,345 2,317 4,759
Sales, general and
administrative............. 2,974 6,290 12,619 1,785 5,172
Depreciation and
amortization............... 246 1,125 11,038 2,690 3,501
------- ------- -------- --------- ---------
Total operating expenses... 7,813 14,433 38,002 6,792 13,432
------- ------- -------- --------- ---------
Loss from operations....... (6,195) (11,433) (38,002) (6,792) (13,432)
------- ------- -------- --------- ---------
Other income (expense):
Interest income............. 201 363 749 50 1,398
Interest expense (Notes 7
and 8)..................... (233) (1,519) (517) (7,982) (3,869)
Miscellaneous income........ -- 65 -- -- --
Gain on sale of subsidiary
stock (Note 10)............ -- 3,194 -- -- --
------- ------- -------- --------- ---------
Net loss................... $(6,227) $(9,330) $(37,770) $(14,724) $(15,903)
======= ======= ======== ========= =========
Pro forma net loss per common
share
(unaudited) (Note 1)........ $ (.96)
========
Pro forma weighted average
common shares outstanding
(unaudited) (Note 1)........ 39,529
========
Net loss per common share.... $ (0.47) $ (0.39)
========= =========
Weighted average common
shares outstanding.......... 31,345 40,469
========= =========

The accompanying notes are an integral part of the consolidated financial
statements.

F-4

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OMNIPOINT CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE DATA)

[Enlarge/Download Table]

TOTAL
COMMON STOCK ADDITIONAL STOCKHOLDERS'
----------------- PAID-IN ACCUMULATED UNEARNED NOTES EQUITY
SHARES AMOUNT CAPITAL DEFICIT COMPENSATION RECEIVABLE (DEFICIT)

Balance, December 31,
1992................... 22,822,443 $228 $ 6,314 $ (6,171) $(120) $ (151) $ 100
Exercise of stock
options................ 13,343 -- 12 -- -- -- 12
Stock options granted
below market value..... -- -- 14 -- (14) -- --
Amortization of unearned
compensation........... -- -- -- -- 91 -- 91
Interest on employee
note receivable........ -- -- -- -- -- (7) (7)
Net loss................ -- -- -- (6,227) -- -- (6,227)
---------- ---- -------- -------- ----- ------- --------
Balance, December 31,
1993................... 22,835,786 228 6,340 (12,398) (43) (158) (6,031)
---------- ---- -------- -------- ----- ------- --------
Issuance of common stock
in exchange for
convertible
subordinated note...... 382,308 4 3,213 -- -- -- 3,217
Issuance of common stock
in exchange for an
option held by third
party to purchase
shares of subsidiary... 1,125,000 11 4,489 -- -- -- 4,500
Issuance of restricted
stock to employee...... 2,500 -- 25 -- -- -- 25
Issuance of common
stock.................. 270 -- -- -- -- -- --
Exercise of stock
options................ 57,560 1 17 -- -- -- 18
Issuance of restricted
stock in exchange for
employee note
receivable............. 25,000 -- 250 -- -- (250) --
Amortization of unearned
compensation........... -- -- -- -- 23 -- 23
Interest on employee
notes receivable....... -- -- -- -- -- (2) (2)
Forgiveness of employee
notes receivable....... -- -- -- -- -- 164 164
Net loss................ -- -- -- (9,330) -- -- (9,330)
---------- ---- -------- -------- ----- ------- --------
Balance, December 31,
1994................... 24,428,424 244 14,334 (21,728) (20) (246) (7,416)
---------- ---- -------- -------- ----- ------- --------
Issuance of 151,714
shares of Series B
preferred stock in
payment of Series B
dividend............... -- -- (1,517) -- -- -- (1,517)
Dividends accrued on
Series B and Series C
preferred stock........ -- -- (1,839) -- -- -- (1,839)
Issuance of warrants.... -- -- 17,797 -- -- -- 17,797
Issuance of common stock
in exchange for
services............... 8,700 -- 58 -- -- -- 58
Exercise of stock
options................ 83,994 1 91 -- -- -- 92
Issuance of options as
form of advanced
compensation........... -- -- 112 -- (112) -- --
Amortization of unearned
compensation........... -- -- -- -- 109 -- 109
Issuance of restricted
stock in exchange for
employee notes
receivable............. 137,500 2 824 -- -- (826) --
Issuance of employee
note receivable........ -- -- -- -- -- (87) (87)
Interest on employee
notes receivable....... -- -- -- -- -- (29) (29)
Forgiveness of employee
note receivable........ -- -- -- -- -- 54 54
Net loss................ -- -- -- (37,770) -- -- (37,770)
---------- ---- -------- -------- ----- ------- --------
Balance, December 31,
1995................... 24,658,618 247 29,860 (59,498) (23) (1,134) (30,548)
---------- ---- -------- -------- ----- ------- --------
Dividends accrued on
Series B and Series C
preferred stock........ -- -- (273) -- -- -- (273)
Shares issued in
connection with initial
public offering, net of
expenses............... 8,050,000 80 118,357 -- -- -- 118,437
Conversion of
subordinated debt...... 1,562,500 16 16,234 -- -- -- 16,250
Conversion of preferred
stock.................. 10,605,591 106 44,597 -- -- -- 44,703
Exercise of stock
options................ 132,330 1 75 -- -- -- 76
Issuance of options in
form of advanced
compensation........... -- -- 350 -- (350) -- --
Amortization of unearned
compensation........... -- -- -- -- 21 -- 21
Interest on employee
notes receivable....... -- -- -- -- -- (37) (37)
Net loss................ -- -- -- (15,903) -- -- (15,903)
---------- ---- -------- -------- ----- ------- --------
Balance, March 31, 1996. 45,009,039 $450 $209,200 $(75,401) $(352) $(1,171) $132,726
========== ==== ======== ======== ===== ======= ========

The accompanying notes are an integral part of the consolidated financial
statements.

F-5

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OMNIPOINT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

[Download Table]

THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- ------------------
1993 1994 1995 1995 1996
(UNAUDITED)

Cash flows used in operating
activities:
Net loss...................... $(6,227) $(9,330) $(37,770) $(14,724) $(15,903)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Amortization and
depreciation................. 246 1,125 11,038 2,690 3,501
Compensation expense from
stock grants................. 91 23 109 17 21
Pilot system equipment funded
by the financing agreement... -- -- 1,053 -- --
Gain on sale of subsidiary
stock........................ -- (3,194) -- -- --
Increase in employee notes
receivable and related
accrued interest............. (7) (2) (116) (5) (37)
Forgiveness of employee notes
receivable................... -- 164 54 -- --
Accrued interest.............. 213 217 -- 7,651 2,057
Payment in kind interest on
financing agreement.......... -- -- 553 -- 540
Accrued interest on New York
MTA License obligation and
reversal based on FCC order.. -- 1,457 (1,457) -- --
Interest expense associated
with warrants................ -- -- 533 300 --
Interest expense associated
with amortization of
discount and issuance cost... -- -- -- -- 591
Issuance of common stock in
exchange for services........ -- -- 58 -- --
Changes in assets and
liabilities:
(Increase) decrease in
operating assets:
Accounts receivable......... 601 110 -- -- --
Prepaid expenses and other
assets..................... (29) (149) 1 24 (262)
Inventory................... (84) (143) (705) (2) (301)
Other assets................ -- -- (879) -- 879
Increase (decrease) in
operating liabilities:
Accounts payable and accrued
expenses................... 201 1,827 3,481 (856) (727)
Deferred revenue............ -- -- 4,300 -- --
------- ------- -------- -------- --------
Net cash used in operating
activities.................... (4,995) (7,895) (19,747) (4,905) (9,641)
------- ------- -------- -------- --------
Cash flows from investing
activities:
Purchase of fixed assets...... (480) (2,424) (3,991) (296) (3,349)
FCC deposit................... -- -- (40,000) -- --
Purchase of license........... -- (50) -- -- --
Proceeds from sale of
subsidiary stock............. -- 3,194 -- -- --
------- ------- -------- -------- --------
Net cash provided by (used in)
investing activities.......... (480) 720 (43,991) (296) (3,349)
------- ------- -------- -------- --------
Cash flows from financing
activities:
Proceeds from line of credit
loan agreement............... -- -- 10,000 3,000 --
Proceeds from issuance of
preferred stock, net of
issuance costs............... 14,402 -- 16,708 -- --
Proceeds from issuance of
debt......................... 3,000 -- -- -- --
Proceeds from issuance of
common stock................. 12 43 92 66 76
Payments of obligations under
capital leases............... (38) (19) (284) (140) (49)
Proceeds from convertible
subordinated and senior
notes........................ -- -- 50,000 -- --
Proceeds from credit
agreement.................... -- -- 40,000 -- --
Payments on credit agreement.. -- -- (3,500) -- (36,500)
Proceeds from financing
agreement.................... -- -- 4,500 -- 2,000
Payment of deferred financing
costs........................ -- -- (1,527) -- --
Payments of short-term debt
and notes payable............ -- (150) (10) -- --
Proceeds from initial public
offering, net of expenses.... -- -- -- -- 118,437
Dividends accrued and paid.... -- -- -- -- (1,536)
------- ------- -------- -------- --------
Net cash provided by (used in)
financing activities.......... 17,376 (126) 115,979 2,926 82,428
------- ------- -------- -------- --------
Net increase (decrease) in cash
and cash equivalents.......... 11,901 (7,301) 52,241 (2,275) 69,438
Cash and cash equivalents at
beginning of period........... 943 12,844 5,543 5,543 57,784
------- ------- -------- -------- --------
Cash and cash equivalents at
end of period................. $12,844 $ 5,543 $ 57,784 $ 3,268 $127,222
======= ======= ======== ======== ========
Supplemental cash flow
information (Note 15):
Cash paid for interest........ $ 16 $ 107 $ 501 $ 10 $ 1,589
Cash paid for taxes........... 3 9 32 21 51

The accompanying notes are an integral part of the consolidated financial
statements.

F-6

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RISKS:

General

Omnipoint Corporation ("Omnipoint" or the "Company"), was incorporated in
Delaware on June 18, 1987 to design, develop and market proprietary digital
wireless products based on spread spectrum. Substantially all of the Company's
revenues have been derived from contracts related to research and development,
prototype equipment sales and related services in the field of wireless
digital communication products. The Company's success in developing its
technology for the first digital personal communication service ("PCS") system
in 1991 and 1992 was instrumental in the Federal Communications Commission
("FCC") awarding Omnipoint Communications Inc. ("OCI"), a subsidiary of the
Company, a Pioneer's Preference in 1993. As a result of the Pioneer's
Preference, the FCC issued to OCI in December 1994 a 30 MHz license to provide
PCS services for the New York MTA (the "New York MTA License"). During 1994,
an unrelated party acquired a 4.42% minority interest in OCI.

On January 31, 1996, the Company completed an initial public offering in
which 8,050,000 shares of common stock were issued which provided the Company
with proceeds of approximately $118.4 million, net of expenses.

Principles of Consolidation

The consolidated financial statements include the accounts of Omnipoint
Corporation, OCI and Omnipoint Corporation's wholly-owned subsidiaries. Losses
in consolidated corporations attributable to minority interest holders in
excess of their respective share of the subsidiary's net equity are not
eliminated in consolidation. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Unaudited Consolidated Financial Statements

The accompanying consolidated financial statements of the Company as of
March 31, 1996 and for the three months ended March 31, 1995 and 1996 are
unaudited. All adjustments (consisting only of normal recurring adjustments)
have been made which, in the opinion of management, are necessary for a fair
presentation thereof. Results of operations for the three months ended March
31, 1996 are not necessarily indicative of the results that may be expected
for the full year or for any future period.

Nature of Operations

The Company is currently in the acquisition and buildout phases of the New
York MTA network. The Company anticipates that it will take several years to
complete the buildout over the entire geographic area of the New York MTA. To
date, the Company has sold PCS equipment only for trials, and the Company does
not expect to have significant PCS services or equipment revenue before 1997.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expense during the
reporting period. Actual results could differ from those estimates.

Current Vulnerability Due to Certain Concentrations

The Company substantially relies upon its relationship with Northern Telecom
Inc. ("Northern Telecom"). The Company has entered into a series of OEM and
equipment supply agreements, a collaborative development agreement, and a
vendor financing agreement with Northern Telecom. The Company has agreed to
purchase from Northern Telecom $250.0 million of equipment and services over
the next five years. The Company relies substantially on the vendor financing
arrangement through which Northern Telecom provides a $382.5 million

F-7

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)
financing agreement for the buildout of the New York MTA Network, including
the purchase of equipment (see Notes 7, 8, and 9).

The Company has had limited revenues and has been dependent on a limited
number of customers for its revenues. In 1994, the Company received all of its
revenue, $3.0 million from Northern Telecom, representing a non-refundable
license fee received upon entering into a non-exclusive OEM agreement. Under
the terms of the agreement, Northern Telecom may pay up to an aggregate of
$12.0 million in license and OEM fees under certain circumstances. The Company
expects Northern Telecom to be a source of significant revenue in the future.
If the agreement were terminated, the lack of revenues from sales to Northern
Telecom would have a material adverse effect upon the Company's financial
condition and results of operations.

Dependence Upon Key Employees

The Company is highly dependent upon the technical and management skills of
its key employees.

The Company's growth may cause a significant strain on its management,
operational and financial resources. The Company's ability to manage its
growth effectively will require it to continue to implement and improve its
operational and financing systems. The Company's success also depends in large
part on a limited number of key technical, marketing and sales employees and
on the Company's ability to continue to attract and retain additional highly
talented personnel. Competition for qualified personnel in the PCS equipment
and service industries is intense.

Uncertainty of Protection of Patents and Proprietary Rights

The Company's technology business relies on a combination of patents,
trademarks, and nondisclosure and developments agreements in order to
establish and protect its proprietary rights. The Company has filed and
intends to continue to file applications as appropriate for patents covering
its technology and products. There can be no assurance that additional patents
will issue, that the existing patents and such additional patents allowed will
be sufficiently broad to protect the Company's technology or that the
confidentiality agreements and other methods on which the Company relies to
protect its trade secrets and proprietary information will be adequate.

Pro Forma Presentation (Unaudited)

The unaudited pro forma net income (loss) per common share as of December
31, 1995 is shown on the face of the income statement because the Company
believes the pro forma presentation is more meaningful since it includes the
conversion of the Redeemable Convertible Preferred Stock and the conversion of
the Convertible Subordinated Notes. The unaudited pro forma net income (loss)
per common share is computed based upon the weighted average number of common
and common equivalent shares outstanding after certain adjustments described
below. Common equivalent shares are included in the calculations where the
effect on their inclusion would be dilutive. In accordance with Securities and
Exchange Commission Staff Accounting Bulletin No. 83 ("SAB No. 83"), all
common and common equivalent shares and other potentially dilutive instruments
which include stock options, stock warrants and the Series C Preferred Stock
issued during the twelve month period prior to the filing of the Registration
Statement have been included in the calculation as if they were outstanding
for all periods. As permitted under SAB No. 83, the common equivalent shares
for stock options and warrants, were determined using the treasury stock
method at the initial public offering price of $16.00 per share. In addition,
outstanding shares of Series A and Series B Preferred Stock that were
converted into common stock upon the effectiveness of the initial public
offering are treated as having been converted into Common Stock at

F-8

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)
the date of original issuance. The Series C Preferred Stock, which is
considered a common stock equivalent, from the date of original issuance, was
also included pursuant to SAB No. 83 on an as-if converted basis from January
31, 1995 until the date of its original issuance. The Convertible Subordinated
Notes were treated as if they were converted on the date of their issuance.

Net Income (Loss) Per Common Share

Net income (loss) per common share on a historical basis is computed in the
same manner as pro forma net income (loss) per common share, except that
Redeemable Convertible Preferred Stock and the Convertible Subordinated Notes
are not assumed to be converted. In the computation of net income (loss) per
common share, dividends on Redeemable Convertible Preferred Stock are included
as an increase to net income (loss) to common stockholders.

Net income (loss) per common share on a historical basis is as follows:

[Download Table]

YEARS ENDED DECEMBER 31,
--------------------------
1993 1994 1995
(IN THOUSANDS, EXCEPT
PER SHARE DATA)

Net income (loss).................................. $(6,227) $(9,330) $(37,770)
Dividends on Redeemable Convertible Preferred
Stock............................................. -- -- 3,357
------- ------- --------
Net income (loss) to common Stockholders........... $(6,227) $(9,330) $(41,127)
======= ======= ========
Net income (loss) per common share................. $ (0.21) $ (0.30) $ (1.31)
======= ======= ========
Weighted average number of common shares
outstanding....................................... 29,702 30,752 31,410

Cash and Cash Equivalents

Cash and cash equivalents are stated at cost which approximates market. The
Company considers all highly liquid debt instruments purchased with an
original maturity at time of purchase of three months or less to be cash
equivalents.

Inventory

Inventory is recorded at the lower of cost or market on the basis of average
cost. Inventory consists of raw materials and other items used in development
of the Company's technology.

Prepaid Expenses and Other Assets

Included in prepaid expenses and other assets is an advance payment for
pilot system equipment financed through the financing agreement.Upon receipt
the pilot system equipment will be expensed and will be included in research
and development expense in the consolidated statement of operations.

Fixed Assets and Depreciation

Fixed assets are recorded at cost. Major renewals and improvements are
capitalized; repairs and maintenance are charged to expense. Depreciation is
provided by use of the straight-line method over estimated useful lives of
three to five years. Depreciation begins when the fixed asset is placed into
service. Upon retirement or sale, the cost of the asset disposed of and the
related accumulated depreciation are removed from the accounts and any
resulting gain or loss is credited or charged to income.

Other Assets

Included in other assets are costs incurred in the preparation of the
Company's initial public offering. The offering costs, which were included in
accounts payable and accrued expense at December 31, 1995, were charged to
additional paid-in capital upon completion of the offering on January 31,
1996.

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)

Licensing Costs and Other Intangible Assets

Licensing costs represent the license fees of $347.5 million for the New
York MTA License granted by the FCC in December 1994. Among other conditions,
the New York MTA License requires that the Company construct a 30 MHz system
in the New York MTA that offers coverage to at least one-third of the
population of the New York MTA within five years of the license grant date and
at least two-thirds of the population within 10 years. The New York MTA
License also contains a condition that requires the Company to construct a PCS
system that "substantially uses" the design and technology upon which the
Pioneer's Preference Award was based. The condition expires upon the system
providing coverage for one-third of the population of the New York MTA.

The New York MTA License expires in December 2004; however, FCC rules
provide for renewal expectancy provisions. The Company expects to exercise the
renewal provisions, and accordingly the New York MTA License is being
amortized from the date of grant using the straight-line method over a period
of 40 years. The Entrepreneurs' Band BTA licenses and any other licenses the
Company purchases in the future will be accounted for in accordance with the
recently agreed upon industry practices. Accordingly, interest incurred for
licenses will be capitalized during the buildout phase and amortization of the
license cost will begin with the commencement of service to customers.

Deferred financing costs include amounts paid related to obtaining proceeds
under debt, credit facilities and financing agreements. These costs are
amortized over the life of the related debt agreement, generally one to ten
years.

Other intangible assets include an asset recorded in connection with shares
of the Company's Common Stock issued in exchange for a previously granted
option to purchase from the Company shares of common stock of OCI (See Note
11). This asset is being amortized using the straightline method over a 40
year period. Other intangible assets also include costs incurred for the
rights to certain information and technologies. These costs are being
amortized over their estimated useful lives of five to 10 years.

Periodically management assesses, based on undiscounted cash flows, if there
has been a permanent impairment in the carrying value of its intangible assets
and, if so, the amount of any such impairment by comparing anticipated
discounted future operating income resulting from intangible assets with the
carrying value of the related asset. In performing this analysis, management
considers such factors as current results, trends and prospects, in addition
to other economic factors.

The Company is required to implement Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" in 1996. As the Company continually
evaluates the realizability of its long-lived assets, including intangibles,
adoption of the statement is not anticipated to have a material effect on the
Company's financial statements at the date of adoption.

Common and Preferred Stock

On December 27, 1995, the Board of Directors authorized, and on December 28,
1995, the stockholders approved, a 2.5-for-one stock split of the Common
Stock, effected in the form of a stock dividend. All share and per share data
have been restated in these financial statements for all periods presented to
reflect this stock split.

Effective on the closing of the initial public offering, the Company's Board
of Directors authorized 5,000,000 shares of preferred stock. The Board of
Directors has the authority to issue these shares and to determine the price,
rights, preferences, privileges and restrictions, including voting rights, of
those shares without further vote or action by the stockholders.

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)

Revenue Recognition

Income from contracts is recognized on the percentage-of-completion basis.
Percentage of completion is determined by relating the actual cost of work
performed to date for each contract to its current estimated final cost. When
current contract estimates indicate a loss, provision is made for the total
anticipated loss. Revenue from license fees or equipment sales and related
support services is recognized when hardware or software has been delivered,
providing other obligations are no longer significant, customer acceptance is
reasonably assured and collectibility is deemed probable.

Research and Development

Expenditures for research and development are charged to operations as
incurred. Research and development expenses include costs for both new product
development and ongoing efforts to improve existing technologies. Costs of
internally developed software which qualify for capitalization are immaterial.

Income Taxes

Deferred income taxes reflect the tax consequences on future years of
differences between the tax bases of assets and liabilities and their bases
for financial reporting purposes, including the recognition of future tax
benefits, such as net operating loss carryforwards to the extent that
realization of such benefits are more likely than not.

Accounting for Stock-Based Compensation

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which is effective for fiscal year 1996. The Company is
evaluating the impact of this pronouncement but currently expects to elect the
disclosure alternative. As a result, the adoption of this pronouncement is not
expected to have a material impact on the Company's financial statements.

2. RELATED PARTY TRANSACTIONS:

Employee notes receivable included a demand note of $158,315 as of December
31, 1993 due from an employee of the Company with a stated interest rate of
5%. In accordance with an agreement, the note receivable was forgiven on April
14, 1994 and recorded as compensation expense. During 1994 and 1995, two
employees executed five-year promissory notes payable to the Company in the
original principal amount of $250,000 and $75,000, respectively, with interest
at the rate of 8.5% per year as consideration for the purchase of Common
Stock. The annual payments due under these notes may be forgiven pursuant to a
special bonus provision contained in the employment agreements. In accordance
with this provision, $54,250 of the $250,000 note was forgiven during 1995
representing $50,000 principal and $4,250 of interest.

On September 19, 1995, an employee executed a three-year promissory note
payable to the Company in the original principal amount of $87,100, plus
interest on the unpaid principal balance from time to time at the rate of
8.5%. The annual payment due under the note may be forgiven pursuant to a
special bonus provision contained in an amendment to the employee's employment
agreement.

On October 1, 1995, an employee executed a five-year balloon promissory note
payable to the Company in the original principal amount of $750,000, plus
interest on the unpaid principal balance from time to time outstanding at the
rate of 8% per year, as consideration for the purchase of 125,000 shares of
restricted Common

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)
Stock at $6.00 per share. The payment due under the note may be forgiven
pursuant to a special bonus provision contained in the employee's employment
agreement.

Interest earned under all employee notes was $2,259 and $29,579 for the
years ended December 31, 1994 and 1995, respectively.

Included in contract revenues is $300,000 for the year ended December 31,
1993 received from a customer that, in an unrelated transaction, became a
stockholder in 1994.

3. PREPAID EXPENSES AND OTHER ASSETS:

Prepaid expenses and other assets consist of the following at December 31,
1994 and 1995 and March 31, 1996:

[Download Table]

DECEMBER 31,
------------- MARCH 31,
1994 1995 1996
(IN THOUSANDS)

Advance payment for pilot system equipment
financed through financing agreement........... $ -- $4,840 $4,840
Insurance....................................... -- -- 230
Deposits........................................ 128 83 111
Other........................................... 72 117 119
------ ------ ------
$ 200 $5,040 $5,300
====== ====== ======

4. FIXED ASSETS:

Fixed assets including equipment under capital leases consist of the
following at December 31, 1994 and 1995 and March 31, 1996:

[Download Table]

DECEMBER 31,
---------------- MARCH 31,
1994 1995 1996
(IN THOUSANDS)

Building......................................... $ -- $ 1,190 $ 1,190
Office equipment................................. 369 649 814
Lab equipment.................................... 2,491 3,693 4,488
Network infrastructure equipment................. -- 12,634 12,634
Cell sites....................................... -- -- 438
Furniture and fixtures........................... 107 265 286
Purchased software............................... 786 1,453 1,735
Leasehold improvements........................... 281 1,325 2,867
Vehicles......................................... -- 214 320
------- ------- -------
4,034 21,423 24,772
Less: accumulated depreciation................... (1,018) (2,466) (3,559)
------- ------- -------
$ 3,016 $18,957 $21,213
======= ======= =======

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)

Depreciation expense for the years ended December 31, 1993, 1994 and 1995
was $241,875, $628,747 and $1,448,751, respectively. Network infrastructure
equipment consists of equipment which has not been placed into service at this
time. Accordingly, no depreciation was recorded.

5. ACCRUED EXPENSES:

Accrued expenses consist of the following at December 31, 1994 and 1995 and
March 31, 1996:

[Download Table]

DECEMBER 31, MARCH 31,
-------------
1994 1995 1996
(IN THOUSANDS)

Salaries and benefits................................ $ 425 $ 724 $ 582
Bonuses.............................................. -- 350 350
Relocation........................................... 147 539 693
Professional fees.................................... 1,181 464 719
Dividends............................................ -- 1,839 --
Initial public offering costs........................ -- 593 --
Other................................................ 343 84 100
------ ------ ------
$2,096 $4,593 $2,444
====== ====== ======

Amounts accrued for dividends as of December 31, 1995 include $338,722
payable in 33,872 shares of Series B Preferred Stock and Series B and C
dividends of $1,500,310 to be paid in cash.

6. REDEEMABLE CONVERTIBLE PREFERRED STOCK:

The Company authorized 3,000,000 shares of Redeemable Convertible Preferred
Stock in 1991 and an additional 1,000,000 shares in 1993. The Company
authorized an additional 1,750,000 shares of convertible stock in 1995. During
1991, the Company sold 666,667 shares of Series A Convertible Preferred Stock
("Series A Preferred Stock") for $1.5 million. In August 1993, the Company
sold 1,500,000 shares of Series B Convertible Preferred Stock ("Series B
Preferred Stock") for $15.0 million. During 1995, the Company sold 1,866,338
shares of Series C Convertible Preferred Stock ("Series C Preferred Stock")
resulting in gross proceeds of $27,995,070, including 666,667 shares issued in
satisfaction of a $10.0 million outstanding balance under a line of credit
loan agreement (see Note 7). Issuance costs of the Series C Preferred Stock
included a $600,000 brokerage commission, transaction fees of $559,861 to
certain investors and $127,276 of other related issuance costs.

Shares of Common Stock reserved for conversion of the Company's outstanding
Series A, B and C Preferred Stock were 1,666,667, 7,550,000 and 4,665,842 at
December 31, 1995, respectively.

The Series A Preferred Stock was convertible at any time into Common Stock
of the Company at a conversion rate of one share of Common Stock for each
share of Series A Preferred Stock, subject to adjustment in the event of any
stock dividend, stock split or other recapitalization. The Company at its
option could require each share of the Series A Preferred Stock to be
converted into shares of Common Stock at any time on or after the closing of
the sale of shares of Common Stock at an initial public offering meeting
certain defined criteria. The holders of the Series A Preferred Stock were
entitled to receive, when and only if declared by the Board of Directors,
dividends in an amount per share equal to the per share amount to be declared
for the Common Stock.

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)
No dividends were declared. Each holder of outstanding shares of the Series A
Preferred Stock was entitled to the number of votes equal to the number of
whole shares of Common Stock into which such shares are convertible at that
time. Upon the closing of the initial public offering on January 31, 1996, the
Series A Preferred Stock was converted into 1,666,667 shares of Common Stock.

The holders of the Series B Preferred Stock had the right to convert such
stock at any time into shares of Common Stock at a one for one conversion
rate, subject to, and automatically convert into Common Stock in the event of
a public offering meeting certain defined criteria. The holders of the Series
B Preferred Stock had the right to vote that number of shares equal to the
number of shares of Common Stock issuable upon conversion. The Series B
Preferred Stock accrued a cumulative dividend on a daily basis, whether
declared or not, at the rate of 1.467% of the original purchase price per
quarter, compounded quarterly on principal investment plus accrued dividends
not paid in cash, payable on the last day of each quarter either in cash or
original shares of Series B Preferred Stock and valued at the original
purchase price. In the event of equity offerings or qualified fundraisings
meeting certain criteria, the dividend rate would have been reduced to zero.
Under an amendment to the Series B Stock Purchase Agreement, unpaid and
previously undeclared cumulative dividends, through April 4, 1995 were paid by
the issuance of 151,714 shares of Series B Preferred Stock. As of December 31,
1995, Series B accrued dividends were $728,197. Upon the closing of the
initial public offering, the Series B Preferred Stock and certain accrued
dividends were converted into 4,273,082 shares of Common Stock. Additionally,
accrued dividends of $236,892 through such date were paid in cash.

The holders of Series C Preferred Stock had the right to convert the Series
C Preferred Stock at any time into shares of Common Stock at a one for one
conversion rate, and could be required by the Company to be converted into
Common Stock in the event of a public offering meeting certain defined
criteria. The holders of the Series C Preferred Stock had the right to vote
that number of shares equal to the number of shares of Common Stock issuable
upon conversion. The Series C Preferred Stock accrued a cumulative dividend,
whether declared or not, at the rate of 1.9427% per quarter, compounded
quarterly on the stated value (plus cumulative dividends which were accrued
but which were not paid). As of December 31, 1995, Series C accrued dividends
of $1,110,835 were payable in cash. Upon the closing of the initial public
offering, the Series C Preferred Stock was converted into 4,665,842 shares of
Common Stock and accrued dividends of $1,299,326 through such date were paid
in cash.

7. NOTES PAYABLE AND FINANCING AGREEMENTS:

On January 29, 1993, the Company received $3.0 million from an investor in
exchange for a $3.0 million face value convertible subordinated note and
warrants to purchase 972,223 shares of Common Stock. The convertible
subordinated note accrued interest at one percent over prime and principal and
interest were payable on January 29, 1994. Interest expense accrued for the
period from January 29, 1993 through December 31, 1993 was $199,698 at an
interest rate of 7%. On January 29, 1994, the $3.0 million face value
convertible subordinated note plus accrued interest of $217,493 was converted
into 382,307 shares of Common Stock of the Company at approximately $8.40 per
share.

On January 31, 1995, the Company entered into a $10.0 million Line of Credit
Loan Agreement with the holder of the Series B Preferred Stock of the Company,
bearing interest at 12%. On March 10, 1995 and April 4, 1995, the Company was
advanced $3.0 million and $7.0 million under the line, respectively. The
Company's shares of OCI stock were pledged as collateral for the Line of
Credit. The Line of Credit expired upon the closing of the Series C Preferred
Stock equity financing on June 29, 1995. The Company issued warrants to
purchase 50,000 shares of Common Stock at $.004 per share at the initial
closing, and issued additional warrants to

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)
purchase 179,168 shares of Common Stock at $6.00 per share, which expire on
March 10, 2002. In connection with the warrants, the Company recorded interest
expense and an increase to additional paid-in capital of $299,800 in 1995.

On June 29, 1995, the $10.0 million outstanding balance under the Line of
Credit expired, and was exchanged for 666,667 shares of Series C Convertible
Preferred Stock.

Northern Telecom Financing Agreement

On July 21, 1995 OCI entered into a $382.5 million credit facility with
Northern Telecom to finance future purchases and installations of
telecommunications equipment, engineering services, certain related
construction costs, third-party equipment and other expenses.

A portion of the financing agreement, which may be used for working capital
purposes including interest payments on the amounts outstanding on the
financing agreement, matures June 30, 1997. Any amounts repaid can be
subsequently borrowed for other purposes allowed under the financing
agreement. The principal amount on the other portions of the financing
agreement are payable in twenty consecutive quarterly installments beginning
in 2000, with the final payment due on December 31, 2004. Interest on the
unpaid principal balance on all loans payable quarterly in arrears at varying
interest rates at a base or LIBOR rate at the Company's election. On each
interest payment date which occurs prior to June 30, 1997, unless otherwise
paid by the Company, all accrued and payable interest on the outstanding
balance of the facility will be paid in kind by increasing the principal
balance under a portion of the financing agreement, provided that no default
or event of default has occurred and is continuing.

The Company, at its election, can prepay the outstanding amount of loans at
any time without penalty or premium.

The financing agreement is collateralized by a pledge of stock of OCI owned
by a wholly-owned subsidiary of the Company and by substantially all of OCI's
assets. Under the terms of the financing agreement, the Company is subject to
certain financial and operational covenants including restrictions on the
payment of dividends by OCI, restrictions on additional indebtedness and
financial maintenance obligations. Additionally, the financing agreement
provides that, among other things, the failure to pay when due amounts owed to
the FCC shall constitute an event of default. As of December 31, 1995 and
March 31, 1996, OCI had an outstanding balance (principal and payment in kind
interest) of approximately $19.5 million and $22.0 million, respectively. Of
the outstanding balance at March 31, 1996, approximately $5.6 million is due
June 30, 1997, with the remaining balance due in consecutive installments
beginning March 31, 2000.

Credit Agreement

On November 21, 1995, the Company, through its subsidiary Omnipoint PCS
Entrepreneurs, Inc. ("OPCSE"), signed a credit agreement and a term note with
a bank in the original principal amount of $40.0 million. This note was used
to fund the deposit with the Federal Communications Commission in connection
with the C Block Auction.

Interest periods on the term note ranged from one to fourteen days with
interest rates set by the bank based on wholesale money market rates available
to the bank which at December 31, 1995 was 6.375%. The agreement and term note
was collateralized by all assets of OPCSE. Interest accrued as of December 31,
1995 was $58,172. The Company's outstanding balance at December 31, 1995 was
$36.5 million. Subsequent to year end, the Company repaid the outstanding
balance with the proceeds from the convertible subordinated and senior notes
and initial public offering proceeds.

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)
Senior Notes

On November 22, 1995, the Company issued to two institutional investors both
warrants to purchase an aggregate of 625,000 shares of Common Stock at $.004
per share and two five year term Senior Notes in the aggregate principal
amount of $25.0 million. The Senior Notes contain sinking fund provisions
requiring the Company to redeem in the aggregate $5.0 million in principal
amount at the third and fourth anniversary dates of the date of issuance. The
Company is subject to certain restrictions and requirements regarding the
issuance of indebtedness senior or pari passu to the Senior Notes. Under the
terms of the notes the Company is subject to certain covenants which, among
other things, restrict the ability of the Company and certain of its
subsidiaries to incur additional indebtedness; pay dividends or make
distributions in respect of its capital stock or make certain restricted
payments; create liens; or merge or sell all or substantially all of its
assets. In the event that the employment of a senior officer of the Company is
terminated prior to June 30, 1998, the Company must either pay the Senior
Notes in full or pay a one time fee in an amount equal to 5% of the then
outstanding principal of the Senior Notes. The Company may prepay the Senior
Notes at any time. Interest is payable at 6% for the period November 22, 1995
to November 22, 1996, and thereafter is payable at 12% semiannually for the
period from November 22, 1996 to November 22, 2000. Interest accrued as of
December 31, 1995 and March 31, 1996 was $162,500 and $747,500, respectively.
Associated with the valuation of the warrants, the Company recorded a debt
discount and increase in additional paid-in capital of $8,747,500. The
discount will be amortized over the five years life of the notes and resulted
in $232,739 and $77,856 of amortization included in interest expense as of
December 31, 1995 and March 31, 1996, respectively.

10% Convertible Subordinated Notes

On November 29, 1995, the Company issued Convertible Subordinated Notes in
the aggregate amount of $15.0 million, together with warrants to purchase
375,000 shares of Common Stock at an exercise price of $.004 per share. On
December 18, 1995, the Company issued Convertible Subordinated Notes in the
aggregate amount of $10.0 million, together with warrants to purchase 250,000
shares of Common Stock at an exercise price of $.004 per share. These notes
are together known as the "Convertible Subordinated Notes". The Convertible
Subordinated Notes have a stated interest rate of 10%, payable semiannually on
March 31 and September 30, commencing on March 31, 1996. Interest accrued as
of December 31, 1995 was $166,982. The Convertible Subordinated Notes were
converted upon the closing of the initial public offering into an aggregate of
1,562,500 shares of Common Stock at $16.00 per share. Associated with the
valuation of the warrants, the Company recorded a debt discount and an
increase in additional paid-in capital of $8,747,500.

The Company paid $1.0 million for investment banking services rendered in
connection with the issuance of the Senior Notes and $15.0 million of the
Convertible Subordinated Notes. The unamortized amounts are included in
deferred financing costs and other intangible assets.

Total interest expense associated with the notes payable and financing
agreements was $1,931,693 and $2,162,801 for the year ended December 31, 1995
and for the three months ended March 31, 1996, respectively.

8. NEW YORK MTA LICENSE OBLIGATION:

In December 1993, OCI was awarded a final Pioneer's Preference for a license
that required no payment from OCI. Subsequent legislation mandated a
methodology for charging for the New York MTA License. In accordance with
terms defined in that legislation, OCI is obligated to pay a license fee to
the FCC for the New York MTA License awarded in December 1994. The license fee
was derived from 85% of the average per population price (based on the 1990
population) paid by the winning MTA auction bidders of the top 23 MTAs
excluding the three MTA areas awarded by Pioneer's Preference. This derived
number of $13.158 is multiplied by the 1990 New York MTA population of
26,411,597 to arrive at the total obligation of $347.5 million.

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)

Prior to December 31, 1995, the FCC had not implemented the exact terms for
principal and interest payments on the New York MTA License. The initial terms
generally allow for installment payments over the first five years of the New
York MTA License; with interest-only for at least the first two years. Since
payments did not begin until after the New York MTA License and Pioneer's
Preference orders were no longer subject to judicial review, the FCC had not
yet determined the interest rate to be charged, the timing and nature of the
installment payments and related issues. Therefore, OCI estimated and accrued
interest at the prime rate (8.5% at December 31, 1994 and 1995) from the date
the New York MTA License obligation was awarded, and had recorded as of
December 31, 1995 accrued interest on the New York MTA License of $33.5
million.

On March 8, 1996, the FCC adopted an Order which specifies the license
payment terms, such as the interest rate and timetable for payment of the
principal obligations for recipients of the Pioneer's Preference license. The
Order provides for the Pioneers to make their payments in installments over
five years. Based on this Order, the payments will be interest only for the
first two years and the unpaid principal balance and interest will be paid
over the remaining three years. The FCC adopted an interest rate of 7.75%.
Payments commence 30 days from the Order date or April 8, 1996, and thereafter
will be due on the last day of each financial quarter over the next five
years. The five year payment period will run and interest will accrue from the
adoption date of March 8, 1996.

Based on the Order, the Company has revised its estimate and accrual of
interest. Pursuant to Accounting Principles Board Opinion No. 20, "Accounting
Changes," this change in accounting estimate was recorded in the Company's
financial statements during December 1995, resulting in a decrease in 1995
interest expense of $33.5 million. Had this adjustment not been made, the
historical net loss and loss per common share for the year ended December 31,
1995 would have been $74.6 million and $2.37, respectively after giving effect
to the dividends on Redeemable Convertible Preferred Stock.

In addition, the license is conditioned upon the full and timely performance
of payment obligations under the Company's installment plan. If the Company is
more than ninety days delinquent in any payment, it will be deemed to be in
default.

9. AGREEMENTS WITH NORTHERN TELECOM:

Northern Telecom and the Company have signed a series of OEM equipment and
supply agreements, as well as a vendor financing agreement (see Note 7).
Northern Telecom will make varying payments as it purchases core electronics
(primarily radio and digital cards for base stations) and software from the
Company. Northern Telecom made an initial $3.0 million license payment in 1994
(part of up to $12.0 million in license and OEM fees to be paid to the Company
under certain circumstances) and may make additional royalty payments based on
shipments of the Company's products. Northern Telecom will then sell
Omnipoint/Northern Telecom integrated systems to PCS operators, including the
Company. The Company's purchases to build out the New York network will be
financed by Northern Telecom under a financing agreement. The Company has
agreed to make certain product upgrades and warranties available to Northern
Telecom's customers. No equipment, hardware or software sales were made to
Northern Telecom under the OEM Agreement during 1994 or 1995.

During 1994, the Company entered into an agreement to purchase $100.0
million of equipment and services over the next five years with Northern
Telecom. Under the terms of the Supply Agreement, if the conditions of OCI's
purchase obligation are satisfied and OCI fails to purchase $100.0 million of
equipment and services, it may have to pay a penalty of 10% of the unsatisfied
portion of the $100.0 million which may be waived under certain conditions. On
July 21, 1995, the Company entered into an amendment to this supply agreement
to increase the purchase commitment from $100.0 million to $250.0 million. The
Company has purchased approximately $19.0 and $19.3 million under this
purchase commitment as of December 31, 1995 and March 31, 1996, respectively.

F-17

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)

Manufacturing License Agreement

On February 28, 1995, the Company entered into an agreement (the
"Manufacturing License Agreement") with Northern Telecom in conjunction with
the OEM Supply Agreement. Under the terms of the Manufacturing License
Agreement, the Company will give Northern Telecom an option to receive the
non-exclusive worldwide right to use, modify, manufacture or have manufactured
all of the products supplied by the Company under the OEM Supply Agreement,
subject to certain terms and restrictions. This option can be exercised if:
(i) there is a breach of the OEM Supply Agreement by the Company, (ii) a
termination of supply of licensed product under the OEM Supply Agreement by
the Company, or (iii) mutual agreement to terminate the OEM Supply Agreement
by the Company and Northern Telecom. Additionally, if Northern Telecom meets
certain purchasing thresholds from the Company, Northern Telecom may also
elect to exercise this option. If the option is exercised under this
circumstance, Northern Telecom has agreed to pay the Company a one-time
license fee. In addition, in all cases, certain royalties on the products
licensed are to be paid. The Manufacturing License Agreement has an initial
five-year term unless terminated earlier in accordance with terms and
conditions specified in the agreement. The agreement may extend for additional
one-year terms.

Collaborative Development Agreement

On March 4, 1995, the Company entered into a five-year agreement (the
"Collaborative Development Agreement") with Northern Telecom to collaborate
with Northern Telecom on their mutual planning and development activities for
PCS products. Under the terms of the Collaborative Development Agreement,
Northern Telecom and the Company have agreed to commit resources to joint
projects. The Collaborative Development Agreement may be renewed for
successive one-year periods, and is subject to earlier termination by mutual
agreement of the parties or by either party upon written notice to the other
party thirty days prior to the end of the initial term or a renewal term.

10. COMMITMENTS AND CONTINGENCIES:

Commitments

The Company has entered into various leases for its office, facilities and
for equipment used in the development of its products. The leases are
typically three to five years in length and payable monthly. The Company also
has acquired the rights to approximately 4,500 sites in the New York MTA as
possible locations for cell sites. Future minimum rentals under these
noncancelable operating and capital leases as of December 31, 1995 are as
follows, in thousands:

[Download Table]

PERIOD OPERATING LEASES CAPITAL LEASES

1996........................................ $ 907 $ 210
1997........................................ 760 108
1998........................................ 277 13
1999........................................ 280 --
2000........................................ 217 --
------ -----
Total..................................... $2,441 331
======
Less amount representing interest........... 43
-----
Present value of minimum lease payments..... 288
Less current portion........................ 182
-----
Long-term portion of capital lease obliga-
tions...................................... $ 106
=====

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)
Total rental expense for the years ended December 31, 1993, 1994 and 1995
was $201,670, $398,978 and $957,167, respectively. Capital leases in the
amount of $551,139, $591,191, net of $116,068 and $234,867 accumulated
depreciation, respectively, are included in fixed assets at December 31, 1994
and 1995, respectively.

On December 12, 1995, the Company and Hansol Paper Co., Ltd. ("Hansol") and
its telecom affiliates entered into a strategic alliance for the promotion of
the Omnipoint System in the Republic of Korea and other parts of Asia, and the
grant of a license to Hansol to manufacture Omnipoint System handsets. The
agreement provides that Omnipoint will enter into a purchase order, subject to
certain preconditions, including competitive pricing, to acquire from Hansol
handsets for sale to subscribers in areas covered by licenses, if any,
purchased by the Company in the Entrepreneurs' Band auction.

Litigation

The Company is not currently aware of any pending or threatened litigation
that could have a material adverse effect on the Company's financial
condition, results of operations or cash flows.

11. STOCK OPTIONS AND WARRANTS:

During 1991, the Company granted a warrant to purchase 915,000 shares of
Common Stock at an exercise price of $.008 per share, a price below market
value, exercisable for a period of 10 years in exchange for investment banking
services over five years. In connection with the warrants, the Company
recorded a charge to operations and an increase to paid-in-capital of $0.8
million in 1991. The Company also issued a warrant to purchase 750,000 shares
of Common Stock originally exercisable for a period of five years from the
date of issuance. The warrants are exercisable for a price of $1.00 per share
for the first 250,000 shares exercised, $1.10 per share for the next 250,000
shares exercised and $1.20 per share for the remaining 250,000 shares
exercised. Subsequent to December 31, 1994, the Company and the warrant holder
agreed that the warrant holder could loan to the Company an amount equal to
the aggregate exercise price of the warrant on or before the original
expiration date. In such event the expiration date of the warrant would be
extended for an additional five years.

In connection with the Senior Notes and Convertible Subordinated Notes
issued in 1995, the Company granted to the holders of the notes warrants to
purchase 1,250,000 shares of Common Stock at an exercise price of $.004 per
share, a price below market value, exercisable for a period of five years from
the date of issuance. In connection with the warrants, the Company recorded a
discount on the notes and an increase to paid-in capital of $17.5 million.

The 1990 stock option plan authorizes the grant of options exercisable for a
maximum of 6,250,000 shares of Common Stock to key employees, consultants,
officers and directors of the Company. Options under the plan expire 10 years
from the date of the grant for incentive stock options and 10 years plus 30
days for nonstatutory options. Prior to the approval of the 1990 stock option
plan, the Company granted a total of 890,000 nonstatutory stock options at an
exercise price below the fair value of the stock. The Company recorded $91,024
of compensation expense in 1993, associated with these options. During 1995,
the Company granted 5,044 additional stock options at an exercise price below
the fair value of the stock. The Company recorded $24,255 of compensation
expense during 1995 associated with these options.

In June 1994, an unrelated party acquired 1,125,000 shares of Common Stock
of the Company in exchange for an option held by such unrelated party an
option to purchase a 9.85% interest in OCI. The estimated fair value of the
Common Stock of $4.5 million at the time of the exercise of the option has
been recorded as an

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)
additional investment in the subsidiary, with a corresponding intangible
asset. Also in June 1994, an unrelated party exercised its option to purchase
549 shares (4.42%) of Omnipoint's stock in OCI for $3.2 million resulting in a
gain of the same amount. The Company issued the options in 1992 to other
Pioneer's Preference applicants, who were ultimately unsuccessful in obtaining
a preference award.

Information regarding the Company's stock option plans and warrants are
summarized below:

[Enlarge/Download Table]

INCENTIVE STOCK NONSTATUTORY STOCK
OPTION PLAN OPTION PLAN WARRANTS
----------------------- ------------------------ -----------------------
NUMBER OF PRICE NUMBER OF PRICE NUMBER OF PRICE
SHARES PER SHARE SHARES PER SHARE SHARES PER SHARE

Outstanding at December
31, 1992............... 462,483 $0.44-$0.90 2,407,741 $0.008-$0.90 1,665,000 $0.008-$1.20
-------- ------------ --------- ------------- --------- ------------
Granted during 1993..... 107,633 4.00 55,000 4.00 972,223 7.20
Expired during 1993..... (29,430) 0.90 (17,778) 0.90 (972,223) 7.20
Exercised during 1993... (13,343) 0.90 -- -- -- --
-------- ------------ --------- ------------- --------- ------------
Outstanding at December
31, 1993............... 527,343 0.44-4.00 2,444,963 0.008-4.00 1,665,000 0.008-1.20
-------- ------------ --------- ------------- --------- ------------
Exercisable at December
31, 1993............... 272,650 0.44-0.90 2,165,888 0.008-0.90 1,665,000 0.008-1.20
-------- ------------ --------- ------------- --------- ------------
Granted during 1994..... 243,458 10.00 86,668 10.00 -- --
Expired during 1994..... (285) 0.90 (1,110) 0.90 -- --
Exercised during 1994... (16,828) 0.44-0.90 (40,733) 0.008-0.90 -- --
-------- ------------ --------- ------------- --------- ------------
Outstanding at December
31, 1994............... 753,688 0.44-10.00 2,489,788 0.008-10.00 1,665,000 0.008-1.20
-------- ------------ --------- ------------- --------- ------------
Exercisable at December
31, 1994............... 377,815 0.44-4.00 2,304,198 0.008-4.00 1,665,000 0.008-1.20
-------- ------------ --------- ------------- --------- ------------
Granted during 1995..... 402,834 6.00-14.00 1,149,636 0.004-24.00 1,479,168 0.004-6.00
Expired during 1995..... (104,033) 0.90-10.00 -- -- -- --
Exercised during 1995... (83,992) 0.90-4.00 -- -- -- --
-------- ------------ --------- ------------- --------- ------------
Outstanding at December
31, 1995............... 968,497 0.90-14.00 3,639,424 0.004-24.00 3,144,168 0.004-6.00
-------- ------------ --------- ------------- --------- ------------
Exercisable at December
31, 1995............... 390,491 0.44-14.00 2,423,133 0.004-24.00 3,144,168 0.004-6.00
-------- ------------ --------- ------------- --------- ------------
Granted during 1996..... 81,931 14.00-27.00 37,270 6.00-16.00 -- --
Expired during 1996..... (1,239) 6.00-10.00 -- -- -- --
Exercised during 1996... (132,330) 0.44-10.00 -- -- -- --
-------- ------------ --------- ------------- --------- ------------
Outstanding at March 31,
1996................... 916,859 $0.44-$27.00 3,676,694 $0.004-$24.00 3,144,168 $0.004-$6.00
======== ============ ========= ============= ========= ============
Exercisable at March 31,
1996................... 280,759 $0.44-$14.00 2,431,945 $0.004-$24.00 3,144,168 $0.004-$6.00

At December 31, 1995, 7,140,000 shares of Common Stock are reserved for the
exercise of stock options, and 3,144,168 shares are reserved for the exercise
of warrants.

In July 1995, the Board of Directors repriced the stock options granted at
$10.00 per share to $6.00 per share to reflect the adjusted fair market value
of the Common Stock.

12. INCOME TAXES:

At December 31, 1995, the Company had net operating loss carryforwards of
approximately $64.2 million to be used to offset future taxable income; these
carryforwards expire during the years through 2010, subject to certain
limitations. Under the Tax Reform Act of 1986, the amount of and benefits from
net operating losses that can be carried forward may be impaired or limited in
certain circumstances. Due to the losses, the Company has not recorded income
tax expense.

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)

Deferred tax assets and liabilities are comprised of the following:

[Download Table]

DECEMBER 31,
-----------------
1994 1995
(IN THOUSANDS)

Deferred tax assets:
Inventory............................................. $ 112 $ 244
Compensation related.................................. -- 361
Deferred revenue...................................... -- 1,720
Other................................................. -- 144
Net operating loss carryforwards...................... 7,585 25,680
Valuation allowance................................... (7,056) (21,611)
Deferred tax liabilities:
FCC License........................................... (601) (6,393)
Fixed assets.......................................... (40) (145)
------- --------
Net deferred tax assets............................... $ -- $ --
======= ========

Due to the uncertainty surrounding the realization of the favorable tax
attributes on future tax returns, the Company has placed a valuation allowance
against its otherwise recognizable net deferred tax assets.

13. MAJOR CUSTOMERS:

In 1993, three customers each accounted for approximately 53%, 19% and 18%
of total revenues. In fiscal year 1994, one customer accounted for 100% of
total revenues. The customers included in these percentages vary from period
to period.

14. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107, "Disclosure About Fair Value of
Financial Instruments." The estimated fair value amounts have been determined
by the Company, using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting
market data to develop the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that the
Company could realize in a current market exchange. The use of different
market assumptions and/or estimation methodologies may have a material effect
on the estimated fair value amounts.

[Download Table]

DECEMBER 31, 1994 DECEMBER 31, 1995
-------------------- --------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)

Credit Agreement..................... $ -- $ -- $ 36,500 $ 36,500
Convertible Subordinated Notes....... -- -- 16,250 25,000
Loan payable under financing
agreement........................... -- -- 19,479 19,479
Senior Notes......................... -- -- 16,485 25,000
New York MTA License Obligation...... 347,518 347,518 347,518 347,518

Cash and Cash Equivalents, Prepaid Expenses and Other Assets, Accounts
Payable and Accrued Expenses

The carrying amounts of these items are a reasonable estimate of their fair
value.

Long-Term and Short-Term Debt

The fair value of these securities are estimated based on recent
transactions. The value of these transactions are based on interest rates that
are available to the Company for issuance of debt with similar terms and
maturities because there are no public market quotes available for these
securities.

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)

New York MTA License Obligation

The fair value of this obligation on the prevailing terms the United States
Government offers other Pioneer Preference license holders. The terms and
conditions for this obligation are set by the FCC based on authority granted
by the Congress of the United States of America.

The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1994 and December 31, 1995.
Although management is not aware of any factors that would significantly
affect the estimated fair value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements since
those dates, and current estimates of fair value may differ significantly from
the amounts presented herein.

15. SUPPLEMENTAL CASH FLOW INFORMATION:

[Download Table]

THREE MONTHS
YEARS ENDED DECEMBER ENDED
31, MARCH 31,
--------------------- ------------
1993 1994 1995 1995 1996
(UNAUDITED)
(IN THOUSANDS)

Non cash investing and financing activities:
Liability incurred for acquisition of the
license.................................. $-- $347,518 $ -- $-- $ --
Capital lease obligations incurred and
notes payable issued in exchange for
fixed assets............................. 278 233 88 -- --
Common Stock issued upon conversion of
subordinated note........................ -- 3,217 -- -- 16,250
Common Stock issued in exchange for an
option held by a third-party to purchase
shares of subsidiary..................... -- 4,500 -- -- --
Common Stock issued in exchange for
employee notes receivable................ -- 250 825 -- --
Issuance of Series B preferred stock in
payment of Series B dividend............. -- -- 1,517 -- 576
Issuance of Series C preferred stock in
exchange for amounts due under line of
credit................................... -- -- 10,000 -- --
Dividends accrued on Series B and Series C
preferred stock.......................... -- -- 1,839 -- --
Proceeds from financing agreement used to
pay origination fee...................... -- -- 7,500 -- --
Common Stock issued in exchange for
services................................. -- -- 59 -- --
Fixed assets financed by the financing
agreement................................ -- -- 13,312 -- --
Advance payment of pilot system equipment
financed through financing agreement..... -- -- 4,840 -- --
Pilot system equipment funded by financing
agreement................................ -- -- 1,053 -- --
Issuance of options as form of advanced
compensation............................. -- -- 112 -- 350
Conversion of preferred stock in
connection with offering................. -- -- -- -- 44,703

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31, 1995
AND 1996 IS UNAUDITED)

16. INDUSTRY SEGMENT INFORMATION, IN THOUSANDS:

[Download Table]

THREE MONTHS ENDED MARCH 31, 1996
--------------------------------------
EQUIPMENT SERVICE
DIVISION DIVISION TOTAL

Revenues................................ $ -- $ -- $ --
Income (loss) from operations........... (8,472) (4,960) (13,432)
Identifiable assets..................... 189,824 354,081 543,905
Depreciation and amortization........... 483 3,018 3,501
Interest income (expense), net.......... (2) (2,469) (2,471)

YEAR ENDED DECEMBER 31, 1995
--------------------------------------
EQUIPMENT SERVICE
DIVISION DIVISION TOTAL

Revenues................................ $ -- $ -- $ --
Income (loss) from operations........... (23,839) (14,163) (38,002)
Identifiable assets..................... 108,684 366,306 474,990
Depreciation and amortization........... 1,900 9,138 11,038
Interest income (expense), net.......... 57 175 232

YEAR ENDED DECEMBER 31, 1994
--------------------------------------
EQUIPMENT SERVICE
DIVISION DIVISION TOTAL

Revenues................................ $ 3,000 $ -- $ 3,000
Income (loss) from operations........... 3,217 (14,650) (11,433)
Identifiable assets..................... 13,810 347,136 360,946
Depreciation and amortization........... 688 437 1,125
Interest income (expense), net.......... 301 (1,457) (1,156)

YEAR ENDED DECEMBER 31, 1993
--------------------------------------
EQUIPMENT SERVICE
DIVISION DIVISION TOTAL

Revenues................................ $ 1,618 $ -- $ 1,618
Income (loss) from operations........... 3,589 (9,784) (6,195)
Identifiable assets..................... 14,465 -- 14,465
Depreciation and amortization........... 246 -- 246
Interest income (expense), net.......... (32) -- (32)

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

The following table provides quarterly data for the fiscal year ended
December 31, 1995 and 1994.

[Download Table]

1995
--------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenues.......................... $ -- $ -- $ -- $ --
Operating expenses:
Research and development........ 2,317 2,860 3,643 5,525
Sales, general, and
administrative................. 1,785 2,639 3,649 4,546
Depreciation and amortization... 2,690 2,690 2,907 2,751
-------- -------- -------- --------
Total operating expenses...... 6,792 8,189 10,199 12,822
-------- -------- -------- --------
Loss from operations............ (6,792) (8,189) (10,199) (12,822)
Other income (expense):
Interest income................. 50 102 400 197
Interest expense (Note 8)....... (7,982) (8,352) (8,270) 24,087
-------- -------- -------- --------
Net income (loss)............. $(14,724) $(16,439) $(18,069) $ 11,462
======== ======== ======== ========
Net income (loss) per common
share........................ $(0.47) $(0.52) $(0.58) $0.36
======== ======== ======== ========
Weighted average number of common
shares outstanding............... 31,345 31,870 31,397 31,529

1994
--------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenues.......................... $ -- $ -- $ 3,000 $ --
Operating expenses:
Research and development........ 1,102 1,575 1,952 2,389
Sales, general, and
administrative................. 990 1,298 1,715 2,287
Depreciation and amortization... 94 115 182 734
-------- -------- -------- --------
Total operating expenses...... 2,186 2,988 3,849 5,410
-------- -------- -------- --------
Loss from operations............ (2,186) (2,988) (849) (5,410)
Other income (expense):
Interest income................. 94 84 95 90
Interest expense................ (25) (11) (11) (1,472)
Miscellaneous income............ -- 65 -- --
Gain on sale of subsidiary
stock.......................... -- 3,194 -- --
-------- -------- -------- --------
Net income (loss)............. $ (2,117) $ 344 $ (765) $ (6,792)
======== ======== ======== ========
Net income (loss) per common
share........................ $(0.07) $0.01 $(0.02) $(0.22)
======== ======== ======== ========
Weighted average number of common
shares outstanding............... 29,969 30,488 31,266 31,274

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OMNIPOINT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)

18. SUBSEQUENT EVENTS (UNAUDITED):

ERICSSON AGREEMENTS

On April 16, 1996, Ericsson, Inc. ("Ericsson") and the Company entered into
definitive agreements governing (i) the licensing and supply arrangement
related to the Omnipoint System, (ii) the purchase by OCI or other Omnipoint
affiliates of GSM handsets, (iii) the sale by Ericsson of IS-661 and GSM
infrastructure equipment, subject to completion of vendor financing
agreements, for which the parties have entered into a non-binding commitment
letter regarding the New York MTA network, and (iv) cooperation on marketing,
standards and technical activities.

Under the terms of the licensing and supply agreements, Ericsson will pay
license fees and royalties, including an initial $4.5 million license fee.

In addition, under the agreement for the sale of Ericsson infrastructure
equipment, the Company and its affiliates will purchase $250.0 million of a
mix of IS-661 and PCS 1900 infrastructure equipment. Under the handset
agreement, the Company will purchase GSM handsets. These commitments are to be
fulfilled within five years of the date upon which the definitive agreement
was executed.

In April 1996, the Company entered into a non-binding memorandum of
understanding with Orbitel Mobile Communications Ltd., ("Orbitel"), a wholly-
owned subsidiary of Ericsson, which contemplates agreements pursuant to which
Orbitel will develop, manufacture and supply to the Company IS-661 and dual
mode IS-661/PCS 1900 handsets in a mutually agreeable timetable upon OCI
agreeing to a minimum purchase commitment to be determined when the parties
have ascertained the resources necessary for the development and manufacture
of such handsets.

The non-binding letter of intent sets forth the terms for vendor financing
to be provided by Ericsson to OCI or Omnipoint affiliates holding licenses
purchased in the Entrepreneurs' Band auction. The $127.5 million vendor
financing commitment is for (i) amounts paid to Ericsson under the
infrastructure supply agreement, and (ii) amounts paid to Ericsson under the
handset agreement so long as these latter amounts do not exceed 50% of the
amounts paid to Ericsson for infrastructure equipment.

ENTREPRENEURS' BAND AUCTION

The Company purchased Entrepreneurs' Band licenses for an aggregate of
$509.1 million (net of the 25% small business discount). The Company will make
its first payment of 5%, or $25.5 million utilizing the $40 million deposit
with the FCC; the remaining $14.5 million of such deposit has been refunded to
the Company. The Company has prepared its long-form application for licenses.
At the time the licenses are awarded, the Company will pay an additional 5%,
or $25.5 million. The remaining 90%, or $458.2 million, will be due in
quarterly installments beginning in the year 2003 and continuing until 2006
and will bear interest until paid at the 10-year Treasury Bill rate on the
date the licenses are awarded. The Company anticipates that these licenses
will be issued by the end of August 1996, unless delayed by FCC proceedings or
litigation. The Entrepreneurs' Band BTA licenses and any other licenses
purchased by the Company in the future will be accounted for in accordance
with the recently agreed upon industry practices. Accordingly, interest
incurred for the licenses will be capitalized during the buildout phase and
amortization of the license cost will begin with the commencement of service
to customers.

F-25

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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY THE COMMON STOCK
IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE THEREOF.

------------

TABLE OF CONTENTS

[Download Table]

PAGE

Prospectus Summary........................................................ 1
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 15
Price Range of Common Stock and Dividend Policy........................... 15
Dilution.................................................................. 16
Capitalization............................................................ 17
Selected Consolidated Financial Data...................................... 18
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 19
Business.................................................................. 24
Management................................................................ 43
Certain Relationships and Related Transactions............................ 51
Principal and Selling Stockholders........................................ 52
Description of Capital Stock.............................................. 57
Shares Eligible for Future Sale........................................... 59
Underwriting.............................................................. 61
Legal Matters............................................................. 62
Experts................................................................... 62
Additional Information.................................................... 62
Glossary of Terms......................................................... 63
Index to Consolidated Financial Statements................................ F-1

------------

UNTIL JULY 22, 1996 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPAT-
ING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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6,000,000 SHARES

[LOGO OF OMNIPOINT CORPORATION APPEARS HERE]

COMMON STOCK

----------------

PROSPECTUS

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DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

ALLEN & COMPANY
INCORPORATED

GOLDMAN, SACHS & CO.

MONTGOMERY SECURITIES

SALOMON BROTHERS INC

JUNE 27, 1996

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B1’ Filing	Date	First	Last	Other Filings

	12/31/04	10	82
	3/10/02	58	82
	8/2/01	58
	11/22/00	83
	3/31/00	10	82	10-Q
	3/31/99	43		10-Q
	6/30/98	83		10-Q, 10-Q/A, S-3
	3/8/98	2	25
	6/30/97	10	82	10-Q
	12/31/96	50		10-K/A, 10-K405
	11/22/96	83
	10/25/96	15
	8/2/96	58
	7/25/96	15	60
	7/22/96	93
	7/3/96	1
Filed on:	7/1/96	50		S-8
	6/30/96	12	23	10-Q
	6/27/96	1	93	10-K/A, 10-Q/A, S-1/A
	6/17/96	23
	6/15/96	4	61
	5/30/96	50
	5/15/96	28		10-Q
	5/10/96	23
	5/6/96	11
	4/30/96	12	41
	4/19/96	23
	4/16/96	39	92	8-K/A
	4/8/96	24	84
	4/5/96	12	41
	4/4/96	23
	4/1/96	23
	3/31/96	5	92	10-Q, 10-Q/A
	3/15/96	69
	3/8/96	11	84
	2/8/96	32
	1/31/96	5	81
	1/26/96	16
	12/31/95	5	91	10-K/A
	12/28/95	77
	12/27/95	77
	12/18/95	23	83
	12/12/95	39	86
	11/29/95	23	83
	11/22/95	14	83
	11/21/95	82
	10/1/95	44	78
	9/19/95	52	78
	7/21/95	82	84
	6/29/95	81	82
	4/17/95	48	52
	4/4/95	81
	3/31/95	19	92
	3/10/95	81
	3/4/95	85
	2/28/95	85
	1/31/95	76	81
	12/31/94	19	91
	12/5/94	52
	7/5/94	49
	4/14/94	78
	1/29/94	81
	12/31/93	21	90
	1/29/93	81
	12/31/92	72	87
				List all Filings

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Filing Submission 0000928385-96-000859 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Omnipoint Corp/DE – IPO: ‘424B1’ on 7/1/96

As of: Monday, 7/1/96 · Accession #: 928385-96-859 · File #: 333-03739

Initial Public Offering (IPO): Prospectus — Rule 424(b)(1)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Initial Public Offering (IPO): Prospectus — Rule 424(b)(1)
Filing Table of Contents